PGT, Inc. Deutsche Bank 23 rd Annual Leveraged Finance Conference September 2015

Transcription

1 PGT, Inc. Deutsche Bank 23 rd Annual Leveraged Finance Conference September

2 Management Presenters PGT is led by a strong and experienced management team 8 Executive Team Members combined have over 100 years window experience Jeff Jackson President and Chief Operating Officer Joined PGT in 2005 as CFO and led the Company s IPO, appointed to EVP of Operations in 2008 and subsequently appointed President and COO in years of operational and financial experience with various Fortune 500 companies Responsible for PGT s strategic and operational results Joined PGT in 2006, appointed CFO in 2014 Brad West Chief Financial Officer 23 years of financial and accounting experience including 17 years of management experience in the manufacturing organizations Responsible for PGT s Accounting and Finance Departments as well as its Risk Management function 2

3 Forward-Looking Statements From time to time, we have made or will make forward-looking statements within the meaning of Section 21E of the Exchange Act. These statements do not relate strictly to historical or current facts. Forward-looking statements usually can be identified by the use of words such as goal, objective, plan, expect, anticipate, intend, project, believe, estimate, may, could, or other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, results, circumstances or aspirations. Our disclosures in this report contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of We may also make forward-looking statements in our other documents filed or furnished with the Securities and Exchange Commission and in oral presentations. Forward-looking statements are based on assumptions and by their nature are subject to risks and uncertainties, many of which are outside of our control. Our actual results may differ materially from those set forth in our forward-looking statements. There is no assurance that any list of risks and uncertainties or risk factors is complete. Factors that could cause actual results to differ materially from those described in our forwardlooking statements include, but are not limited to: Changes in new home starts and home remodeling trends The economy in the U.S. generally or in Florida, our primary market Raw material prices, especially aluminum Integration of CGI Transportation costs Level of indebtedness Dependence on our WinGuard branded product lines Product liability and warranty claims Federal and state regulations Dependence on our manufacturing facilities Any forward-looking statements made by us or on our behalf speak only as of the date they are made and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances. Before making any investment decision, you should carefully consider all risks and uncertainties disclosed in all our SEC filings, including our reports on Forms 8-K, 10-Q and 10-K and our registration statements under the Securities Act of 1933, as amended, all of which are accessible on the SEC s website at and at 3

4 Introduction to PGT PGT is the leading manufacturer of impact-resistant windows and doors in Florida PGT manufactures both impact-resistant products as well as non-impact resistant products both in aluminum and vinyl frames. Impact-resistant products represented 81% of our year to date in Non-impact products represented 19% of sales. Non-Impact- Resistant 19% PGT has the #1 position in the market for impactresistant windows and doors in Florida, and with the recent acquisition of CGI, has approximately 60% of said market. New residential construction accounted for 40% of our year to date sales growing 36% over last year while sales into the repair and remodeling represented 60% of sales growing 11%. PGT operates manufacturing facilities in Venice, Florida, including its new glass processing facility. With the acquisition of CGI, PGT added manufacturing operations in Miami, Florida, a leading impact-resistant product market. Key brands include WinGuard, Estate, Sentinel, PremierVue, Eze-Breeze and EnergyVue Residential Repair & Remodel 60% Impact- Resistant 81% New Residential Construction 40% Founded in 1980 and is listed on NASDAQ (ticker: PGTI) 4

5 Q2 Highlights Sales of $101M, highest since 2006 Significant margin improvement to 32.7% vs 32.0% in Q2 of last year Adjusted EBITDA of $18.9M or 18.8% CapEx spend $4.9M Total employee count 2,

6 Nation s Leader for Impact Resistant Window and Doors Market Leader 35-year History of Quality & Innovation Nationally Recognized Brands Pioneered Impact-Resistant Market Strong Presence in Both New Construction and Repair and Remodel Superior Value Proposition Customer First 360-Degree Service Model Premium Positioning Highest Quality In-House Glass Processing Deliveries made by our trucks and drivers Proven Management Team Over 100 collective years in Fenestration Industry 46 years of financial, sales & operations with various Fortune 500 companies Positive EBITDA every quarter through Great Recession $358M Revenue (1) (1) as of TTM June 2015, Proforma for full year of CGI ~ $371M 6

7 Industry Leadership Significant Barriers to Entry Expertise in highly technical, time consuming and expensive regulatory approval process Overview of Industry Participants Florida Fabricators Entrenched relationship with dealers, architects and homebuilders Embedded industry, product, and manufacturing expertise National Fabricators Superior product performance, quality, features and customer service Existing foothold within the largest U.S. impact-resistant window and door market PGT s leading position in the U.S. impact-resistant window and door market and its unrivaled designs and products enable the Company to consistently deliver best-in-class solutions 7

8 Customers, Suppliers and End Market Breakdown Customers and Suppliers Highly diversified customer base that is comprised of approximately 1,100 window distributors, building supply distributors, window replacement dealers and enclosure contractors Largest customer accounts for approximately 3.8% of net sales, and top ten customers account for approximately 20% of net sales Sales are comprised of residential new construction and repair and remodeling end markets, which represented approximately 40% and 60% of PGT s sales, respectively, during the second quarter of This compares to 38% and 62% in The Company does not supply its products directly to homebuilders, but demand for its products is also a function of relationships with a number of national homebuilders, which are strong PGT s primary manufacturing materials include aluminum and vinyl extrusions, glass, and polyvinyl butyral. Although in many instances PGT has agreements with its suppliers, these agreements are generally terminable by either party on limited notice All of the Company s needed materials are typically readily available from other sources PGT End Market Breakdown 80% 60% 40% 54% 46% 63% 37% 73% 75% 76% 27% 25% 24% 72% 28% 68% 32% 64% 36% 60% 60% 40% 40% 20% 0% Q Q Repair and Remodeling New Construction 8

9 Comprehensive Product Offering PGT offers premium brands across a diverse and comprehensive line of products Impact-resistant sales increased as a percentage of total sales from 61% in 2005 to 81% 2015 Product Category WinGuard CGI Windows and Doors Architectural Systems Porch Enclosures PremierVue Vinyl Aluminum Eze-Breeze PGT Branding Product Description Impact-resistant windows and doors Combine heavy-duty frames (aluminum and vinyl) with special laminated glass Impact-resistant windows and doors Estate, Sentinel, and Targa product lines Heavy duty aluminum frame construction Designed for increased wind and water loads required for taller buildings Newest product offering; heavy duty vinyl frame impact window for high end residential and commercial First R-5 impact window in the industry Vinyl frame windows and doors Energy efficient product for any climate; meets 30/30 requirement of 09 ARRA Aluminum frame windows and doors Target markets with warmer/humid climates due to strength and durability Lighter-weight non-glass porch enclosure products Used for repair/remodel additions and enclosures % of 2014 Proforma (1) Sales 62% 13% 2% 3% 7% 8% 4% % of Q2 Sales 60% 16% 2% 3% 7% 7% 5% (1) 2014 Proforma sales include CGI sales prior to acquisition date 9

10 Investment Highlights 10

11 Why Invest in PGT? Market leader in attractive impact-resistant window and door market Competitive advantages Flexible and Vertically-Integrated Manufacturing Capabilities & Technical Expertise Well positioned for Florida market recovery Diversified and loyal customer base Public peer-leading growth and margins 11

12 Market Leader in Attractive Impact-Resistant Window and Door Market PGT is the leader in the impact-resistant window and door market Significantly greater market share than any competitors in our core Florida market We believe there is significant opportunity in the impact-resistant window market Target market in hurricane-prone coastal states Increasingly stringent building codes and protocols Continued increase in awareness of benefits of impact-resistant windows and doors compared to shutters, etc. Florida is PGT s largest market accounting for approximately 88% of sales in FY 2014 Impact-Resistant Market * Impact protection required in Florida. 12

13 Key Competitive Advantages Customer Intimate Company Highly loyal customer base with over 1,000 partners Brand Recognition PGT WinGuard is synonymous with impact-resistant windows & doors Industry Leading Service Model World Class Capabilities & Services Unprecedented Quality Over 3.5 Million WinGuard Units have been installed Zero (0) Reported Impact Failures Superior Product Portfolio Ranging from Niche to Commercial More Impact SKUs than any other manufacturer History of pioneering new products allows us to address continually evolving customer needs Training and accredited courses offered at PGT University educate all constituents in the industry Trained more than 40,000 customers, installers, architects and building code officials 13

14 Leading Manufacturing Capabilities Leading Technical Expertise Flexible and Vertically-Integrated Manufacturing Capabilities and Technical Expertise Vertically integrated manufacturing In-house glass cutting, tempering, and laminating lowers costs / reduces lead-time Synchronous flow manufacturing enables efficient production Custom made-to-order products can be delivered in as little as 1-2 days Consistent focus on continuous improvement drives manufacturing efficiencies Recognized as industry expert / pioneer of impact-resistant windows Actively involved in creation of standards / building codes More Miami-Dade County Notice of Acceptances than any competitor Complete in-house product design and testing 14 14

15 Well Positioned for Florida Housing Market Recovery Florida Single-Family Housing Starts ( 000s) 20-year (1) average: Single-family housing starts in Florida finished up 4% in 2014 at approximately 56,000 Still early in the housing recovery cycle Florida s population, named 3 rd most populated state in 2014, has supported housing starts well in excess of recent annual totals. Past averages suggest 110,000 starts mid-cycle. (1) 20-year average represents Source: Moody s 15

16 Diversified and Loyal Customer Base Across Multiple Distribution Channels A broad, diversified distribution network allows PGT to both effectively serve its large customer base and maintain a significant barrier to entry Diversified Top 10 customers represented 20% of 2014 sales Largest customer represented only 3.8% of 2014 sales Loyal Highly loyal distribution base Little turnover in top 10 customers despite challenging home construction market over past several years Expansion 3 rd Lami line installed in July Additional glass plant equipment coming online within the next 6 months 16

17 Public Peer (1) Leading Growth and Margins 2015 Q2 Revenue Growth 2015 Q2 Gross Margin 2015 Adj EBITDA Margin 24% 32.7% 18.8% 24.0% 11% 12% Peer Average Median Peer Average Median Peer Average Median (1) Peer group includes Fortune Brands Home and Security, Masco, Masonite and Ply Gem Holdings 17

18 FCF conversion % % of sales Attractive Cash Flow Characteristics Free Cash Flow Conversion: (EBITDA Capex) / EBITDA Capex as % of Sales 100% 90% 80% 82.0% 84.5% 80.0% Average: 75.6% 85.4% 80.5% 75.0% 7% 6% 6.3% 70% 68.0% 5% Average: 2.9% 60% 50% 49.2% 4% 3.8% 3.2% 40% 30% 20% 3% 2% 2.1% 1.4% 1.8% 2.1% 2.2% 10% 1% 0% % $15M of capital outlay in related to new glass plant 18

19 Pro Forma Capitalization ($ in thousands) As of September 2014 As of June 2015 $ % X EBITDA $ % X EBITDA Cash $ 43,672 $ 47,487 Term Loan A 200,000 Total First Lien Debt 200,000 $ $ 198,500 $ 30.1% 3.8X $ 198, % 3.1X Market Capitalization 464, % $ 696, % Total Capitalization $ 664, % $ 894, % TTM EBITDA * $ 53,031 $ 64,099 Net Leverage 2.9X 2.3X * TTM EBITDA is pro-forma EBITDA to include CGI. Excludes any adjustment for Synergies 19 19

20 APPENDIX 20

21 Financial Summary 21

22 Use of Non-GAAP Measures This presentation includes financial measures and terms not calculated in accordance with generally accepted accounting principles in the United States (GAAP). We believe that presentation of non-gaap measures such as adjusted net income, adjusted net income per share, EBITDA and adjusted EBITDA provides investors and analysts with an alternative method for assessing our operating results in a manner that enables investors and analysts to more thoroughly evaluate our current performance compared to past performance. We also believe these non-gaap measures provide investors with a better baseline for assessing our future earnings potential. The non-gaap measures included in this presentation are provided to give investors access to types of measures that we use in analyzing our results. Adjusted net income consists of GAAP net income adjusted for the items included in the accompanying reconciliation. Adjusted net income per share consists of GAAP net income per share adjusted for the items included in the accompanying reconciliation. We believe these measures enable investors and analysts to more thoroughly evaluate our current performance as compared to the past performance and provide a better baseline for assessing the company s future earnings potential. However, these measures do not provide a complete picture of our operations. EBITDA consists of GAAP net income adjusted for the items included in the accompanying reconciliation. Adjusted EBITDA consists of EBITDA adjusted for the items included in the accompanying reconciliation. We believe that EBITDA and adjusted EBITDA provide useful information to investors and analysts about the company s performance because they eliminate the effects of period to period changes in taxes, costs associated with capital investments and interest expense. EBITDA and adjusted EBITDA do not give effect to the cash the company must use to service its debt or pay its income taxes and thus do not reflect the funds generated from operations or actually available for capital investments. Our calculations of adjusted net income, adjusted net income per share, EBITDA and adjusted EBITDA are not necessarily comparable to calculations performed by other companies and reported as similarly titled measures. These non-gaap measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP measures. Schedules that reconcile adjusted net income, adjusted net income per share, EBITDA and adjusted EBITDA to GAAP net income are included in the following financial schedules accompanying this presentation. 22

23 ($ in millions) Historical Financial Summary Fiscal year Q FL Single Family Housing Starts (000s) (1) Q Total revenue $372 $278 $219 $166 $176 $167 $175 $239 $306 $95.3 $100.8 % growth 11.7% (25.1%) (21.5%) (24.0%) 5.9% (4.8%) 4.3% 37.1% 28.0% 51.9% 23.5% Gross profit % margin 38.1% 32.5% 31.1% 26.6% 28.5% 23.4% 34.2% 33.5% 30.3% 32.6% 32.7% SG&A % of sales 23.2% 27.5% 28.7% 31.1% 30.7% 29.0% 27.0% 22.8% 18.4% 18.6% 16.6% Adjusted EBITDA (2) % margin 19.6% 11.9% 11.5% 8.8% 9.0% 8.6% 14.9% 16.2% 15.1% 17.0% 18.8% New construction and repair & remodeling accounted for 67% and 33% of FY2005 sales as compared to 40% and 60% of Q sales (1) Independent third party source (2) See GAAP reconciliation in appendix 23

24 Adjusted EBITDA Reconciliation ($ in millions) Adjusted EBITDA Reconciliation Fiscal year Net Income/(Loss) ($1) $1 ($163) ($9) ($15) ($17) $9 $27 $16 $6.7 $6.8 Depreciation and Amortization Interest Expense Income Tax Expense/(Benefit) 0 1 (29) (6) 0 (2) 0 (3) EBITDA (165) 8 6 (1) Cash payment to Option Holders Impairment Charges Management Fees Consolidation Charges Manufacturing Inefficiencies Restructuring Charges Gain on Asset Sales (1) - (2) Write-off Deferred Financing Costs Secondary Offering & Debt Refinancing related expenses Non-Cash Stock Compensation Debt Extinguishment Ineffective Hedges CGI Acquisition New Product/Start Up Costs Adjusted EBITDA Q Q

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