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PGT, Inc. (PGTI)
Q3 2009 Earnings Call Transcript
November 5, 2009 10:30 am ET
Jeff Jackson – EVP and CFO
Rod Hershberger – President and CEO
Ray Huang – JP Morgan
Sam Darkatsh – Raymond James
Nishu Sood – Deutsche Bank
Jim Wilson – JMP Securities
Robert Kelly – Sidoti & Co.
Peter Reed – Mast Capital Management
John Spikes [ph] – Numeria [ph]
Previous Statements by PGTI
» PGT Inc. Q2 2009 Earnings Call Transcript
» PGT, Inc. Q1 2009 Earnings Call Transcript
» PGT, Inc. Q4 2008 Earnings Call Transcript
Thank you and good morning. Welcome to PGT’s third quarter 2009 conference call. I'm Jeff Jackson, CFO, and I'm joined today by Rod Hershberger, President and CEO. We 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 are subject to risk and uncertainty. Actual results may vary materially from those contained in the forward-looking statements. So please refer to yesterday's press release and our most recent Form 10-K filed with the SEC. We undertake no obligations 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 is the unaudited consolidated balance sheets 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 of these non-GAAP measures can be found in our Form 8-K filed yesterday with the SEC. These non-GAAP measures are not intended to replace the presentation of financial results in accordance with GAAP. Rather we believe the presentation of non-GAAP measurements provide additional information for investors to facilitate the past and present performance.
For today's call, Rod will provide an overview of our performance for the third quarter. Then I'll discuss our results in more detail. After our prepared remarks, we'll take your questions.
With that, let me turn the call over to Rod. Rod?
Thanks Jeff and good morning everyone. As I mentioned in our press release, the third-quarter produced some signs that there is a recovery taking place in the home building industry. Several of the nation's largest homebuilders report increase in new home orders and decreases in cancellation.
The existing home sales in September increased 34% compared to the prior month in our primary market of Florida, as buyers who were reluctant to enter the market moved to take advantage of sales incentives, to stress bargains, and the first-time homebuyers tax credit of 8000. We also saw a 10% increase in sequential quarter, single and multifamily construction starts during the third quarter.
However, new home construction remains in a historically low level as starts in our core market were down 42% in the third quarter compared to last year's third quarter. The continued decline in home prices and low interest rates plus the tax incentives for first-time homebuyers provided some beneficial economic effects during the quarter. But the negative economic effects of increased foreclosures and mortgage delinquency, tight credit standards and higher unemployment, which is now almost 10% nationally, will likely continue to hamper any recovery in the home building industry and make predicting the timing and extent of the turnaround or even stability difficult.
In the face of this market, our sales decreased 23%. Compared to the third quarter of 2008, sales into the repair and remodeling market were down 13%. Our sales into the new construction market were down 43%. As a percentage of total sales for the third quarter of 2009, R&R sales accounted for 73% and new construction sales accounted for 27% compared to the third quarter of 2008 where R&R sales accounted for 64%, and new construction represented 36%.
Even in this challenging environment, we continue to invest in new product offerings to better serve our customers. In August, we began taking orders of our new Vinyl Series 400 and Vinyl WinGuard Series 500 windows that qualify for energy tax credits provided for through The American Recovery and Reinvestment Act of 2009. This act includes an incentive for US homeowners to receive a 30% tax credit for the cost of energy-efficient home improvements made in 2009 and 2010, up to $1500.
In a dealer and distributor road show in late September, we rolled out our new Series 670 and 770 sliding glass door to the marketplace. The feedback has been outstanding. Our customers were thrilled with its improved aesthetics, clean design, ease of installation and the many new features the door offers.
The product line also includes a Series 870 high-performance sliding glass door. We began taking orders in late October and early indications are that the new doors are a success. While we expect this new sliding glass door to eventually replace certain of our existing sliding glass door products, we think its new design and features will drive incremental sales well into the future.
As we announced in a press release in mid-August, we acquired the operating assets of the Hurricane Window & Door Factory previously located in Fort Myers, Florida. Hurricane Window & Door Factory designed and manufactured high-end vinyl impact products for the single and multifamily residential markets. The products provide long-term energy and structural benefits, while qualifying homeowners for the government’s energy tax credit through The American Recovery and Reinvestment Act of 2009.