PGT Reports Record Second Quarter and Year-to-Date 2006 Results.VENICE Venice (vĕn`ĭs), Ital. Venezia, city (1991 pop. 309,422), capital of Venetia and of Venice prov., NE Italy, built on 118 alluvial islets within a lagoon in the Gulf of Venice (an arm of the Adriatic Sea). , Fla. -- PGT PGT Public Guardian and Trustee PGT Procuradoria Geral do Trabalho (Brazil general attorney's office of the work) PGT Pistol Grip Tool PGT Post Graduate Training PGT Princeton Gamma-Tech, Inc. , Inc. (Nasdaq:PGTI PGTI Professional Golf Tour of India ), the leading U.S. manufacturer and supplier of residential impact-resistant windows and doors, today announced record sales and earnings from operations for its quarter ended July July: see month. 1, 2006. "We delivered outstanding results in the second quarter by leveraging our competitive strengths and aggressively executing our strategy," said Rod rod: see English units of measurement. rod wand or staff carried as a symbol of office and authority. [Western Culture: Misc.] See : Authority Hershberger, PGT's President and Chief Executive Officer. "Our year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. accomplishments were highlighted by the successful completion of our initial public offering and record first half sales of $205.0 million, which represents an increase of 30% over the prior year period. In addition, our adjusted net income in the first half increased by 127% year-over-year after adjusting for items related to the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. and refinancing Refinancing An extension and/or increase in amount of existing debt. transactions." A reconciliation of non-GAAP financial measures to their GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). equivalents is attached to this release and can also be found on the company's website. Second Quarter 2006 Financial Results ------------------------------------- (See accompanying financial schedules for full financial details and reconciliations of non-GAAP financial measures to their GAAP equivalents.) --Total sales for the second quarter were $108.7 million, an increase of 39%, versus $78.2 million for the same period in 2005. This growth is largely due to increased sales volume of our WinGuard(R) Impact-Resistant Windows and Doors. --Gross margin percentage for the second quarter was 43.3%, compared to 35.1% in the same quarter of 2005. The primary drivers of gross margin expansion include an increase in sales of our WinGuard impact-resistant products, which carry a higher margin than our other product lines, as well as overall higher prices and improved manufacturing efficiencies. WinGuard sales represented 65.9% of our total sales for the second quarter of 2006, compared to 51.6% for the second quarter of 2005. --Second quarter net income of $10.0 million grew 169% from $3.7 million for the comparable period of 2005. On an adjusted basis, second quarter net income was $13.0 million, an increase of 239% over the comparable period of 2005. --Diluted weighted average shares outstanding for the second quarter of 2006 were 18,173,432 compared to 17,221,477 for the same quarter last year. The higher share count was due to the company's initial public offering (IPO), which was completed on June June: see month. 27, 2006, and inclusion of options in the current year that were considered anti-dilutive last year. Assuming the IPO was completed at the beginning of the respective reporting periods, the pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. weighted average shares outstanding for the second quarters of 2006 and 2005 were 27,932,643 and 27,368,535, respectively. --Net income per diluted share for the second quarter of $0.55 increased from $0.22 for the comparable period of 2005. On an adjusted basis, net income per pro forma diluted share of $0.47 increased from $0.14 for the prior year period. --EBITDA for the second quarter was $27.4 million, an increase of 119%, versus $12.5 million for the comparable period of 2005. On an adjusted basis, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for the second quarter was $28.4 million, an increase of 122%, versus $12.8 million for the comparable period of 2005. Commenting on the second quarter results, Jeff Jackson Jeff Jackson (born April 24, 1965 in Chatham, Ontario) is a retired professional ice hockey player who played 263 games in the National Hockey League. He played for the Toronto Maple Leafs, New York Rangers, Quebec Nordiques, and Chicago Blackhawks. , PGT's Chief Financial Officer, said, "We closed our second quarter on solid financial footing by reporting double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" gains in sales and more than doubling net income for the quarter compared to the prior year. Overall, we benefited from a strong demand for our WinGuard impact-resistant products, price increases, improved operating efficiencies, and leverage of our operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. ." First Half 2006 Financial Results --------------------------------- (See accompanying financial schedules for full financial details and reconciliations of non-GAAP financial measures to their GAAP equivalents.) --Total sales for the first half were $205.0 million, an increase of 30%, versus $157.6 million for the same period in 2005. This growth is largely due to increased sales volume of our WinGuard impact-resistant products. --Gross margin percentage for the first half of 2006 was 40.4% compared to 36.3% in the same period of 2005. Gross margin expansion was largely driven by price increases, improved manufacturing efficiencies, and an increase in sales of our WinGuard impact-resistant products, which carry a higher margin than our other product lines. --First half 2006 net income/(loss) was ($4.1) million compared to $8.5 million in the same period in 2005. The loss in 2006 was largely due to the $26.9 million cash payment to option holders in connection with the payment of dividends to our shareholders. On an adjusted basis, first half 2006 net income was $19.8 million, an increase of 127% year-over-year. --Diluted weighted average shares outstanding for the first half of 2006 were 15,950,129, compared to 17,221,477 for the same period last year. The lower share count was largely due to the exclusion exclusion /ex·clu·sion/ (eks-kloo´zhun) 1. a shutting out or elimination. 2. surgical isolation of a part, as of a segment of intestine, without removal from the body. of options in the diluted share calculation in 2006 as a result of our net loss position. Assuming the IPO was completed at the beginning of the respective reporting periods, the pro forma diluted weighted average shares outstanding for the first half of 2006 and 2005 were 27,890,530 and 27,368,535, respectively. --EBITDA for the first half was $18.6 million, compared to $26.5 million for the same period of 2005, such decrease was due to the $26.9 million payment to option holders in 2006. On an adjusted basis, EBITDA was $47.0 million, an increase of 74%, versus $27.0 million for the same period in 2005. Financing Activities -------------------- (See accompanying financial schedules for full financial details.) --Subsequent to the end of our second fiscal quarter, we repaid $137 million of long term debt through the use of the proceeds generated from our initial public offering of $115 million and cash on hand of $22 million. Following this debt repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan , total outstanding debt was $183 million and cash on hand was $10 million. --On July 27, 2006, IPO underwriters exercised their over-allotment option in full and, on August 1, 2006, purchased 1,323,529 additional shares that generated approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $17 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). for the company which we expect to use to pay down long term debt. Following this debt repayment, we expect total outstanding debt to be approximately $166 million and cash on hand to be $17 million. Outlook ------- Commenting on the company's outlook, Mr. Hershberger said, "We exceeded our goals in the first half of 2006 and anticipate a solid back half as demand for our WinGuard products remains robust and we continue to penetrate the active impact-resistant market. We also believe that our enhanced product mix and expanded marketing efforts will drive our top line growth and help maintain our margins." Mr. Hershberger concluded, "We remain committed to enhancing shareholder value by continuing to leverage our competitive strengths and executing our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth strategy. We believe we are well positioned to continue our positive momentum and look forward to 2007 with confidence."
Conference Call
---------------
As previously announced, PGT will hold a conference call Thursday Thursday: see week. , August 3, 2006, at 10:30 a.m. Eastern Time and will simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics broadcast it live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . To participate in the teleconference, please dial into the call a few minutes before the start time: 866-510-0705 (U.S. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of ) and 617-597-5363 Eastern Time (international). A replay of the call will be available from 3:00 p.m. Eastern Time through August 17, 2006. To access the replay, please dial 888-286-8010 (U.S. and Canada) and 617-801-6888 (international). Please refer to pass code 38944732. To access the webcast, go to http://www.pgtinc.com and click on "Investors". The online archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. of the webcast will be available for approximately 14 days. About PGT PGT(R) pioneered the U.S. impact-resistant window and door industry and today is the nation's leading manufacturer and supplier of residential impact-resistant windows and doors. PGT is also one of the largest window and door manufacturers in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . In its 25th year, the company employs approximately 2,400 at its 485,000-square-foot manufacturing, glass tempering tempering, process involving slow and moderate heating to increase the hardness and toughness of metals that have undergone previous heat treatment. Metals are usually hardened (see hardening) by being heated to high temperatures and quenched rapidly. and laminating lam·i·nate v. lam·i·nat·ed, lam·i·nat·ing, lam·i·nates v.tr. 1. To beat or compress into a thin plate or sheet. 2. To divide into thin layers. 3. plants, and delivery fleet facilities in Venice, FL, and its 225,000-square-foot production facility in Lexington Lexington. 1 City (1990 pop. 225,366), seat of Fayette co., N central Ky., in the heart of the bluegrass region; inc. 1832, made coextensive with Fayette co. 1974. , NC. Sold through a network of over 1,300 independent distributors, the company's total line of custom windows and doors is now available throughout the eastern United States, the Gulf Coast and in a growing international market, which includes the Caribbean, South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. . PGT's product line includes PGT(R) Aluminum and Vinyl vinyl /vi·nyl/ (vi´nil) the univalent group CH2dbondCH—. vinyl chloride a vinyl group to which an atom of chlorine is attached; the monomer which polymerizes to polyvinyl chloride; it is toxic Windows and Doors; WinGuard(R) Impact-Resistant Windows and Doors; Multi-Story Series 800 Windows and Doors; and Eze-Breeze(R) Sliding Panels. Use of Non-GAAP Financial Measures This press release and the financial schedules hereto here·to adv. To this document, matter, or proposition. hereto Adverb Formal or law to this place, matter, or document Adv. 1. include financial measures and terms not calculated in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting in the United States (GAAP). We believe that presentation of non-GAAP measures such as adjusted net income, pro forma 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 The horizontal line to which the bottoms of lowercase characters (without descenders) are aligned. See typeface. baseline - released version for assessing our future earnings potential. The non-GAAP measures included in this release are provided to give investors access to the types of measures that we use in analyzing our results. Pro forma net income per share consists of GAAP net income per share adjusted for the items included in the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. reconciliation. We believe this measure enables investors and analysts to more thoroughly evaluate our current performance as compared to past performance and provides a better baseline for assessing the company's future earnings potential. However, this measure does not provide a complete picture of our operations. Therefore, net income per share and adjusted net income, on both a GAAP and non-GAAP pro forma basis, may need to be considered to get a comprehensive view of our results. 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 pro forma 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, pro forma net income per share, EBITDA and adjusted EBITDA to GAAP net income are included in the financial schedules accompanying this release. Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements in this news release and the schedules hereto which are not purely historical facts or which necessarily depend upon future events, including statements about forecasted financial performance or other statements about anticipations Anticipations is the magazine of the Young Fabians, the under-31 section of the Fabian Society. The magazine was founded in 1996, however the group only produced one edition. , beliefs, expectations, hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . Readers are cautioned not to place undue reliance on forward-looking statements. All forward-looking statements are based upon information available to PGT, Inc. on the date this release was submitted. PGT, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements, including risks or uncertainties related to the Company's revenues and operating results being highly dependent on, among other things, the homebuilding industry, aluminum prices, and the economy. PGT, Inc. may not succeed in addressing these and other risks. Further information regarding factors that could affect our financial and other results can be found in the risk factors section of PGT, Inc.'s Form S-1 (File No. 333-132365) filed with the Securities and Exchange Commission. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein. Financial Schedules to Follow
PGT, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited - dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
------------------- -------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
--------- --------- --------- ---------
Net sales $108,689 $ 78,217 $205,044 $157,581
Cost of sales 61,579 50,800 122,213 100,436
--------- --------- --------- ---------
Gross margin 47,110 27,417 82,831 57,145
Stock compensation expense
related to dividend - - 26,898 -
Selling, general and
administrative expenses 23,796 18,482 45,664 37,973
--------- --------- --------- ---------
Income (loss) from
operations 23,314 8,935 10,269 19,172
Other expense, net (357) 157 (766) 77
Interest expense 7,282 3,203 17,641 6,346
--------- --------- --------- ---------
Income (loss) before income
taxes 16,389 5,575 (6,606) 12,749
Income tax expense (benefit) 6,365 1,851 (2,554) 4,234
--------- --------- --------- ---------
Net income (loss) $ 10,024 $ 3,724 $ (4,052) $ 8,515
========= ========= ========= =========
Basic net income (loss) per
common share $ 0.62 $ 0.24 $ (0.25) $ 0.54
Diluted net income (loss) per
common and common equivalent
share $ 0.55 $ 0.22 $ (0.25) $ 0.49
Weighted average common shares
outstanding:
Basic 16,151 15,720 15,950 15,720
Diluted 18,173 17,221 15,950 17,221
PGT, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands)
July 1, December 31,
2006 2005
------------ ------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 39,692 $ 3,270
Accounts receivable, net 41,508 45,193
Inventories 14,222 13,981
Deferred income taxes 6,497 3,133
Other current assets 12,309 11,360
Subscriptions receivable related to
proceeds from IPO 114,882 -
------------ ------------
Total current assets 229,110 76,937
Property, plant and equipment, net 79,504 65,508
Goodwill 169,648 169,648
Other intangible assets, net 104,703 107,760
Other assets, net 5,753 5,700
------------ ------------
Total assets $ 588,718 $ 425,553
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 34,763 $ 31,137
Current portion of long-term debt 2,050 -
------------ ------------
Total current liabilities 36,813 31,137
Long-term debt less current portion 317,437 183,525
Deferred income taxes 54,319 54,320
------------ ------------
Total liabilities 408,569 268,982
------------ ------------
Total shareholders' equity 180,149 156,571
------------ ------------
Total liabilities and shareholders' equity $ 588,718 $ 425,553
============ ============
PGT, INC. AND SUBSIDIARY
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
THEIR GAAP EQUIVALENTS
(unaudited - dollars and shares in thousands,
except per share amounts)
Three Months Ended Six Months Ended
---------------------------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
--------- --------- --------- ---------
Reconciliation to Adjusted Net
Income and Adjusted Net Income
per Share:
Net income / (loss) $ 10,024 $ 3,724 $ (4,052) $ 8,515
Reconciling items:
Cash payment to stock option
holders (1) - - 26,898 -
Write-off of unamortized debt
issuance costs in connection
with the February 2006
refinancing (2) - - 4,617 -
Reduction / (increase) in
interest expense assuming
February 2006 debt
refinancing and repayment of
debt with IPO proceeds
were completed at the
beginning of each period (2) 3,897 (69) 5,941 (135)
Management fee (3) 973 253 1,434 491
Tax effect of reconciling
items at 38.6% (1,880) (71) (15,012) (137)
--------- --------- --------- ---------
Adjusted net income $ 13,014 $ 3,837 $ 19,826 $ 8,734
========= ========= ========= =========
Weighted average shares
outstanding:
Diluted shares 18,173 17,221 15,950 17,221
Incremental shares for IPO
(4) 9,759 10,147 9,953 10,147
Incremental shares for stock
incentive awards (5) - - 1,987 -
--------- --------- --------- ---------
Pro forma diluted shares 27,933 27,369 27,891 27,369
========= ========= ========= =========
--------- --------- --------- ---------
Adjusted net income per pro
forma share - diluted $ 0.47 $ 0.14 $ 0.71 $ 0.32
========= ========= ========= =========
Reconciliation to EBITDA and
Adjusted EBITDA:
Net income / (loss) $ 10,024 $ 3,724 $ (4,052) $ 8,515
Reconciling items:
Depreciation and amortization
expense 3,772 3,748 7,591 7,390
Interest expense 7,282 3,203 17,641 6,346
Income tax expense /
(benefit) 6,365 1,851 (2,554) 4,234
--------- --------- --------- ---------
EBITDA 27,443 12,526 18,626 26,485
Add: Cash payment to stock
option holders (1) - - 26,898 -
Management fee (3) 973 253 1,434 491
--------- --------- --------- ---------
Adjusted EBITDA $ 28,416 $ 12,779 $ 46,958 $ 26,976
========= ========= ========= =========
Adjusted EBITDA as
percentage of sales 26.1% 16.3% 22.9% 17.1%
(1) Represents cash payment made to stock option holders (including
applicable payroll taxes) in lieu of adjusting exercise prices in
conjunction with the payment of dividends to our shareholders.
This amount is included as a separate line item in the
consolidated statement of operations of which $5,069 and $21,829
related to cost of sales and selling, general and administrative
expenses, respectively.
(2) This amount is included in interest expense.
(3) Represents management fees paid to our majority stockholder.
Since consummating the initial public offering, these fees will no
longer be paid. The fees are included in selling, general and
administrative expenses.
(4) Represents incremental shares related to the company's IPO
assuming 10,147 shares sold by the company (including the
over-allotment option of 1,324 shares) were issued at the
beginning of the respective periods.
(5) Represents incremental shares for stock options that were excluded
in the calculation of earnings per share for the six months ended
July 1, 2006 because their effect would have been anti-dilutive.
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