Imperial Capital 6th Annual Global Opportunities...

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Imperial Capital 6 th Annual Global Opportunities Conference September 19, 2012

Transcript of Imperial Capital 6th Annual Global Opportunities...

Page 1: Imperial Capital 6th Annual Global Opportunities Conferencepgt-innovations-ir.prod-use1.investis.com/~/media/... · WinGuard (Impact Resistant) 66% PremierVue 5% 2011 Sales $167.3

Imperial Capital

6th Annual Global Opportunities Conference

September 19, 2012

Page 2: Imperial Capital 6th Annual Global Opportunities Conferencepgt-innovations-ir.prod-use1.investis.com/~/media/... · WinGuard (Impact Resistant) 66% PremierVue 5% 2011 Sales $167.3

Forward-Looking Statements This presentation and related remarks made by representatives of PGT, Inc. and its affiliates (“PGT”) in connection herewith contain confidential and proprietary information regarding PGT. By accepting this presentation and participating in the related discussion, the recipient agrees not to divulge any such information to any other party and will return this presentation together with any copies or descriptions thereof (in any media) to PGT immediately upon request therefore.

The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and beliefs, as well as a number of assumptions concerning future events. These statements are subject to risks, uncertainties, assumptions and other important factors. You are cautioned not to put undue reliance on such forward-looking statements because actual results may vary materially from those expressed or implied. PGT, Inc., assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. PGT makes no representation or warranty, express or implied as to the accuracy or completeness of the information contained in this presentation, and nothing contained herein or in related remarks made by representatives of PGT in connection herewith is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Any recipient hereof should conduct its own independent analysis of PGT and the data contained or referenced to herein.

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Management Presenters • Co-founder of PGT in 1980

• 30 years with PGT in a variety of strategic and operating positions

• Joined PGT in 2005

• 18 years of financial and accounting experience with various Fortune 500 companies

• Background in public reporting, operations, human resources, logistics and manufacturing

PGT is led by a strong and experienced management team 7 Executive Team Members – combined have over 100 years window experience

Jeff Jackson Executive Vice President

and Chief Financial Officer

Rod Hershberger President and CEO

Nasdaq Ticker: PGTI

Recent Price $3.26 as of close August 28, 2012

Shares Outstanding: 53.70M as of close August 28, 2012

Analyst Coverage: Deutsche Bank, JMP Securities,

Ladenburg, Raymond James

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PGT Overview

Aluminum

12% Vinyl

8% Arch Systems

3%

Eze-

Breeze/Other

6%

WinGuard

(Impact

Resistant)66%

PremierVue5%

2011 Sales$167.3 million

30-year history of quality and innovation Clear market leader

Pioneered impact-resistant market in 1992 following Hurricane Andrew

Offers the broadest line of impact-resistant windows and doors.

Complete line of premium aluminum and vinyl windows and doors

Provides maximum customer service Custom, make-to-order products

Minimal lead times and on-time delivery

Outstanding before and after-sale support

Highly fragmented industry

PGT is the nation’s leading manufacturer of residential impact-resistant window and doors

PremierVue 4%

Aluminum12% Vinyl

7%Arch

Systems1%

Eze-Breeze/

Other

7%

WinGuard (Impact

Resistant)

69%

First Half of 2012$84.7 million

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Expansive Product Offering • PGT offers premium brands across a diverse

and comprehensive line of products

Note: 2005 percentages pro forma for the divestiture of NatureScape.

Windows and Doors Porch

Enclosures

Product Category WinGuard Architectural

Systems Aluminum Vinyl PremierVue Eze-Breeze

PGT Branding

Product Description Impact-resistant windows and doors Combine heavy-duty frames (aluminum and vinyl) with special laminated glass

Heavy duty aluminum frame construction Designed for increased wind and water loads required for taller buildings

Aluminum frame windows and doors Target markets with warmer/humid climates due to strength and durability

Vinyl frame windows and doors Energy efficient product for any climate; meets 30/30 requirement of 09 ARRA

Newest product offering; heavy duty vinyl frame impact window for high end residential and commercial First R-5 impact window in the industry

Lighter-weight non-glass porch enclosure products Used for repair/remodel additions and enclosures

% of 2011 Sales 66% 3% 12% 8% 5% 6%

% of first half 2012 Sales 69% 1% 12% 7% 4% 7%

Impact sales increased as a percentage of total sales from 61% in 2005 to 74% in 2011

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PGT is the Clear Leader in the Impact- Resistant Window and Door Market

WinGuard brand is synonymous with impact-resistant windows and doors

Target markets in hurricane-prone coastal states with increasingly stringent building codes

Dominant market share in our core Florida market

Over 3 million WinGuard units installed with zero reported impact failures

Additional advantages: Superior performance, ease-of-use, insurance incentives, security features, noise reduction, etc.

Protection always in place

First R-5 impact window

Meets DOE requirements for government projects

DOE/EPA pushing for R-5 (U.20) as “the standard” by 2015-2020

Grown from 1 product to 44 in 4 product lines

Aluminum residential

Aluminum commercial

Vinyl residential

PremierVue

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PGT WinGuard vs. The “Competition”

Superior performance

Ease of use

Improved aesthetics

Insurance incentives

Security features

Noise reduction

WinGuard has a number of competitive advantages:

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Impact-Resistant Market Provides Long-Term Growth Opportunity

“Passive” (window) protection vs. “active” (shutter) protection

$1.5 – 2.0 billion total market opportunity

Market expanding along Eastern seaboard and Gulf Coast as states adopt and enforce code

International markets/Caribbean increasingly demanding impact-resistant products

Insurance companies providing incentives to ensure impact protection always in place

NOAA forecasts a 10-20 year active storm cycle

(1) Building codes require structures to withstand wind speeds in these ranges * Impact protection required

Impact-Resistant Market

Wind Speeds (mph)(1)

130 to 150 *

120 to 130 *

110 to 120 *

100 to 110 *

90 – 100

Less than 90

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PGT’s Core Geographic Market

is in Early Stages of Recovery • Florida’s downturn in new home construction has been significantly more pronounced than in other parts of the U.S.

– Since 2005 peak levels, single-family starts are down nearly 85%

– Since hitting trough levels in 2009, starts have recovered modestly in the last two years; however, starts remain well below normalized levels

• Based on average single-family starts per thousand since 1990, normalized annual starts are estimated to be over 100,000 versus 31,888 starts in 2011

• Given the overbuild that occurred in Florida, we anticipate a prolonged period of time to revert to start levels consistent with longer-term historical averages

0

40

80

120

160

200

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012P

Florida Single-Family Housing Starts (in thousands)

FL Single-Family Starts

FL Population (in thousands)

Start per Thousand

31,888

19,057

1.7

31,543

18,496

1.7

25,730

18,496

1.4

39,269

18,389

2.1

63,953

18,251

3.5

132,635

18,058

7.3

193,111

17,736

10.9

172,408

17,343

9.9

146,692

16,959

8.6

122,546

16,668

7.4

107,615

16,349

6.6

97,697

16,049

6.1

99,188

15,111

6.6

95,299

14,908

6.4

86,260

14,683

5.9

87,252

14,427

6.0

79,016

14,185

5.6

93,316

13,962

6.7

89,713

13,714

6.5

80,873

13,505

6.0

68,296

13,289

5.1

81,965

12,938

6.3

35,477

-

-

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Leader In Technical Expertise PGT’s expertise is unmatched in the industry and provides a significant competitive advantage

Viewed as the industry expert dating back to early 1990s

Actively involved in the creation of testing standards and building codes

Provide leadership roles in key industry association that drive and/or influence code

Possess more Miami-Date County Notice of Acceptances (NOA’s) than any competitor

Built and tested first impact window in U.S. – Developed first R-5 impact window

Complete in-house product design and testing

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Unmatched Manufacturing Capabilities

• Vertically integrated manufacturing (including glass plant and truck fleet) provides a strong competitive advantage

• Cost savings

• Lower lead times

• Outstanding customer service and support

• Synchronous flow manufacturing enables efficient delivery of fully customizable, premium windows

• Every unit is custom made-to-order

• PGT’s culture focuses on growth and continuous improvement to drive output and manufacturing efficiencies

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Diverse Distribution Channels

Broad distribution allows PGT to effectively serve its

large customer base and manage demand fluctuations – Highly loyal distribution base with over 1,300 customers

• PGT University has trained approximately 31,000 customers

– Largest customer represents only 2% of 2011 sales

– Top 10 customers represent 16% of 2011 sales

2011 Sales Breakdown End Market Breakdown

Aluminum

Contractors

3%

Distributors and

Lumberyards

48%

Eze-Breeze

Dealers

4%

Window

Replacement

45%

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3%

6%

11%

20%

26%27% 27%

0%

5%

10%

15%

20%

25%

30%

1999 2001 2003 2005 2007 2009 2011

Penetration of Impact-Resistant Windows & Doors is Continuing

• Impact-resistant windows and doors gaining penetration from 3% in 1999 to 27% in 2011

– Approximately 75% of impact-resistant market is still using shutters and other “active” protection

• Increased penetration largely due to greater awareness of benefits of impact-resistant windows and doors versus shutters among consumers, builders and contractors

– Superior performance and ease-of-use

– Improved aesthetics

– Insurance incentives (ranging from 20% to 40% savings)

– Security features

– Noise reduction

– Energy efficiency

Impact-Resistant Windows and Doors Penetration

Note: Based on units.

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Recent Financial Performance 2011 represented a year of transition for PGT Company further drove efficiency and savings by consolidating all operations into the Florida facility

In 2012, PGT is expected to further benefit from the consolidation of Company operations and an increased focus on top line growth despite continued weakness in the housing market

($ in millions) FY 2009 FY2010 FY 2011 LTM 6/30/12 6M of 2011 6M of 2012

Revenue $166,001 $175,741 $167,276 $166,046 $85,816 $84,586

Y-O-Y Growth (%)

- 5.9% (4.8)% - - (1.4%)

Gross Profit $47,440 $51,223 $46,851 $58,033 $17,234 $28,416

Margin (%) 28.6% 29.1% 28.0% 34.9% 20.1% 33.6%

*Adj. EBITDA $15,101 $16,838 $14,462 $19,431 $6,161 $11,130

Margin (%) 9.1% 9.6% 8.6% 11.7% 7.2% 13.2%

Capital Expenditures

$2,330 $3,197 $3,496 $4,195 $1,652 $2,351

% of sales 1.4% 1.8% 2.1% 2.5% 1.9% 2.8%

*Adjusted for non recurring items including restructuring and consolidation costs, as well as non-cash stock compensation and impairment charges

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Gross Margin Near Top of Industry *

36.9%

33.6% 30.9%

26.5% 25.9%

21.7%

18.8%

13.8% 13.5% 13.3% 12.2% 11.7%

0.0%

10.0%

20.0%

30.0%

40.0%

TREX PGTI FBHS HW MAS AWI LEG OC USG LPX AMWD UFPI

*Based on most recent quarterly public filing

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Maintaining a Healthy Balance Sheet

($ in millions) Year End 2011 .

First Half 2012 .

Cash & cash equivalents $10.9 $15.7

Working Capital $16.5 $22.6

Capital Assets $48.6 $42.7

Intangibles $51.8 $48.6

Total Debt $45.5 $43.5

Shareholder’s Equity $67.4 $71.0

LTM EBITDA/Total Debt 3.1 2.3

DSO 39 34

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Focused Growth Strategy Given the market opportunities and PGT’s strong competitive position, the

Company has engaged a new executive to lead sales and marketing initiatives, including a three-pronged growth strategy:

Increase market share in SE/SW Florida, our two largest markets

Capitalize on end-user shift from “active” to “passive” protection

Leverage PGT’s market-leading position and high barriers to entry

Greater awareness of PGT branded products

> WinGuard

> SpectraGuard

> PremierVue

Leverage sound/security benefits

Continue Growing in Existing Markets

1

Coastline from Mexico to Long Island, with a specific focus on the Gulf Coast and the Carolinas

Aggressive expansion in energy efficient markets

Team members reorganized to drive international growth

New team focused on expanding Eze-Breeze sales and distribution channels

Expand to New Markets

2

Two recent SGD launches, one aluminum and one vinyl, won consecutive Crystal Achievement Awards

PremierVue

> Vinyl framed impact window for high-end residential and commercial

> First R-5 impact window in the industry

SpectraGuard

> Energy efficient new construction and replacement vinyl window

Introduce New Products

3

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Investment Update • Despite challenging housing market conditions: –Significant upside exists once the housing market rebounds

–Paid down long term gross debt from $320M in 2006 to $40.5M currently

–Recognized leader in structural and energy code development

• PGT is well positioned to drive strong growth in revenue and profitability:

–Attractive long-term industry fundamentals

–Strengthening housing market environment

–Market-leading position with a 50%+ national market share

–Outstanding manufacturing capabilities

–Multiple growth strategies, including new product introductions

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Why Invest in PGT

Market Leader in Core Markets

Competitive Barriers through Superior Brand

Awareness and Technical Expertise

History of Solid Financial Performance

Irrespective of Housing Market

Extensive and Loyal Distribution Channels

Across Balanced End-Markets

Manufacturing Excellence and Continuous Improvement Culture

Focused Growth Strategy