Earnings call transcript Q4 2022

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Operator

Good morning and welcome to PGT Innovations Fourth Quarter 2022 earnings call. All participants will be in listen-only mode. [Operator Instructions]. Please note that this event is being recorded.

I'd now like to turn the call over to Mr. President Development. Vice Senior West, of Corporate Brad Please go ahead.

Brad West

our welcome PGT XXXX and Innovations you. call conference Good quarter our the and morning today the John on year Thank Chief fourth Financial Jeff Kunz. to and With me and Officer, President CEO, call. Jackson, investor full

today's issued is of we well as as recorded slide presentation On section website, be replay find today, our the available Investor webcast the website. on earlier you'll posted discussion. to and will the accompany have company being Relations earnings This press release for a company's

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

on that the from on actual results cause SEC expected factors could results available differ most to is recent filings. company's information Additional

compare provide Additionally, information non-GAAP financial release in measures is believe three, tables the results to the report and using to appendix. on which the periods. earnings we and help directly note Slide measures, A reporting comparable GAAP that we performance slide investors reconciliation most between additional the included presentation in

to over hand call now our Jeff CEO will I the time, this and company At President, Jackson.

Jeff Jackson

and today's call. morning, Good on everyone, Brad. thanks for you, us joining Thank

Innovations. hurricane attack. and a what turned EBITDA category revenue record full be every included we for by and contributions record and team year Despite We to and to four face, challenges a begin delivered a which like I'd the ransomware to the for both member subsequent year. overcame thanking for PGT each out their

cost, the create to strategic profitable long-term and as we steady Innovations operational to result attacks, to is despite improve our economy customers continue labor to million supply Grow growth, EBITDA revenue interest XXXX, due able increase $X.XX shareholders, materials, inflationary adjusted on and serving challenges, and running a expand XXXX. hurricanes, our effort EBITDA compared rates. billion. growth points while Our by of We and in We to framework a to $XXX margins adjusted pressures our XXX PGT ground hit value our of for slowing chain through were our high to ransomware communities. basis

category, addition Garage selling adjacent We cross Martin also an expanded the broaden our garage presence brand expand doors our to product has our into with building portfolio add products Doors. of companies. both creating Martin footprint us while premium to product allowed for and geographic opportunities portfolio,

of early Innovations brings the We the years. stages PGT Martin the business coming are still to integrating in about acquisition opportunities, optimistic remain and the in

five, let's look on fourth and closer trends Next take a key messages. at Slide the sales quarter, our

challenges presented by generated the total of ransomware the million attack, Despite $XXX the and during revenue quarter. Hurricane Ian, we

was X% ability the generate growth the quarter. call. As for Both on third limited quarter we to Thus our revenue events quarter. during fourth our organic mentioned

our were year prior million versus sales events, by in the Sales during quarter. to both an million the of southeast impacted leading region X increase of quarter, XXX

allowing in quality even us position market These though focus lead quarter allowed execute labor region. had southeast improvements into in our XXXX, service our our be initiatives of third we to of supplier for the our the efficiencies, times, orders customers share. backlog However, costs. of to and one us increases to on strategic from going the us recapturing choice reduce sequential

the cost to plants. structure at adjust the This in during decremental not our did our teams immediately suddenness allow unfavorable our resulted operating margins the Operationally, event match of to each operating capacities quarter.

had operations fully for rates However, Vince storm. the than are the were recovered December, currently to at better prior operating and of they month our

our While ransomware operations. attack disrupt Southeast Florida did temporarily the

a restoring need Services and ransomware in Technology make back Business payment. did Our our to fantastic team up job any running, and systems getting averting any us

Western with each strong primarily the restoring XX% capacity since increased to lead Organic has the coming range. by XXXX, by The throughput XX production sales market. to we million Region core allowed in our X-to-XX-week in increase or from December made our us investments growth times XX%

the to grew Systems of our acquired in our space. recently over of business and Window capacity production full X the quarter and Window has with builders the products each Western year. manufacturing produce Both now million addition launch Western week, of custom

to launch was the glass have product introduced premium we builder international in and see expecting are this been the the share reactions the of XXX our series newest door. This earlier at with increased initial Additionally, sliding show encouraging. indoor-outdoor month, market extremely minimalist

portfolio, implementation. initiatives of stage are The in and our focus to expansion us expand at initiatives region in markets. capacity, our production or an Anlin the These product our us early to in allow southwest our enable vinyl increase increase will

our increased to came quarter. in at Our in were EBITDA margins segment prior higher price, sales expectations. acquisition to model resulted resulted Anlin our business the above Western compared portfolio leverage cost We year our able unit with

was features, performance innovative customers two Our the with builders demanded value during our to to which new quarter products innovation drives and commitment deliver products. us highlighted the of by glass launch and with

and our insulated unit Our diamond triple glass thin glass impact resistant glass units.

be to PGT products. manufacturer the market window the offer first indoor Innovations will such in U.S.

greater All Diamond doors the of use exclusive supplier glass more buildings Additionally, featuring use residential and will our come in impact design impact and glass we thus and impact diamond provides the and mixed the for and than resistance pressure install. product standard windows clarity, resistant be these in current up U.S. ratings with to easier benefits scratch as same the the XX% products. lighter to

incentives improved significant obtain weight without provides they cost to Inflation ENERGY for triple energy the It Reduction Version for America have need other a performance hardware as rework. a advantage tightening to technologies. Thin installation X. and standards to meets known meet requirements And emerging the frame, North STAR glass homeowner the Act or

at to X quarter, orders million our we've This down from products was of due Martin XXX end XXX from of XXX in prior of of operational backlog in million organic making in performance related year, Our year. fourth and business. been improved at million investments quarter. backlog XXX the received million the the the is start realization We the million during the down reduction the to year the our of including

over call like John to detail, fourth the results the Kunz I'd in John. Now turn quarter review to greater to

John Kunz

you, Thank Jeff.

Ian businesses attack had business. the XXX to was from Moving by increase driven The on our to in on the Martin achieved Slide million net from sales fourth X% impact in and Anlin have year-over-year revenue ransomware our Hurricane our We very acquisitions. and pleased the recent were of and growth legacy quarter six. sales organic despite

Western organic Our X% growth interruptions. segment had XX% a the grew organically, our southeast despite while segment

was the our In new rose XXXX XX%. The sales prior increase breakdown XX%, and for the million brands legacy the organic Organic X% our quarter the quarter R&R grew of XXX new construction. strength quarter, year R&R XXXX. sales quarter. of XX% profit to Gross fourth fourth construction to by compared helped to of XX% fourth compared sales

driven teams. were by fourth quarter results continued performance our Our from solid operating

operations, recent the XX% increase distribution from our quarter, administrative acquisitions, expenses new compared expansion staff labor marketing prior an general costs driven increased of by the to fourth the year, and in increased in selling, and and our Adjusted SG&A investment.

XX.X was disruptive resulting increased by offset with inefficiencies from the million the from prior aforementioned EBITDA experienced, quarter flat Adjusted events. sales year resulting the two

and associated of the product adjustments certain to improve expense throughput approximately our with included quarter assets, an million discontinue our of underutilized for within X Our we and product In profitability lines reduce portfolio. WinDoor brand. effort to WinDoor elected rationalization

attack the of related adjust Martin refinancing facility. costs garage our associated restructuring. related related our costs with and to associated with The Hurricane for remaining Additionally, acquisition of the doors we expenses the will Ian, costs credit to certain and ransomware

to or expense XX.X in adjusted million tax per quarter at assumptions. fourth reported compared share, in XX.X% XX.X share our cents in XXXX. full quarter Our to per expense of our year year XX.X%, income We of full net diluted bringing $X.XX the $X.XX line the or with million tax in diluted came

sheet net $XX quarter, including balance fourth of our million. on seven. Slide the the had balance of to of cash a million, end now $XXX we debt Turning At

had October, to acquisition. liquidity. which in on mentioned quarter a into on third with the was million while facility the The we As us company's we new enhancing Martin hand call, entered used cash facility fund five our allowed maturities extend credit along year revolving XXX to new

we XX-month free flow performance our priorities, the of another share and increase our had an year, repurchase We prior of EBITDA performance year-end, This cash in year. impressive trailing debt solid cash cash flow million ratio our versus of we funding XXX generated adjusted capital free to for had XXX bank million the covenants a As strategic X.Xx. free year future in flow as backdrop of allocation acquisitions. including program for net provides

to ahead XXXX, within XX%. to XX to XX% interest amortization be within be X rate to million, sales, capital X% depreciation to X% to would be expenditures million expense we Looking million, and to to be expect first tax quarter of around and X our

the I to And like to back turn that, Jeff? call would over with Jeff.

Jeff Jackson

Thanks, John.

about Board. to authorized I $XXX recently announced our share speak million like our program by Next, repurchase would X-year

price remain agree We rate of environment believe long-term the reflects action the do long-term bit raise pressure rising value the our we company. year products cloudy We come making interest stock interest have outlook building about the our around murky, While very company. under to stocks environment outlook would rates, that from Feds operating near bullish current the economy. uncertainty a not term of full by is but our the and

in sources demand. borrowers years. R&R will units macroeconomic reach to million and are X%. XX new for will trends XXXX, mortgage the by trends below coming locked prime John include million remodeling These the there with support growth Burns housing XX% meet several that suggest need Industry that construction years are mortgage an rates in of markets over homes additional XX including

equity has an all-time their XXX,XXX The of for average high homeowner homes. in

the relief construction others more in the tend suggests averages, see to coupled favorable should with additional our next of than than we impact on benefit have years. brands space. a trends our products two where the sales national strategy the of Florida awareness, more standards, increased of hurricane over being These enactment markets hardening Our home tax be an in benefit demographics the of evolving and

performance during our our better been that has recent historically than of peers. Additionally, contractions

looking impact leader while to expect new in resistant penetrate the doors grow windows and would share for ways to As markets.

program order As allocation commitment million an first share impact XXX to impact $XXX,XXX products for capital a modestly to pleased very repurchase priorities. resistant our have recently our example, received will NOI. we're The long-term

to two flow our expect use times to to stated of fund program. operations the net continue the debt will to from we within to cash three EBITDA. We operate leverage And

We assessing that on capital right our program to would not or commitment the an matter expect have in share the to strategic our for acquisition. reinvest repurchase that ability for impact our business,

investments make allow to expectations. continue customers and in capital quality will us exceed as equipment will delivery We or to meet that Advanced such and our automation Manufacturing

our to outlook. XXXX on Moving

moved for both retraction Our recent experts reports during have markets construction R&R XXXX. more Industry a new national calling in and positive. are

current for the interest the into visibility starts the actions clarity the and EBITDA time, limit to provide the rate Additionally, by Fed At and beyond end settle we more the to to down. remaining our as limiting outlook first first we're economy this quarter, quarters going quarter. market ourselves the will are

solid environment, interest another we Despite quarter. by expect first to the challenges rate deliver presented higher the

prior expect for in supporting southeast was January the first these in We to XXX the sales region, to pickup quarter million, million December a our year XXX of orders levels in November, and exceeded range in be levels. which revenue the

to EBITDA cost allow be [Technical million our adjusted XX business. to not of us in to leverage range million structure the anticipate We Difficulty] XX effectively the of historically fixed

marketing include of be associated over and will will $X and The participation expenses those year's builder costs quarter. not quarter first first million incremental expenses show that participate in our international with the in Additionally, additional impact we increased prior the did show, whereas approximately year. advertising last

why reiterate our long-term in me believe value In an excellent Innovations position for is closing let creating to continue PGT we today, shareholders.

a are that over brands we First, leader the for we have years. an past national portfolio outstanding strengthened few

strategy, brands. growth building adjacent our to categories our indoor We into existing portfolio window executing product expanding complement of are including

outdoor strong continue resistant with geographies Our products to traction. living impact indoor We gain markets serve population growth. and and

which of and diversification further construction the expand continues profitable in R&R new from both to product acquisition growth product our and introduction, Second, portfolio the new challenge. facilitates

business flow Third, provides expansion. our our and in operational investments in return improvements cash shareholders. us capital and helps capacities, options increased meet reinvest have capital which the free to deliver Strong demand margin to

products investments needs. customers with innovation, premium and help to their Fourth, our provide in us innovative ongoing product development, meet new changing talent

lives. responsible help And property protect and commitment will not conducting both compromise products to manner. socially in Our we a business our

our Lastly, shareholder program, by committed increasing as value. we evidenced repurchase recently announced are share to

were impacted and bullish more ransomware during for been results never our long-term by While Ian outlook have attack the company. the Hurricane on we quarter, the

I for Operator? thank At our channel the shareholders, begin want members, this me partners suppliers time, to Q&A. team support. the continued and let

Operator

now you. begin Thank question-and-answer Instructions]. We'll [Operator the session.

First will Hughes question Please from ahead. be of go Mr. Keith Truist.

Keith Hughes

represent the talk could at quarter southeast there, versus west? first you if about of that On organic you about within kind guide, would could kind least what of number talk

John Kunz

do can Sure, Keith. you. I that for

Martin acquisition in or you top-line there around XXX, we have XXX well. the to as you If look year, add in the thereabout at came prior

call acquisition XX it, you price then, million, few And have So XX the you million number. for a Anlin million impact. have

price be then volume, that a X%, decline the it impact recall we're anywhere And can expecting XX%. So overall.

is anticipation the up call That's we'll we it as have we far mean, to where expectation volume I a our as XXX how that decline. that's range. XXX So are. to get the

than say, would more seeing Western And specific region. than a softness want I that. overall is to get the I don't bit southeast the regions, little Between more

I I we're expectations on our putting think think for that's granular the guide. enough, that

Jeff Jackson

That's just hard makes what to I that. Keith, to add predict. would it

of at if in look business our If almost I you months, XX%. in like last you at up southeast, is entry my few which said is comments, XX% look the order the our

this set given we're and in we look point out entire what it just, makes at feeling it where it year, pretty you good we're if more So the cloudy seeing.

Keith Hughes

There the my what order really Jeff, what question, growth. talk raises It's products, just of second landscape? number kind comes the on Can a you given them? surprising more, the

Jeff Jackson

the No, southeast. combination. Like this it's mentioned in a Yes. I

One, South brands, we're PGT hit think several So four New obviously, let's it's call our CGI category And Florida, in is come brands, eco brands, hurricane it. reasons. mainly it we through awareness, what we a had -- seeing brands, it's us. Hurricane

awareness in order of now. South sites lot web The New in out And the terms and regarding So lot of there's of of volume path hits a that. lot storm lower inquiries on getting in market or XX% a of there, the actual online a stores upper the increases. we're

even more. storm the where is So hit

awareness. there's So

credit of home this the call, And the last as for I then, purchases. in R&R secondly, mentioned, quarter's state passed Florida hardening tax

Ron your anything to free with, dealer heard Patronus, next feedback the five our around home people for impact We Jimmy you and i.e., that the and the state So those to doors. harden the individual we And from make with great windows want years. tax could work DeSantis And of we've Florida, sure be talked base. that. CFO, Governor to for

XXs. running are it improved about think operations you lead full dramatically, the in if XXs, times then, and our quite in have last is at And here PGT our frankly, year to was into time on compared upper

to brand, market, with had we leader more because frankly go the back a a impact perform that weight, it starting fix some more we're lot lost in Obviously, but performance. people lot of performance we gain to that rather and operational So issue. in options quite the creates we share

we're starting gain share So and had XXXX. actively the we end to of at lost XXXX that back

Operator

Thank you.

ahead. Phil Ng Our from question Jefferies. go of Please next

Jeff Jackson

Phil, you on be mute. might

Operator

you. Thank

back. get to for wait Ng we Mr. As

JPMorgan. Let's to go Mr. Michael Rehaut,

Doug Wardlaw

Doug Mike. Wardlaw for on

softer talked on approached kind that on Just on from just demand expectations bit a total? drop? about that in with insight as be would so, quarter, I'm you just drop line wondering a And color gain been more of I little how in Last builders. price anticipated demand we changed, quick more has been guys it question. you if your if the or haven't guess, has

Jeff Jackson

Yes. Yes. I'll or would And volume. no. speak be maybe to our the Have it. in one-off? we answer total, approached XX% X% been of But

builders just our is full. simply we we've can and in who do as we're couple we price, in been haven't as Well, a choice. deliver not pricing, to on actually the and total, asked And So their row, of pricing by pressured? access, long time given supplier do whole that, getting a hold builders

construction received impression. now the side, of not giving material new as So impact any have on on

Doug Wardlaw

about Thanks. How what's curious, acquisition was your one with pipeline strategic And right just what recently share now? recently I'm looking And acquisition? use? method talked approved, repurchase. it. right you the environment, look Got In and accelerated like current that criteria potential the for this does

Jeff Jackson

clear and literally in will I makes we're way think that $XXX put Monday. we a plan a off program, we undervalued. That question. kick in good a think Yes, shares, stocks repurchase our start think And plan program place, million are share And place, undervalued. statement, buying we

So we're as off to trading as first market can based going buy much that priority. we going the be That's allow to volumes. in our

would we portfolio Midwest look criteria Those be I course, any clad other our point, I at absent portfolio, significant in that or hadn't different before. I'll don't as but I is call and and look type, our for that criteria. but acquisition And would looked diversity, clear acquisitions, geographic the those priority maybe of stock our say, locations a at at would meet look look are at top product that margin, at I more it wood, some have let's we this

Operator

Instructions]. you. Thank [Operator

Next Mr. question Ng Jefferies. Phil will be from of

Unidentified Analyst

year full at what Phil. your the call. for just I swing to Okay. guess if XXXX, biggest confidence about outlook? hopped you to happen outlook, or the uncertainties are It's first talk Maggie I demand? could give And you I looking for need sorry, the end and market on would missed on what But and earlier, this providing on factors more

John Kunz

Sure, Maggie.

looking for what only our really in days last the radically at of started give plan December -- over today. what just guidance from XXXX. And when XX in January, our then to change were and calling sentiment we've the was One what were were, elected expectations early the the expectations QX we are timeframe different they into why reasons they

what we look see would really, is some stability. So to just

can dynamics than bit better we end what driving So little confidence the understand we do the that markets a have today. we

in I would qX, able you as April, we we at may the markets timeframe or guidance guidance by there give and think to stability then may with prognosticators will into not opinion give that happening year. the construction year into the the but the some see what as that May as an time, of as remainder may we whatever movement in exist market, out much end move just stability be full far and the far in progresses that so that various to more and more to as just as the be market, economy, for how markets, we us as like that our what's of get year new remaining year is each some R&R forecast it confidence

And economy our versus think Right. versus remember one stable and have we way different turn continue to from end the be robust? to have more about what to actions, scenarios planning you should being is different

agile margin So business our feet. is to this EBITDA said what we an long-term what be on business we've is, going upper we And forward. teens have to I pretty what be suggest think I would and expect

to be would that that be would upper expectation teens business to continue EBITDA that margin maintain business. So down this the we is

Jeff Jackson

saw We reduction attrition flexible roughly pattern in been started just, will initiatives. changes. we've XXX, and quarter, when cost XXX. people, another at the reduction some the of terms already of in of XXX I of force order Today, we we've had fourth end that And

the XXX months. last about down call we're over people, it So three

only our feel there's the So definitely we opportunity investing holding we're great over where strong cost. coming about year. We're And a watching margins return.

Unidentified Analyst

impact played XQ, Can revenues And carryover operational Yes. and sense. just quarter, lower hurricane forecasted. looking talk issue then, and it. at definitely the than I disruption initially were expected into Got Okay. if on headwinds makes you out the from in ultimate any the there's how about ransomware the XXXX. on That the those guess, impact dynamics had you

John Kunz

period get So were, entry time. back disrupted our order of our the And up. for The dynamics produce. to to of specifically for we us the for or recover each hurricane production and quarter a ability in those, lost

to from basically was So to that recover. be could. degree so where we made down perspective, shut attack us able was that an order one that in, we The to to had we up entry the lost ransomware weren't revenue

here news team dramatic The made operating the a region job. is, southeast good wonderful our changes, did we've in

As Jeff back we rates, got said, weren't to the prior storm. to where

to we're back making moving order So from are perspective. online, and that respect back we forward we're that With up. entry,

dealer no to Jeff our move we those. expectation both there's And that quarter. all to either to QX, continue said, deliver, related perspective, continuing time from we're were be is continue choice. base will So continue think pleased as They supplier we into an performance effect of to and with from an I see to -- operational and our continue as as full, the from that is long the we going to as a of

Operator

remarks. the to This the to for question-and-answer back management I'd you. Thank call closing concludes session. like turn over

Jeff Jackson

you. on May. we Thank look to you again. call. participation you call full XXXX earnings to continued quarter company. of and forward in appreciate year your Thank quarter our earnings participation our We the again first And support and your fourth talk on will We today XXXX

Operator

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

You disconnect. may now

PGT Innovations (PGTI) 22 Feb 232022 Q4 Earnings call transcript