PGTI - Earnings call transcript Q4 2020

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Operator

Good morning, and welcome to PGT Innovation's Fourth Quarter and Full-Year 2020 Earnings Conference Call. All participants will be in listen-only mode. Please note today's event is being recorded. I would now like to turn the conference over to PGT Innovation's Interim Chief Financial Officer, Brad West. Please go ahead, sir.

Brad West

morning. good and you Thank And welcome investor and XXXX fourth PGT call. Innovation’s conference quarter year-end to

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

COVID-XX disclosure direct we disclaimers Slide contain statements statement cause going performance statements. our our press the business and risks, pandemic forward. remarks, forward-looking Those SEC attention Before forward-looking financial statements as included the to the related remarks our filings and results XXXX earnings could on about that including other on please of factors as your involve our presentation the statements, materially. begin outlook the the release X differ and uncertainties, actual Today's to to prepared of possible well impact in

release take will hand for opening Jackson, Innovations we Jeff CEO PGT And on of earnings the we After this and Jeff by financial to reported also believe help prepared results call slide questions. note and remarks, the performance. Appendix the investors in facilitate directly prior reconciliation most Slide measures the to GAAP present in comparable I'll included the on and to call that comparison provide tables to A non-GAAP which we presentation, remarks. of measures should I'm the over morning's joined your using X is our Additionally now information President. additional for you attached

Jeff Jackson

unprecedented I'm team and morning good thank in pandemic. today's us for XXXX challenges Innovations accomplished what at our caused and by despite COVID-XX of on proud the you Brad, you, very joining PGT everyone, Thank call.

year with acquisitions. for extraordinary driving X.X. our and safety a of our our grew EBITDA million million, I'm all market taking to number our to of quarter by this, Our their and key an solid off sales forefront our topped We XXXX. leverage members dealer $XXX share, fourth year while We and adjusted results $XXX ended of organically We both of to of action. quality service net deliver accomplished continue to products over dedication team the at humbled partners. X,XXX keeping by the record

begin Turning in with to demand sales serve ability the X, key We for currently demand. our we will the quarter. to I achieved illustrating highlights Slide and the strength markets growth, strong that service and

as in adding a the This positioned this homes. the states. and XXXX. drove our agreement advertising demand expected innovation the in recently in is sales continued continue our transaction and we help they're achieved full-year which Overall, while and these quarter, real pandemic, NewSouth the Southeast market into largest markets as despite the completed over record continued and through forward entry high targeted We million objectives a fourth quarter other of strong fourth And the we vaccine and NewSouth The contribution strong by U.S. which our several February demand versus business Florida. for legacy did fourth into and and XXXX. that in our safety XXXX. last fully year, achieve for our we of continued homes We're in communities. a In optimistic XXXX. sales which improved employees COVID protecting focus look XXXX. Villages development the unit The XXX,XXX We're ECO as exclusive out reopen this the was the XX% Central of in initiatives. the acquired driven of the reflecting of XXXX, as our history and currently throughout designs customers product year. XX% us attractive from growth, year-end solid our in of in estate to health have we well we of $XXX investing our end our North share has in the backlog seen and rate organic is excluding demand quarter Coastal and We're Florida products Florida growth within Villages We a to factors impact purchase leverage in our rolled an entry will strength for continued of products order the There families, our announced results over markets for strong capital ratios. business. in growth of marketing will all most growth. are this deal We in Last Enterprises, continued continue stake and while to seeing their maintaining profitable well an ownership increase XX% financed month, North strategic with We Southeastern is driven order growth, trends X,XXX as has on

disposable out have now COVID spending folks other most incomes and and at time more As less costs, spend has higher driven on upgrades. they're more in because travel, home, home investment considerably many leisure, dining

will working We XXXX. expect the the shift continue home in for trend much of disposable and trends from income of

Arizona regions from colder more including favorable the U.S. high in continue footprint, population Texas. benefit the from to tax we'll climates Additionally, and Florida, our to shift see

we increased impact also This on not While record increased have our season. for consumer a market, did awareness hurricane a media benefited coverage, witnessed the we we season from core which hit of past in our believe, Florida products. direct need

at-home impact play to both approach to continue and digital data-driven To increase apply the also we XXXX. on during use generate our leads marketing to audience and marketing capture in a demand, awareness growth. further positive investments Our

contribution in in quarter space from sales by dealers. The We portfolio We XXXX $XX strong fourth also known which demand the well brands, growth in customer and products was of the driven in our can NewSouth market. our for million to leverage partnerships leaders Florida network with the broad of residential attribute across direct-to-consumer Materials meet trusted needs. growing Building our the

level operations NewSouth growth resulted in and locations, reminder, retail has NewSouth February new a expansion X, and of we been capacity, from a opened existing our developing and Florida other channel future our additional open Integration additional As three Since expect we NewSouth to outside record of further we've in continued acquired coastal and in store XXXX. production in showrooms direct-to-consumer expect in XXXX. into XXXX the in three states. NewSouth, showrooms We in Florida this year. acquiring presence of

direct our efficiencies efficiencies, was sales our growth, improvements operational by and cost developing distribution in continued points. facility increased additional marketing to solid XXX This ability investments awareness result driven traditional excellent in enhance of brand profit XX% of diligent ability openings our NewSouth Window and also labor have in channels. efforts and our accretion our We company leverage with XXXX internal drove sales and EBITDA achieved gross at draw operational and the growing this the improvement control. through and leveraging digital basis product store This teams market and by share. operational facility, to from We and Systems mix year. further all Adjusted Western and of improvement NewSouth, advertising increased from performance strong enhance ongoing been to capture creative will a margins for across

comparisons Looking first growth, full-year expect our plans fourth to prior-year our into quarter quarter, margins lines of similar margin we again to at while less continued new business to markets, ahead XXXX, in exceed organic we to and exit opening see due pressures still NewSouth. sales profitable

to Slide X. turning Now

value our focus of had strategic communities. we its share on shareholders, to for our While challenges, framework create servicing continue and long-term customers our execute to while XXXX profitable growth of and plan

first our that customers' the maintaining by bringing desire. innovation and value our Our centric pillar customer focus is to performance products market offer on

the are improve driving We further times their more R&R that have that continue strategies insight upon our to us sales gain to our market, as consumers in enabled now market spending demand homes. is innovative into in

of many second in have the labor the of where and COVID-XX across is pandemic hiring Our relevant market, retaining challenges other industries pillar current throughout and increased stresses factors the U.S. attracting talent particularly

employees appreciated the culture rewarded. retaining attracting and work right on workplace set. they're depends safe employees a maintain and skill success and long-term to we And dedicated Our where know hard with

in meet our improve high cost, capabilities, Our maintain levels, manufacturing operations, operating continually investing the the grow demand and increases third business to is over quality lower pillar long-term. the

operational newly in in come up end as also free recently XXXX goal driving investing systems Over the on the allocating focused seven at Systems quarters, Western focus NewSouth puts and with improvements we in the we the our our to as first and by and execution. XX% the our our support of paying deploying acquisitions, profitable Enterprises to position of debt, growing pillar, at operations down We're This which improving me have best value which business serve past a in practices growth, to with take could shareholder is good have Western, the consistent all acquired leads past markets demand cash flow or facility. form done, weeks. and of Window several us for advantage we demand ECO fourth

its this objectives. Florida-based Slide the Window to and Turning team I'm related accomplish last We're join excited believe company we X, very XX% ECO to as Enterprises. ECO closed PGT ownership Systems excited several will of which the calling to ECO we are Innovations from acquisition in have say we month transaction

and expand commercial our the multifamily the that expected portfolio growth is continue high-growth market. diversify Florida's the in The lines allow to are able better presence to strong product secular together expected us to market. and in First, acquisition we're long-term our expand in trends behind ECO to market

added capacity. Second, significant and value ECO has produces all its in-house production glass

vertically cost, our our we glass expect the improve in supply, and and is lower industry our challenge chain. to over an capacity, our long-term ongoing more enhance integrating into visibility material glass control the by supply of of production and incrementally Sourcing

ECO's existing to footprint with residential line Southern that Florida, our highly generally not aluminum in extends product business has ECO And portfolio. served. our believe complementary network resistant product Third, dealer is legacy incremental our we very impact a

is accretive to in fit us good in the So a XXXX. ECO expect strategic very we for summary, acquisition and be

our has distancing by Let's our discuss total backlog increased prior-year, entry from in our of and COVID-XX Southeast social versus driven protect health employees implemented work unit, we've to in our safety Backlog of XXX% operations and of the health teams been strong other our as chain seven-day and the to production our safety to and to meet to address continue backlog, supply related backlog, meet ramp To by order ramp-up production impacted do schedule implemented disruptions growing NewSouth, demand. capacity recently production some other times priority. primarily to rising impacts business be our excluding power the capacity. pandemic. But our employees' clear, top by promote to continue everything we'll glass the extension a our lead capacity Florida-based operations the and to as measures to demand and robust to

production the levels to Florida into the backlog in address growth expect to sales year. this increase anticipate strong organic we We current and incrementally normal robust and XXXX return later

we continue. market Looking We market. strong new the forward, to & robust a continue a repair believe remodeling expect will XXXX construction momentum and

begun Window sequential We Systems to pipeline markets including core sales markets, grow. have to into Western see our in in our continues already improvements our and Southeastern California

consistent and We expect increase was our In our company's closing, extraordinary ahead. the core I'd are markets. within to servicing a each customers, their into our to other, our also for implementing. that Throughout certainly delivering integration XXXX while communities, wrap-up, our strength expenses, which times, power like chain in expand efforts. our employees capacity, challenging our reduce operational customers improvements, year, from growth a We years have determination highlighted continued we our efforts our uncertain earnings to it and make results XXXX more shown look of employees benefits to forward supply To helped shipping these currently the vertical our possible. thank support including and and

back I'll Brad with turn call detail. the review to Now greater to the Brad? that, over in results

Brad West

you, Thank Jeff.

X. Slide to Turning

Legacy To reported the Southeast decreased prior-year due business and further, break this XXXX. market prior-year consisting rose unit, of XX% fourth the million. the the XX% primarily in Western quarter Florida quarter California, net in down sales our pandemic-related sales versus lift versus of quarter in sales softness several unit and sales from we $XXX large projects business our to commercial the For

However, saw exiting have orders growth a growth continue Western's we and the that XXXX. trend seen year-over-year in into we quarter,

in the Remodel, fourth the construction Looking prior-year the we by at of fourth sales year-ago compared acquisition for quarter were for our XXXX. new addition sales sales & prior-year where we administrative million of period, by quarter and sales $XX as NewSouth XX% than on and excluding Repair quarter In growth and the to in primarily largely driven quarter improved This the the higher Selling, channel, NewSouth compared marketing organic to expenses X, to XXXX. channel, expect by R&R sales in first Florida the due continued sales growth was sales the general were February up XX% saw strategy. QX Legacy channel of half SG&A period. fourth roughly increased following its year-over-year the in part X% reflecting

at NewSouth, in basis improved from investments benefit advertising decreased approximately by Western. points as sales percent from SG&A operational basis a labor and continue prior-year marketing. leverage investments more Excluding Direct than XX the enhancements versus efficiencies by growth sales to and XX offset we as incremental as points and of

efficiencies reporting line resources improvements from savings in boosted realized also workflows. labor which and dashboarding production systems, and We to

$XX we're of costs. of $X.X to EBITDA Adjusted million operations result an of manufacturing Gross increase for projected the the its an adjusted the reflecting $XX a to profit achieve cost track a run million, quarter Venice for Orlando consolidation plant XX% approximately our million XX% Additionally, increased of $XX reduced EBITDA closure increased the savings at a on and as to rate for facilities. Tampa of and quarter. compared into and annualized sales our prior-year million manufacturing quarter was

reasonable the share compared our of high-level came fourth per operations always or provide to adjusted the We million XXXX or including per Our diluted balancing effective $X in costs of net diluted in million share XXXX. We're at fourth quarter for tax the while goal with to income to of better striving the running of lead $X.XX $X.XX in of lean rate manage XX%. $XX quarter quarter need customer times. a service, reported

so visibility, and trends. a of monitoring provides order degree backlog constantly evaluating entries Our we're sales

outlook the expanding we toward our expect the working currently to production, changes. to in we're event our While demand structure maintain manage flexibility cost

$XX business, Turning full-year, now X% part million, the full-year full-year increase our which X% up sales included X% increase reported XX% of in by contribution sales for sales Organic Legacy million excluding our of were from the XXXX in is and NewSouth. $XXX to the by Systems Window we as Slide across a X, Western diluted Southeast XX% our driven decrease result share NewSouth. year sales This in an was from margin business. million in NewSouth from a XXXX. accretion Gross for to was of of from to in $X.XX Adjusted for or operational $XXX efficiencies portfolio XXXX the grew primarily Western prior-year. leverage $X.XX sales. EBITDA along compared per for with XX.X% Adjusted offset earnings

million. sales included year strong not $XX sales similar a results, and Innovations growth PGT approximately of posted while the strong including Additionally, XXXX, ECO year of in finishing in

Turning of now to our debt ended We balance year with sheet. the net million. $XXX

term loan is only Our XXXX. $XX near-term debt due our maturity of million late in significant

a cash issued to $XXX at a million capacity unused As issued year-end, including of XXXX. Subsequent $XX notes on million, of in senior of our balance X.XX% due the million of and $XX debt premium total a of we This was of revolver. had liquidity XXX.X. we million year-end, $XXX

Our debt EBITDA trailing ratio, approximately of the pro net to adjusted forma full-year X.X as times. XXXX XX-month was

acquisitions. of to XX, of show record on net we de-leveraging following highlight the debt Next, our and ratio leverage our completion track Slide historical

One like margin important As in by review expect internal you PGT allocation Innovations priority opportunities drive Slide find to projects discuss reducing growth investment capital to XX, I'd to expenses. we priorities. is

enhancements whether opportunities that for to by increase production. also product higher or look is revenues, We

balance by conservative our after structure capital commitment paying maintaining Another a debt is and important acquisitions. sheet down strong to priority

conservative X.X range to a is of generally maintain any to target debt-to-EBITDA times within a X.X Our leverage net large profile acquisition. absent goal

and us use to opportunities evaluate these new we Finally, products. to believe we'll of as strategic acquisition criteria accretive, strategic met acquisitions We be NewSouth expand expected ECO or capital generate for part recent acquisitions that allow strong continue are that or regions, our into and other returns channels possible plan. to our

billion range NewSouth XX, to of which a in adjusted guidance includes $X.XXX expect Moving full-year $XXX This on guidance, EBITDA of ECO sales billion, $XXX contributions net estimate for period and partial a $X we to for the on the million. of to year Slide closed million February XXXX full-year of and X.

have calculation we results. estimated assumptions of can additional XX reference, left in on estimates, modeling you our your included column the For Slide XXXX of your are guidance embedded with it assist hand our that and

on you Program. Coverage also our Let Aluminum me update

As have of needs approximately aluminum today, we XXXX. XX% for of contracted estimated our

Premium $X.XX near current is is Our $X.XX. Midwest current inclusive pricing per market pound, whereas coverage of

period rise pricing due steady aluminum in part pandemic. We COVID a have seen a was in to depressed that the following prices of

for believe these strong Otherwise, and we bolstered coverage costs. pressure summary seeing of I'm about been program Our aluminum acquisitions. the can further why Innovations in inflationary we're with cost of I'll by helps how not brands, categories to have long-term material PGT our meaningful create mitigate any on our with which We're a conclude leader a we pressures. growing currently excited national shareholders. value recent future

a history through the delivering our best the have leadership products, talent. and acquisitions, intend maintain and R&D, We industry of to innovative retaining we making right hiring and

improved let will long-term comprehensive can that We're continuous help help improvement portfolio drive with We growing mindset At outstanding this time, and operational a customers. margin us our continue the profitably. efficiencies And our us to believe shareholders us striving have long-term strategy Q&A session. significantly a create we expansion. to value finally, begin our execute for product

Operator

session. now Thank first Phillip question-and-answer go Jefferies. with from comes [Operator the Ng Instructions]. We'll Today's question begin you. ahead. Please

Maggie Grady

Phil. for on morning. good is guys, Maggie Hey, This

Jeff Jackson

morning. Hey, Maggie. Good

Maggie Grady

kind single-digit Can just mid guess NewSouth so out baked of the to Yes, high the that month maybe backing guide, and organic growth. and of and you ECO assumptions there a I or I just end-markets? about on different the wanted talk full-year getting segments in the between start to

Jeff Jackson

makes you that's comment And definitely if so far. has growth, Local XX% up look up at strong Western, which in as year-to-date of our mentioned we're I'd to our facility based experiencing $XXX Really, million and as yes backlog at PGT, today. brands, organic sense. my increased math actually in Florida also, that Sure, -- our Venice is here

organic So, growth. strong we're experiencing

degree. impact Now, upward some that back that see mid that across mean R&R I suggest which mix can pretty the so comfortable do a brands, to probably certain -- we're to slated our new margin and upward you construction acquisitions, if the far. is we we've market, -- you seen more to have if look you But out what the with growth

Maggie Grady

that growth, in Okay. sales? And clarify you order XX% just that Western, rates is or to mentioned

Brad West

backlog like That's order rate our point. the at is this all NewSouth of Jeff mentioned, across of brands portfolio included. But strong

in comes that confidence our from very So, growth demand. strong

Maggie Grady

extending bottlenecks lead great. And quarters, bottlenecks, of back you about you talked And, that's some of some Great, But the past those time. and of of labor to easing been definitely lead those getting discussion time? more the and across timing normalized thinking then a about topic are industry. material few the how

Jeff Jackson

Well as you look across flow that impact operational and from our organization, efficiencies. we continue to our ebb have COVID

that kind our said, do trend degree. doing right demand strong of continuing. up to a certain this that the year-over-year year, spreading XX% Brad and that's limited we social what's distancing lines capacities continue We out like far and see so demand, But is the to on

our to Supplier to improvements COVID QX glass to similar I'm they in had of suppliers. way trend. to go, as allocated critical here, that's we've in some to many our also factor surging supply their is labor industry made of challenges going main demand capacities. already presented have us. suppliers but some in performance QX, the But slow improve QX, PGT even So the have are across And performance was their QX, continue delivery definitely that constraints, presented site those their at some of in improvement an hoping seen challenges to has we've

We any at of internally glass on brought you our of doing direct if material there. you kind any to look we've via is ECO additional try to help XX% what to added there. we XX% of some for about we're is capacity, spend. additional that, eliminate glass, we've some it And vertical allocation we're at, shortfalls going like to our materials, is direct make about So glass extruders, needs extruders up adding will, the if call and you think aluminum, which combat onboarded instance, issues if look say some integration of and

more and across So, we're chain needs shore looking of to our And our at other it. looking that try onboard obviously, vertical up supply support in we've some add integration, chain to as itself. to we're demonstrated supply to

we definitely as So feel we'll into XXXX. that have move benefit, we

Brad West

been as also generally situation. we to the of including in just things speaking, Florida I lot add vinyl strong And manufacturing these growth, for will speaking, capacity, has demand are I lot of just for general the for we think increasing to impact-resistant to adjustments, support making we're be growth would products, COVID continued a us. navigate feel capacity Yes. products in a very we generally adding that add what try some is long-term increases very, fact would that because this But vinyl

all we're are things able these demand. be to with to keep up doing the So, that

Maggie Grady

Thanks, a guys it. congrats good on Got and quarter.

Jeff Jackson

you. Thank

Operator

Please comes today Josh Raymond at Wilson go James. question from next ahead. Your

Josh Wilson

you quarter First versus versus your could of lead time backlog, call last normal? on would topic the of stand us where give you the what a and today sense

Jeff Jackson

And change is custom for going program. Western normal their that's corporate six from location. two ordered. based-off Yes, to their is product on XX, weeks the builder they're to anywhere depending lead times,

lot of from builders. signed which as we here I mentioned, So demand, a standpoint up The for lead line. us. the the in operational location extended Venice win actually a significant new Villages, It's Western really just we And and mainly corporate sheer have because in onboarded times of is the is

the going quite the you some vinyl on know, industry result, capacity, move in place And Brad have capacity. we're there's happen the say we're been we store especially that. facility, experiencing we've, next change But turn finished see a in the that adding call in to it we're for frankly, who as I'd of order, warehouse to earlier, you'll But PGT, over those to our two center manufacturing lead our plans our we goods been into space. that warehousing. here -- at production have and the currently going all quarters, vinyl We'll extend Coast line April shipping increase so general directly to extended adding we'll onsite on from have we'll adding warehouse warehouse you equipment, literally finished that warehouse into as We've of our capacity. on got to by and take that a that start East alluded the start goods on as space times and lines. we we're And equipment do going

some the side times XX bucket Venice, are we're from here you're and in to the for product. in we depending general, I XX times. be buckets. the But those in buckets those seven times to R&R lead what anywhere again we are would among have improve in those So lead our builder corporate even on different you're depending have to weeks in can doing things lead what and at and looking But R&R location corporate categories on up the say of builders, XX,

continue product shipping strong. we're lead But that And facility. times we're -- now we ramp-up said, have out to we're stay not demand than with this as see we continuing I So like million. those place ever to out more is we've of got actions comfortable $XXX in backlogs

Josh Wilson

in acquisitions. of of cost in there's per installation a crosscurrents terms variety And and the it. Got bringing

could the sense in So us what you're up year much or down year-on-year gross assuming the give year-on-year a each margin of it progresses, of you as for quarters? may how be

Brad West

increase basically year, year. start the roughly of times to affecting X% the point we will of the middle the of just X%. great those of the and increases second a Josh, beginning there. most our half quarter so positively We the Jeff of price margins price of to back Yes, to lead not had until because But the that mentioned, get

XXX pressure see the probably some these margin in So as we're changes. margin. even to amount, first a bps gross quarter Year-over-year, expecting navigate be good on potentially we down we'll

up I make that think SG&A. we'll in

close price kick percent we quarter kicks improve So that Jeff as start The in. year, we'll talked guidance the be as how into to the down to pretty increase on but probably will margin the see place year-over-year. get And full-year. the line about for our and fourth EBITDA rest the in these to gross that's changes of

Jeff Jackson

year that able to in to And improvements been gross tenured we talent. market some in a the of substantial get by the And we've based price that, probably margin year. of in increase, workforce increase we operational And Wage a quite even I’ll like get to offset in stabilized We're comfortable more improve like during wages We the to got action and We've pressures to Yes, try for -- past in first a in achieved is quarter on we to off this a add to workforce. feel the year. in talent, inflation, June already as What will in that the in frankly. margins the demand our that starts tenured roughly we've back labor this later able find we've and the that cover deliver that. efficiencies have add past, on that had add got fourth to cost in we're pricing Brad we of that knowing pricing, just the Brad we'll can that, coming. substantial put we in wages. said, wage puts we going year-over-year. be But said is place, have EBITDA see we are the quarter, we're plans going seeing. to those pressure

Operator

Please Truist. comes Hughes with Keith Our next from question today go ahead.

Keith Hughes

you. Thank

acquisition the up? ramped how of Just I business initiative, that you know want a talk but sort that set to and about plan on, is, get they what big to talk just just about their have the commercial closed

Jeff Jackson

waiting the then of Keith products side currently approval. for very a ECO that are of it and currently lot a and that component lot commercial time. is developing approved big of Yes, this not are actually at have products a They

ECO, there. the frankly with residential different in So the in is -- portfolio the the dealer the And quite of Multifamily of last sales large expect very signed a ECO. bought we small Commercial is commercial is we commercial piece pipeline of But Commercial segment in jobs, and couple was side several good growth a network. robust XXXX, weeks. material over potential small, We've do mostly

a ECO it's sales very sell network we through. that As said, dealer to to current one our incremental -- that

products is commercial And in win these and upside so landing good big your to jobs. launch all the for XXXX start some

do. in we're to great shape think I

Keith Hughes

your year Okay. mix? on let me the are housing, se, a you perspective point, is how you you've market that's demand for businesses, way, is shift this shift, it mix, sort in seen really is seeing ask what not your towards other you outlook of your given end, lower per And on this just the at strong

Jeff Jackson

especially I'm for I'm numbers; R&R seeing new Well, isn't okay, give up us; you much. we're with he'll itself market going is XX%. is peak. construction the detail Brad, what's a XX% give to And Florida is here, in Florida that to happening. up seeing you What markets we're come the both up

I and a say should share, So have. to we're which opportunity, problem, taking great is

earlier, new construction we dedicated been said has to mix business. skewed add will facility here, R&R as that But as point. towards I capacities more to at capacities So more our our this those be

more right we now, been XXXX growth you dominant back construction. think between the dominant even that R&R, new R&R But more and the to more new that yes, speak. I has of and construction of mix shift So as more see mix during

Brad West

For new of the R&R XX% and was full-year XX%. was construction XXXX,

the sectors acquisition some both XXXX. right. downturn XX% been facility both seen So But the past, in our you some have an as is the we've back in acquisition grow then sectors. even NewSouth focused play, R&R we've before XX:XX, New we've seen of opportunity and of as on And of CGI the high our as and that, in growth of I'll construction meaningful when well. -- say R&R new the very in our brands And Venice go periods and seen to

So in up set I to think we're categories. well both grow

strong R&R very and doing two, well well. now very markets the kind to do new got so, to both set strong. we've as and playing on been in right And the predict So maybe it's construction growing navigate but just those both now us both, faster right was very, has stronger both of the I of to now, do know they're hard that past we're channels in

Operator

next question And with our J.P. Please Michael today Rehaut go comes from ahead. Morgan.

Maggie Wellborn

Hi, Maggie for Mike. this is on

Brad West

Maggie. Hi,

Maggie Wellborn

on XXXX, opening? saw performing three give on the opened stores idea was you you're us is could continued, order look you you XXXX what obviously, stores. also, you the stores are question growth timing in that an is wondering additional planning of new three on as versus I NewSouth, pretty in existing And strong if how to Forkhill. the that First the

Brad West

Yes, opens year roughly the getting sales place, a kind basically of place, in that when there's presence in store, force establishing of say NewSouth Maggie, marketing probably in when a a up and I'd the space. getting really

the stores I XXXX increase the the fourth are expect of new something second see year. I'll they in in year, the in sales, first the So those this in one stores question answer quarter, any one not The in of in your will basically for would probably that. second first. third just quarter, one meaningful to timing part be the like because their

as back you opened half good as would we got For the year, the expect. stores of last had year, towards that some results we the

Pensacola new some demand in affected started open has seeing stores was see bit end the by of our here little of but Some COVID nice demand year, our to is nice the -- starting obviously ability of last robustly store in towards it's were the stores it's some in which impact year. the the the the quarter store had a the year. of Houston was to to store really opened nice end open-up And saw first Charleston, momentum then first this some in on

across in the stores. more from think stores. in from very So And original stores. would the growth guess saw that XXXX we growth in mostly stores, Legacy I even I XXXX. And we started see strong stores some new we that, was argue those the we'll NewSouth the obviously I seeing meaningful In momentum saw in the Florida XXXX

Maggie Wellborn

ECO. you. thank on another And second, question Okay,

Florida the of end where the of footprint, market throughout to right kind the now As Southeastern Southern the rest could markets expand you ECO footprint? the of about it's you talk growth, rest think just other of outside your through potential maybe stronger its your about and

Jeff Jackson

got Yes, ways. in ECO well. be of some to in pipeline. install to the We've out, And the business. that we've relationships side that already I from obviously, got different several develop some we I are coming commercial both out, mean, look at the various One, more develop that to as mentioned going the products

bidding currently outside piece or of whole side process plan we're Northern commercial the leveraged Florida in leveraging state. Florida. the entire We instance. the bidding of that over So can And of business projects in for on the be Southern actually projects

be of glass up outside and we to market going to base the us sold would leverageable definitely South so because terms insulating that the of most lot State the in remain Probably the different potential the the of think On we on of shoring glass for that at Florida, can population of incredible probably the a the then in there Southern that's commercial. mean be through. impact of view as there's statewide dealer kind well, that going that's Florida window, on IG side, the supply your the just residential basis side growth out, dealer within buckets. serves. ultimately, And commercial residential three I And to And on take side, ECO we question, on Florida.

Operator

Please next Today's from KeyBanc. ahead. Instructions]. question with Ken go [Operator comes Zener

Ken Zener

glass go got a see stuff capacity, the Or me just I is as, margin, years vertical big small shouldn't it suppliers, you has of and the of part in large of that brings going needed in two locking this between today? would cost kind Glass ECO it's inflation, margin how lot fixed really your about high costs and glass Glass; the terms What supply given gross a terms back where it A strikes integration, is your you worry this few comment? side strategy is up? of cost the you you gross as business Is that glass so really around on. was got is just down, the of communicated me ECO a glass what

Jeff Jackson

question, maybe great little a say bit I'd both. Ken, of

be at of look impact were side to adding underestimate on capacity, going We don't was the of equation. to it significant for severely actual the you for If the us, strained in nine this mean, tough. want I months especially that XXXX. it's the I with impact-glass.

yourself, is needed in incredible And that ability to house so an asset. if that to have do

reason of sold in XXXX back glass the some our recall you if Now, we equipment --

Brad West

XXXX.

Jeff Jackson

just and XXXX, we production because we're is still we Miami, needed market. needed is here we running did factory production that labor different Venice, a in capacity, glass Miami labor, okay, in

So big they're, glass labor as because their their issue. an production in labor, of not is

view strategic to benefit as we geographically So margins. it as long-term well both

Ken Zener

capacity. a jumping talk can to I like capacity interesting past the in or capacity? give footprint answer of where But a Fascinating, like that wider that. extent all there's I feel or an you mean, within or makes perspective, don't that this of what sense. more sense really squeezing XX% is about, get labor you you're larger was production the framing I the you to mean narrative balloon us help Can mean costs here. comfortable, the back maybe material given a you type -- like to in, need XX%, dialogue an There input it so it

Jeff Jackson

as ECO, But for going here we're We more well XX% can up give of CGI up trends growing. similar to out storefront growth; service facility, ECO of we'll able to now we've CGIC the operations, majority we're CGI, of PGT. our incorporate terms probably in we assure probably to you it's by where will -- be capacity is next ECO. I seeing color around as quarter that that basically quoted added are It's capacity

growing. is ECO So

So is business to they what and to in parties. also we're other not glass but do, sell this

So as well of it that's piece -- the

Ken Zener

come margins Your of will out that.

Jeff Jackson

had utilize. We've to

Ken Zener

Great. supplier solo to much you I that it's also sure. bigger redid of Extruder, when now. believe couple tactic all I apologize in to these there execution unique heard extrusion company word you buying I I saying vinyl, my sense strategic doing profiles. expand switched I over guys a -- wasn't you're to a a that kind your kind you the larger like was, lines, go It on good this the the of it's amid sounds that? that memory pictures think you gets you're and your when on whole times. Could on you've but you're of Extruding, into were extrusion now

like of what issues terms there profiles? issue, Have extrusion haven't capacity in to any You extruders. you'd bought talk you to? seeing that and the we are Is pricing

Jeff Jackson

in speak comment. will I'll No, Brad general,

integrated get in There's we vinyl. It's types, vertically any our extrusion. basically bought two where and haven't We the profile. aluminum right

simple never done because good options, we've that. some our okay. this We've supply onboarded we one. squeezed increased used just this a aluminum use more whole don't during what just thing, suppliers. We've So we've one. got which thing, COVID base is as It's as of Vinyl,

have majority a we do with use. a extruder. they that particular Western But a extruder relationship vinyl Now vinyl has

one, have has we has we NewSouth had -- one one, PGT brands one. mean the Legacy

as on multiple the options have we well. side vinyl So

Brad West

said not I Yes, vinyl adding referring was capacity. earlier to that I to When we're just extruded additional make Ken. to capacity, windows add, capacity manufacturing vinyl

Ken Zener

that into about interesting. faced very more XXXX more customized custom. production you opening to untapped is you've which West, you get Yes, Thank initiatives out talk windows know that business? versus huge taken Phoenix were as there. right production efficient but stocked, stuff? you for Not handle some Could R&R, the much. would well transformation the you I which you we're grow versus production but market guys large talked the R&R have of to like, where out COVID untapped been as in to about West, upside. Windows a not highly storefronts, initiatives given on Has

Jeff Jackson

been income, has let on I'll comment return speak growth around and Well, Brad general some whatnot, and incredible. initiatives which in margins I'll about

market. whole of by a Toll house the national the historically, means Diego, and Walls, stores And opened trying that to platform, a targeted our to and these to our Western our restrictions on having business, presence We We're terms We've adding growing with a store those within second also brand. business, first have opened California has as Anaheim, experiencing targeting a In has good package. multiple up new again contracts going we market, R&R retail Western been in opened construction an the is we're to again concept as expand offering starting like. traction. store R&R are to in some to onboard Sky R&R the product Brothers which in the full expand San expand store national come the up up contract

on a going So couple a are sales have that growth of we from initiatives those standpoint.

You want on comment turnaround? to

Brad West

Yes.

improvements and of And is they So got to their product margins started of EBITDA compared quite direct last year. basically the major we that. quarter their business they Western saw in improvements to where making Bps how manufacturing, the and alone, XXX flow and Western distribution the quarter really labor gross over and a was the what customers of their all of started their distribution, basically on really bit and making focus and some were increasing costs course the up in fourth labor on large fourth year, they and

doing the on that. team made obviously as impact job, pretty and material PGTI a So well Western fantastic has by did

West, do excited in out to they're they position So which forward. about they great handle now have And get to to and demand they're going obviously growth. return things to the base more that recover as means able in grow it what and we're a start

Operator

any I'd concludes conference this remarks. gentlemen, over the management for question-and-answer final team to turn to and back the the like Ladies session.

Brad West

talking Thanks, care. forward call everyone today you and next to for joining Take look quarter. us on our to we

Operator

Thank all presentation. attending you, sir. We today's thank for you

now disconnect lines. wonderful day. may a You your Have

PGT Innovations (PGTI) 24 Feb 212020 Q4 Earnings call transcript