PGT, Inc. (PGTI)

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PGT, Inc. (PGTI)

Q4 2009 Earnings Call Transcript

February 19, 2010 10:30 am ET


Brad West – Corporate Controller

Rod Hershberger – President and CEO

Jeff Jackson – EVP and CFO


Sam Darkatsh – Raymond James

Ray Huang – J.P. Morgan

Rob Hansen – Deutsche Bank



Good day and welcome to the PGT, Incorporated fourth quarter 2009 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brad West. Please go ahead, sir.

Brad West

Thank you. Good morning and thank you for joining us for PGT’s fourth quarter 2009 conference call. I am Brad West, Corporate Controller and I am joined today 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 February 11th 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 Included in the press release are 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 measurements can be found in our Form 8-K filed February 11th 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 for investors to facilitate the comparison of past and present performance.

For today's call, Rod will provide an overview of our performance for the fourth quarter and then 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 to Rod Hershberger. Rod?

Rod Hershberger

Thanks, Brad and good morning, everyone. As I mentioned in our press release, new home construction remains at historically low levels as starts in our core market were down 28% in the fourth quarter compared to last year's fourth quarter.

However, we did see some signs of a recovery including a 3% increase in single-family starts over the prior-year fourth quarter; a modest 6% seasonal decline in sequential quarter starts, much lower than each of the previous two years where the decline was approximately 25%; a 44% increase in existing home sales compared to the prior-year quarter in our primary market of Florida; and a decrease in inventory levels compared to the prior year in certain primary market cities including 35% in Miami and 23% in Tampa.

Despite these promising trends, certain negative factors such as continued tight credit standards and unemployment, which is still around 10% nationally and nearly 12% in Florida, will likely continue to make predicting the timing and extent of the turnaround difficult.

With pressures on both the R&R and new construction markets, our sales decreased 27%. Compared to the fourth quarter of 2008, sales into the repair and remodeling market were down 14%, while sales into the new construction market were down 49%. As a percentage of total sales for the fourth quarter of 2009, R&R sales accounted for 74% and new construction sales accounted for 26% of sales compared to the fourth quarter of 2008 when R&R sales accounted for 65% and new construction represented 35%.

In previous calls during 2009, I mentioned some new products were recently launched. I'd like to update you on those products. We officially began taking orders on our new sliding glass door in October 2009 and totaled $1.3 million in sales during the fourth quarter, exceeding our expectations. Our customers are thrilled with the improved aesthetics, clean design, ease of installation, and the many new features the door offers. The product line also includes a high performance sliding glass door.

While we expect this new sliding door to eventually replace certain of our existing sliding glass door product sales, we think its new design and features put us at the forefront of technology currently in the marketplace and will drive incremental sales into the future. We also previously discussed our acquisition of the operating assets of Hurricane Window & Door Factory located in Fort Myers.

We've branded this high-end energy-efficient impact vinyl line PremierVue. These products provide long-term energy and structural benefits, meeting the requirements of Miami-Dade for impact protection, as well as qualifying homeowners for the government energy tax credits through the American Recovery & Reinvestment Act of 2009. This product line was developed specifically for the hurricane protection market and combines some of the highest structural ratings in the industry with excellent energy efficiency. Our official web (inaudible) launch was in January of '10, allowing our customers to order online.

Lastly, I'll give an update of our SpectraGuard branded vinyl window products. We launched this non-impact R&R vinyl window line last March and enjoyed sales totaling $4.3 million for the remainder of 2009. We also continued to gain traction with our vinyl window targeted for the new construction market that was launched in 2008. We recorded $3.7 million in sales of this product compared to $1.4 million in 2008.

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