PGT's CEO Discusses Q1 2012 Results - Earnings Call Transcript

PGT, Inc. (PGTI)

Q1 2012 Earnings Call

May 3, 2012 10:30 AM ET

Executives

Brad West – Director, Finance and Corporate Controller

Rod Hershberger – President and CEO

Jeff Jackson – EVP and CFO

Analysts

Josh – Raymond James

Rob Hansen – Deutsche Bank

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the PGT Inc First Quarter 2011 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions on how to participate will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Brad West, Director of Finance and Corporate Controller. You may begin.

Brad West

Good morning and thank you for joining us for PGT’s first quarter 2012 conference call. I am Brad West, Corporate Controller, and I am joined by Rod Hershberger, President and CEO; and Jeff Jackson, Executive Vice President and CFO. Rod and Jeff will represent PGT on this morning’s call.

Before we begin, let me remind everyone that today’s conference call may contain statements concerning the company’s future prospects, business strategies and industry trends. Such statements are considered to be forward-looking statements under the Private Securities Litigation Reform Act of 1995.

These statements are based on our current expectations and are subject to risk and uncertainty. Actual results may vary materially from those contained in the forward-looking statements. Please refer to the May 2 press release, our most recent Form 10-K and other documents filed with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements.

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 sheets and statements of operations prepared in accordance with GAAP and adjusted information, which is quantitatively reconciled to GAAP.

Our company uses non-GAAP measurements as key metrics for evaluating performance internally. A detailed explanation of these non-GAAP measurements can be found in our Form 8-K filed May 2 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 from investors to facilitate the comparison of past and present performance.

For today’s call, Rod will provide an overview of our performance for the first quarter and 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 Rod Hershberger. Rod?

Rod Hershberger

Thanks, Brad. Good morning, everyone. I am pleased to report that the first quarter of 2012 produced our best first quarter EBITDA as a percentage of sales since the first quarter of 2008. This achievement is the direct result of incredible efforts and achievements of our employees whose dedication, talent and commitment position us to reap the benefits of our consolidation. I also need to thank our distributors whose loyalty to our company is greatly appreciated. Our improved results, most notably increased EBITDA of 1.8 million were accomplished despite lower top line sales.

Sales were down to $2.5 million or 6.3% due mainly to three factors including challenging market conditions within our Southeast Florida market or sales were down $2.3 million, our decision to exit certain United State markets, which resulted in lower sales by $800,000, and lastly, the completion of a larger condo retrofit project in 2011, which resulted in lower sales for architectural systems product line of $900,000. These factors were offset by an increase in sales in our Southwest Florida markets of $900,000.

Though housing starts have increased 29% over the first quarter of 2011, the majority of this increase represent home at price point where impact products are not generally installed. However, increased housing start is a good sign even if they are not houses that traditionally utilize our products. We’re confident that as the employment market in general economic conditions stabilize, housing starts of homes at various price points will increase and drive demand for our products.

In the interim, we will continue to take market share within the R&R market, drive additional operational improvement and focus our efforts to driving topline sales to leverage our cost structure. As part of our effort to drive topline sales, we are excited to announce the addition of Todd Antonelli to our executive team. Todd is joining our team as Vice President of Sales and Marketing. He comes to PGT with many years of building products experience, most recently with Masco where he led sales teams in both the window and door and cabinet divisions. We are confident that Todd’s customer focused experience, expertise and proven track record will add incremental bench strength as we shift our focus from cost reduction and share preservation to aggressive topline growth and market share gains.

Our fixed costs and operational efficiencies are greatly improved and we have enjoyed significant financial benefit from the consolidation in each of our three most recent fiscal quarters. In terms of fixed costs, in 2011 we saved $1.5 million in each of the third and fourth quarters. In the first quarter of 2012, savings were $1.6 million and we are confident and we will reach our goal of $6 million to $7 million of annual savings.

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