Increases Across the Board Borne Out in PGT Innovations Latest FinancialsNovember 10th, 2020 by Tara Taffera
All indicators are up, according to the third quarter financial results published late last week by PGT Innovations. Net sales increased 20%, to $238 million, including $27 million from the company’s NewSouth acquisition.
“PGT Innovations’ third quarter sales reflect strong demand in our key markets, including 7% organic growth and $27 million of sales from NewSouth Window Solutions,” said Jeff Jackson, president and CEO. “Looking ahead to the fourth quarter of 2020 and into 2021, we expect sales growth based upon the strength of new orders, and our growing backlog. Our legacy Southeast and Western business units together saw order entries grow 26% over the prior-year quarter, while NewSouth increased orders by 48%. Execution of strategic selling and marketing initiatives has been a key driver of sales in addition to recovering market demand for our portfolio of products, aided by an active hurricane season.”
Additional third quarter results include:
• Gross profit increased 24% to $87 million;
• Net income increased 15% to $17 million;
• Net income per diluted share increased 12%, to $0.29, and adjusted net income per diluted share increased 19% to $0.31; and
• Adjusted EBITDA increased 24% to $43 million.
Sherri Baker, senior vice president and chief financial officer, also reported how the company is paying down debt.
“With strong recurring cash flow and overall liquidity, we also made voluntary prepayments of borrowings under the term loan totaling $10 million during the third quarter,” she said. “As we think about capital allocation, we continue to prioritize internal investment in projects that we expect to drive margin growth or further improve our operational efficiency.”
The company has a positive outlook for the fourth quarter as well.
“In the fourth quarter of 2020, we expect consolidated net sales, inclusive of NewSouth, to be in the range of $200 million to $210 million, an increase of 14 to 20% compared to fourth quarter 2019, reflecting current market strength and order entries booked through October,” Jackson added.
Executives delved further into the results during a conference call with shareholders. This is where Jackson reported that order flow is increasing, as is the company’s backlog.
“We are working steadily to increase production output while adhering to important safety protocols to try to prevent COVID-19 transmission at our facilities,” Jackson said. “We believe these enhanced safety protocols have been effective at allowing us to responsibly increase capacity to accommodate consumer demand without jeopardizing safety.”
It was here that Jackson also reported expansion into other markets. “One of the most important steps we have taken is putting in place the team and supporting infrastructure to drive commercial sales,” said Jackson. “As a result, we have been able to build relationships to win new jobs in the commercial space. Additionally, our sales team has developed exclusive agreements with production builders to capture growth in new construction. We have expanded our presence in growing channels.”
At the same time, the company is paying down debt and realizing additional savings. “We are on track to achieve cost savings at an annualized run rate of approximately $3.5 million as a result of the consolidation of our Orlando plant into our Venice and Tampa manufacturing facilities,” said Baker.
This positive fourth quarter outlook comes with a caveat—that no “significant new pandemic related government restrictions or other macroeconomic disruptions that would adversely impact our business or the economies of our core markets” arise along the way, Baker said. “It also assumes we will not experience any significant disruptions to our supply chain for materials or availability of labor due to the pandemic for government responses to the pandemic,” she added.
The team also alluded to the possibility of future acquisitions.