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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 2, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-37971

PGT Innovations, Inc.

 

1070 Technology Drive

North Venice, FL 34275

Registrant’s telephone number: 941-480-1600

 

State of Incorporation

 

IRS Employer Identification No.

Delaware

 

020-0634715

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes No ☐

 

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes ☐ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No ☑

Common Stock, $0.01 par value, outstanding was 59,918,550 shares, as of April 30, 2022.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.01 per share

 

PGTI

 

New York Stock Exchange, Inc.

 

 


PGT INNOVATIONS, INC.

TABLE OF CONTENTS

 

Form 10-Q for the Three months Ended April 2, 2022

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

Number

Part I.

 

Financial Information

 

3

 

 

Item 1.

 

Condensed Consolidated Financial Statements (unaudited):

 

3

 

 

 

 

Condensed Consolidated Statements of Operations

 

3

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income

 

4

 

 

 

 

Condensed Consolidated Balance Sheets

 

5

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

6

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity

 

7

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

8

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

29

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

38

 

 

Item 4.

 

Controls and Procedures

 

38

 

 

 

 

 

 

 

Part II.

 

Other Information

 

39

 

 

Item 1.

 

Legal Proceedings

 

39

 

 

Item 1A.

 

Risk Factors

 

39

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

39

 

 

Item 6.

 

Exhibits

 

40

 

 

 

 

Signature

 

41

 

 

 

 

 

 

 

 

 

- 2 -


PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

 

Three Months Ended

 

 

April 2,

 

 

April 3,

 

 

2022

 

 

2021

 

 

(unaudited)

 

Net sales

$

358,662

 

 

$

271,092

 

Cost of sales

 

224,069

 

 

 

177,130

 

 

 

 

 

 

 

Gross profit

 

134,593

 

 

 

93,962

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

95,882

 

 

 

69,766

 

 

 

 

 

 

 

Income from operations

 

38,711

 

 

 

24,196

 

 

 

 

 

 

 

Interest expense, net

 

7,080

 

 

 

7,457

 

 

 

 

 

 

 

Income before income taxes

 

31,631

 

 

 

16,739

 

 

 

 

 

 

 

Income tax expense

 

7,805

 

 

 

3,944

 

 

 

 

 

 

 

Net income

 

23,826

 

 

 

12,795

 

 

 

 

 

 

 

Less: Net income attributable to redeemable non-controlling interest

 

(657

)

 

 

(411

)

 

 

 

 

 

 

Net income attributable to the Company

$

23,169

 

 

$

12,384

 

 

 

 

 

 

 

Calculation of net income per common share attributable to common shareholders:

 

 

 

 

 

Net income attributable to the Company

$

23,169

 

 

$

12,384

 

Change in redemption value of redeemable non-controlling interest

 

(2,136

)

 

 

 

Net income attributable to common shareholders

$

21,033

 

 

$

12,384

 

 

 

 

 

 

 

Net income per common share attributable to common shareholders:

 

 

 

 

 

Basic

$

0.35

 

 

$

0.21

 

Diluted

$

0.35

 

 

$

0.21

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

Basic

 

59,831

 

 

 

59,286

 

Diluted

 

60,219

 

 

 

59,894

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 3 -


PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

 

 

Three Months Ended

 

 

April 2,

 

 

April 3,

 

 

2022

 

 

2021

 

 

(unaudited)

 

Net income

$

23,826

 

 

$

12,795

 

 

 

 

 

 

 

Other comprehensive income (loss) before tax:

 

 

 

 

 

Change in fair value of derivatives

 

6,075

 

 

 

8,288

 

Reclassification to earnings

 

(2,062

)

 

 

(1,775

)

 

 

 

 

 

 

Other comprehensive income
  before tax

 

4,013

 

 

 

6,513

 

 

 

 

 

 

 

Income tax expense related to other
  comprehensive income

 

1,030

 

 

 

1,618

 

 

 

 

 

 

 

Other comprehensive income,
  net of tax

 

2,983

 

 

 

4,895

 

 

 

 

 

 

 

Comprehensive income

 

26,809

 

 

 

17,690

 

 

 

 

 

 

 

Less: Comprehensive income attributable to
   redeemable non-controlling interest

 

(657

)

 

 

(411

)

 

 

 

 

 

 

Comprehensive income attributable to the Company

$

26,152

 

 

$

17,279

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 4 -


PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

 

 

 

April 2,

 

 

January 1,

 

 

 

2022

 

 

2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

103,631

 

 

$

96,146

 

Accounts receivable, net

 

 

179,167

 

 

 

141,221

 

Inventories

 

 

97,399

 

 

 

91,440

 

Contract assets, net

 

 

51,193

 

 

 

55,239

 

Prepaid expenses

 

 

11,236

 

 

 

8,727

 

Other current assets

 

 

28,515

 

 

 

28,985

 

Total current assets

 

 

471,141

 

 

 

421,758

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

186,030

 

 

 

185,266

 

Operating lease right-of-use asset, net

 

 

88,812

 

 

 

91,162

 

Intangible assets, net

 

 

380,682

 

 

 

394,525

 

Goodwill

 

 

370,366

 

 

 

364,598

 

Other assets, net

 

 

2,087

 

 

 

3,301

 

 

 

 

 

 

 

 

Total assets

 

$

1,499,118

 

 

$

1,460,610

 

 

 

 

 

 

 

 

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST
   AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

137,414

 

 

$

122,681

 

Current portion of operating lease liability

 

 

13,676

 

 

 

13,180

 

Total current liabilities

 

 

151,090

 

 

 

135,861

 

 

 

 

 

 

 

 

Long-term debt, net

 

 

625,959

 

 

 

625,655

 

Operating lease liability, less current portion

 

 

81,473

 

 

 

83,903

 

Deferred income taxes

 

 

38,519

 

 

 

37,489

 

Other liabilities

 

 

8,766

 

 

 

11,742

 

 

 

 

 

 

 

 

Total liabilities

 

 

905,807

 

 

 

894,650

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable non-controlling interest

 

 

39,656

 

 

 

36,863

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Preferred stock; par value $.01 per share; 10,000 shares
  authorized;
no shares outstanding

 

 

 

 

 

 

Common stock; par value $.01 per share; 200,000 shares authorized; 63,883 and
  
63,516 shares issued and 59,901 and 58,696 shares outstanding at
  April 2, 2022 and January 1, 2022, respectively

 

 

639

 

 

 

635

 

Additional paid-in-capital

 

 

434,212

 

 

 

433,347

 

Accumulated other comprehensive income

 

 

9,989

 

 

 

7,006

 

Retained earnings

 

 

127,104

 

 

 

106,398

 

Treasury stock at cost

 

 

(18,289

)

 

 

(18,289

)

Total shareholders' equity

 

 

553,655

 

 

 

529,097

 

 

 

 

 

 

 

 

Total liabilities, redeemable non-controlling interest and shareholders' equity

 

$

1,499,118

 

 

$

1,460,610

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 5 -


PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

Three Months Ended

 

 

 

April 2,

 

 

April 3,

 

 

 

2022

 

 

2021

 

 

 

(unaudited)

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

23,826

 

 

$

12,795

 

Adjustments to reconcile net income to net cash

 

 

 

 

 

 

(used in) provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

8,470

 

 

 

6,697

 

Amortization

 

 

8,043

 

 

 

4,749

 

Provision for allowance for doubtful accounts

 

 

1,408

 

 

 

2,411

 

Stock-based compensation

 

 

2,205

 

 

 

1,750

 

Amortization of deferred financing costs, debt discount and premium

 

 

304

 

 

 

230

 

Loss on sales of assets

 

 

747

 

 

 

67

 

Change in operating assets and liabilities (net of effects of acquisition):

 

 

 

 

 

 

Accounts receivable

 

 

(39,357

)

 

 

(24,980

)

Inventories

 

 

(6,286

)

 

 

(4,307

)

Contract assets, net, prepaid expenses, other current and other assets

 

 

10,669

 

 

 

(20,898

)

Accounts payable, accrued and other liabilities

 

 

7,291

 

 

 

20,039

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

 

17,320

 

 

 

(1,447

)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(8,180

)

 

 

(6,512

)

Investment in and acquisition of business

 

 

 

 

 

(94,321

)

Proceeds from sales of assets

 

 

8

 

 

 

7

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

(8,172

)

 

 

(100,826

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of senior notes

 

 

 

 

 

63,300

 

Payments of financing costs

 

 

 

 

 

(1,363

)

Purchases of common stock relating to tax withholdings on employee equity awards

 

 

(1,663

)

 

 

(1,005

)

 

 

 

 

 

 

 

Net cash (used in) provided by financing activities

 

 

(1,663

)

 

 

60,932

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

7,485

 

 

 

(41,341

)

Cash and cash equivalents at beginning of period

 

 

96,146

 

 

 

100,320

 

Cash and cash equivalents at end of period

 

$

103,631

 

 

$

58,979

 

 

 

 

 

 

 

 

Non-cash activity:

 

 

 

 

 

 

Issuance of common stock in Eco Acquisition

 

$

 

 

$

6,108

 

Establish right-of-use asset

 

$

1,324

 

 

$

29,490

 

Establish operating lease liability

 

$

(1,324

)

 

$

(29,490

)

Property, plant and equipment additions in accounts payable

 

$

127

 

 

$

1,022

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 6 -


PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except shares)(unaudited)

 

 

 

PGT Innovations, Inc. Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

Paid-in

 

 

Comprehensive

 

 

Retained

 

 

Treasury

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Earnings

 

 

Stock

 

 

Total

 

THREE MONTHS ENDED APRIL 3, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 2, 2021

 

 

58,998,711

 

 

$

625

 

 

$

420,202

 

 

$

2,720

 

 

$

79,896

 

 

$

(18,309

)

 

$

485,134

 

Vesting of restricted stock

 

 

147,106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grants of restricted stock

 

 

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

Forfeitures of restricted stock

 

 

 

 

 

(1

)

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of treasury stock

 

 

(42,414

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,005

)

 

 

(1,005

)

Retirement of treasury stock

 

 

 

 

 

 

 

 

(844

)

 

 

 

 

 

(161

)

 

 

1,005

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,750

 

 

 

 

 

 

 

 

 

 

 

 

1,750

 

Issuance in acquisition of Eco

 

 

357,797

 

 

 

4

 

 

 

6,104

 

 

 

 

 

 

 

 

 

 

 

 

6,108

 

Net income attributable to the Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,384

 

 

 

 

 

 

12,384

 

Change in redemption value of redeemable
  non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income, net of
  tax expense of $
1,618

 

 

 

 

 

 

 

 

 

 

 

4,895

 

 

 

 

 

 

 

 

 

4,895

 

Balance at April 3, 2021

 

 

59,461,200

 

 

 

631

 

 

 

427,210

 

 

 

7,615

 

 

 

92,119

 

 

 

(18,309

)

 

 

509,266

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THREE MONTHS ENDED APRIL 2, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2022

 

 

59,696,117

 

 

$

635

 

 

$

433,347

 

 

$

7,006

 

 

$

106,398

 

 

$

(18,289

)

 

$

529,097

 

Vesting of restricted stock

 

 

288,962