RBC Capital Markets Global Industrials Conference September 2014
RBC Capital Markets
Global Industrials Conference September 2014
Forward-Looking Statements
This presentation includes forward-looking statements. These statements do not relate strictly to historical or current facts. Forward-looking statements usually can be identified by the use of words such as “goal,” “objective,” “plan,” “expect,” “anticipate,” “intend,” “project,” “believe,” “estimate,” “may,” “could,” or other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, results, circumstances or aspirations. Forward-looking statements are based on assumptions and by their nature are subject to risks and uncertainties, many of which are outside of our control. Our actual results may differ materially from those set forth in our forward-looking statements. There is no assurance that any list of risks and uncertainties or risk factors is complete. Factors that could cause actual results to differ materially from those described in our forward-looking statements include, but are not limited to those described in our filings with the Securities and Exchange Commission.
Any forward-looking statements made by us or on our behalf speak only as of the date they are made and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances.
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Management Presenters
PGT is led by a strong and experienced management team
8 Executive Team Members – combined have over 100 years window experience
Joined PGT in 2006
16 years of corporate experience including 8 years leading the Strategic Planning Process
Responsible for PGT’s Corporate Governance and Compliance as well as its Engineering, Information Systems and Code Compliance Departments
Joined PGT in 2005 as CFO and led the Company’s IPO Appointed to EVP of Operations in 2008 and subsequently appointed President and COO in 2014
25 years of operational and financial experience with various Fortune 500 companies
Responsible for PGT’s strategic and operational results
Jeff Jackson President
and Chief Operating Officer
Mick Ferrucci Vice President, General Counsel,
and Secretary
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Introduction to PGT and the Impact-Resistant Window and Door Market
Nation’s Leader for Impact Resistant Window and Doors
(1) LTM as of Q2 2014
$271M Annual
Revenue(1)
4
Market Leader
34-year History of Quality & Innovation
Nationally Recognized Brands
Pioneered Impact-Resistant Market
Strong Presence in Both New Construction and Repair and Remodel
Superior Value Proposition
Customer First − 360-Degree Service Model
Premium Positioning
Highest Quality
In-House Glass Processing
Deliveries made by our trucks and drivers
Proven Management Team
Over 100 collective years in Fenestration Industry − 46 years of financial, sales & operations with various
Fortune 500 companies
Positive EBITDA every quarter through Great Recession
Paid down $290M of debt over last seven years
− February 2006: $320M
− May 2013: $30M
Aluminum11.0% Vinyl
7.0% Arch. Systems1.0%
Eze-Breeze/Other7.0%
WinGuard (Impact Resistant)71.0%
PremierVue3%
LTM Sales
$191.3 million
Revenue by Product Type & Geography
PGT Inc. (PGT) manufactures and supplies products to the residential impact-resistant windows and doors market
Also manufactures non-impact-resistant products in both aluminum and vinyl frames including its SpectraGuard™ line of products
Caters to residential new construction and repair & remodeling end markets
Key brands include: WinGuard®, PremierVue™, Architectural Systems, SpectraGuard™ and Eze-Breeze®
Distributes products through multiple channels, including approximately 1,200 window distributors, building supply distributors, window replacement dealers and enclosure contractors
Headquartered in North Venice, FL
The Company sells and delivers product into Florida (88%) as well as Canada, Central America, Coastal mid-Atlantic, Gulf Coast, the Caribbean and the Southeastern U.S.
Approximately 1,700 employees as of July 29, 2014
Founded in 1980 and is listed on NASDAQ (Ticker: PGTI)
Business Description
Company Overview
$122
$87
$54
$8
$0
$20
$40
$60
$80
$100
$120
$140
(in
millio
ns)
Impact Non-impact
5
Industry Leadership
Overview of Industry Participants
Expertise in highly technical, time consuming and expensive regulatory
approval process
Entrenched relationship with dealers, architects and homebuilders
Embedded industry, product, and manufacturing expertise
Superior product performance, quality, features and customer service
Existing foothold within the largest U.S. impact-resistant window and door market
PGT’s leading position in the U.S. impact-resistant window and door market and its unrivaled designs and products enable the Company to consistently
deliver best-in-class solutions
Significant Barriers to Entry
Florida Fabricators
National Fabricators
6
Customers, Suppliers and End Market Breakdown
Aluminum11.0% Vinyl
7.0% Arch. Systems1.0%
Eze-Breeze/Other7.0%
WinGuard (Impact Resistant)71.0%
PremierVue3%
LTM Sales
$191.3 million
Highly diversified customer base that is comprised of approximately 1,200 window distributors, building supply distributors, window replacement dealers and enclosure contractors
Largest customer accounts for approximately 3.2% of net sales, and top ten customers account for approximately 19.5% of net sales
Sales are comprised of residential new construction and repair and remodeling end markets, which represented approximately 32% and 68% of PGT’s sales, respectively, during 2013. This compares to 28% and 72% in 2012
The Company does not supply its products directly to homebuilders, but demand for its products is also a function of relationships with a number of national homebuilders, which are strong
PGT’s primary manufacturing materials include aluminum and vinyl extrusions, glass, and polyvinyl butyral. Although in many instances PGT has agreements with its suppliers, these agreements are generally terminable by either party on limited notice
All of the Company’s needed materials are typically readily available from other sources
Customers and Suppliers
PGT End Market Breakdown
54%
63%
73% 75% 76%72%
68%64%
46%
37%
27% 25% 24%28%
32%36%
0%
20%
40%
60%
80%
2007 2008 2009 2010 2011 2012 2013 2014 YTD
Repair and remodeling New construction
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Comprehensive Product Offering
Windows and Doors Porch
Enclosures
Product Category WinGuard Architectural
Systems PremierVue Vinyl Aluminum 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
Newest product offering; heavy duty vinyl frame impact window for high end residential and commercial First R-5 impact window in the industry
Vinyl frame windows and doors Energy efficient product for any climate; meets 30/30 requirement of 09 ARRA
Aluminum frame windows and doors Target markets with warmer/humid climates due to strength and durability
Lighter-weight non-glass porch enclosure products Used for repair/remodel additions and enclosures
% of 2014 Q2 TTM Sales 71% 2% 3% 8% 10% 6%
TTM Gross Margin Impact – 37% Non-Impact – 15% Eze-Breeze – 37%
PGT offers premium brands across a diverse and comprehensive line of products
Impact-resistant sales increased as a percentage of total sales from 61% in 2005 to 76% in Q2 2014
8
WinGuard offers multiple benefits versus active storm protection including:
Superior performance
Ease of use
Improved aesthetics
Insurance benefits
Noise reduction
Better safety and security
Full egress
Better visibility with UV protection
Energy efficiency
PGT WinGuard® vs. the “Competition”
WinGuard The “Competition”
Over 3.5 Million WinGuard Units Have Been Installed with Zero Reported Impact Failures
Heavy-duty multi-chambered
frame
Impact-resistant laminated glass
Optional third piece of glass for
insulation
9
Flexible and Vertically-Integrated Manufacturing Capabilities and Technical Expertise
Vertically integrated manufacturing
In-house glass cutting, tempering, and laminating lowers costs / reduces lead-time
Synchronous flow manufacturing enables efficient production
Custom made-to-order products can be delivered in as little as 1-2 days
Consistent focus on continuous improvement drives manufacturing efficiencies
Recognized as industry expert / pioneer of impact-resistant windows
Actively involved in creation of standards / building codes
More Miami-Dade County Notice of Acceptances than any competitor
Complete in-house product design and testing
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Investment Highlights
Why Invest in PGT?
Market leader in attractive impact-resistant window and door market
Public peer-leading growth and margins
Diversified and loyal customer base
Superior customer service and support
Well positioned for Florida market recovery
Competitive advantages
12
Market Leader in Attractive Impact-Resistant Window and Door Market
PGT is the leader in the impact-resistant window and door market
− Significantly greater market share than any competitors in our core Florida market
We believe there is significant opportunity in the impact-resistant window market
− Target market in hurricane-prone coastal states
− Increasingly stringent building codes and protocols
Florida is PGT’s largest market accounting for approximately 88% of sales in FY 2013
* Impact protection required in Florida.
Impact-Resistant Market
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Customer Intimate Company
Highly loyal customer base with over 1,200 partners
Brand Recognition
PGT WinGuard® is synonymous with impact-resistant windows & doors
Industry Leading Service Model
World Class Capabilities & Services
Unprecedented Quality
Over 3.5 Million WinGuard® Units have been installed
− Zero (0) Reported Impact Failures
Technical Leadership
More Miami-Dade Notice of Acceptances (NOA) than any company in fenestration (the Nation’s toughest criteria)
Actively involved in creation of building standards / codes
Superior Product Portfolio
Ranging from Niche to Commercial
More Impact SKUs than any other manufacturer
Key Competitive Advantages
14
96
102
91 96 94
103 107 106120
129
153
179
206
152
73
3926
32 3242
54 54
82
121
-10
40
90
140
190
240
1993 1994 2995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Florida Single-Family Housing Starts (‘000s)
Well Positioned for Florida Housing Market Recovery
Growth in single-family housing starts from 2012 – 2015 expected to be higher than U.S. as a whole
Growth driven by recovery in Florida economy; improved housing market fundamentals and continued population growth driven by migration from other parts of the U.S.
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20-year(1) average: 114
(1) 20-year average represents 1988 – 2007 Source: Moody’s
Aluminum11.0% Vinyl
7.0% Arch. Systems1.0%
Eze-Breeze/Other7.0%
WinGuard (Impact Resistant)71.0%
PremierVue3%
LTM Sales
$191.3 million
LTM Q2 2014 EBITDA Margin LTM Q2 2014 Gross Margin
Public Peer(1) Leading Growth and Margins
(1) Peer group includes Fortune Brands Home and Security, Masco, Masonite and Ply Gem Holdings
Peer median Peer median
LTM Q2 2014 Revenue Growth
Peer median
32%
28%
34%
13%
16%
11%
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Attractive Cash Flow Characteristics…
Aluminum11.0% Vinyl
7.0% Arch. Systems1.0%
Eze-Breeze/Other7.0%
WinGuard (Impact Resistant)71.0%
PremierVue3%
LTM Sales
$191.3 million
Capex as % of Sales Free Cash Flow Conversion: (EBITDA – Capex) / EBITDA
68.0%
82.0% 84.5%
80.0% 75.0%
85.4%
80.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010 2011 2012 2013
FC
F c
onvers
ion %
Average: 79.4%
3.8%
2.1%
1.4%
1.8%
2.1% 2.2%
3.2%
0%
1%
2%
3%
4%
5%
2007 2008 2009 2010 2011 2012 2013
% o
f sa
les
Average: 2.4%
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Superior Customer Service and Support Our expertise and differentiated capabilities allow us to provide superior customer service and
support
− Vertically integrated manufacturing delivers best-in-class lead time
− Cross-functional workforce and owned truck fleet ensure on-time delivery
− Extensive points of contact with customers via customer service department, and both inside
and outside sales team
History of pioneering new products allows us to address continually evolving customer needs
Training and accredited courses offered at PGT University educate all constituents in the
industry
− Trained more than 40,000 customers, installers,
architects and building code officials
Highly trained and knowledgeable sales team works
closely alongside customers
Zero reported impact failures on more than 3.5 million
installed units
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Diversified and Loyal Customer Base Across Multiple Distribution Channels
Top 10 customers represented 19.5% of 2013
sales
Largest customer represented only 3.2% of 2013
sales
Highly loyal distribution base
Little turnover in top 10 customers despite challenging home construction market over past several years
A broad, diversified distribution network allows PGT to both effectively serve its large customer base and maintain a significant barrier to entry
Recent new customer wins in homebuilder and retail channel (Menards)
Continued focus on expanding customer relationships with recent hirings as follows:
– Increased Sales headcount from 26 to 34
– Director of Marketing
New vinyl product platform launch in Q1 2015 to expand share in strong vinyl areas
Diversified Loyal
Expansion
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Acquisition Strategy
Strategic Rationale for CGI Acquisition
21
Accretive to PGT in 2015 with significant operating and cost synergies
Product line integration Effective brand positioning, differentiated service offering by price point, and lower than expected dealer fall out due to single supplier will mitigate
cannibalization
Significantly expands presence in high-end market
Extends CGI product reach to currently underserved geographies by leveraging PGT’s widespread footprint
Broadens manufacturing platform and capabilities
Defends core market and prevents access to dealer base
Financial Summary
Historical Financial Summary Fiscal year
($ in millions)
2006 2007 2008 2009 2010 2011 2012 2013
TTM
6/29
FL Single Family
Housing Starts (000s)(1) 152 73 39 26 32 32 42 54 54
Total revenue $372 $278 $219 $166 $176 $167 $175 $239 $271
% growth 11.7% (25.1%) (21.5%) (24.0%) 5.9% (4.8%) 4.3% 37.1% 34.0%
Gross profit 142 91 68 44 50 39 60 80 87
% margin 38.1% 32.5% 31.1% 26.6% 28.5% 23.4% 34.2% 33.5% 32.2%
SG&A 86 77 63 52 54 49 47 55 54
% of sales 23.2% 27.5% 28.7% 31.1% 30.7% 29.0% 27.0% 22.8% 19.8%
Adjusted EBITDA(2) 73 33 25 15 16 14 26 38.8 42.7
% margin 19.6% 11.9% 11.5% 8.8% 9.0% 8.6% 14.9% 16.2% 15.8%
New construction and repair & remodeling accounted for 67% and 33% of FY2005 sales as compared to 36% and 64% of Q2 2014 sales
(1) Independent third party source (2) See GAAP reconciliation in appendix 23
Adjusted EBITDA Reconciliation
Fiscal year TTM TTM
($ in millions)
2005 2006 2007 2008 2009 2010 2011 2012 2013
Q2
2013
Q2
2014
Net Income/(Loss) $8 ($1) $1 ($163) ($9) ($15) ($17) $9 $27 $21 $23
Depreciation and Amortization 16 16 16 17 16 15 14 12 11 12 8
Interest Expense 14 29 11 9 7 5 4 3 3 3 4
Income Tax Expense/(Benefit) 4 0 1 (29) (6) 0 (2) 0 (3) (4) 7
EBITDA 41 43 29 (165) 8 6 (1) 25 38 32 42
Cash payment to Option Holders 7 27 - - - - - - - - -
Impairment Charges 7 1 1 188 1 6 6 - - - -
Management Fees 2 1 - - - - - - - - -
Consolidation Charges - - - - - 2 4 - - - -
Manufacturing Inefficiencies - - - - - - 4 - - - -
Restructuring Charges - - 2 2 5 - - - - - -
Gain on Asset Sales - - - - - - (1) - (2) (2) -
Exit Costs 1 - - - - - - - - - -
Write-off Deferred Financing Costs 0 - - - - - 0 - - - -
Secondary Offering & Debt
Refinancing related expenses - - - - - - - - 2 2 -
Non-Cash Stock Compensation - 0 2 1 1 2 2 1 1 1 1
Adjusted EBITDA 58 73 33 25 15 16 14 26 39 33 43
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