- Net sales increased 5.2% to $430.0
million for the first quarter.
- Net loss improved $23.9 million for
the first quarter.
- Adjusted EBITDA increased to $27.1
million or 9.5% for the first quarter.
Ply Gem Holdings, Inc. (“Ply Gem” or the “Company”)
(NYSE: PGEM), a leading manufacturer of exterior building products
in North America, today announced financial results for the quarter
ended April 1, 2017.
First Quarter 2017 Highlights
- Total net sales for the first quarter
increased 5.2% to $430.0 million.
- Operating earnings increased $2.3
million to $11.8 million compared to the first quarter of
2016.
- Net loss for the first quarter improved
$23.9 million from the first quarter of 2016.
- Adjusted EBITDA was $27.1 million
compared to $24.7 million for the first quarter of 2016 achieving
an LTM Adjusted EBITDA of $231.4 million.
- Basic and diluted loss per share was
($0.05) for the first quarter of 2017 compared to ($0.40) for the
2016 period.
- Adjusted loss per share was ($0.04) for
the first quarter of 2017 compared to ($0.20) for the first quarter
of 2016.
“I am pleased by the strong first quarter financial and
operating performance of the Company. Both businesses continued to
make substantial contributions to adjusted EBITDA and allowed us to
deliver the twelfth consecutive quarterly year-over-year growth of
adjusted EBITDA,” said Gary E. Robinette, Ply Gem’s Chairman and
CEO. “The seasonality of our business and the typical winter
weather experienced in our market footprints traditionally impacts
our ability to leverage the business during the first quarter.
However, during the first quarter of 2017, we experienced strong
demand for our products largely attributed to favorable winter
weather in our key market footprints while our businesses continued
to control costs and implement price increases, which will be
realized during the remainder of 2017, to offset rising material
costs.”
Commenting on the Company’s results, Shawn K. Poe, Ply Gem’s
Chief Financial Officer added, “In the first quarter, we continued
to drive financial improvements within our business segments. We
achieved an incremental year-over-year quarterly adjusted EBITDA
growth of 9.5% and a record first quarter adjusted EBITDA of $27.1
million. As a result of our strong performance during the first
quarter of 2017 and the trailing twelve months, we achieved an LTM
adjusted EBITDA of $231.4 million.”
First Quarter 2017 Financial ResultsNet sales increased
$21.4 million or 5.2% to $430.0 million compared to $408.6 million
for the first quarter of 2016. The net sales increase was primarily
driven by improved U.S. market demand for our products combined
with favorable weather conditions that existed throughout the
quarter ended April 1, 2017, demonstrating the continued recovery
of the U.S. housing market.
Gross profit margin was 20.8%, which represented a decrease of
40 basis points from the first quarter of 2016. The decrease in
gross profit margin can primarily be attributed to higher raw
material input costs that offset the 5.2% net sales increase,
specifically aluminum, PVC resin, and glass costs.
Operating earnings were $11.8 million, an improvement of $2.3
million from the first quarter of 2016 from lower SG&A expense
as a percentage of net sales and lower amortization expense in
2017.
Adjusted EBITDA was $27.1 million compared to $24.7 million in
the first quarter of 2016. Net loss was ($3.6) million compared to
($27.6) million for the first quarter of 2016. Our Adjusted basic
and diluted EPS for the first quarter of 2017 was ($0.04) as
compared to ($0.20) for the comparable period in 2016, and basic
and diluted EPS was ($0.05) as compared to ($0.40) for the
comparable 2016 period. A reconciliation of non-GAAP (adjusted)
financial measures to comparable GAAP financial measures is
provided as notes to this release.
Siding, Fencing and StoneSiding, Fencing and Stone’s net
sales totaled $190.8 million, up $14.5 million, or 8.2%, compared
to $176.4 million in the first quarter of 2016. The net sales
increase resulted primarily from improved U.S. market conditions
and weather conditions reflected in industry metrics for both the
new construction and repair and remodeling markets. Gross profit
margin for the quarter ended April 1, 2017 was 24.1%, a decrease of
210 basis points from the 26.2% for the quarter ended April 2,
2016. The decrease in gross margin percentage resulted from higher
raw material input costs that fully offset the 8.2% net sales
increase.
Windows and DoorsWindows and Doors’ net sales totaled
$239.2 million, up $6.9 million, or 3.0%, compared to $232.2
million in the first quarter of 2016. The net sales increase for
the quarter ended April 1, 2017 can be attributed to the improved
U.S. market conditions favorably impacting both our new
construction business as well as our repair and remodeling
business. For the quarter ended April 1, 2017 compared to the
quarter ended April 2, 2016, our new construction business
increased $12.2 million or 8.1% while our repair and remodeling
business decreased $6.2 million or 10.3%.
Gross profit margin was 18.2% for the quarter ended April 1,
2017, increasing from 17.4% for the quarter ended April 2, 2016.
Our gross profit increase of 80 basis points can be attributed to
the continued improvement in our new construction business and the
sustained performance of our repair and remodeling business. The
gross profit improvement for our U.S. businesses was primarily
driven by increased selling prices of 4.3% and favorable product
mix which improved gross profit by $8.4 million, while our Canadian
business experienced improved gross profit of $0.8 million relative
to the prior year.
OutlookThe Company’s 2017 annual outlook is based on a
U.S. single family housing starts market growth assumption of 5% to
10% and an assumption of 3% to 5% growth in the U.S. big ticket
repair and remodel market.
“As we enter into the seasonally important second and third
quarters, we look forward to capitalizing on the momentum we’ve
built over the past several quarters,” said Mr. Robinette. “As the
housing market in the U.S. continues to recover, we are well
positioned to drive profitable growth and generate meaningful
operating leverage, earnings and cash flow. In addition, we remain
committed to driving shareholder value, continuing to improve our
balance sheet and being opportunistic within our strategic
priorities. In looking to the remainder of 2017, we reaffirm our
full year 2017 adjusted EBITDA to be in the range of $250 to $265
million.”
WebcastPly Gem management will host a webcast today,
Monday, May 8, 2017 at 10:00 a.m. Eastern to discuss first quarter
results. To access the webcast, visit www.plygem.com and click on
Investor Relations. The webcast link will be available under
“Upcoming Events” as well as “Events & Presentations.” If
internet access is not available, please dial 877-201-0168,
participant passcode 5620186. International participants, please
dial 647-788-4901, participant passcode 5620186. A replay of the
call will be available on our website through June 7th.
About Ply GemPly Gem is a leading manufacturer of
exterior building products in North America. Ply Gem produces a
comprehensive product line of windows and patio doors, vinyl and
aluminum siding and accessories, designer accents, cellular PVC
trim and mouldings, vinyl fencing and railing, stone veneer,
engineered slate and shake roofing and gutterware, used in both new
construction and home repair and remodeling in the United States
and Canada. Ply Gem siding brands include Mastic Home Exteriors®,
Variform®, NAPCO®, Mitten®, Cellwood®, Georgia-Pacific Vinyl Siding
and Accessories, Durabuilt®, Ply Gem® Stone, Canyon Stone, Ply Gem®
Trim and Mouldings, Ply Gem® Fence and Railing, Ply Gem® Shutters
and Accents, Leaf Relief®, Leaf Logic®, and Monticello® Columns.
Ply Gem windows and patio door brands include Ply Gem® Windows,
Simonton® Windows, Mastic® Replacement Windows, Ply Gem® Canada,
and Great Lakes® Window. The Company’s brands are sold through
short-line and two-step distributors, pro dealers, home improvement
dealers and big box retailers. Additionally, Ply Gem distributes a
wide-variety of exterior building products including stone veneer,
fencing, railing, windows, doors and architectural accents via
export globally and offers installation services in western Canada
under the Gienow® Renovations by Ply Gem brand. Ply Gem employs
approximately 9,000 associates across North America. Visit
www.plygem.com for more information.
Note: As used herein, the term “Ply Gem” refers to Ply Gem
Holdings, Inc. and all its subsidiaries, including Ply Gem
Industries, Inc., unless the context indicates otherwise. This term
is used for convenience only and is not intended as a precise
description of any of the separate corporations.
Forward-Looking StatementsThis press release and oral
statements made from time to time by our representatives may
contain certain statements that are not historical facts, including
information concerning possible or assumed future results of our
operations. Those statements constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements involve known and unknown
risks, uncertainties and other factors that could cause our actual
results to differ materially from the results expressed in or
implied by our forward-looking statements, including the
availability and cost of raw materials and purchased components,
the level of construction and remodeling activity, changes in
general economic and business conditions, conditions affecting the
industries we serve and our customers, the rate of sales growth,
availability of labor force and efficiencies, product liability
claims, our degree of leverage and other factors discussed in our
news releases, public statements and/or filings with the Securities
and Exchange Commission, including our most recent Annual and
Quarterly Reports on Form 10-K and Form 10-Q. Many of these factors
are outside of our control and all of these factors are difficult
or impossible to predict accurately. We undertake no obligation to
update publicly any forward-looking statements, whether as a result
of new information, future events or otherwise.
PLY GEM HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
For the three months ended (Amounts in
thousands, except share and per share data) April 1, 2017
April 2, 2016 Net sales $ 430,015 $ 408,614 Cost of
products sold 340,490 321,913 Gross profit 89,525
86,701 Operating expenses: Selling, general and administrative
expenses 72,355 70,735 Amortization of intangible assets 5,344
6,390 Total operating expenses 77,699 77,125
Operating earnings 11,826 9,576 Foreign currency gain 155
584 Interest expense (16,886 ) (18,692 ) Interest income 14 10 Loss
on modification or extinguishment of debt — (2,399 ) Tax receivable
agreement liability adjustment — (18,150 ) Loss before
benefit for income taxes (4,891 ) (29,071 ) Benefit for income
taxes (1,254 ) (1,494 ) Net loss $ (3,637 ) $ (27,577 ) Basic and
diluted net loss per share attributable to common shareholders $
(0.05 ) $ (0.40 ) Basic and diluted weighted average shares
outstanding 68,399,887 68,127,491
The accompanying notes are an integral part of these unaudited
condensed consolidated statements of operations.
1. The accompanying unaudited condensed consolidated statements
of operations of Ply Gem Holdings, Inc. (the “Company”) do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included.
The selected balance sheet data for the periods presented in
Note 5 has been derived from the December 31, 2016 audited
consolidated financial statements of the Company and the unaudited
condensed consolidated financial statements of the Company as of
April 1, 2017, and does not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements.
The Company’s fiscal quarters are based on periods ending on the
Saturday of the last week in the quarter. Therefore the financial
results of certain fiscal quarters will not be exactly comparable
to the prior and subsequent fiscal quarters.
2. We define adjusted EBITDA as net income (loss) plus interest
expense (net of interest income), provision (benefit) for income
taxes, depreciation and amortization, non-cash foreign currency
gain/(loss), non-cash loss (gain) on modification or extinguishment
of debt, restructuring and integration expenses, customer inventory
buybacks, litigation class action charges, and tax receivable
liability adjustments. Other companies may define adjusted EBITDA
differently and, as a result, our measure of adjusted EBITDA may
not be directly comparable to adjusted EBITDA of other companies.
Management believes that the presentation of adjusted EBITDA
included in this press release provides useful information to
investors regarding our results of operations because it assists
both investors and management in analyzing and benchmarking the
performance and value of our business. The Company has included
adjusted EBITDA because it is a key financial measure used by
management to (i) internally measure our operating performance and
(ii) determine our incentive compensation programs. In addition,
the Company’s senior secured asset-based revolving credit facility
has certain covenants that apply ratios utilizing this measure of
adjusted EBITDA.
Adjusted EPS represents basic and diluted net loss per share
attributed to common shareholders adjusted to exclude the estimated
per share impact of the specifically identified items used to
calculate adjusted EBITDA described above, adjusted at the
statutory tax rate of 35%.
Although we use adjusted EBITDA and adjusted EPS as financial
measures to assess the performance of our business, the use of
adjusted EBITDA and adjusted EPS is limited because it does not
include certain material costs, such as interest and taxes,
necessary to operate our business. Adjusted EBITDA and adjusted EPS
included in this press release should be considered in addition to,
and not as a substitute for, net earnings and earnings per share in
accordance with GAAP as a performance measure. You are cautioned
not to place undue reliance on adjusted EBITDA or adjusted EPS.
Certain amounts in this release have been subject to rounding
adjustments. Accordingly, amounts shown as totals may not be the
arithmetic aggregation of the individual amounts that comprise or
precede them.
Ply Gem Holdings, Inc. (Amounts in thousands)
For the three months ended April 1, 2017 April 2,
2016
Net loss $ (3,637 ) $ (27,577 ) Interest expense, net
16,872 18,682 Benefit for income taxes (1,254 ) (1,494 )
Depreciation and amortization 13,453 14,030
EBITDA 25,434 3,641 Non cash gain on foreign currency
transactions (155 ) (584 ) Customer inventory buybacks 566 471
Restructuring/integration expense 957 653 Litigation - class action
charges, net 288 — Tax receivable agreement liability adjustment —
18,150 Loss on modification or extinguishment of debt —
2,399
Adjusted EBITDA $ 27,090 $ 24,730
Ply Gem Holdings, Inc. For the three
months ended April 1, 2017 April 2, 2016
Basic and diluted net
loss per share attributable to common shareholders $
(0.05 ) $ (0.40 ) Non cash gain
on foreign currency transactions — (0.01 ) Customer inventory
buybacks 0.01 — Restructuring/integration expense 0.01 0.01
Litigation - class action charges, net — — Tax receivable agreement
liability adjustment — 0.17 Loss on modification or extinguishment
of debt — 0.02
Adjusted EPS $
(0.04 ) $ (0.20 )
Basic and diluted weighted average shares outstanding
68,399,887 68,127,491
3. Operating segment results for the three months ended April 1,
2017 and April 2, 2016 are as follows:
For the three months ended (Amounts in thousands)
April 1, 2017 April 2, 2016
Net sales Siding, Fencing and Stone $ 190,837 44 % $
176,376 43 % Windows and Doors 239,178 56 % 232,238
57 % $ 430,015 100 % $ 408,614 100 %
Gross
profit Siding, Fencing and Stone $ 45,963 24 % $ 46,264 26 %
Windows and Doors 43,562 18 % 40,437 17 % $ 89,525
21 % $ 86,701 21 %
Operating earnings
(loss) Siding, Fencing and Stone $ 19,823 10 % $ 20,374 12 %
Windows and Doors 1,429 1 % (1,250 ) (1 )% Unallocated (9,426 ) (2
)% (9,548 ) (2 )% $ 11,826 3 % $ 9,576 2 %
4. Long-term debt amounts in the selected balance sheets at
April 1, 2017 and December 31, 2016 consisted of the following:
April 1, 2017 December 31, 2016
(Amounts in thousands) Senior secured asset based revolving
credit facility $ 30,000 $ —
6.50% Senior notes due 2022, net of
unamortized early tender premium, discount and debt issuance costs
of $47,926 and $49,935, respectively
602,074 600,065
Term Loan Facility due 2021, net of
unamortized early tender premium, discount and debt issuance costs
of $16,536 and $17,854, respectively
240,564 240,321 $ 872,638 $ 840,386
Less current portion of long-term debt (4,300 ) (4,300 ) $ 868,338
$ 836,086
5. The following is a summary of selected balance sheet amounts
at April 1, 2017 and December 31, 2016:
April 1, 2017 December 31, 2016
(Amounts in thousands) Cash and cash equivalents $ 20,661 $
51,597 Accounts receivable, less allowances 215,758 209,919
Inventories 185,366 161,956 Prepaid expenses and other current
assets 25,525 26,850 Property and equipment, net 165,941 165,556
Intangible assets, net 98,942 104,159 Goodwill 478,795 478,514
Accounts payable 84,807 75,398 Payable to related parties pursuant
to tax receivable agreement-current 25,383 25,383 Payable to
related parties pursuant to tax receivable agreement- non-current
54,336 54,336 Long-term debt 868,338 836,086
Stockholders’ equity
4,268 4,106
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170508005135/en/
Ply Gem Holdings, Inc.Shawn Poe,
919-677-3901investors@plygem.com
PLY GEM HOLDINGS INC (NYSE:PGEM)
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