PGTI - Earnings call 3 2023 | PGT Innovations Inc

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Operator

Good morning, and welcome to PGT Innovation's Third Quarter 2023 Earnings Call. [Operator Instructions]. I would now like to turn the conference over to PGT Innovation's Senior Vice President of Corporate Development, Brad West. Please go ahead.

Brad West

Thank you. to Innovations welcome Conference Quarter and Call. morning, the Third PGT XXXX Good the President Anderson. today Jackson; me call With on are Interim Financial and Chief and Officer, Craig our Jeff CEO,

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

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

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

and Slide directly note periods. additional financial provide report which we investors measures, measures X, GAAP the that results believe non-GAAP to to most performance reconciliation using between we A help compare reporting comparable and information on Additionally, in Jeff in the CEO when this available is Jack. included slide the in earnings presentation I now President, tables to hand company's call our release will the time, At appendix. over the

Jeffrey Jackson

today. for us thanks Thank and you, Brad. morning, Good joining everyone,

speculation the the we transaction Before media. quarterly our market results, to get into in recent want earnings removes and I acknowledge

presenting on focused our results. those earnings We rumors are today on comment not are going strong to and

we with dialogue welcome constructive in their our all engage to investors, continue and perspectives. We

today's maximize opportunities to shareholder get let With open me results. value. always are earnings that, to We to

today, third this products Our growing are financial for dynamic demand results meet our the operating current market in in. earlier we showcased our conditions to released ability quarter

record sales new year. a enables the over team and is deliver past to structural construction and solid repair exposure our balanced to advantage that both profits consistently Our and remodeling channels

premium products team on strong Our financial are quarter entire and third all strong results executing remain demand our cylinders. that for the evidence that is

at quarter shares continued success their third team grant of Our and a of team the efforts, incentive heart not in restricted long-term of special members announced we stock during to plan. participate XXX,XXX members are the recognition do of who in those company's our the

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

of for sales the the The Our market conditions. the demand repair remodeling X% was EBITDA increase year-over-year quarter. channels, revenue partially growth continued offset and was and our new declined growth The third impact weakness year year-over-year construction, XX% which an increase interest versus by in our driven high adjusted on in products prior rates strong continues of despite X%. by current housing XX%

brands quality, and proposition a maintain and us drive our market penetration are relationship normal our increased helping to geographies. service times, continue lead industry-leading We value across in price/cost

year sales Next, an million, a record key of on quarter, third take Sales versus Slide increase initiatives. sequentially. look X, X% our a $XXX segment our also trends let's the the were at quarter Southeast closer in prior and X% and third

construction new of channels. the power results Southeast our in and remodeling repair show and brands Our both the

Order prior quarter. the Ian, by Western versus demand increased Organic new Southeast in order a a fourth in growth second R&R contracted prior in driven double-digit growth. decline by the order in revenue in quarter was quarter declined year year $XX sales were Sales versus quarter, sales were quarter, where The in into volume segment year X% and X% by including of unit improvements the impacted construction flat increase Hurricane sales. the was X% year the prior deferred demand. XX% million $XX prior year increase the versus million, Our West X% new year-over-year quarter, organic and improvement Western year-over-year X% out quarter driven an sequentially. construction seen XX% the our primarily sales at demand the down the prior more versus from XXXX.

XXX awards. as quarter, Window our the was part architect best from newspapers of Western awarded products an door their During Series the System minimal Pi Editor's XXXX multi-slide of

innovative along a Systems hands-on This We design in with product products architects, on Western our will and will November to experts to our will studio outdoor products. best product open spaces architectural the in industry collaborate dealers the to other premium custom for Santa design help provide location California set with be showcasing Window provide studio in XX. this with experience opportunity Monica, our any builders project. indoor premium for also It a premium for an living

featuring launched quarter, new our design innovative Our the provides desire. Pandor Martin lines acquisition, homeowners XXXX, which third in that in Keystone closed Garage that an cleaner new Door late

already to in are stores Texas Grade Martin the South of launching growth our We New launch Derived Coast distribution network. markets. other New in and seeing East well the markets Martin We door as our South from order as look forward

now Martin the the takeover Houston to we have the across South Texas and areas direct-to-consumer new with opportunity executing San subproducts For brand, direct Garage value new Antonio initiative, doors. metro Dallas, custom are along Austin, experience the Worth, Texans our of Fort our factory

leadership products customers will through-time our and efficiency as offering lower began technology brands. third glass, scratch today, production available improved partner. architectural support George impact in Virginia. soon. be premium option impact win diamond products fabrication announce I'm appreciate excited local our are Prince our to first the to industry-leading the from a County, the provides first featuring be our glass. community our installation, glass began Corning ultraligglass and PGT-branded as production Diamond of featuring facility During quarter to that maintaining latest being the WinDoor to glass diamond and team we of state trusted glass innovation, triple we third and We technical will resistance XXXX. improved standard hiring and clarity, that to innovation in of the expect testing quarter, resistant is energy and adding while a in begin with This quarter, member Equipment laminated forward look local weight, homeowners scheduled

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

Craig Henderson

Thank you, Jeff.

X% X%, decline offset impact sales partially net increase X% taken business. price year. legacy prior X% $XXX from X. Slide increase in the organic sales the quarter, from by from to the a third net third prior quarter. a year price up The Turning our by in year-over-year were driven Consolidated was was increases Unit volume million in

our sales segment prior Western prior segment X% Southeast year from the quarter, Sales third the from Our while were year. down grew X%

During were R&R R&R quarter, sales delivered up continues of quarter was R&R for the third sales compared geographies. as strong our products sales to third the XXXX. XX% new growth breakdown across XX% all XX% construction. and We our demand

sales versus the were third quarter. X% down New prior year construction

X% second reflects XX% $XXX a the activity in construction year third New Gross an the improvement quarter. quarter prior of third million from to quarter. the compared increased year-over-year experienced was profit decline in

year actions, volumes. by Selling, were reduced solid of This partially EBITDA quarter from strong a million expenses margin compared impact EBITDA continued in Adjusted the by prior percent in higher or performance prior the inflation by increased were $XX from an additional cost and lower and the efficiencies wage the offset increase of to actions. cost $XXX management driven year-over-year of by material third discipline, our fixed leverage partially the quarter. year, offsetting offset was QX general results driven than prior XX% and Our pricing XX.X% operating mainly operational X% third administrative impact of million, teams, pricing by discipline, management driven cost investment. year decrease of and marketing was

$XXX,XXX related adjustment during Raleigh for Charlotte offset adjustments of showrooms. the a taken the North non-GAAP charge of for our quarter $X.X Durham, favorable and million the adjustment QX. closing Our This an Carolina portion to

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

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

XX-month operating revolver cash generated end quarter, third had the the performance of We debt the we $XX million reduce of net us our trailing covenant million. to X.Xx. $XX of bank a flow in enabled As ratio borrowings by This of to EBITDA strong quarter. adjusted third

program our of $XXX X-year of repurchase to share million returned million million the continued repurchase shareholders nearly addition, through shares. $XX and In X we execution

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

X. Slide our to on guidance Moving on

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

fourth volume For sales quarter, the the the expected increases recent in unit we versus from QX seasonally quarter. an created rates. contract our interest third to ineffective uncertainty to volumes by Year-over-year are expect given decrease

We discipline with us expect strong uncertain operations will strong continue deliver to enable cost this results along execution, continued market. to in

EBITDA hold successfully. we leverage facilities, on We of operation spending Despite that rate glass our to equipment ensure capital to sales investment, the in operations X% I Jeff. to level our Xx to in the launch the will range. million to new And our spending. spend in the over back now, new call glass expect of this $XX X% This and like would normal turn will increased low higher XXXX to run target addition continue

Jeffrey Jackson

we current near-term Thanks, above-market is the continue despite challenges. position current Craig. the the The conditions why is growth I'll environment. have constrained housing to recognize We demand added believe to in housing. pent-up for conclude summary additional Innovations today's excellent challenging a market of need that long-term being PGT with call an affordability deliver by to

increasing to once stop pent-up that and interest significant for expect provide tailwinds normal our business. demand this rates levels, will We return

better near and While with term. builders, affordability gotten conditions has offered homeowners homebuyers the the new in affect for by to new various incentives continue homes being

interest rate to current likely once be of willing by will of homeowners longer. these lock-in a This new homes to take new stock, over effect coming homes will macroeconomic in that and markets new in R&R is term, reduction Longer equity rates more The there the the projects home affect to sales existing in are homeowners repair remodeling mortgages, industry channel on impact is more trends Our their helping dramatic record stable and the and stabilize. several of stay to means home boosted activity lower remodeling construction their to in that as housing lock-in update meaning large well home level construction construction. in years. continue positively as growth the are sources continues recovery drive suggest age the effect increase fixed

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

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

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

into strategy, product complement our door window, of on growth our executing including are We brands. to expansion portfolio and garage existing adjacent premium building door categories

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

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

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

investments diamond our new provides and expand customer thin help with provide free changing shareholders. to glass in Our their products innovation, flow triple customers options reinvest new in the to with innovative product cash our base ongoing development to meet such talent capital technologies and and our business Fourth, us and premium glass. our as strong needs return

is capital through our our our Lastly, position macroeconomic next profitability through on increasing achieve a and foundation management shareholders great We customers. are to working the value shareholder and we repurchase shareholders for in customers. maintain committed program. allowed remain are volatile on proposition create while has strong level PGT current to believe Innovations stronger commitment build environment and long-term share focused to to weather of returning growth our and to us our environment, value a our to value cost to Throughout our we this disciplined profitability. for and continue This robust delivering

to to and to our for performance We brands, continue investors and our automation with people and will committed the value and customers. returns delivering competition and in the near long the in demanded We in both invest our our capacity deliver products term. remain and builders outperform by our features,

repurchase including million We program. share continue for plans to long-term $XXX to execute create value our our shareholders, the

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

reflect shareholder in for of higher. current drive long-term our each discussed all believe In time, just thank does And trading innovation Q&A. for begin shareholder actions range let all that will potential for want our the members we've belief shareholders. addition, company. not the we our and properly this Operator? their the At team me value to I dedication value

Operator

[Operator will a momentarily roster. We this Instructions]. begin At to now question-and-answer the assemble session. we'll pause time,

comes question first Keith Our from from Truist. Hughes

Keith Hughes

sounds the I midpoint. growth, earnings of offsets kind at order said at double-digit like a you in guidance strong The going is [indiscernible]. volume Southeast, east you're about the the think was pretty little of revenue flat impressive. in the to it the or it South what is not XX% you talk kind surprised I'm Can see, that

Jeffrey Jackson

a some push speak year's I'll quarter, did fourth have the from basically, Keith, the But fourth then and can bit hurricane Craig, last quarter. details. you that add little we into Yes.

gave, quarter of growth, with Hurricane $X.X the down full $XX $X.X going year, the push a basically it, year. XX% So guidance There from But it's down again, guidance of we we're at if due our million to last call R&R look the face Ian. to were We QX in being and going in you year, year year this challenge. for that's And terms flat be to be into just of fourth construction sequential new the last was billion year. X%. billion full QX

even And we're executing. share. EBITDA. market we're importantly, our leveraging gaining more We're So

$XX Our EBITDA plus this was It to $XXX be year $XXX-ish. last is be year million. million, will going

is frankly, clicking everything incredibly quite we're share in So right performing housing. gaining and despite well the

Keith Hughes

would of are question here. the the of going what things the sort well guess that sort to any revenue you're you facility orders triple kind feel going have orders by with kind any you Evidence or manufacturers. you what facility, on of get? way, is tell right? that the Do that out I Panglass. the of get in could new Great. goes I of third-party Any facility. on view Is assume to of other kind Virginia

Jeffrey Jackson

as as does internal It Yes. manufacturers third-party needs. well

finished in Corning. glass. potential will the also world. have raw from the we'll slate actively And agreement and be those drop X window of raw will We And for Fusion Guardian, quarter We to it glass solution third-party sales, products, glass that do drawn triple end about of actually energy-efficient also a our trying We the signed unit in the putting other next a were the it at a Fin we able operational that's at ribbon we're year. market. the distribution in customer slated manufacturers We're glass vinyl distributor, do point, sell to is raw and pursue Anlin to to make potential Cardinal, signed for have also be most this instance, the with Nothing selling both the weeks a pain we The fusion drawn also a units ago to the like And too. And obviously, relationships. glass of cutting, going heavy guys, a big Oldcastle are into. that glass year. full definitely full discussions. that facility maker this to but be in first on

Operator

JPMorgan. Michael from question next comes from The Rehaut

Douglas Samuel Wardlaw

Mike. for Wardlaw Douglas morning. Good

price, guys and you X% by increased So X% said that sales offset the volume. driven by by organic partially from was

evolving quarter can what So you year? can regarding this color saw see detail the you that and how a add price into little next more just you or potentially moving from bit market past on

Jeffrey Jackson

We're demand that has pressure continues to we -- serve. any as power, stable, segments pricing remains strong. believe recovering Southeast Western have see price don't we the geographies still see we the and construction been Doug, Yes. there's and prices. within that strong heal to and reduce No, We new we

there's of So price a lot not a perspective. from talk concession

Douglas Samuel Wardlaw

And to how picture region the And was say parts that about moving you met Got quarter, forward, sequentially it would new new 'XX? bit I a in region more optimism it. is that the guys you Western would that of early are said into standards? you tied And particularly residential, last your Western moving on just improvement guess basis, thinking of construction. a big And improve. there

Jeffrey Jackson

Yes. increase growth taken in the always From some it's while flow a And side sequentially. lag on through business, a X% Western longer perspective, demand our organic to the to see the between activity a grew there's starts. little of

the that and the grow that, will then into fourth business in next quarter optimistic year. are We

Craig Henderson

Yes.

install are and to growing. well. ourselves again, the We product, get arm the that's whether it's triples in that's share once help with installation And differentiate product we think there marketplace involved in builders that really our have thin some heavily several to going gain CRI innovation we we the Anlin our initiatives with in as that also, going, our

So we we're what there. actually and West very optimistic about them, have the going

Operator

[Operator Instructions].

from Ahlersmeyer Our next Bank. question from comes Deutsche Joe

Joseph Ahlersmeyer

just at of you to the on next I'm To of a looking that And thinking potentially how outgrow consensus about in just there's things to all next the EBITDA you. the seems doing year, that. I'm your year. point range, tough for just could market the results. really backdrop stable those And much R&R, X% up stronger about that Congrats just bit all you're just right at look like in environment. against wondering construction, growth your new kind potentially Yes. I'm things updated go a potential growth that little rates,

Jeffrey Jackson

outperform penetration to Southeast due of to stable and indoor/outdoor at footprint been of year. of to that interest I and consistently spite in out in the the due the national higher the rates, into both we're Yes, we definitely, West. mean see upside 'XX we products our going impact-resistant the in look next have able in environment averages you if the

And that's results to reason so, deliver going to we continue no be and next see year. not we'll why strong able

Craig Henderson

year for We've We've order that year. Yes. stabilization of a a good And on we we operating seen on announcing next seen with ever patterns in, XXXX. handle definitely next market do and we've we're a rates. plan increasing guidance growth actually in this got good stabilization feel

So our guidance growth. be we call, expect end, on that and we'll next from we our announcing do --

Joseph Ahlersmeyer

you're For year, the is be the giving full what guidance you'll saying?

Craig Henderson

Yes.

Joseph Ahlersmeyer

relative context Cool. in your allocated Okay. of that capital it your just valuation there of of you've do. profits? to a on you lack for having think comments to of those then more the investments buybacks, thinking stock can of about reflection expectations M&A internal is the do that the your it view Or And right just wanted to opportunity, the this to that you is is then enough a capital

And so, a sort pull to could back price understand is the much on buybacks, more look mind what the of to in buybacks? how kind to your where we on do as it of for more starts attractive be you

Jeffrey Jackson

we different Yes, despite our look, in on has now. in. that buyback, -- is rate But We're trade. companies terms should choice really of stock we opportunity X the environment balance M&A opportunities. trading still talking operating where actively share our with to interest it we're below

why share program. stock million Our back to in $XXX repurchase our Board firmly that's believes allocated that. we And buy

million to of be think to execute So and executing a may and we buybacks. $XX date, we we'll -- more able total

So comfortable at. the commenting I'm in we on not look price

great now of is a shareholders us. we to the share think and for returning buybacks off definitely cash opportunity right But need that think fluctuates capital via I opportunities. other based our former

Craig Henderson

of And a I that would cash flow. lot business is Yes. still say the generating free

to that that use. put we And those going great of is funds. to of that capital use so, believe to -- shareholders we're returning a And excess

Operator

over any session. to I question-and-answer the remarks. the Anderson would to concludes like back closing turn Craig for This conference

Craig Henderson

much. Innovations, and forward looking we're at XXXX to to call. results appreciate guidance today's We connecting soon continued discussing look you year conferences, with support joining for you our investor upcoming your Thank February. in to and we PGT Thanks and forward so full our

Operator

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

disconnect. now may You

PGT Innovations (PGTI) 2 Nov 232023 Q3 Earnings call transcript