PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited - in thousands, except per share amounts)

 

 

Three Months Ended

Six Months Ended

 

July 1,

July 2,

July 1,

July 2,

 

2017

2016

2017

2016

 

Net sales

$

137,384

$

119,033

$

250,105

$

219,239

Cost of sales

92,831

81,563

173,813

151,786

   Gross profit

44,553

37,470

76,292

67,453

Selling, general and administrative expenses

24,650

20,615

47,435

40,676

   Income from operations

19,903

16,855

28,857

26,777

Interest expense, net

4,568

5,282

9,478

9,440

Debt extinguishment costs

-

-

-

3,431

   Income before income taxes

15,335

11,573

19,379

13,906

Income tax expense

5,080

4,223

6,125

5,077

   Net income

$

10,255

$

7,350

$

13,254

$

8,829

 

Basic net income per common share

$

0.21

$

0.15

$

0.27

$

0.18

 

Diluted net income per common share

$

0.20

$

0.15

$

0.26

$

0.17

 

   Weighted average common shares outstanding:

Basic

49,473

48,710

49,368

48,702

 

Diluted

51,664

50,473

51,607

50,465

PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited - in thousands)

 

 

 

July 1,

December 31,

 

2017

2016

ASSETS

Current assets:

Cash and cash equivalents

$

50,282

$

39,210

Accounts receivable, net

57,308

41,646

Inventories

35,055

30,511

Prepaid expenses and other current assets

8,691

11,010

Total current assets

151,336

122,377

 

Property, plant and equipment, net

84,375

84,209

Intangible assets, net

117,771

120,930

Goodwill

108,060

108,060

Other assets, net

1,403

1,072

     Total assets

$

462,945

$

436,648

 

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued expenses

$

32,986

$

22,803

Current portion of long-term debt

705

-

Total current liabilities

33,691

22,803

 

Long-term debt, less current portion

248,569

247,873

Deferred income taxes, net

31,838

31,838

Other liabilities

1,367

1,282

Total liabilities

315,465

303,796

 

Total shareholders' equity

147,480

132,852

Total liabilities and shareholders' equity

$

462,945

$

436,648

PGT INNOVATIONS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO THEIR GAAP EQUIVALENTS

(unaudited - in thousands, except per share amounts)

 

 

Three Months Ended

Six Months Ended

 

July 1,

July 2,

July 1,

July 2,

 

2017

2016

2017

2016

Reconciliation to Adjusted Net Income and

Adjusted Net Income per share (1):

Net income (2)

$

10,255

$

7,350

$

13,254

$

8,829

Reconciling items:

Management reorganization costs (3)

-

-

715

-

Thermal Plastic System start-up costs (4)

-

-

517

-

Refinancing- and acquisition-related costs (5)

-

-

-

4,333

Product line termination costs (6)

-

-

-

275

Tax effect of reconciling items

-

-

(435

)

(1,626

)

Adjusted net income

$

10,255

$

7,350

$

14,051

$

11,811

 

Weighted average shares outstanding:

Diluted (2)

51,664

50,473

51,607

50,465

 

Adjusted net income per share - diluted

$

0.20

$

0.15

$

0.27

$

0.23

 

Reconciliation to EBITDA and Adjusted EBITDA:

Net income (2)

$

10,255

$

7,350

$

13,254

$

8,829

Depreciation and amortization expense

4,669

3,966

9,266

7,418

Interest expense, net

4,568

5,282

9,478

9,440

Income tax expense

5,080

4,223

6,125

5,077

EBITDA

24,572

20,821

38,123

30,764

Reconciling items:

Management reorganization costs (3)

-

-

715

-

Thermal Plastic System start-up costs (4)

-

-

517

-

Refinancing- and acquisition-related costs (5)

-

-

-

4,333

Product line termination costs (6)

-

-

-

275

Adjusted EBITDA

$

24,572

$

20,821

$

39,355

$

35,372

Adjusted EBITDA as percentage of net sales

17.9%

 

17.5%

 

15.7%

 

16.1%

 

(1) The Company's non-GAAP financial measures were explained in its Form 8-K filed August 3, 2017.

 

(2) Effective on January 1, 2017, we adopted Financial Accounting Standards Board ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting" (ASU 2016-09). ASU 2016-09 changes the accounting for excess tax benefits by requiring that they be treated as discrete items of income tax expense in the period they occur. For the three  and six months ended July 1, 2017, income tax expense has been reduced by $407 thousand and $795 thousand, respectively, relating to excess tax benefits on the exercise of stock options and the lapse of restrictions on stock awards. ASU 2016-09 also changed the treasury stock method of calculating diluted shares outstanding to exclude the presumption that common stock equivalents can be reduced by repurchasing shares using excess tax benefits. For the three and six months ended July 1, 2017, diluted shares outstanding includes 710 thousand and 720 thousand shares, respectively, that prior to the adoption of ASU 2016-09 would have been presumed to be bought-back with the proceeds of excess tax benefits, and therefore not outstanding. For the three and six months ended July 2, 2016, diluted shares outstanding would have increased by 839 thousand and 827 thousand shares, respectively, if we had adopted ASU 2016-09 at the beginning of our 2016 fiscal year.

(3) Represents costs associated with planned changes in our management structure in the first quarter of 2017, directed towards maximizing the effectiveness and efficiency of the Company's leadership team, classified within selling, general and administrative expenses in the six months ended July 1, 2017.

(4)  Represents costs incurred in January and February 2017 associated with the start-up of our second Thermal Plastic Spacer system insulated glass line, all of which is classified within cost of sales in the six months ended July 1, 2017.

(5) Represents costs and expenses relating to our February 16, 2016, acquisition of WinDoor, Inc., and simultaneous refinancing of our then existing credit facility into the 2016 Credit Agreement. Of the $4.3 million, $3.4 million represents a non-cash charge relating to and classified as debt extinguishment costs for the six months ended July 2, 2016. The remaining $902 thousand represents transaction- and refinancing-related costs and expenses classified within selling, general and administrative expenses.

(6) Represents costs relating to the discontinuance of PremierVue product category, classified within selling, general and administrative costs in the six months ended July 2, 2016.