Attached files
| file | filename |
|---|---|
| 8-K - FORM8-K - CPG INTERNATIONAL INC. | form8-k_q42009.htm |
| EX-99 - EXHIBIT_99.2.PDF - CPG INTERNATIONAL INC. | exhibit_99-2.pdf |
| EX-99 - EXHIBIT_99-2 - CPG INTERNATIONAL INC. | exhibit_99-2.htm |
For Immediate Release
CPG Posts Fourth Quarter and Full Year Results
Wednesday, February 24, 2010
CPG International Inc. (CPG) a leading manufacturer of premium, low maintenance building products for residential, commercial, and industrial markets today announced fourth quarter 2009 financial results. CPG’s products include AZEK Trim, AZEK Deck, AZEK Porch, AZEK Moulding, and AZEK Rail for residential housing markets and bathroom and locker systems sold under the brand names Comtec Industries, Hiny Hider and TuffTec, used in commercial building markets.
Fourth Quarter Highlights
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• |
Fourth quarter sales were $44.7 million, down 0.4% from the fourth quarter 2008. Revenue growth at AZEK Deck, driven by new product offerings and a stabilizing residential repair and remodel market, only partially offset the effect of the increasing softness in the commercial market. |
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• |
Gross margin increased to 34.1% from 11.0% in the fourth quarter of 2008 driven by lower material costs and improved operating efficiencies with higher volumes. |
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• |
Net loss was $(9.4) million for the fourth quarter of 2009, compared to a net loss of $(48.1) million in the fourth quarter of 2008. |
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• |
EBITDA increased to $3.5 million in the fourth quarter of 2009. Adjusted EBITDA was $5.4 million in the fourth quarter of 2009, up from $1.4 million in the fourth quarter of 2008. |
Full Year Highlights
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• |
Sales for 2009 were $266.9 million, down 12.6% from 2008. Growth at AZEK Deck only partially offset the effects of a declining housing market and softness in industrial and commercial markets. |
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• |
Gross margin increased to 35.1% for the year ended December 31, 2009 from 23.0% driven by lower material costs and operating efficiencies. |
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• |
Net loss, inclusive of goodwill impairment charges of $14.4 million, was $(10.3) million for 2009, compared to a net loss, inclusive of goodwill impairment charges of $40.0 million, of $(48.4) million in 2008. |
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• |
EBITDA, inclusive of $14.4 million of goodwill impairment charges, increased to $42.5 million in 2009. Adjusted EBITDA, excluding the goodwill impairment charges and other adjustments, was $60.9 million in 2009, up from $46.3 million in 2008. |
“Although the overall market environment was extremely difficult in 2009, we made significant progress on positioning the Company for long term success while generating strong earnings,” said Eric Jungbluth, CPG’s President and Chief Executive Officer. “In addition to improving operating efficiencies in this lower demand environment, we executed on our commitment to bring new and improved products to market and increase our presence in the sales channel. We expect this will position us to capture market share as the markets recover over the coming years.”
-1-
EBITDA Guidance
(See the accompanying financial schedules for full financial details and a reconciliation of non-GAAP financial measures to their GAAP equivalents.)
CPG announced earnings guidance for 2010 with Adjusted EBITDA guidance of $55 million to $65 million. Scott Harrison, Executive Vice President and Chief Financial Officer, said “We expect 2010 to be a moderate growth year from a revenue perspective with some recovery in the residential markets and new product introductions being offset by the continued decline in the commercial building products market. Although we anticipate moderate revenue growth, increasing material costs that we are already experiencing are expected to have a negative impact on margins.”
Investor Call
CPG will hold an investor conference call to discuss Fourth Quarter 2009 financial results at 9 AM Eastern time on Friday, February 26, 2010. Eric Jungbluth, President and Chief Executive Officer and Scott Harrison, Executive Vice President and Chief Financial Officer, will host the call.
To access the conference call, please dial (866) 863-6818, and use conference ID code 56466366. An encore presentation will be available for one week after the completion of the call. In order to access the encore presentation, please dial (800) 642-1687 or (706) 645-9291, and use the conference ID code 56466366.
Forward-looking Statements
Statements in this investor release and the schedules hereto which are not purely historical facts or which necessarily depend upon future events, including statements about forecasted financial performance, guidance or other statements about anticipations, 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. Readers are cautioned not to place undue reliance on forward-looking statements. All forward-looking statements are based upon information available to CPG on the date this release was submitted. CPG 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 CPG’s revenues and operating results being highly dependent on, among other things, the homebuilding industry, the commercial building industry, raw material prices, competition, the economy and the financial markets. CPG 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 CPG’s most recent annual report on Form 10-K and quarterly report on Form 10-Q 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.
About CPG International
Headquartered in Scranton, Pennsylvania, CPG International is a manufacturer of market-leading brands of highly engineered, premium, low-maintenance, building products for residential and commercial markets designed to replace wood, metal and other traditional materials in a variety of construction applications. The Company’s products are marketed under several brands including AZEK® Trim and Moulding, AZEK® Deck, AZEK® Rail, Santana Products, Comtec Industries, Capitol, TuffTec™, Hiny Hider® and Celtec®, as well as many other brands. For additional information on CPG please visit our web site at www.cpgint.com.
-2-
Financial Schedules
CPG International Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2009 and December 31, 2008
(unaudited)
(dollars in thousands)
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December 31, |
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December 31, |
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||
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2009 |
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2008 |
|
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ASSETS: |
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|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
44,501 |
|
$ |
22,586 |
|
|
|
Receivables: |
|
|
|
|
|
|
|
|
| Trade, less allowance for doubtful accounts of $964 and $1,660 in 2009 and | ||||||||
|
2008, respectively |
|
|
14,219 |
|
|
17,404 |
|
|
|
Inventories |
|
|
45,922 |
|
|
33,664 |
|
|
|
Deferred income taxes—current |
|
|
2,414 |
|
|
2,579 |
|
|
|
Prepaid expenses and other |
|
|
3,097 |
|
|
5,078 |
|
|
|
Total current assets |
|
|
110,153 |
|
|
81,311 |
|
|
|
Property and equipment—net |
|
|
84,332 |
|
|
93,451 |
|
|
|
Goodwill |
|
|
246,842 |
|
|
260,004 |
|
|
|
Intangible assets —net |
|
|
92,699 |
|
|
96,610 |
|
|
|
Deferred financing costs—net |
|
|
5,079 |
|
|
7,345 |
|
|
|
Other assets |
|
|
299 |
|
|
184 |
|
|
|
Total assets |
|
$ |
539,404 |
|
$ |
538,905 |
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|
|
|
|
|
|
|
|
|
|
|
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LIABILITIES AND SHAREHOLDER’S EQUITY: |
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Current liabilities: |
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|
|
|
|
|
|
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Accounts payable |
|
$ |
24,263 |
|
$ |
11,981 |
|
|
|
Current portion of capital lease |
|
|
1,747 |
|
|
1,940 |
|
|
|
Current portion of long-term debt obligations |
|
|
250 |
|
|
5,250 |
|
|
|
Accrued interest |
|
|
13,049 |
|
|
14,413 |
|
|
|
Accrued warranty |
|
|
413 |
|
|
621 |
|
|
|
Accrued rebates |
|
|
3,916 |
|
|
2,320 |
|
|
|
Accrued expenses |
|
|
14,114 |
|
|
9,907 |
|
|
|
Total current liabilities |
|
|
57,752 |
|
|
46,432 |
|
|
|
Deferred income taxes |
|
|
35,067 |
|
|
34,640 |
|
|
|
Capital lease obligation—less current portion |
|
|
3,316 |
|
|
5,053 |
|
|
|
Long-term debt—less current portion |
|
|
302,042 |
|
|
302,010 |
|
|
|
Accrued warranty—less current portion |
|
|
3,183 |
|
|
3,232 |
|
|
|
Other liabilities |
|
|
35 |
|
|
612 |
|
|
|
Commitments and contingencies |
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|
|
|
|
|
|
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Shareholder’s equity: |
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|
|
|
|
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Common shares, $0.01 par value: 1,000 shares authorized; 10 issued and outstanding at December 31, |
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2009 and December 31, 2008 |
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— |
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— |
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Additional paid-in capital |
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212,152 |
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211,941 |
|
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Accumulated deficit |
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|
(62,899 |
) |
|
(52,593 |
) |
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Note receivable – CP Holdings |
|
|
(8,872 |
) |
|
(7,349 |
) |
|
|
Accumulated other comprehensive loss |
|
|
(2,372 |
) |
|
(5,073 |
) |
|
|
Total shareholder’s equity |
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|
138,009 |
|
|
146,926 |
|
|
|
Total liabilities and shareholder’s equity |
|
$ |
539,404 |
|
$ |
538,905 |
|
|
-3-
CPG International Inc.
and Subsidiaries
Consolidated Statements of Operations
Three Months Ended December 31, 2009 and 2008
(unaudited)
(dollars in thousands)
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Three |
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Three |
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Months Ended |
|
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Months Ended |
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December 31, |
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December 31, |
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|
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2009 |
|
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2008 |
|
|
Net sales |
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$ |
44,697 |
|
$ |
44,888 |
|
|
Cost of sales |
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|
(29,438 |
) |
|
(39,947 |
) |
|
Gross margin |
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|
15,259 |
|
|
4,941 |
|
|
Selling, general and administrative expenses |
|
|
(16,349 |
) |
|
(11,303 |
) |
|
Loss on disposal of property |
|
|
(381 |
) |
|
— |
|
|
Impairment of goodwill and other intangibles |
|
|
— |
|
|
(40,000 |
) |
|
Operating loss |
|
|
(1,471 |
) |
|
(46,362 |
) |
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(7,664 |
) |
|
(8,582 |
) |
|
Interest income |
|
|
38 |
|
|
152 |
|
|
Miscellaneous – net |
|
|
(652 |
) |
|
30 |
|
|
Foreign currency loss |
|
|
(20 |
) |
|
(215 |
) |
|
Total other expenses-net |
|
|
(8,298 |
) |
|
(8,615 |
) |
|
Loss before income taxes |
|
|
(9,769 |
) |
|
(54,977 |
) |
|
Income tax benefit |
|
|
402 |
|
|
6,856 |
|
|
Net loss |
|
$ |
(9,367 |
) |
$ |
(48,121 |
) |
-4-
CPG International Inc.
and Subsidiaries
Consolidated Statements of Operations
Year Ended December 31, 2009 and 2008
(unaudited)
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
Year Ended |
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
2009 |
|
|
2008 |
|
|
Net sales |
|
$ |
266,875 |
|
$ |
305,240 |
|
|
Cost of sales |
|
|
(173,328 |
) |
|
(235,099 |
) |
|
Gross margin |
|
|
93,547 |
|
|
70,141 |
|
|
Selling, general and administrative expenses |
|
|
(57,392 |
) |
|
(50,644 |
) |
|
(Loss) gain on disposal of property |
|
|
(525 |
) |
|
21 |
|
|
Impairment of goodwill and other intangibles |
|
|
(14,408 |
) |
|
(40,000 |
) |
|
Operating income (loss) |
|
|
21,222 |
|
|
(20,482 |
) |
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(31,462 |
) |
|
(35,405 |
) |
|
Interest income |
|
|
115 |
|
|
500 |
|
|
Miscellaneous – net |
|
|
(628 |
) |
|
153 |
|
|
Foreign currency gain (loss) |
|
|
336 |
|
|
(215 |
) |
|
Total other expenses-net |
|
|
(31,639 |
) |
|
(34,967 |
) |
|
Loss before income taxes |
|
|
(10,417 |
) |
|
(55,449 |
) |
|
Income tax benefit |
|
|
111 |
|
|
7,095 |
|
|
Net loss |
|
$ |
(10,306 |
) |
$ |
(48,354 |
) |
-5-
CPG International Inc. and Subsidiaries
Calculation of Earnings before Interest, Taxes, Depreciation and Amortization
Three Months Ended December 31, 2009 and 2008
(unaudited)
(dollars in thousands)
|
|
|
|
Three |
|
|
Three |
|
|
|
|
|
Months Ended |
|
|
Months Ended |
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
2009 |
|
|
2008 |
|
|
Net loss |
|
$ |
(9,367 |
) |
$ |
(48,121 |
) |
|
Interest expense, net |
|
|
7,626 |
|
|
8,430 |
|
|
Income tax benefit |
|
|
(402 |
) |
|
(6,856 |
) |
|
Depreciation and amortization |
|
|
5,610 |
|
|
5,518 |
|
|
EBITDA |
|
$ |
3,467 |
|
$ |
(41,029 |
) |
|
|
|
|
|
|
|
|
|
|
Reconciliation to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
3,467 |
|
$ |
(41,029 |
) |
|
Allowable adjustments: |
|
|
|
|
|
|
|
|
Impairment of goodwill and other intangibles |
|
|
– |
|
|
40,000 |
|
|
Composatron non-recurring/acquisition costs |
|
|
– |
|
|
260 |
|
|
Relocation and hiring costs |
|
|
365 |
|
|
143 |
|
|
Severance costs |
|
|
45 |
|
|
5 |
|
|
Management fee and expenses |
|
|
395 |
|
|
388 |
|
|
Non-cash compensation charge |
|
|
47 |
|
|
15 |
|
|
Disposal of fixed assets |
|
|
381 |
|
|
– |
|
|
SFAS 141 inventory adjustment |
|
|
– |
|
|
1,505 |
|
|
Lease termination fees |
|
|
657 |
|
|
– |
|
|
Registration expenses related to Notes |
|
|
– |
|
|
71 |
|
|
Adjusted EBITDA |
|
$ |
5,357 |
|
$ |
1,358 |
|
-6-
CPG International Inc. and Subsidiaries
Calculation of Earnings before Interest, Taxes, Depreciation and Amortization
Year Ended December 31, 2009 and 2008
(unaudited)
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
Year Ended |
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
2009 |
|
|
2008 |
|
|
Net loss |
|
$ |
(10,306 |
) |
$ |
(48,354 |
) |
|
Interest expense, net |
|
|
31,347 |
|
|
34,905 |
|
|
Income tax benefit |
|
|
(111 |
) |
|
(7,095 |
) |
|
Depreciation and amortization |
|
|
21,604 |
|
|
21,491 |
|
|
EBITDA |
|
$ |
42,534 |
|
$ |
947 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
42,534 |
|
$ |
947 |
|
|
Allowable adjustments: |
|
|
|
|
|
|
|
|
Impairment of goodwill and other intangibles |
|
|
14,408 |
|
|
40,000 |
|
|
Composatron non-recurring/acquisition costs |
|
|
– |
|
|
606 |
|
|
Relocation and hiring costs |
|
|
474 |
|
|
802 |
|
|
Severance costs |
|
|
412 |
|
|
171 |
|
|
Settlement charges |
|
|
– |
|
|
26 |
|
|
Management fee and expenses |
|
|
1,740 |
|
|
1,855 |
|
|
Non-cash compensation charge |
|
|
97 |
|
|
118 |
|
|
Disposal of fixed assets |
|
|
525 |
|
|
– |
|
|
SFAS 141 inventory adjustment |
|
|
– |
|
|
1,505 |
|
|
Lease termination fees |
|
|
657 |
|
|
– |
|
|
Registration expenses related to Notes |
|
|
26 |
|
|
309 |
|
|
Adjusted EBITDA |
|
$ |
60,873 |
|
$ |
46,339 |
|
-7-