PGTI Reports 2017 Fourth Quarter and Fiscal Year Results

PGT Innovations, Inc. (NYSE:PGTI), the leading U.S. manufacturer and supplier of impact-resistant windows and doors, announces financial results for its fourth quarter and fiscal year ended December 30, 2017.

Financial Highlights for Fourth Quarter 2017 versus Fourth Quarter 2016

• Net sales of $134.1 million, an increase of $24.6 million, or 22 percent
• Gross margin of 32.0 percent, compared to 28.8 percent
• Net income of $20.3 million, compared to $4.1 million
• Adjusted net income of $9.4 million, compared to $5.0 million
• Net income per diluted share of $0.39, compared to $0.08
• Adjusted net income per diluted share of $0.18, compared to $0.10

Financial Highlights for Fiscal Year 2017 versus Fiscal Year 2016

• Net sales of $511.1 million, an increase of $52.5 million, or 11 percent
• Gross margin of 31.1 percent, compared to 30.6 percent
• Net income of $39.8 million, compared to $23.7 million
• Adjusted net income of $31.5 million, compared to $26.6 million
• Net income per diluted share of $0.77, compared to $0.47
• Adjusted net income per diluted share of $0.61, compared to $0.53

"PGT Innovations delivered a year of solid growth and execution. We finished 2017 with a strong fourth quarter, on the heels of the most impactful hurricane season Florida has seen in 12 years. I am incredibly proud of our team for assisting affected communities, achieving impressive results, and gaining momentum each month after Hurricane Irma hit in September,” stated Jeff Jackson, CEO of PGT Innovations. "For the fourth quarter, we delivered sales of $134 million, increasing 22 percent over last year, bringing annual sales to $511 million, up 11 percent. During 2017, we grew our market share and captured increased demand for impact-resistant products in one of America’s strongest markets.”

"Hurricane Irma was a real-world test of our industry-leading products. Reports we have received from homeowners and our customers confirm that PGTI's impact-resistant products perform as-promised, protecting life and property against this powerful storm. This is a testament to our commitment for over 37 years to produce high-quality products that are tested to meet some of the most stringent standards in the nation,” Jackson commented.

"We believe PGTI is well-positioned to capture a significant share of the increased demand for impact-resistant products expected from heightened, post-Irma awareness, due to our leading market position, breadth of highly-innovative product offerings, and increased advertising,” stated Jackson. "As we continue to execute against our strategy of profitable growth and disciplined capital allocation, we expect continued strong performance throughout 2018.”

"Our team delivered adjusted EBITDA of $84.1 million in 2017, up 11 percent from last year, and adjusted diluted earnings per share of 61 cents, increasing 15 percent,” stated Brad West, PGT Innovations CFO. "This enabled us to generate solid free cash flow during 2017 which we used to further strengthen our balance sheet.”

"During 2017, we lowered our leverage significantly by using cash from operations to make a total of $40 million in voluntary prepayments of debt, including $20 million in the fourth quarter,” continued West. "Our net debt to adjusted EBITDA ratio, which was 3.4 times in early 2016, driven by acquisitions and related refinancings, has decreased to 2.2 times, a decrease of over 35 percent.”

"Due to the Tax Cuts and Jobs Act, which was enacted in December 2017, we recorded a $12.4 million non-cash tax benefit in the fourth quarter relating to the revaluation of our net deferred tax liability,” stated West.

Fiscal Year 2018 Outlook

The Company is providing the guidance listed below for its 2018 fiscal year. Management will discuss assumptions underlying this guidance during its upcoming earnings call. For its 2018 fiscal year, the Company currently expects to achieve the following. All comparisons are to fiscal year 2017:

• Net sales of $550 million to $575 million, increasing 8 percent to 13 percent;
• Adjusted EBITDA of $95 million to $105 million, increasing 10 percent to 22 percent;
• Net income per diluted share of $0.81 to $0.98; and
• Free cash flow of $59 million to $67 million

Beginning in 2018, the Company is updating its reporting of adjusted EBITDA to exclude non-cash stock-based compensation expense. In the above outlook comparison, adjusted EBITDA for 2017 has been adjusted to reflect this change. Comparisons to prior periods in future earnings releases will also be adjusted to reflect this change.

Conference Call

PGT Innovations will host a conference call on Tuesday, February 20, 2018, at 8:30 a.m. The conference call will be available at the same time through the Investor Relations section of the PGT Innovations, Inc. website, http://ir.pgtinnovations.com/events.cfm.

To participate in the teleconference, kindly dial into the call a few minutes before the start time: 877-883-0383 (U.S.) and 412-902-6506 (Canada and international). The conference ID is 0955560. A replay of the call will be available within one hour after the end of the call on February 20, 2018, through March 6, 2018. To access the replay, dial 877-344-7529 (U.S.), 855-669-9658 (Canada) and 412-317-0088 (international) and refer to pass code 10116521.

You may also provide your contact information in advance by using the following link: https://hd.choruscall.com/?callme=true&passcode=0955560&info=company&r=true&b=16. At the time of the call, the phone number you provided will be automatically called and connected to the conference.

About PGT Innovations, Inc.

PGT INNOVATIONS, INC. (NYSE:PGTI), headquartered in North Venice, Florida, through its wholly-owned subsidiaries, creates products which focus on protecting and enhancing the beauty and functionality of homes and businesses. The Company’s trusted brands include PGT Custom Windows & Doors, CGI Windows & Doors and WinDoor. PGT Innovations, Inc. holds the leadership position in its primary market and is part of the S&P SmallCap 400 Index. For additional information, visit http://ir.pgtinnovations.com.

Forward-Looking Statements

Statements in this press release regarding our business that are not historical facts are "forward-looking statements” that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Such forward-looking statements generally can be identified by the use of forward-looking terminology, such as "may,” "expect,” "expectations,” "outlook,” "forecast,” "guidance,” "intend,” "believe,” "could,” "project,” "estimate,” "anticipate,” "should” and similar terminology. These risks and uncertainties include factors such as:

• unfavorable changes in new home starts and home remodeling trends, especially in the State of Florida, where the substantial portion of our sales are generated;
• unfavorable changes in the economy in the United States in general and in the State of Florida, where the substantial portion of our sales are generated;
• increases in our cost of raw materials, including aluminum, glass and vinyl;
• our dependence on a limited number of suppliers for certain of our key materials;
• increases in our transportation costs;
• our level of indebtedness;
• our dependence on our impact-resistant product lines;
• our ability to successfully integrate businesses we may acquire;
• product liability and warranty claims brought against us;
• federal, state and local laws and regulations, including unfavorable changes in local building codes;
• our dependence on a limited number of manufacturing facilities;
• the continuing post-storm impact of Hurricane Irma on our customers and markets, demand for our products, and our financial and operational performance related thereto; and,
• the other risks and uncertainties discussed under "Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016, and our subsequently filed quarterly reports on Form 10-Q, filed with the SEC.

Statements in this press release that are forward-looking statements include, without limitation, our expectations regarding: (1) demand for our products going forward; (2) the benefits expected from the heightened awareness from Hurricane Irma and the benefits of impact-resistant window and door products; (3) the Company’s ability to capture a meaningful share of any increased demand for impact-resistant products; (4) the benefits expected from our post-Irma advertising; (4) our financial and operational performance for our 2018 fiscal year, including our "Fiscal Year 2018 Outlook” set forth in this press release; (5) new housing starts and housing market conditions in 2018 and beyond, especially with respect to the State of Florida; (6) our ability to increase our market share; (7) the breadth and innovativeness of our product offerings; and (8) the ability of our management team and employees to execute our strategy. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. 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 press release.

Use of Non-GAAP Financial Measures

This Press Release and the financial schedules include financial measures and terms not calculated in accordance with U.S. generally accepted accounting principles (GAAP). We believe that presentation of non-GAAP measures such as adjusted net income, adjusted net income per share, adjusted EBITDA provides investors and analysts with an alternative method for assessing our operating results in a manner that enables investors and analysts to more thoroughly evaluate our current performance compared to past performance. We also believe these non-GAAP measures provide investors with a better baseline for assessing our future earnings potential. The non-GAAP measures included in this release are provided to give investors access to types of measures that we use in analyzing our results.

Adjusted net income consists of GAAP net income adjusted for the items included in the accompanying reconciliation. Adjusted net income per share consists of GAAP net income per share adjusted for the items included in the accompanying reconciliation. We believe these measures enable investors and analysts to more thoroughly evaluate our current performance as compared to the past performance and provide a better baseline for assessing the Company's future earnings potential. However, these measures do not provide a complete picture of our operations.

Adjusted EBITDA consists of net income, adjusted for the items included in the accompanying reconciliation. We believe that adjusted EBITDA provides useful information to investors and analysts about the Company's performance because they eliminate the effects of period-to-period changes in taxes, costs associated with capital investments and interest expense. Adjusted EBITDA does not give effect to the cash the Company must use to service its debt or pay its income taxes and thus does not reflect the actual funds generated from operations or available for capital investments.

Our calculations of adjusted net income, adjusted net income per share, and adjusted EBITDA are not necessarily comparable to calculations performed by other companies and reported as similarly titled measures. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP measures. Schedules that reconcile adjusted net income, adjusted net income per share, and adjusted EBITDA to GAAP net income are included in the financial schedules accompanying this release.

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