PGTI Reports First Quarter 2018 Results

PGT Innovations, Inc. (NYSE: PGTI), the leading U.S. manufacturer and supplier of impact-resistant windows and doors, announces financial results for its first quarter ended March 31, 2018.

"PGT Innovations delivered a solid top-line performance in our first quarter of 2018. Sales of $140 million increased $28 million, or 24 percent, over the first quarter of last year. We continued to increase our share of the Florida market in the first quarter, as our sales into the repair and remodeling market increased 32 percent compared to last year’s first quarter, and represented 63 percent of sales,” stated Jeff Jackson, CEO of PGT Innovations. "Our strategy of investing in marketing and advertising, combined with the heightened awareness of the benefits of impact-resistant products from an active 2017 hurricane season, continued to benefit our sales during the first quarter of 2018. Homeowners are preparing for what experts are forecasting to be another active hurricane season in 2018, and, we believe they are selecting our products at an increasing rate for their impact protection needs, and to comply with Florida’s building codes, which are the strongest, safest building codes in the country.”

Financial Highlights for First Quarter 2018 versus First Quarter 2017

• Net sales of $140.3 million, an increase of $27.5 million, or 24 percent
• Gross margin of 31.9 percent, compared to 28.2 percent
• Net income of $7.3 million, compared to $3.0 million
• Adjusted net income of $9.9 million, compared to $3.8 million
• Net income per diluted share of $0.14, compared to $0.06
• Adjusted net income per diluted share of $0.19, compared to $0.07

"Our strong top-line results delivered a solid operating performance due to our increased ability to leverage fixed costs, resulting in improved margins in the first quarter of 2018, compared to last year’s first quarter. This leverage, combined with manufacturing and operating efficiencies we achieved during the first quarter delivered a nearly 4 percentage-point increase in gross margin compared to last year,” Jackson continued. "The inflationary headwinds we experienced in the second half of last year were still a factor during the first quarter of 2018, especially a higher cost for aluminum. We took actions to offset the unfavorable impact of this cost increase, including announcing a price increase during the first quarter, the benefits of which we began to see in March.”

"Our team delivered adjusted EBITDA of $21.7 million in the first quarter of 2018, up 42 percent from the first quarter of last year, and adjusted diluted earnings per share of 19 cents, increasing 12 cents,” stated Brad West, PGT Innovations CFO. "We are pleased with these metrics, which confirm our ability to profitably leverage our growth.”

"During the first quarter of 2018, we amended our credit facility, which resulted in a 125 basis-point reduction in our interest rate margin, which we estimate should reduce our cash debt service costs by an aggregate of nearly $2.8 million over the next twelve months. We accomplished this refinancing at minimal cost to the company and recorded a non-cash charge of $3.1 million for the write-off of deferred financing costs,” continued West. "Including last year’s refinancing, we have lowered our interest margin by a total of 225 basis points in a little more than one year, a reflection we believe of our strong financial position and ability to generate cash.”

Fiscal Year 2018 Outlook

The Company remains confident in its core market of Florida and expects to finish its 2018 fiscal year at the higher end of the ranges that was previously provided as guidance for its 2018 fiscal year, which are listed below. 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 updated 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, May 1, 2018, at 10:30 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 6617629. A replay of the call will be available within one hour after the end of the call on May 1, 2018, through May 15, 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 10119077.

You may also provide your contact information in advance by using the following link: https://hd.choruscall.com/?callme=true&passcode=6617629&r=true&info=company&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, including, without limitation, 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;
• 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;
• 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 other risks and uncertainties discussed under "Risk Factors” in our Annual Report on Form 10-K for the year ended December 30, 2017.

Statements in this press release that are forward-looking statements include, without limitation, our expectations regarding: (1) demand for our products going forward, including the demand for our products from homeowners who are preparing for the 2018 and future hurricane seasons; (2) our ability to continue to leverage fixed costs in a favorable manner; (3) the heightened awareness brought by Hurricane Irma and our post-Irma advertising initiatives about the benefits of impact-resistant window and door products; (4) the favorable impact that the increase in our product prices may have on our performance, and our ability to take future price increases to offset further increases in our costs; (5) the amount of the decrease in our cash interests costs going forward; (6) the Company’s ability to capture a meaningful share of any increased demand for impact-resistant products; and (7) our financial and operational performance for our 2018 fiscal year, including our "Fiscal Year 2018 Outlook” set forth in this press release. 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, and 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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