PGT Innovations, Inc. [PGTI] Filings

10-Q 1 pgti-20230701.htm 10-Q 10-Q

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 July 1, 2023

☐ 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

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.

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 58,351,339 shares, as of July 31, 2023.

PGT INNOVATIONS, INC.

TABLE OF CONTENTS

Form 10-Q for the Three and Six Months Ended July 1, 2023


			Page
			Number
Part I.	Financial Information		3
	Item 1.	Financial Statements	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	26
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
	Item 4.	Controls and Procedures	37

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 3.	Defaults Upon Senior Securities	40
	Item 4.	Mine Safety Disclosures	40
	Item 5.	Other Information	40
	Item 6.	Exhibits	40
		Signature	42

- 2 -

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)


	Three Months Ended						Six Months Ended
	July 1,			July 2,			July 1,			July 2,
	2023			2022			2023			2022
	(unaudited)						(unaudited)
Net sales	$	384,934		$	406,521		$	761,763		$	765,183
Cost of sales		230,983			241,391			458,581			465,460

Gross profit		153,951			165,130			303,182			299,723

Selling, general and administrative expenses		100,005			109,505			195,918			205,387
Restructuring costs and charges		2,516			—			2,516			—

Income from operations		51,430			55,625			104,748			94,336

Interest expense, net		8,214			7,155			15,870			14,235

Income before income taxes		43,216			48,470			88,878			80,101

Income tax expense		11,462			12,005			22,697			19,810

Net income		31,754			36,465			66,181			60,291

Less: Net income attributable to redeemable non-controlling interest ("RNCI")		(264	)		(304	)		(1,101	)		(961	)

Net income attributable to the Company	$	31,490		$	36,161		$	65,080		$	59,330

Calculation of net income per common share attributable to common shareholders:
Net income attributable to the Company	$	31,490		$	36,161		$	65,080		$	59,330
(Increase) decrease in redemption value of RNCI		(460	)		351			(1,637	)		(1,785	)
Net income attributable to common shareholders	$	31,030		$	36,512		$	63,443		$	57,545

Net income per common share attributable to common shareholders:
Basic	$	0.53		$	0.61		$	1.07		$	0.96
Diluted	$	0.53		$	0.61		$	1.07		$	0.96

Weighted average number of common shares outstanding:
Basic		58,559			59,928			59,188			59,880
Diluted		58,867			60,257			59,528			60,241

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						Six Months Ended
	July 1,			July 2,			July 1,			July 2,
	2023			2022			2023			2022
	(unaudited)						(unaudited)
Net income	$	31,754		$	36,465		$	66,181		$	60,291

Other comprehensive income before tax:
Decrease in fair value of derivatives		(1,215	)		(12,929	)		(903	)		(6,854	)
Reclassification to earnings		(19	)		(3,698	)		(159	)		(5,760	)

Other comprehensive loss before tax		(1,234	)		(16,627	)		(1,062	)		(12,614	)

Income tax benefit related to other comprehensive loss		(318	)		(4,270	)		(273	)		(3,240	)

Other comprehensive loss, net of tax		(916	)		(12,357	)		(789	)		(9,374	)

Comprehensive income		30,838			24,108			65,392			50,917

Less: Comprehensive income attributable to redeemable non-controlling interest		(264	)		(304	)		(1,101	)		(961	)

Comprehensive income attributable to the Company	$	30,574		$	23,804		$	64,291		$	49,956

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)


	July 1,			December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	39,397		$	66,548
Accounts receivable, net		150,530			160,107
Inventories		117,155			112,672
Contract assets, net		50,910			47,919
Prepaid expenses		16,625			11,763
Other current assets		18,232			16,532
Total current assets		392,849			415,541

Property, plant and equipment, net		213,165			208,354
Operating lease right-of-use asset, net		102,864			104,121
Intangible assets, net		433,754			447,052
Goodwill		461,927			460,415
Other assets, net		6,854			4,766

Total assets	$	1,611,413		$	1,640,249

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	126,560		$	168,961
Current portion of operating lease liability		17,615			16,393
Total current liabilities		144,175			185,354

Long-term debt, net		670,436			642,134
Operating lease liability, less current portion		94,928			95,159
Deferred income taxes		47,134			47,407
Other liabilities		6,933			7,459

Total liabilities		963,606			977,513

Commitments and contingencies

Redeemable non-controlling interest		—			34,721

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; 64,148 and 63,940 shares issued and 58,337 and 59,912 shares outstanding at July 1, 2023 and December 31, 2022, respectively		641			639
Additional paid-in capital		446,222			442,116
Accumulated other comprehensive (loss) income		(566	)		223
Retained earnings		267,250			204,891
Treasury stock at cost (4,710 shares and 2,760 shares at July 1, 2023 and December 31, 2022, respectively)		(65,740	)		(19,854	)
Total shareholders' equity		647,807			628,015

Total liabilities, redeemable non-controlling interest and shareholders' equity	$	1,611,413		$	1,640,249

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)


	Six Months Ended
	July 1,			July 2,
	2023			2022
	(unaudited)
Cash flows from operating activities:
Net income	$	66,181		$	60,291
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		17,742			17,064
Amortization		13,298			13,924
Provision for credit losses		1,463			6,048
Stock-based compensation expense		5,969			4,909
Amortization of deferred financing costs		654			611
Asset impairment charges		—			2,131
Non-cash portion of restructuring costs and charges		2,473			—
Gain on sales of assets		(193	)		(39	)
Change in operating assets and liabilities:
Accounts receivable		5,782			(44,148	)
Inventories		(4,847	)		(18,539	)
Contract assets, net, prepaid expenses, other current and other assets		472			5,713
Accounts payable, accrued and other liabilities		(48,698	)		36,958

Net cash provided by operating activities		60,296			84,923

Cash flows from investing activities:
Purchases of property, plant and equipment		(24,866	)		(17,328	)
Business combinations		(744	)		(787	)
Proceeds from sales of assets		698			41

Net cash used in investing activities		(24,912	)		(18,074	)

Cash flows from financing activities:
Payment of fair value of contingent consideration in Anlin Acquisition		(4,348	)		(2,362	)
Redemption of redeemable non-controlling interest		(37,459	)		—
Proceeds of amounts drawn from revolving credit facility		50,000			—
Payments of borrowing under revolving credit facility		(22,352	)		—
Purchases of treasury stock under share repurchase program		(45,431	)		—
Income taxes paid from stock withheld relating to vesting of equity awards		(3,350	)		(1,663	)
Proceeds from issuance of common stock under employee stock purchase plan (ESPP)		405			291

Net cash used in financing activities		(62,535	)		(3,734	)

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10-Q	[2015-05-08]
10-K	[2015-03-19]
10-Q	[2014-10-31]
10-Q	[2014-07-30]
10-Q	[2014-05-08]
10-K	[2014-02-28]
10-Q	[2013-11-01]
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