Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to PGT Innovations' Second Quarter 2023 Earnings Conference Call. All participants are in listen-only mode.

I'd now like to turn the conference over to PGT Innovations' Senior Vice President of Corporate Development and Treasurer, Brad West. Please go ahead.

Brad West

Thank you and good morning. Innovations' XXXX PGT conference the to second investor quarter call. Welcome are on Chief CEO, Henderson. the me President Financial call Craig Interim With our today and and Jeff Officer, Jackson;

will of today, earlier well accompany as we company section today's release presentation as Relations slide posted Investor earnings press the website, On you have find the discussion. an issued our to

This company's website. the for replay webcast on is being recorded and will be available

presentation, Slide SEC as release your Before as we attention direct X begin of statement disclosure and discuss please included the our disclaimers statements. to on well press the in filings prepared the earnings forward-looking remarks, the that our

to remarks contain materially. performance uncertainties, financial involve Today's XXXX risks, statements results forward-looking and other about could differ our Those that statements statements outlook. factors including actual cause

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

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

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

Jeff Jackson

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

partners second continue executing earlier results of ever-changing today supplier environment. released members quarter and to financial our in Our showcased the team commitment macro an

delivered quarter sequential continued revenue company in results, uncertainty. profitability first economic the Following record despite increases and both

the execution. profitability on our quarter We able focus total productivity to $XXX XX.X% of revenue million million quarter. of and continued and Turning were in EBITDA to $XX strong due Slide operational in we adjusted or to deliver the delivered X, second

sequentially. by increases Our sequential and X% our unit in adjusted grew increased EBITDA X% volume revenue driven

signs lock driven effect market continued declined of offset X% show new increase The home continues The X% sequentially. housing channels, on in offsetting was sequential weakness activity the home new repair in which and construction existing by of remodeling to growth partially in the optimism the with by partially construction, impact sales.

normal maintain and a brands. to delivery our are continue getting We lead relationship price-cost across times near-standard all and

second on a trends, Next initiatives. sales at key and the take let's our closer quarter, look Slide X,

During second total million. were XXXX. of grew Southeast of $XXX revenue generated sequentially the versus quarter quarter, in first quarter. $X X% we our $XXX an versus Sales X% of prior and million, year the segment the contracted million increase Sales

Our in show continue Southeast market. down resilience a to brands

sales, than revenue were sales driven R&R sequential off record and R&R X% Our by offset sales Southeast X% construction XX%. new construction This X% sales. declined in was where decline less growth in prior-year XX%, increase partially new grew a by a the quarter sales is

volatility. continued market Our Southeast year-over-year in sales quarter due the was primarily second housing to decline

recently are We of chain excited Eco XXXX of of announced We vertically growth, Eco and Enterprises, LLC. supply finalize purchase initial adding remaining our acquisition our to additional leverage to first glass We've portion Eco been of glass XX% the acquired to production ownership the other able the the business the the the expand of to in in integrate remaining business. capabilities and the strengthen margins, brands capacity. by accelerate XX%

sequentially. an in prior-year versus the in increase first million XX% grew contracted the Sales organic our segment $XX West were Western million, Western quarter the XXXX. quarter. Sales X% of of versus sales $X by

our bias June and Western the to comps quarter July. segment's of segments and a southwest were both towards increase the The organic new XX% year-over-year challenging momentum construction in in market. in slower saw XXXX, a cycling We sales over positive second due all

new is Multi-Slide Western opening heights sizes product configurations. XX extreme including provide max feet continues our relaunched Door. and This to we leading-edge sizes. quarter, of larger performance This but much panel at in provides the Series During XXXX product our multiple available

a growth across Doors sequential our acquisition, and quarter. closed into delivered our Western locations. weather-impacted region XXXX committing execute planned Garage Martin NewSouth late strong in which Our We're first our synergies to actively on off sales resources

launching third Keystone stamping new rib pan using that Martin, minimal new we'll on door door our quarter, desire. be a featuring a the clear This innovative lines the homeowners in face. a with provides design in-lane design

we During for openings in the second showrooms grand Dallas. held retail our NewSouth quarter,

along Doors. San These Antonio, new Texas. custom with Worth, offer products and Garage our locations all Fort NewSouth Martin

forward Garage markets later showroom look about expansion this Austin this later other NewSouth opening the adding Texas be of will the in metro to year. Martin year. Doors excited Our We're into major locations to and the brand NewSouth

this environment, our costs value macroeconomic commitment proposition and allowed delivering and remain maintain volatile profitability. on on us This customers. controlling to while we strong to achieve Throughout has focused

long to term. our competition automations, the deliver outperform our continue will invest We our and and near capacities, in the for and to brands, people our investors, in and both returns

we our which everything -- is continued do. innovations, commitment to underlies We

with proud are Diamond be impact-resistant our that to third announce to feature our will exclusive first the our in from quarter. We technology Corning partnership launching product Glass, using glass we

Diamond resistance Our would improved from WinDoor our clarity, efficiency the maintaining resistance, to Glass customers improved scratch premium while impact weight, lower brand the that energy first receive and industry-leading impact brands. will and be Xx transition to expect

costs price, featuring increase bringing in excited available no performance Diamond customers. to our WinDoor Glass increased products with will no to I'm report improved be

As at our Diamond will a adding we glass to as in scale premium we products. be our branded Glass operations up PGT our Venice, facilities

to We features performance on customers. builders early execute triple insulated remain our demanded manufacturers and to plan thin committed deliver glass to window value by other our with and continue We products to in units door delivering our XXXX. and

million Southeast million the up the the demand at end of quarter, in order is from open quarter, Our from $XX segment. first primarily backlog $XXX our

described plan the Regarding necessitating the to March our of in our shareholder circumstances exist. press XXth rights the implementation plan, continue release

to always to shareholder to continue We're investors all our value. constructive in maximize their open We opportunities engage all welcome we perspectives. with dialogue and

for our $XXX including shareholders all long-term repurchase execute million on We program. continue to share to our our plan create value

During in million share total the invested shares market we year-to-date. in repurchase second open for our of transactions repurchases $XX.X $XX.X million quarter, to a

to like turn over greater quarter to to results review Craig I'd our Henderson detail. second Now Craig? in call the

Craig Henderson

Jeff. Thank you,

in X, quarter. Turning year net to from the year-over-year sales was prior plus our decrease in an in The impact second of year X% increases from second legacy decline $XXX prior from by sales quarter. a businesses. the price were X% caused down The the million X% unit consolidated quarter, decline volume price impact Slide by partially net XX%, taken was second of offset primarily

segment down XX% sales X% were from year's segment prior Southeast our prior year. second the the contracted from Our Western quarter while sales

quarter, XX% construction. and X% was compared second breakdown second sales of XX% down sales the During were our quarter the new R&R Organic XXXX. R&R to

sales year's the in PGT was by new construction second R&R but our strong reflecting deliver to XX% offset home continue to and brands. quarter Organic other the down this were growth Eco, weakness sales prior new We activity. construction in

Gross second $XXX was profit when and quarter. million X% to in prior quarter second year declined compared the the

results offsetting were of by from wage continued actions additional volumes, leverage cost containment driven QX impact operating cost measures. pricing from prior-year reduced fixed by solid material our and Our The inflation lower and performance teams. partially offset

by cost in X% the driven administrative second year, measures. quarter the containment general and expenses Selling, strong compared prior to decreased

This or fixed lower driven in cost by second EBITDA $XX year-over-year volumes. lower dollars decrease of sales reduced than million were the leverage from X% Adjusted XX.X% was quarter. prior year

performance inflation. high continued of was the offsetting impact material operational and result and pricing However, wage a the of margin actions efficiencies

in Our Raleigh-Durham adjustments for the XXXX. NewSouth the which showrooms, related quarter our Charlotte to opened million and $X.X included closing of

this markets these exiting to business during are We investments areas focus other drive to growth macro volatile in environment. of the our

adjusted relating quarter approximately one-time cyber In to for our the fourth second $XXX,XXX XXXX we incident. addition, to results quarter quarter and our by acquisitions charges second in incurred costs for related

for $X.XX to income in $XX reported quarter diluted Our XX.X%. at the million expense XXXX. quarter per compared $X.XX adjusted We share per of tax in or or second diluted of million $XX the came net share

Turning second and debt now we liquidity end to had $XXX balance quarter, Slide the million. of X, our net $XXX the on of of million total sheet at

had XX a bank trailing As of of EBITDA covenant month second net quarter, ratio X.Xx. the to debt the end adjusted of we

We generated second million operating quarter. cash the of $XX in flow

initiatives reduction, and expansion us CapEx, profitability XXXX beyond. invested to our We also enable in capacity to $XX improve related cost mostly million in will that and

three through the shareholders quarter, second execution million $XXX continued shares. repurchase returned to the During our share of year, of repurchase we million XXX,XXX program $XX.X and

Moving the on limit outlook on our again uncertainty Slide guidance to X, continued will the EBITDA our and quarter. next macroeconomic sales to

million be the the in we the $XXX adjusted of anticipate $XXX $XX range be million. third within EBITDA For million. $XX to million to to range We revenue of anticipate to quarter,

year quarter, third price over expect contribute growth For prior our we X% the to quarter. the to

in recovery increase We the expect volumes stability new and R&R to driven a sales. in from quarter construction second by sales

containment along continue market. deliver will with expect us enable uncertain operations strong this our cost We profits execution to to in continued strong

our expect to glass successfully. X% our We leverage at higher were the rate addition of hold level spend in to facilities, to target to sales million normal X% continue Xx spending. ensure operations XXXX in we will new our glass of capital operation Despite EBITDA. $XX This to equipment spend investment, on run that new Xx and this launched increased

the And to would back turn now call like Jeff? over I to Jeff.

Jeff Jackson

Craig. Thanks,

long-term the near-term and to today believe with challenging we despite I'll continue PGT demand to summary conditions Innovations market current the while conclude positioned of above-market environment. a is deliver growth

longer. continues volatility home to Meaning and buyers stay our lower remodeling effect bolstered mortgages. more likely and fixed-rate macroeconomic affect repair their to homes of by the both While channel are lock-in the underlying homeowners, is in homeowners

age activity lock-in The projects construction. the stable on their home to are record homes. construction sales helping in homeowners update level will to reduction as a impact positively effect drive of long-term are home recovery the we and new means see willing This equity well increasing in new to dramatic homes home in more existing remodeling in take

the the X.X suggest are additional energy million million has in to demand, new homeowner rates that to XX mortgage continue the Long-term R&R and coming $XXX,XXX will demographic major will support new a XXXX. X%, through reach need XXXX, growing average meet residential trends efficient incentives home in industry housing population Act XX.X years locked an millennials of in XX% additional homes remodeling be to home. million sources include the below units federal upgrades over introduced their are Reduction for several These to equity to growth that with for adult drive changes Inflation construction markets in prime trends through The mortgage macroeconomic the especially years. formed, borrowers there

Our technology incentives. for homeowners enable will new these to glass qualify

have Hardening construction of standards benefit Relief increased and brands Home Our enactment Tax products. the the added awareness, Sales of impact Act Florida hurricane the evolving on

in others built economy our space PGT to long-term we advantage solid has a a Turning benefit X. Innovations and foundation these take trends to than the see when Slide stabilizes. greater of

Our the strategy demographic to trends is focus markets favorable on more where the is average. than national

our First, past outstanding strengthened categories national that have the leader brands. existing We're Window to of strategy, building including on an with of expansion Door years. few portfolio into product our portfolio executing we're growth adjacent complement a brands and we over

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

Second, balanced through a facilitates the in new acquisitions to diversification construction further new and expand continues product of product the both our portfolio R&R portfolio channels. growth and introductions, which

in Third, and capacities expansion. increased operational capital our delivered investments improvements have margin

reinvest our Our provides to return free the strong capital in to flow and business options shareholders. cash

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

improving shareholders we're to share shareholder and our program. repurchase returning Lastly, through value our committed capital increasing through profitability to

Innovations to for a next the continue for environment in create to and great build working current the growth weather stronger value economic our a is position believe and level to shareholders customers. We and of long-term foundation PGT are

our our addition, drive the discussed want does shareholders. And and for company's higher. our have not the PGT current suppliers we value In actions team channel potential believe I value trading members, continued reflect properly support. to range thank we their shareholder Innovations' partners long-term our shareholders, will for

let the Operator? time Q&A. At begin us this

Operator

will from come Ng with Jefferies. first [Operator Instructions] question Phil Our

now go may You ahead.

Margaret Grady

on Hi, Phil. It's Maggie morning. good for

JeffJackson

Hi, Maggie.

Margaret Grady

XXXX to outlook demand more right expecting you're sequential but positive sounds your see has those new the inflection markets a a end construction, like markets. Do quarter. guess It been end next or outperforming across of year-over-year that is in both I this into first expect now. digging R&R you year event of improvement a

JeffJackson

just-- You or mean Maggie total in sales

Margaret Grady

by guess, Yes, I market. end

of You to see year new Do that a you inflecting in kind R&R. recovery for and talked starting you're about, construction. this positive see same

Craig Henderson

from Yes. Maggie, perspective. be that definitely profile the continues we believe demand to an strong R&R

do the the New construction, has But activity excuse just see is in of improving. weaker, we from XXXX. the me because signs early -- second it been of half fall-off that

perspective. more R&R flat new construction up from be an a flattish, will perspective be perspective, year-over-year a will from dollar So, definitely but will be from

JeffJackson

Yes, mean July I'm I and I speak not in total look by segment. will going if say Maggie, you to

trends order in last July July the Our X% year. were the over of already month up

I that's feeling reflected that's why guidance. think year the in increased are positive the more QX of we really in half back our

Margaret Grady

Okay.

Okay, of got what your Act. activity helpful. tailwinds the as it. Home into balance those have you response from Can then first Florida you in consumer the recent in then secular the talk the from hurricane And and both those of the Hardening That's And been. contribution going specifically, about half well as to what's have sense XXXX. of some

JeffJackson

Tax very I Relief has Home been Yes, mean, the response strong. the Hardening to

did homes. as Hurricane on our in we base. selling the Especially they're dealer dealer a into has significant able just the and base into to lines call Our since those obviously that advantage of PGT we hit, doors out see windows have interest our at to Ian that out been take

If Florida alone at the has you over XXX,XXX. state's above people XXX,XXX was time just the look state. that fourth moving history And last the in Florida only into had been year

in, factor awareness hitting selling moving very you've been until that hurricanes plays and product. have factor through hurricane people So impact are well awareness for

Hurricane benefits. benefits the So next at Ian we say see least of XX those I'd the reap continue to we'll months. from

saw about period. Irma back good two-year uplift a Irma, Looking to in we for

in the Ian, benefit And terms estimate so sales. at, same would in if look that you a of I timeframe about

add, Craig. to You you want anything have

Craig Henderson

demand of a seeing the that Yes, to so still related hurricane just we're far awareness. is lot

and potentially second into Southwest Florida the the of repair of especially first piece the where region next happens half is the so of And remodel inbound it, in year. most half damage in and still

Margaret Grady

Thanks, That's guys. great. Okay, helpful.

JeffJackson

Thank you.

Operator

will question Rehaut from come JPMorgan. Mike next Our with

go You may ahead. now

Douglas Wardlaw

add get you Wardlaw in just color little region And bounce from the And Doug you back first expect region Western morning. then Mike. weather the little on how the to back talk saw throughout if could about quarter. a moving into bit a directionally. half could good trend guys year the you the trends the of bit guys, quarter, more for in segment Hi Can impact the how on the you there. you the if

JeffJackson

half part all quarter being the Sure, high the really speak and the share numbers year, stuff. the the -- level of the some Craig this by I'll Arizona and yes, of can way obviously, by first weather more details. California, impacts through first with first But melts rain, impacted into the snow

pretty Utah What we've In start Lowe's soon So we've new Lowe's are we with good really been much the had we sales at there. in both Utah. coming is set Doors benefits to seen stabilizing, pleased come all at we're up weather-related think set behind new with in to through terms in Western very the Martin in us And acquisition, year and having seven top Martin, will we actually even Garage be growth now. as with line dealers. We're we've issues. the itself. synergies Anlin But, starting and least up a of those able there's trend our --

got some say good that So out I going half we've will volume. initiatives drive good what would on we back think really some West

Toll we Western for with have Now, impacted and still slowdown construction know still is does those in their et like by indoor-outdoor new because basically new Brothers players is all various you living. construction as cetera national it the agreements

we more do slowed, that half could the that traction see half we feel back So back there. that again has but is some as enter we here,

Craig Henderson

weakness seeing evident and Western improvement construction, brands, QX, we into year-over-year and see that's we move QX. to comps, as Yes, in further improvement we're sequentially seeing I new the definitely but expect in the the would say

Douglas Wardlaw

up I strategy, Got looking it. starts, you And starting improve. your we've as M&A family then are said guess refreshing looking which new just your acquisition, been at is resi single to and

at you are acquisitions does guys So the way change that that end looking forward. moving market improvement

JeffJackson

to think wait Yes, for We're we've the comes shareholders, the going our instance, to portfolio to the in add But for changed right necessarily for strategy share on. forward. so. program moving right it if obviously and looking capital We're again, fit don't of I back think don't opportunity available. anything's move I We the repurchase always deploying brands. got

Douglas Wardlaw

Thank Great. you, guys.

Operator

question Truist. Keith Our comes [Operator Instructions] next from with Hughes

You go ahead. may now

Keith Hughes

gross here years. anything those reached number keep running PGTI. on like a higher Question is solid a for margins margin, level question gross were that I assuming you. Thank future new the solid pre-COVID, in they guess quarter, in here margins gross more would and we environment a gross going the demand indicating Have than are some far margins you're coming. there my margin is down,

Craig Henderson

slightly the perspective No, and have it as this We've to looking standard the incremental where little perspective I from since forward. if capital significantly That's is from mean, you're and and a we cost definitely gross PGTI to perspective. going business capacity new a our anything I impact so improved margin fixed needed. demand increases. grown And not overcoming there capacity we're expand as think from COVID out a going margin will

So as a of in in move a others, right to forward. now cost a gross like and we're we but maintain materials, expand feel in from we're it kind seeing of be able perspective. in deflation materials from buckets relationship We're and that inflation perspective, some we great balance a place margin raw raw price good we'll

JeffJackson

folks. pressures our couple We what We've compensate have to said leverage agree. would inflation both increased did some years. fixed cost and has our competition for significantly With and echo wage base last in to Craig wage of basically, Keith, definitely I keep just the

aluminum check. have hedging baked a successful program. and that we're the in Actually currently, we in very that's So experiencing not

would component count don't can current well. we said is getting like margin, majorly the trends just is impacting And aren't our that Craig on volume see a anything I something going more that gross we as there leverage to forward. say good So

Keith Hughes

question about Okay. rate growth that talked, breakout West. sounds that's like Jeff, believe East versus does you One order that company-wide, other how X% I

JeffJackson

I think that One second, may Craig detail. have

Craig Henderson

Yes.

the growth the third XX% Southeast in down is X% the quarter still the So, demand a from in and West. then perspective, XX% in

Keith Hughes

you. Thank Okay.

Craig Henderson

of QX are year. of demand back increase over seasonality of took due growth a very the QX. solid quarter, In actual more really continue little the price second gives and to of kind we the that we are in Both and Kind sideways see quarter the the improving really this but came In putting in sequential us the some those demand changed demand got the in forth the bit for which support that we're trends growth second QX. numbers, is to stability market, last results

Keith Hughes

thank right, you. All

JeffJackson

Keith. Thanks,

Operator

appears this over conference concludes to like the are session. to would for turn further Craig I It Henderson questions, closing no there remarks. back any question-and-answer our

Craig Henderson

future Thanks forward with call conversations We for the to joining a look and on us quarter connecting to in early November. you forward next today. Have day. look great

Operator

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

disconnect. now may You

PGT Innovations (PGTI) 3 Aug 232023 Q2 Earnings call transcript