PGT, Inc. (PGTI)
Q4 2012 Earnings Call
February 21, 2013 10:30 am ET
Brad West – Director, Finance and Corporate Controller
Rodney Hershberger – President, Chief Executive Officer
Jeffrey T. Jackson – Executive Vice President and Chief Financial Officer
Sam Darkatsh – Raymond James
Gunnar Hansen – Sidoti & Company, LLC
Previous Statements by PGTI
» PGT's CEO Discusses Q3 2012 Results - Earnings Call Transcript
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» PGT's CEO Discusses Q4 2011 Results - Earnings Call Transcript
I would now like to turn the conference over to your host Mr. Brad West. You may begin.
Good morning and thank you for joining us for PGT’s fourth quarter 2012 conference call. I’m Brad West, Corporate Controller, and I’m joined today by Rod Hershberger, President and CEO; and Jeff Jackson, Executive Vice President and CFO. Rod and Jeff will represent PGT in 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 do not relate strictly to historical or current facts. Rather, they 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 the February 20 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 www.pgtinc.com. Included in the press releases are the unaudited consolidated balance sheets and statements of operations prepared in accordance with GAAP and adjusted information, which is 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 press release, which was included as an exhibit to our Form 8-K filed February 20 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 ended December 29, 2012, 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 our CEO, Rod Hershberger. Rod?
Thanks, Brad. Good morning, everyone. In 2012, we focused on driving sales in our core markets utilizing strategies such as promotional activities and partnering with national accounts to take advantage of the growing new construction market. Our focused promotional activities positively impacted Q4 sales as it capitalizing on our value proposition. These activities combined with the improving housing market through the sales increase of $9.5 million, or 26.6%. The sales of our flagship product line WinGuard grew 38% over the prior year. From a market perspective, new construction sales increased $5.3 million, or 59.8% as a result of improvement in the new construction market and our partnering with National Accounts.
Repair and Remodel sales increased by $4.2 million, or 15.7% as we continue to see signs of an economic recovery beginning. From a product standpoint, fourth quarter sales included an increase in our impact sales of 32.8% to $34 million, compared to $25.6 million in the prior year. Our non-impact products, which include Aluminum, Vinyl and Eze-Breeze increased $1.1 million, or 10.6% from 2011. EBITDA in the fourth quarter was $6.9 million, or 15.3% of sales, compared to prior year’s fourth quarter EBITDA of $0.6 million, or 1.8%.
Our gross margin was 35.4% of sales compared to 25.1% for the fourth quarter of 2011. This increase of 10.3% was driven by additional volume, mixed improvement, and continued focus on operational efficiency. SG&A costs for the fourth quarter of 2012 increased $300,000, or 2.2%. This was driven by $1.3 million increase in employee-related compensation expense offset by a decrease of $400,000 in selling materials and advertising expense, $200,000 in reduced transportation costs and $200,000 in bad debt expense.
Lastly, within our core markets, total housing starts were up 52% for the fourth quarter of 2012 when compared to 2011. Single-family starts during the quarter were up 42%, compared to a year ago. Some highlights for the year include, sales were $174.5 million, up $7.3 million from prior year, or 4.3% increase.
Housing starts improved 40%. WinGuard dollar sales were up 11.8%. New construction sales increased $8.7 million. Gross margin percentage of 34.2%, up 640 basis points from 2011 adjusted gross margin, net income of $9 million, or $0.16 per diluted share, compared to an adjusted net loss of $0.10 last year, and EBITDA of $24.7 million, up $12 million, or 96% versus 2011 adjusted EBITDA.
This improvement in net income and EBITDA resulted from increasing sales and profitable categories, improving manufacturing efficiency, reducing scrap, and increasing efficiency within our transportation team. Looking at 2013 and beyond in January of this year, we closed the sale of our Salisbury, North Carolina facility for approximately $8 million in cash, which provides additional momentum for 2013.