PGT, Inc. (PGTI) Q4 2010 Earnings Call February 25, 2011 10:30 AM ET Executives Brad West – Corporate Controller Rod Hershberger – President and CEO Jeff Jackson – EVP and CFO Analysts Rob Hansen – Deutsche Bank Sam Darkatsh – Raymond James Will Wong – JP Morgan Presentation Operator
Previous Statements by PGTI
» PGTI CEO Discusses Q3 2010 Results - Earnings Call Transcript
» PGT, Inc. Q2 2010 Earnings Call Transcript
» PGT, Inc. Q1 2010 Earnings Call Transcript
A copy of our press release is posted on the Investor Relations section of our corporate website at www.pgtinc.com. Included in the press release are, the unaudited consolidated balance sheet and statements of operations prepared in accordance with GAAP and adjusted information, which was quantitatively reconciled to GAAP. Our company uses non-GAAP measurements as key metrics for evaluating performance internally.A detailed explanation on these non-GAAP measurements can be found in our Form 8-K filed February 24th with the SEC. These non-GAAP measurements are not intended to replace the presentation of financial results in accordance with GAAP. Rather, we believe these non-GAAP measurements provide additional information for investors to facilitate the comparison of past and present performance. For today’s call, Rod will provide an overview of our performance for the fourth quarter and full-year then Jeff will discuss our results in more detail. After their prepared remarks, they will take your questions. With that, let me turn the call over to Rod Hershberger. Rod? Rod Hershberger Thanks Brad. Good morning, everyone. I am pleased to report that we closed out 2010 with a 5.9% increase in sales, our first year-over-year sales increase since 2006. This includes an 8.4% increase in our fourth quarter 2010 sales compared to the fourth quarter of 2009. Our growth was driven by our Florida market sales with an increase of $4 million or 14.4% compared to prior year. WinGuard sales increased by $1.7 million or 8% due to both the success of our new aluminum door launch last fall and an increase in vinyl WinGuard sales where many replacement customers took advantage of tax credits offered. Vinyl WinGuard sales into Florida increased a $1 million, including $542,000 in sales into the Southern Part of Florida. Our new PremierVue line of high end vinyl impact products contributed $300,000 in additional sales. Finally, a version of our new vinyl non-impact product SpectraGuard designed for the Florida market and launched last year contributed $1.1 million in additional sales. This growth was partially offset by a decrease in international sales down $400,000 for the quarter and a decrease in our out of state sales of $600,000 or 9.4% driven by curtain-wall revenue down $500,000.
Exclusive of curtain-wall revenues, sales in the fourth quarter were up 10% led by increases into both the R&R and new construction markets, both of which increased 10% over a year ago. As a percentage of total sales for the fourth quarter of 2010, R&R sales accounted for 74% and new construction sales accounted for 26% of sales.Comparing our fourth quarter to the prior year fourth quarter, the gross margin contribution from our fourth quarter sales increase was offset by a shift in mix between impact and non-impact and product mix within impact sales. In 2010, we recorded consolidation charges of $885,000 compared to restructuring charges of $1.1 million in 2009. As a percentage of sales, adjusted gross margin was 25.8% in 2010 versus an adjusted gross margin of 28.2% in 2009. SG&A cost, adjusted for the 2010 consolidation charges and 2009 restructuring charges increased $2.1 million due mainly to an increase of $1 million in bonuses, $500,000 in increased salaries resulting from returning employees to their 2009 base, a $600,000 increase in non-cash stock compensation expense and a $300,000 increase in healthcare costs. Driven by our non-cash impairment charges of $5.6 million and a consolidation charges of $2.1 million, we recorded the net loss of $12.2 million for the fourth quarter of 2010. These charges are result of our decision to consolidate our operations into our Florida facility. Adjusted EBITDA was $228,000 in the fourth quarter of 2010, which is down from adjusted EBITDA of $2.9 million from prior year. The decrease in adjusted EBITDA was driven mainly by a shift in mix toward lower margin non-impact products which offset contribution margin gained on additional sales as well as the SG&A increases just described. We recorded an adjusted net loss of $4.6 million in the fourth quarter, compared to an adjusted net income of $2.5 million in the fourth quarter of 2009. Read the rest of this transcript for free on seekingalpha.com