ANNUAL SHAREHOLDERS MEETING - PGT Innovationsir.pgtinnovations.com/~/media/Files/P/PGT... · ANNUAL...

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ANNUAL SHAREHOLDERS MEETING MAY 22, 2019

Transcript of ANNUAL SHAREHOLDERS MEETING - PGT Innovationsir.pgtinnovations.com/~/media/Files/P/PGT... · ANNUAL...

Page 1: ANNUAL SHAREHOLDERS MEETING - PGT Innovationsir.pgtinnovations.com/~/media/Files/P/PGT... · ANNUAL SHAREHOLDERS MEETING MAY 22, 2019. SAFE HARBOR STATEMENT Statements in this presentation

ANNUAL SHAREHOLDERS MEETINGMAY 22, 2019

Page 2: ANNUAL SHAREHOLDERS MEETING - PGT Innovationsir.pgtinnovations.com/~/media/Files/P/PGT... · ANNUAL SHAREHOLDERS MEETING MAY 22, 2019. SAFE HARBOR STATEMENT Statements in this presentation

SAFE HARBOR STATEMENTStatements in this presentation that are not historical facts are "forward-looking statements" that involve risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Such statements generally can be identified by the use of forward-looking terminology, such as “believe”, “expect”, “anticipate”, "will", “outlook”, “project”, “plan” and similar terminology. These risks and uncertainties, many of which are outside of our control, include, but are not limited to, factors such as:

• adverse changes in new home starts and home repair and remodeling trends, especially in the state of Florida, where the substantial portion of our sales are currently generated, and in the western United states, where the substantial portion of the sales of Western Window Systems’ operations are generated, and in the U.S. generally;

• macroeconomic conditions in Florida, where the substantial portion of our sales are generated, and in California, Texas, Arizona, Nevada, Colorado, Oregon, Washington and Hawaii, where the substantial portion of the sales of Western Window Systems are currently generated, and in the U.S. generally;

• our level of indebtedness, which increased in connection with our acquisition of Western Window Systems; the effects of increased expenses or unanticipated liabilities incurred as a result of, or due to activities related to, the Western Window Systems acquisition;

• the risk that the anticipated cost savings, synergies, revenue enhancement strategies and other benefits expected from the Western Window systems acquisition may not be fully realized or may take longer to realize than expected or that our actual integration costs may exceed our estimates;

• raw material prices, especially for aluminum, glass and vinyl, including, price increases due to the implementation of tariffs and other trade related restrictions; • our dependence on a limited number of suppliers for certain of our key materials;• sales fluctuations to and changes in our relationships with key customers;• increases in bad debt owed to us by our customers in the event of a downturn in the home repair and remodeling or new home construction channels in our core markets and our inability to collect such debt;• in addition to the Western Window Systems acquisition, our ability to successfully integrate businesses we may acquire, or that any business we acquire may not perform as we expected at the time we

acquired it;• increases in transportation costs, including due to increases in fuel prices; • our dependence on our impact-resistant product lines and contemporary indoor/outdoor window and door systems, and on consumer preferences for those types and styles of products; • product liability and warranty claims brought against us;• federal, state and local laws and regulations, including unfavorable changes in local building codes and environmental and energy code regulations;• our dependence on our limited number of geographically concentrated manufacturing facilities;• risks associated with our information technology systems, including cybersecurity-related risks, such as unauthorized intrusions into our systems by “hackers” and theft of data and information from our

systems, and the risks that our information technology systems do not function as intended or experience temporary or long-term failures to perform as intended; and• the risks and uncertainties discussed under Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 29, 2018.

Statements in this presentation that are forward-looking statements include, without limitation, our expectations regarding: (1) demand for our products going forward, including the demand for our impact-resistant products and the products of Western Window Systems; (2) our ability to gain market share in 2019 and beyond; (3) the Company’s ability to continue to grow its sales and earnings in 2019 and going forward; (4) our ability to position ourselves as a national leader in the premium window and door market, and our performance in that market; (5) our integration of Western Windows Systems and achievement of synergies related thereto; and (6) our financial and operational performance for our 2019 fiscal year, including our 2019 fiscal year outlook set forth in this presentation. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances from the date of this presentation.

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PRODUCT GROUP2 END MARKET2

51%49%

PGT INNOVATIONS AT A GLANCE (NYSE: PGTI)

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Striving to Create the Strongest, Safest Building Products with a Customer-First Approach

Founded Headquarters National Employees Market-cap

1980 North Venice, FL ~3,000 ~$0.9B1

69%

31%

Impact Resistant Non-Impact

1 As of 5/3/2019; 2 As of 3/30/19

36% 35%Repair & Remodel New Residential

Gross Margin

$698M net sales full-year 20182

120+ years combined history

>1.4M square feet manufacturing space

~1,500 dealers/distributors

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EXECUTIVE TEAM

Dave McCutcheonSVP

Business Integration

Debbie LaPinskaSVP Human Resources

Brent BoydstonSVP

Sales & Marketing

Jeff JacksonCEO & President

Sherri BakerSVP & CFO

Brad WestSVP of Corporate

Development & Treasurer

Scott GatesSVP PGTI & PresidentWestern Business Unit

P G T I N N O V A T I O N S . C O M | 4

Bob KellerSVP PGTI & President

Southeast Business Unit

John EngelstadSVP & CIO

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Full-Year 2018 vs. Full-Year 2017

$698MNet Sales

37%

34.9%Gross Margins

3.8%

35.0%Adjusted Gross Margins

3.5%

$1.00Diluted EPS

30%

$1.18Adjusted Diluted EPS1

93%

$127MAdjusted EBITDA1

48%

Highlights

• Completion of acquisition of Western Window Systems positions PGTI as national leader in premium window and door space

• Full-year sales growth of 37%—with 27% of year-over-year growth achieved organically

• Solid operational execution, including several product and facility relocations

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DELIVERING STRONG FULL-YEAR 2018 RESULTS

1. Refer to reconciliation to GAAP

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RECORD-BREAKING GROWTH IN 2018

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Best-in-Class Growth and Margins

Net Sales ($M) Adjusted EBITDA1

& MarginFree Cash Flow1,2 ($M) CapEx as % of Revenue

$389.8$458.6

$511.1

$698.5

2015 2016 2017 2018

$69.2$77.5

$86.0

$126.9

17.8%

16.9% 16.8% 18.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

$-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

2015 2016 2017 2018

$15.1

$28.7$34.3

$76.5

2015 2016 2017 2018

4.5%

3.8%

2.9%

3.4%

2015 2016 2017 2018

1 Refer to reconciliation to GAAP; 2 Free cash flow defined as cash flow from operations less Capex

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WHY WESTERN WINDOWS

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Our Core Values and Continuous Improvement Culture

EXCELLENCE INNOVATION PARTNERSHIP

Western Window Systems recognized as one of the best places to work according to Inc. Magazine’s

June 2018 issue

Commitment to enhancing strong brand with innovative, unique

products and solutions addressing customer needs

Encourage openness to new ideas by being respectful to our coworkers,

customers, suppliers and community

Our Vision is to HAVE FUN creating a winning Company that changes construction and helps our Partners LIVE BETTER!

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BUSINESS OVERVIEW

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• Developing strong working relationships with architects, custom home builders and designers while building a stronginternational dealer network to capture pull throughdemand

• Strong brand awareness driven by a comprehensive advertising and marketing campaign at trade shows and in industry printand digital platforms

• Host events at WWS manufacturing facility to highlight newest products and unique companyculture

CUSTOM

Single-family luxury residential homes

✓ Innovative, customized products

✓ Authentic contemporary and indoor/outdoor solution

Go-to-Market Strategy• Focused on developing strong relationships with volume production

builders and growing preferred vendor program

• Strong brand awareness and price protection driven by a comprehensive advertising and marketing campaign in industry print and digital platforms that has built exceptional brandequity

• Preferred vendor program creates an economic touch point between WWS and builders to cement relationships andfacilitate pull through demand via dealer network

CORPORATE BUILDER

Single-family residential production builder homes

✓ Market leader for indoor/outdoor living

✓ Industry leading lead times and best-in-class service

Go-to-Market Strategy

BUSINESS OVERVIEW

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• Expands geographic footprint and solidifies PGTI as leading company in multiple segments

• Strengthens brand recognition, diversifies product portfolio

• Creates margin improvement opportunities from operational efficiencies and realization of expected cost synergies

• Builds on culture of innovation, product development

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WWS HQ

PGTI HQ

PGTI-Southeast’s Core MarketPGTI-West’s Core MarketsPlant Locations

ACQUISITION OF WESTERN WINDOW SYSTEMS CREATESA NATIONAL LEADER IN PREMIUM WINDOWS AND DOORS

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WELL POSITIONED FOR GROWTH WITH EXPANDED PLATFORM

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Proven Track Record of Acquisition Integration

Built Strong Foundation Repositioned Sustained Growth Ahead

1980-2013 2014-2017 2018-2019 and beyondCreated leading position in impact-

resistant products in Florida through innovation and

strong customer focus

Two acquisitions, renamed company to PGT Innovations – market-leading

brands

National platform with niche market leadership; leveraging technical expertise, customer focus and

operational capabilities

Acquired CGI for $111M in July 2014

Acquired WinDoor for $102M in November 2015

Acquired Western Window Systems for

$355M in August 2018

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2018……. A YEAR OF TRANSITION• My first year as CEO of PGT Innovations

• Milestone sales and profit year

• Completed our largest out-of-state acquisition with Western Window Systems

• Ran our second TV commercial to increase our brand awareness with homeowners

• Bond issuance of $315M, equity offering of $161M and debt reduction of $152M

• Made every Employee a Shareholder

• Opened PGTI childcare center for employees in our Venice operations

• Launched the “Inspire the Future” scholarship for all dependents of team members

• Further diversified our leadership with the addition of strong females to both our Board and our Executive teams

• Continued our Leading Ladies program which now includes women from all of our locations (including Phoenix) for a total of 30+ Leading Ladies company-wide.

1 1

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LOOKING FORWARD2019

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STRATEGIC PATH FORWARD

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Expect Strong Execution of Disciplined, Profitable Growth Strategy

01 02 03 04Continue Expanding Footprint

Enhance Product Portfolio

Drive Brand Equity/ Awareness

Disciplined Capital Approach

Execution of strategic plan to create a national, market leading building products company

Keen focus on products and brands, which continues to yield strong margins and significant cash flow

Alignment with key high-growth markets, industry trends and evolving building codes

Balance sheet strength resulting from strong cash flow and rapid deleveraging following strategic acquisitions

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FULL-YEAR 2019 GUIDANCE

1 4

Well Positioned to Capture Long-term Profitable Growth and Create Shareholder Value

Full-Year 2018 Results 2019 Guidance as of 5/2/19 2019 Guidance vs. Full-Year 2018

Net Sales$698M

Net Sales$775M-$800M 11% – 15%

Adjusted EBITDA1

$127MAdjusted EBITDA$143M – $152M 13% – 20%

Net Income / Diluted Share$1.00

Net Income / Diluted Share$0.93 – $1.05

1. Refer to reconciliation to GAAP

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WHY INVEST IN PGT INNOVATIONS

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National leader in growing premium impact-resistant and indoor/outdoor window and door category

Continue investing in talent and R&D to remain an industry leader in innovation and product development

Continued focus on operational efficiencies expected to drive additional margin expansion

Execution of our strategy expected to create long-termcustomer and shareholder value

Well positioned with diversified product portfolio to capture profitable growth in new construction and repair and remodel channels

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THANK YOU JOE MCHUGH FOR

YOUR 13 YEARS OF VALUE ADDING

SERVICE

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Prior Audit Committee Chair, Board Member since 2006

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Q&A

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THANK YOU FOR ATTENDINGANNUAL SHAREHOLDERS MEETING