PGTI - Earnings call transcript Q1 2020

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Operator

Good day, and welcome to the PGT Innovations First Quarter 2020 Earnings Call. Today's conference is being recorded. [Operator Instructions].

I would now like to turn the conference over to Sherri Baker, Senior Vice President and Chief Financial Officer. Please go ahead.

Sherri Baker

Operator. you, Thank and call everyone, for us joining Good thank the today. on morning, you

Investors company's is on quarter On find of today's for presentation section the the replay to posted and press well the accompany with will we as available have the This website, website. release our recorded results the first webcast company's XXXX discussion. as slide being earnings will you be

factors X the our the begin that cause direct remarks, to the and disclosure disclaimer as a statement well in prepared Slide materially. disclaimer, to results the press is the the in to could we Before forward-looking This of remarks your filings the differ on statements included and is outlook statements. statements summary about the please statutory may statements forward-looking impact company's including company's of related included other with of involve which our the brief as presentation Today's attention that actual disclaimers forward-looking XXXX and statements contain release COVID-XX risks, uncertainties SEC.

slide you and also reconciliation the Slide investors release X, included is additional attached most the help in comparable tables for to results of we believe should measures, earnings A and on note provide information report that appendix to comparison GAAP measures facilitate using present presentation. Additionally, the performance. non-GAAP prior we which directly of to in the the

available our take today remarks, joined your Innovations' I am be Jackson. and by PGT to prepared Jeff CEO we will President, After questions.

the to opening hand for over remarks. now will call I Jeff

Jeffrey Jackson

company, joining marketplace with us safety call our suppliers am and continuing this everyone, and an morning, good along for thank also the maintaining, for expressing result members, extremely are team like a by health high-quality off times. this as the customers employees other to the start well products as our of while of customers communities. pandemic. a to navigating how as customers, We, morning. service thank dynamic top as to COVID-XX these I through to our employees and our during for priority, morning our you I incredible every proud deliver all I Sherri, you, would challenging Thank of support and and their want

few a how the words COVID-XX at handling on Innovations. pandemic Next, are we PGT

essential pandemic to our safety safety took the action implemented the As manufacturing appeared, the to we effects our our task of members company. on and we operations customers to on, customers. services, this team take providers an a a our formed continue. we we partner COVID the Early and of team force the protect plan responsibility focused products are of comprehensive of and enabling first to while important could suppliers, When and Early is health, seriously. members our we on, immediately COVID-XX study have on measures

monitored local that changes also state were with in implemented line federal, and government We mandates. both and

arrival include at in all examples our temperature plan checks upon and our visitors. all our Some external robust put for place facilities, sanitation our on included of at and Slide X, are employees enhanced facilities, limited safety

expect products significant markets construction our sales while guidelines. and R&R extremely for proud new going overall the high-quality into quarter, I'm both in within service first of growth, to and achieved brands our our the operating the continuing For our of new the deliver we XXXX. strength reflecting employees customers

carefully products liquidity strength deliver continuing prioritizing while first times reducing taken keeping preserve have customers. to expenditures addition safe, balance discretionary needed in employees the intended given capital These and booster our costs sheet the actions and our we several the to economy. uncertain the In in include to cash decisive by quarter and

I X. however, regarding financial have our additional to today, expectations combined need the our pandemic. the through will to in on position, products current presentation given flexibility our COVID-XX expect we our liquidity we details on of call. Sherri Slide we impact examples believe by will with summarize, we the balance shown of can current our saying, that provide Throughout economic flow, later our take the on to in resources cash on brought flex by demand potential for you changes sheet the here

our strive X, against execute creating for stakeholders our long-term pillars briefly well value customers. of Slide cover on strategic Next, will the as to goal I X with that as our we

ultimately focus of and Our business. are on first who brand the at loyalty, to our By drive our our customers customer-centric we expect pillar is center growth. delivering recognition maintaining innovation,

customers have example, enable them with to safely operate. to latest during defogging pandemic this For assisted several we their facilities

is pillar attract second which recognizes the best people. talent, retain to continually must why employee maintaining work that Our long-term and the we requires best success

leadership times. our uncertain the dynamics throughout business with very successfully I'm pleased responded the operating keep accomplish rapidly Our quickly team this result these in as been has a changing to able to and pandemic, to marketplace of our what

is manufacture in Our our business initiatives. the We demand operational this ongoing through markets serve. to through customer and investments which products improvement continuous third efficiency, meet pillar best achieved accomplished to investing we in the we

to we facility example, operating efficiency. to further the improve consolidate the from intention announced manufacturing products Orlando into our our and Tampa our Venice For of locations network

business expenditures actions expect our products. in in of is strategy capital to business to improve of to and Although to our investments our XXXX, and preserve and we our cash reduce invest the overall liquidity, further our in to operations other amount long-term continue as part

is in making to strategically all driving the We capital. and year, the shareholder with paying currently goal which include this or a acquisition And allocate recent growth The is our fourth debt down with us assess pillar. in versus priorities, direct-to-consumer to ultimately channel value. business, our allocation brand pillar recognized continually acquisitions reinvesting capital may key order enables to is the enter of over example seeing XX% NewSouth, one prior which

Slide to turning Next, X.

in with described I the momentum both XXXX Southeast last As outstanding our segments. market quarter and previously Western growth forward quarter an carried into had organic mentioned, strong we as a

our completing after acquisition expectations. internal NewSouth on million brand February of which QX X, Window U.S. Solutions our the met sales, contributed $XX to Additionally,

driven by Our grew and the labor and EBITDA direct by material adjusted higher costs. from lower sales leverage XX%,

calls, custom investment challenges Systems at prior now are the process in On commercial associated have mixed Window costs labor impact and direct of have in with and Western a reduce cost. to improvement we products. we discussed our online, direct These come projects seeing improved

across into quarter, efforts and demand our to and we due a last our of organization margins to actions reduce our the Additionally, our took to capacity efficiencies optimize costs based in to ongoing upon year's improve fourth continuously XXXX. outlook going series

we and we able in fixed our earlier strong impact to to than to base. our stronger navigate believe were second demand without are a manage were efforts cost that costs, QX we expected, in the we of Sales of quarter. pandemic growing position COVID-XX impacting Because control our

year. construction legacy growth growth. We NewSouth excluding off new a prior throughout posting portfolio. and Florida quarter, Slide the will first strong unit, of Both refer which our the Southeast last to order across turning Now organic significant across improved with X. growth this our call, quarter entire as swing to, to we XXXX started remodel operations, sales reflecting sales growth to and compared XX% board, and saw the repair In sales versus our strong business

number In versus market overall XX% improvement key a reflecting legacy the in and prior quarter the implementation year, and strategic our repair increased of initiatives. remodeling, successful first of sales our

We outside continue Florida, of sales in the to to quarter with XX% first year. increase our prior growing out-of-state compared sales as

projects. and mixed-use in the commercial of condominium, hospitality signs and strength Within channel, growth seen we have

grow in invested we PGT legacy development opportunities our to product We accelerate NewSouth and resources in growth with this to this brands. addition brand our in in area, segment currently to evaluating are current

program, our grew the driven by sales first XX% For year-over-year increased Builder new business construction, which Corporate Southeast our quarter. unit, XX%, by in

legacy have well overall benefit business to Our as developed builders. large activity agreements builder from as in Florida with we exclusive continues increase the

XX% sales overall of the We Systems such key markets, contributed strong prior essentially year market in improvement flat an last expansion as reflecting by quarter, California, versus Window XX% in to QX Custom continued core Western year's production year. markets. emerging were builder increase versus sales Western of signs prior to which and compared sales comparison. saw increased

we the our sales demand, year-over-year. help show as you customer well of backlog level as understand orders our To underlying

resulting QX order backlog our you COVID, As XX% in ordering the in months. from result year as away outpaced increase capacity which as activity of in reduction this legacy through a a And XXXX. has steadily increase April working we The we of have experienced summer gone through grow see, orders versus our and backlog to can XX% has are a manufacturing in not a the ago. in resulted pandemic, actually grown our has

safety are team of in place, still we protect we While put the and we necessary that to follow health members. believe guidelines our

was end down backlog backlog business XX% up QX, year-over-year. our our Southeast Drilling in of the at unit

backlog Window result Western activity. down in in Systems was Our not sales to efforts was reduction backlog primarily year-over-year. that a increase of production X% add output, improve overall our But

on weighted of in XXXX. QX Together for this backlog average XX% overall in a resulted basis, a increase

Innovations' underscores order to growth existing was XX% belief model. addition, entry long-term for In is PGT for great business that a complementary up over and our which NewSouth, this acquisition the

growth decline to the meet markets of we has see of quarter. prior our to Florida beginning recovering XX% orders XX% for approximately we remainder the the demand. versus order back orders April But changed to the of adjusted operations second our are the the increased a quarter of are a and quickly industry, to demand. entry of an changes rate. pipeline in in COVID the pandemic to seen year, seeing first we slowdown have our up to environment our Similar we with over as declines in meet Obviously, for began May, overall capacity because macro outlook sequential that market, the We build in Florida year. the month entering our compared In

patterns, and/or building decline first California Nevada, the In some seeing are growth pandemic, down such April more as early that sequential to the year had restrictions from and order to over of to with as related compared rate. a softer we XX% XX% quarter areas prior XX% stringent versus

the withdrew start a Despite of of And unfavorable uncertainty our facing. the and result, there great XXXX are limited last pandemic month, the of remains to has the duration impact remainder it extent of we the to we global created environment has pandemic bit economic our This year. a quite ability and around of guidance. the this a year, the uncertainty as forecast

do economies significant sales a continue do, to year, we COVID-XX their in Assuming related cases heavily order increases not see recovery the quarter. and the we to as reopen, in move throughout however, expect our weighted in more trends fourth and any markets experience modest

our by markets We year-end. expect Florida year-over-year to growth achieve

to related EBITDA COVID-XX pandemic. that costs will and burdened the for expect to our to we endured year be incremental we've addition, ensure expect In continue by

over greater And call now detail. our review Sherri? I'll turn quarter the in Sherri to to

Sherri Baker

you, Thank Jeff.

to to turning Now our X results. Slide detail on give more

For Also, organically we QX as XX% Southeast with week from year versus $XX million the construction includes the Window of which, should note, an reported Jeff business net the unit both in versus I repair quarter. growth $XXX by prior sales. the quarter, quarter extra increased in of sales included new sales prior NewSouth year and and mentioned, our Solutions. sales remodel strong quarter, million,

improvements Western Window quarter increase volume, the for production the the to reflecting driven was over profit our a million, effective XX% efficiency Gross first increased Systems prior higher year, versus last return year by by for control. of sales operational quarter, builder XX% growth cost sales. a $XX quarter in and the strong quarter

saw gross we prior aluminum margin approximately year point from quarter. pricing that in basis improvement Additionally, the resulted XXX in favorable

quarter for resulting and year of NewSouth the control Selling, higher efficiencies. EBITDA and selling our sales, improvement from was compared increase or and general an over expenses quarter, higher million benefit $XX.X cost following material the million primarily in sales of year prior increased increased prior Adjusted and by $XX driven EBITDA marketing million the XX%. adjusted to EBITDA quarter lower distribution expense versus diligent reflects spend acquisition, from higher year. of costs $XX.X for for compared The the operating G&A to administrative and labor prior direct

quarter rate at was for estimate. in the full our came which effective below year tax Our XX%,

This of an quarter excess tax $XXX,XXX. included benefit

first share per or quarter $X.XX in to We Excluding for per this the discrete reported the million diluted diluted of or XX.X%. item, rate XXXX. adjusted quarter $XX.X net the effective first for the is $X.X compared quarter $X.XX of million share income tax

And now turning to sheet. balance our

increase million, the an with new the maintaining is quarter We is to $XXX as priorities of top our sheet the of balance the One economy of positioned the debt net company normal the our well ended course seeks strength over notes of help ensure year. a million NewSouth. year-end, of to on aggregate the million purchase issued $XXX added to Recall that senior $XXX company's the from million XXXX. earlier at the fund due which senior of these of notes in amount $XX includes the principal year

We maturing have no a only in term loan XXXX. debt of late significant $XX with other maturities million

of liquidity million, $XX As million, including revolver. of capacity on had of $XX unused plus $XXX quarter million a end, balance total of we cash our

was As adjusted debt a basis, EBITDA NewSouth net of On approximately $XXX May trailing million. we acquisition. X, total our maintained XX-month liquidity all-cash for ratio X.Xx pro forma the netted to of an

yet expense. monitoring bad accounts or days seen We our not significant are any in material debt and sales closely change outstanding in receivable have increase

excluding of excess spring commitment, of the financial of agreement of million covenant terms in apply letters undrawn that revolving XXXX financial covenants, the credit. In we contains XXXX facility $X.X in in a would if of credit XX% draw due

Now priority you. We'd of reducing many out COVID-XX leverage will of believe that pandemic us of familiar to and out significant we to record XX. acquisition, and on proven visibility should Slide chart have capital point to a we the track of This be we necessary, to of after so transition going this preservation our effects like our our turning be is of business. completion for the once forward more mode continue

gain into the our pursue we pandemic we're where review we're Once minimize liquidity I pandemic, want adequate to the of the XXXX the cash, the On related with like I of would we for capital visibility primary priorities, expenditures share possible. company year balance about to our capital to to note and our focus allocation to have the allocation priorities. and on capital that XX, better is Please steps how impacts the assuming Slide for uncertainties and business capital allocation. preserve taking capital that thinking to traditional COVID

remains to value. shareholder internal in revenue, projects investment first Our reduce cost expected priority future generate drive and

results, we active see on front, improvement can this our you QX of making from continuous as As incremental improvements our have been part culture.

commitment debt maintaining to Our reduction a second our would sheet. be balance and priority strong

to range at leverage for a net with end We profile expect of that to low a a conservative preference Xx the debt-to-EBITDA with staying Xx of maintain range.

new footprint strong generate for capital expect to be to channels and priority that products expand would strategic we us third that Our use markets, geographies into acquisitions our expand new allow other and building to or margins.

NewSouth, the economic as primary Given of our recent expect focus the as preserving we will uncertainty of that for our our around manufacturing well optimization acquisition be outlook XXXX assets. liquidity and

potential in acquisitions that future expect or occur We will most beyond. XXXX any likely

remain you that to well as and repurchases I No a the Finally, plan made share were to have foreseeable described note just as the may stock we quarter, the priority. removed repurchase committed liquidity as we during for priorities maintaining have future.

the withdrawn have monitoring assumptions for half XXXX, back our to we financial closely key year indicators for current XXXX. While we our what share guidance are full QX I the and for are want of

to by in sales same year, lower to orders, driven by in COVID-XX-related April. last QX be compared period expect XX% as which X% primarily the started to reduction We

to in to mid-teens ongoing We for expected and of incurred margins product and Western Florida lower and expect pandemic. the negative combination QX our be a EBITDA mix costs COVID-XX QX and response the markets, in to business sales our in both incremental those an due

to while needs. deliver funded reductions, cost levels and that, reflecting to QX service in our that reasonably will that and structure cost will our assumes customers return manner products that resources sales in a maintain to a structure customers' properly decisions the to our by expect and We some manufacture require timely cost QX

cases recovery and our earlier, Florida year-end. significant we any sales expect year and markets throughout growth experience the economies year-over-year move reopen, we in that achieve trends increases a COVID-XX to order to our Jeff by As see to mentioned in continue modest expected markets do not assuming as with related

factors the factors do structure We may may that entry And and remainder cost to of are reduce and year. as get the further into indicate economic of we demand this we our XXXX. a sales products year and monitoring the believe our further we as constantly evaluating through need so for the projections, those visibility impact trends and remainder order

are As expenditures that to stated earlier, those we are minimizing business-critical. capital our

We reported expect April. complete will our occur closure savings. capital in June Orlando as which Once invest in to to we $X.X facility of we of the $X.X completed, this year, deliver we in to of cost million to expect annualized million

closing the for to turn now, would Jeff And some to Jeff? over like I back thoughts. call

Jeffrey Jackson

Today, Sherri. Innovations' I has despite changed us. of which conclude the by reiterating Thanks, investment prepared will not my uncertainty remarks economic thesis, ahead PGT

brands a in national we strong growing compete. are leader the with We categories

we Second, and acquiring brands by the hiring as advantage innovators. investing leaders talent. We in to maintain our in industry are our intend product best and R&D, retaining

expansion on striving plan a Third, Fourth, and product value believe strategy our to efficiencies operational we serve. that for to finally, portfolio improving growth will over drive markets And on customers. long-term. we our positions the capture are we our focus shareholders long-term continue create the margin in we to believe that us we execute profitable

the I healthcare delivery all by lines expressing on drivers responders would employees, this front like deep benefit my store to have working the been appreciation who and essential first have the workers grocery the close for to been and who of workers all professionals from crisis, of others. hard essential for

begin this to time, Operator? over the I'd Q&A. to At call operator like turn to the

Operator

we'll our with question And first from Jefferies. Instructions]. take [Operator Phil Ng

Philip Ng

sales like dynamics. very on understand new Help appreciating off, from high-teen have sales? you strong some there's of kick what's out could seem and trends the implied in based to does it to and lot XQ quarter. your organic a the Because be you're things and these typical backlogs Jeff, on in of lag mid- the a orders potentially orders of Congrats kind but us in puts pipeline takes. the the recent decline conservative, months, to calling

Jeffrey Jackson

for nonimpact due lunch to the to those of Yes. we changes X weeks like cetera. the impact to had -- business the operational week times to But stretch lead the we've due most. lines out X X to, from shifts, times the of both to part be from times staggering lead spreading times week the staggering to X we've to lines, Typically, et made on what social in breaks, some say, at anywhere lead out, is pandemic, our weeks instance,

All of capacity. that served the has impact

-- hiring freeze. March, beginning actually, and a of I on, early at initiated the So

so And at hiring freeze. we're

I also, We to later, weeks no think, X went overtime.

pipeline kind we that Quite was keep safety busy the busy. of to my keep and other of stretched So job. other out them frankly, to in a employed priority folks our than folks,

So result as had had we've no unlike a have companies pandemic, layoffs this do. other of to

So up. stretched we that pipeline basically

quarter's So time because order X the in we've volume. the now, adding of half even right lead based they're though those improving added started X-week now, probably Right to area. lead are times second those -- times, off back capacity back lead

Philip Ng

Okay. Got it.

helpful. That's color earlier little I May? or know in you on more And may Okay. appreciating a mid-April. bottomed out have things perhaps, give can

that market that some markets? have be like states those big orders performing yet you Florida may positively Given reopened for how a you. inflect is the to a Has California, year-over-year? give And of in certainly, sense us started Texas and can in

Jeffrey Jackson

It's As to no, May be down mainly better, far would we're May. because to be I'd of still to our going in as -- I going say stick goes, Florida.

I Bahamas. this read hurricane We morning a being the little season. monitored hurricane June over where X is season. just pressure entering is are

be hurricane So tropical it's storm, the time that and active season could well. of as supposed first an to be

lift or be the that offset Florida natural a So will potentially market. for

night, reopening, for I orders I another of extended last L.A. their But just markets also -- California, counties in read stay-at-home months. X terms heard

definitely online, are coming I'd different it's by but area. So markets say back

that So market continue permits all main in Production were something the I year. in negative to and our is in think for California last That Southern but Western mainly quarter XX% the versus to Cal, going the Southern because April. up like -- instance, builders, XX% for is or is down. were Cal first Sherri, market. is shut they

Sherri Baker

That's correct.

Jeffrey Jackson

if We expect May. not similar, worse for

we're to striving what We're patterns that going going mainly having, again, and current end May we're is to down in in Western going tough year-over-year seeing in Florida, up So comp. we to we're the to end hope I Florida of be think unit, be business by flat the be our quarter.

Sherri Baker

year. the End of

Jeffrey Jackson

butt sorry, I'm And in. I

Philip Ng

Got it.

me. just And Okay. for last one one

business home it the business, order seems been your a of are acquisition flag in nature be Your the kind have run NewSouth the given very distancing. in more that of Can of growth strong for would social I NewSouth? driving things by some was strength impacted you April. the thought, could to actually have BXC

Jeffrey Jackson

in expand has in a Quite that's direct been of with aggressively a that the we and the side. gives has It acquisition. us COVID, it's basically opening consumer Florida Yes, also and great stores. to channel. a more state of is it Thanks, the new with ability up a NewSouth happening install the question. great brand by outside channel and What's weren't impacted new been frankly,

So sales while has The quite said, up. for we built quotes orders NewSouth. Like are are up, up. pipeline frankly, are

times, basically ourselves based right what for of was The So orders off orders those of pushed the NewSouth. out X April. available pipeline our we or installation months' worth of have now, lead is

some will come and by end stabilize back products. And us the people July, their terms the by into of back R&R letting we be quarter, in installing market those the to back May to of we'll streamed June and those in Florida. install hope homes, homes in

Sherri Baker

as is are And actually believe folks direct-to-consumer one because they marketing investment so important this an that we have opportunity home. a to add because thing. I'd keeping we our through level really like ample just is to reach advertising And the model, of

of that's future pay going will we impact when our into that but at margins, forward of it we're that see sales. QX the to you looking some So believe

Operator

with we'll take [Operator Hughes And question next Keith Instructions]. from our SunTrust.

Keith Hughes

down guess, would the you're Based press on in in my negative XX-something quarter. on second your guess revenue it's this release, margin saving discussion that commentary be if third I the or second looks and better EBITDA will the get I of contribution moves? like quarter in similar percent in will margin, -- the it quarter is, the that margins cost will decremental question case, look same, some the with

Sherri Baker

typically XX%. couple We And expect are And a you better. things in Yes. the to it see margin, around, get of there's is would decremental call going that to it QX. XX% would on

So from one, you're Jeff talking we seeing the seeing, also perspective, with a was everything just mix about market sales a that perspective. negative are from

on So the construction than business side side. and heavier a to new we are due are production we declines legacy some custom of heavier pace in faster on we're those the Florida builder And markets. the mix custom seeing at what on the

in of got you you've that So QX Jeff the also impact hitting mix about. impact talking of reduced negative capacities that just and the was the that's

continue ramping moving start as of up So capacity the you're our benefit that moving leverage we're the expecting the we're sales to increase and sequentially. throughout as to to and we're as our year, you'll see

Keith Hughes

Florida that the kind had goal that you sure NewSouth about of understand. quarter. great. talked to that I I in of not? previously Is make in detail include orders? that on would be flat a or revenue? And Does Any second Okay. being here Is want

Sherri Baker

Yes.

is flat the legacy. So

least for Florida the your to So core first particularly markets. we NewSouth will year, separate from try, at out legacy

about your intended So to legacy talk really that Florida. is

currently. XX%, down roughly seeing You're

that get expecting sequentially to time by and hopefully improve back to year-end. the are growth we We to get

Jeffrey Jackson

we're to those growth think to But going continue see. we do see we a we there's NewSouth, rates --

aggressively. orders taking still is NewSouth

Sherri Baker

Absolutely.

Keith Hughes

what the question. Okay. was not revenue change heard in the in And that The revenue. earlier, what was if quarter, the in was first or final -- sure orders it I I'm Western? I number Southeast? a guess

Sherri Baker

Yes.

new NewSouth, on So XX%. excluding organic your was year. roughly XX% and was prior And It XX% XX% growth R&R on was Florida, Western up versus your legacy construction.

Operator

from next our is Fargo. Wells question And Truman with Patterson

Truman Patterson

you quarter. hear are healthy Great and that Yes, well. to as safe too glad

Florida your on markets. question First

they've bit whether in seeing on be front You hearing suggested I would you're you or their to remodel us residential on update that to a really this recover that in little on dig contractors the the and figured what May. out likely give hoping And I'm having side? R&R pretty break you is side. Could that well? Could side on and of homeowners started the cautious home. repair just new any as enter this

Jeffrey Jackson

Yes.

up, New quite frankly. construction has held

regional builders builders. basically We in pipeline. the are are was national and currently They're out finishing what

And pipeline, down of down in Mainly also what held of with our been so themselves installation, continually the it's somebody the has go do in-home have come some. has that's centers, box our as obviously, big have slowed think look quarter rates if anything can box kind Again, would you to R&R, especially that or well. impacted. impacted, up big that it nicely. slowed first home people growth a And we at seeing. out or were you

are and do some, expect to people we the So starting guess, see in I letting us homes.

and clean are who homes. in We are be and aggressively marketing our their safe sterile, to program

that waivers sign They they're check. medically temperature get good. they employees, Our

April to place we're have back to gotten say, June, hoping like the as Anything, well. quite And their we're will by starting some, May, It as to in we're homeowner account frankly. see taking safety normal. closer be to okay. that processes and we that we into experienced. more fall people try in everybody Sherri? assure So And bad

Sherri Baker

add, other would as to months not particularly on X on the the construction do side our of dealer have X The on you Yes. new I the only also side, side but backlog, thing probably is only benefit a well.

entry we're perspective closer to So QX. probably pattern an show order seeing really will up what to start from

Truman Patterson

Okay.

in margins, quarter. the expectations of well And came first in on EBITDA Okay. the ahead then

then when the are? run maybe rate? Could of $X.X be the timing And to complete and efficiencies, cost go also and give to You million into depth Window think close the including management will how you an all sustainable side. mentioned running be just consolidation plant operating these Western Orlando $X.X a update you'll on that about bit million more you

Sherri Baker

I starting start business, I'll direct had are perspective, seeing see amount is From operating the with And particularly operations we with were your to saw cost a say on the was think, will which Sure. and the incredible. quarter organically Western that from just candidly, an side. we phenomenal The of where a labor I we that benefits Florida control, perspective. leverage growth the that

your last some were through in operational So your the costs perspective. that new our from that And that labor, but leveling. working as ordering that's not benefiting talked we recall direct perspective we well. place challenges or an and there We've procedures from only on call also were put process orders a improvement shipping

as and into into quarter place really we lot we and a programs second processes QX to quarter. exiting first the coming to really those starting So come of that in fruition put are were the

Jeffrey Jackson

we I'd And we and took to business, fixed costs. year reducing of took leverage that our also QX in of the where charge well, say, to also cost able out last then so restructuring, remember, we're as speak, that

Operator

is from Zener Ken question KeyBanc. with next Our

Kenneth Zener

Good parts able on million that keep to sorry, or of employees wasn't with X% the A backlog it's about of different the in was sales. in I to when moving But NewSouth. organic I to hear the start that -- to clear know lot we here. engaged. manage you are guidance, the that. was XQ, NewSouth? of terms you including $XX said XX% If could

Sherri Baker

That includes Yes. NewSouth.

it's worse that with being is the weighted and segregation the year-over-year high more a that, Western Florida of slightly decline basis, than better but teens organic And teens. on average being Your than high in organically. about

Kenneth Zener

you clearly. I just the Excellent. couldn't I And -- correct? that Is hear EBITDA, it then mentioned mid-teens.

Sherri Baker

is correct. That

Kenneth Zener

Great. Okay.

per plus mean, centers, market, show with Do into Jeff, insights say, versus you what you And and the doing costs given you going those the job? go through installation. you are installation, historically? guys bit, guys the do X little they to or fixed it's has you could that dealers NewSouth a Now would I

Jeffrey Jackson

every different. job One, is Yes.

customer a than base and more say, door jobs, may And dealer our quite would and to out frankly, more the doors, windows. one-offs. the a I base wants historical smaller targeted. go what different targets, they there with PGT are just ultimately NewSouth for If to switch start then instance, person

well opened Charleston at of model to stores, have end we up open the Pensacola very again, scheduled NewSouth the as as Houston well. we fits this year. open and the that we which up And as store, store,

marketing the not start NewSouth. open how costs to with mentioned here, we as we'll So leveraging up is cost of stores, in earlier, as we which some an necessarily start go-to-market investment,

our we've and an very a product. dealer-based standpoint, similar our to able to standpoint both from is What is product been learn installation price,

undercutting And other. money, to able So very the quite are and it's both, both therefore, market frankly. complementary. we're not We're make each in

able we've as with or thing a implementing and base. generation Coffee. from It's start technology it we've dealer going and bases, an been lead dealer generation other we The Project implement we our for call NewSouth's initiative standpoint have is lead learned to their PGT innovation take our that in

about lead on have leads the lot install, up But terms of So we've following in in-house, we labor, And most those of though those that even and of outsourced. generation, a is quite leads. some of frankly, is cost again, most learned variable. that install

quoting that local will we as installer a go And that home, labor have So we'll the into the the with that included. related product going store with labor sell or we're job. we'll to a prepriced home, at they're that product prarranged sell

Kenneth Zener

sales obviously, difference kind and Could better the X the perhaps, that the custom about direct last and margin ago? shift data, really mentioned, that a you lower are the mean, the production custom. you range? West, then West, from we Sherri, shows in about have been that region? us, than quarter, in lot working builder for your is West. specifically Jeff, because I in would X% you XX-K, process thought to which perhaps we more in opportunity talked update of And Is between Southeast X obviously, months have you or the the has growth of still the EBIT labor segment getting

Sherri Baker

take I'll Yes, Yes. that.

process QX they really from but end the the towards are of were benefits put to a in starting in Western improvements place labor, perspective, So and of direct the QX. see we into

back So but seeing we normalize are you of are and we labor higher still expecting. on would bit see year-over-year basis, that starting where sequentially a to to a direct get be

you're see in, in say to I'd So benefit QX. going coming of more that

in of the market-related driven, just COVID. an a just to shift overall that. that we will I'd a have not, On a mix perspective market-driven, that of production health In an about, effect business due QX, product all factors but macro more talked mix also all see to the say, negative all Jeff of custom from into and builder EBITDA you will play do basis,

starting more that well. I'd product at QX you'll up structure So there be least seeing But that see more going are similar mix normalized cost you would of see, negative were a as say, to into of will show a we what to year. last

Jeffrey Jackson

open the in you Yes. up to outlet, of brand, incredible obviously retail be We've in Skye is Walls, did our R&R we're implemented which going first various We if It's changes California. an more market there. at Western. establishing will, and aggressive

at again, the California, out the wall leveraging that's to opportunity demand COVID-XX but place an and -- moment, brand kind incredible that not of indoor/outdoor Although, in market. that there keep window to open that it's this be best

several got like had plant, and had are initiatives material, the between to that. scheduling, temp And of mentioning year, -- level materials. XX-XX loading last employees. we've workforce, the internally, we going That's bill purchases of split we Sherri I The accuracy increasing about So a permanent away. synchronizing and

of about important XX% a we have employees that are And there. maintaining force We're that split XX-XX Basically, knowledge about permanent. is have. temporary We're training base to a XX% now. it's only them.

California impacts I I And significant from had from a wouldn't been still during is the show on up I of -- at improvements, later there's COVID-related this seeing point. overemphasize. EBITDA Western. in want of California are year. don't a changes lot mentioned, top actual will some Sherri It to for mean, but Texas terms a for one, market Western. So we -- at

Operator

next question Michael Our from Rehaut JPMorgan. is with

Margaret Wellborn

is for This Maggie Mike. on

of a sort to I First, question questions some the follow-up first, earlier. -- of

about several Skye opening the the expansion previously stores segment. new business, across new initiatives in You've Wall talked NewSouth,

still you've them year, the has mentioned California. extent? that these you open in openings has for Skye NewSouth situation to did impacted planned later talk store think could how COVID-XX you And about plans. Wall was any that out a this got pushed it if you and I But hoping I

Jeffrey Jackson

probably certain for to, open to would initiatives, march create of The had out to better expansion our other Vegas, And in going where Northern going Yes. change Cal. Quite a third frankly, instead it We it's time. yes, to quarter, the be answer be long-term, we're that the in that were we we we would next demand. We first quarter But will it word. targeted yes. a We're I quarter. market results not duration some execution potential we and laid to and may probably second the go. we've assess of trying had -- question. -- Yes. that be in over Obviously, that is of did from do thesis, great of up it again, an fourth delay market will going look the to the a to It's may dynamics the year. environment to impact second Wall and to, Las us. say, do we're We currently impacts any investment Skye quarter still

delayed have initiatives. we So certain

do However, Pensacola more now, store identified would plan say we talking still store frame I it would I them locations. sooner. time are opening. to between And Houston We do towards quarter have still opening. say, fourth on We've mid-year. we're the several versus, pushed

much, down Sherri, obviously, on orders markets, I approach quite spend cut about say, -- built million. of that's down $XXX those some cut we've spending, the don't got frankly. up, know to roughly are we an And been expenditures. CapEx. And initiatives. initially an stable for of stable, our taken forecasting We've overall those to pipeline types of our most from XX%, we've certain how what in have tried We've were there part. incredible I would So on CapEx

how states And have the strong. much banks. of going that of than downturn form We're XX XX% goal at are come opening. back We long demand, is get -- our this about their and last went quite we'll takes. lasts. took here, as more with frankly. is flex or that capacity This our plus And just impact businesses see different to to plans out it's into starting not to long some to opening how how to unlock feeling read, -- economies. got this work and they're Last I downturn, people work, to start liquidity of see while that thing million We a the of all. crisis basically. last the The

Our worst flow analysis, constantly wise, shape just great through and has think the current fine. why on, go are cash her That's liquidity in to we're us we which case team Sherri pandemic.

taking we're that's say, strategy still So but following approach, I here. yes, would cautious guidance our a overall, we're and

Margaret Wellborn

give Could idea now give mentioned are that cut? how where started then idea capacity. an pre-COVID-XX of you us versus back an levels? capacity in And maybe on you second, you of Florida, come much to you And it Okay.

Jeffrey Jackson

mean, instance, overtime, capacity, And percent to it, on XX% overtime, I I roughly. no starting Yes. we're had just probably about a play back, at again, if a running on put Saturday. and for that's looking

the So investment that the the system any of immediately into adds of kind really direct on without labor. capacity variable cost

So we're about XX% running capacity.

quickly that to, bring again, as we based think demand. need we I as off back

will about think you location. at be If it different each --

we're people. adding Western, not losing there. Here labor the unlike and the in times, the again, people we're if folks we're -- say, still sooner. to If up pool We're through At at labor overall, attrition, replacing we spend necessary, -- attrition, freeze. is is expect it Florida, there, having hiring pool to I past would times but

And it's foot already times easier and put the in And it up anything so to demand, lead turn instance, was not on Sherri, definitely flexed our but the we we've want have do easy, going you certain say than lines say? it's I'm when off past. here based in gas you down capacity. for Florida. to in

Sherri Baker

normalized the to, we're would into getting just QX through would say frame. quarters, what Yes. as backlog say I I get be going call, time back that a that we're I the we would working to as

back normal by we're ramping more as to something up QX. end would to get we So capacity we're quarter, and of moving the the

Operator

would remarks. now any back closing I turn the Sherri for Baker to session. like question-and-answer our concludes conference This over to

Sherri Baker

your for to us PGT next healthy appreciate look forward all Innovations. all and safe. you to talking We you Thank today. in continued quarter, We stay joining and interest

Operator

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

PGT Innovations (PGTI) 13 May 202020 Q1 Earnings call transcript