Attached files
| file | filename |
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| EX-99 - EXHIBIT 99-1 SLIDE PRESENTATION - CPG INTERNATIONAL INC. | exhibit_99-1.pdf |
| 8-K - FORM8-KPRESENTATION - CPG INTERNATIONAL INC. | form8-k_2010.htm |
2010 Wells Fargo Securities
Housing and Building Products Conference
February 24th 2010
Scottsdale, AZ
Exhibit 99.1
Safe Harbor Statement and Use of Non-GAAP and Pro Forma Information
FORWARD LOOKING STATEMENTS
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements made in
this presentation that relate to future events or the
Company’s expectations, guidance, projections, estimates, intentions, goals, targets and strategies
are forward looking statements. You are cautioned that all forward-looking statements are based upon current expectations and estimates and
the
Company assumes no obligation to update this information. Because actual results may differ materially from those expressed or implied by the
forward-looking statements, the Company cautions you not to place undue reliance on these statements. For
a detailed discussion of the important
factors that affect the Company and that could cause actual results to differ from those expressed or implied by the Company’s forward-looking
statements, please see “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and “Risk Factors” in the Company’s
current and future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.
ADJUSTED EBITDA STATEMENT
We refer to the term “Adjusted EBITDA” in various places throughout this presentation. Adjusted EBITDA, or earnings (adjusted as described below)
before interest, taxes, depreciation and
amortization calculated on a pro forma basis as provided herein, is a material component of the significant
covenants contained in our credit agreements and the indenture governing the notes and accordingly, is important to the Company’s liquidity
and ability
to borrow under its debt instruments. Adjusted EBITDA is calculated similarly under both the credit agreements and the indenture by adding
consolidated net income, income taxes, interest expense, depreciation and amortization
and other non-cash expenses, income or loss attributable to
discontinued operations and amounts payable pursuant to the management agreement with AEA Investors. In addition, consolidated net income is
adjusted to exclude certain items, including
non-recurring charges with respect to the closing of the acquisition of Compos-A-Tron Manufacturing, (the
“Composatron Acquisition”), the closing of the acquisition of Procell Decking Systems (the “Procell Acquisition”) and the related
financing transactions,
as well as certain other nonrecurring or unusual charges. Please see the Company’s December 31, 2008 10-K, which contains a detailed description of
our covenants and a thorough description of our use of Adjusted
EBITDA, and the use of Adjusted EBITDA in connection with certain calculations under
the covenants, under our credit agreements and indenture.
While the determination of appropriate adjustments in the calculation of Adjusted EBITDA is subject to interpretation under our debt agreements,
management believes the adjustments are in accordance with the
covenants in our credit agreements and indenture, as discussed above. Adjusted
EBITDA should not be considered in isolation or construed as an alternative to our net income or other measures as determined in accordance with
GAAP. In
addition, other companies in our industry or across different industries may calculate Adjusted EBITDA differently than we do, limiting its
usefulness as a comparative measure. In future SEC filings, we may be required to change our presentation
of Adjusted EBITDA in order to comply
with the SEC’s rules regarding the use of non-GAAP financial measures. In addition, you are cautioned not to place undue reliance on Adjusted
EBITDA. For a reconciliation of Adjusted EBITDA
to net income, please see the Appendix to this presentation.
CPG Overview
CPG International Overview
Founded in 1983
Headquarters in Scranton, PA
TTM Revenue: $267mm
TTM PF Adjusted EBITDA: $61mm
EBITDA margin: 23%
Net Debt/EBITDA of 4.3x (12/09)
$65 million credit facility
$25 million term loan
$128 million Senior FRN
$150 million Senior Notes
Acquired by AEA Investors in 2005
Investment Thesis
CPG Overview
Excellent Financial
Performance
Market Leading
Brands
Products with Superior
Value Proposition
Large and Growing
Distribution Network
Diversified End Markets
Large Addressable
Markets Early in
Conversion Cycle
Favorable Long-term
Demographics
Leading Innovation
and Manufacturing
Excellence
Leading Brands of High Performance Building Products
$66mm rev 2009
Leading brand in bathroom
partition & locker systems
Conversion opportunity &
product extensions
$164mm revenue 2009
Leading brand in exterior residential building
product materials
Significant conversion opportunity, market growth
$37mm rev 2009
Leading provider of PVC
& olefin sheet solutions
Rebranding, channel
expansion
CPG Serving Large Markets in Early Stages of Conversion
CPG Overview
($ in billions)
______________________________________________________________________________________________________________
Source: Management estimates
Conversion Opportunity for Trim/Deck/Rail
Conversion to Synthetic Materials
Introduction
Growth
Maturity
Decline
Fiber Cement
Siding
Vinyl
Windows
Timeline
OSB
Wood
Windows
Plywood
AZEK
Trim
Lumber
Vinyl
Siding
AZEK
Deck
CPG Overview
Composite
Decking
Laminated
Shingles
Plastic
Partitions
Plastic
Lockers
______________________________________________________________________________________________________________
Source: Management estimates
Long Term Investment in Housing
Year of Construction of Housing Stock
The Median age of existing housing stock in 2008 was over 30 years
______________________________________________________________________________________________________________
Source: The Freedonia Group, Inc. U.S Census, Monthly Outlook, September 09 - Wells Fargo U.S Economic Forecast
SAAR Total Housing Starts Outlook
Starts in 000’s
CPG Overview
A Long History of Growth and Profitability
CPG Overview
($ in millions)
* Adjusted EBITDA per credit agreement
AZEK Launched
Santana Acquired
Comtec Launched
Procell Acquired
Mouldings Launched
AZEK Canada
AZEK West
Retail Channel
Net Sales and EBITDA*
Composatron Acquisition**
E
Performance in a Difficult Market
Capital Expenditures
Net Debt/EBITDA
($ in millions)
$6
TTM Rev & EBITDA
($ in millions)
Adjusted Working Capital *
($ in millions)
Excludes Cash, Deferred Income Tax, Line of Credit and Accrued Interest
CPG Overview
_____________________
(1) Represents Adjusted EBITDA as defined by our credit agreement.
Appendix
Net Income to Adjusted EBITDA Reconciliation(1)
Year Ended
Year
Ended
(Dollars in thousands)
December 31,
December 31
,
200
8
200
9
Net
loss
$
(48,354
)
$
(
10,306
)
Interest expense, net
34,905
3
1
,3
47
Income tax
benefit
(7,095
)
(11
1
)
Depreciat
ion and amortization
21,491
21,6
04
EBITDA
947
42,534
Impairment of goodwill and other intangibles
40,000
1
4,408
SFAS 141 inventory adjustment
1,505
—
Relocation and hiring costs
802
474
Composatron non
-
recurring charges
60
6
—
Management fee
and expenses
1,855
1,7
40
Severance costs
171
412
Settlement charges
26
—
Non
-
cash compensation charge
118
97
Disposal
of fixed assets
—
52
5
Lease termination fees
—
657
Registration expenses
rela
ted to Notes
309
26
Adjusted EBITDA
$
46,339
$
60,8
7
3