Ply Gem Reports First Quarter 2011 Results

CARY, N.C.--()--Ply Gem Holdings, Inc. (“Ply Gem” or the “Company”), a leading manufacturer of residential exterior building products in North America, today announced financial results for the first quarter ended April 2, 2011. Our first quarter highlights included:

  • Net sales were $200.1 million, a decrease of $4.1 million, or 2.0%, compared to the prior year first quarter of $204.2 million.
  • Excluding $6.7 million of buyback expense associated with a significant new customer win, our first quarter operating loss was $7.6 million compared to a $3.7 million loss for the first quarter of 2010.
  • Adjusted EBITDA was $6.5 million compared to Adjusted EBITDA of $12.1 million for the first quarter of 2010.

Gary E. Robinette, President and CEO, said “Ply Gem’s first quarter 2011 sales and Adjusted EBITDA continue to reflect the challenging conditions that exist in the housing market today. Despite single family housing starts being down 21% from the prior year, Ply Gem’s sales only showed a modest decline, reflecting a significant new customer win in the first quarter and further demonstrating our ability to gain profitable market share.”

Mr. Robinette continued, “Given that market conditions for 2011 are expected to remain challenging, Ply Gem will continue to focus on maintaining a lean overall cost structure while maximizing cash flow and striving to outperform the market place in all business units, which will ensure that Ply Gem emerges stronger as the housing market recovers.”

Ply Gem, headquartered in Cary, N.C., is a leading manufacturer of residential exterior building products in North America. Ply Gem produces a comprehensive product line of vinyl siding, designer accents and skirting, vinyl and aluminum soffit and siding accessories, aluminum trim coil, vinyl and composite fencing and railing, stone veneer, vinyl windows and doors, wood windows, aluminum windows, vinyl and aluminum-clad windows and steel and fiberglass doors used in both new construction and home repair and remodeling in the United States and Western Canada. Ply Gem siding brands include Mastic® Home Exteriors, Variform®, NAPCO®, Ply Gem® Stone, Kroy®, Cellwood®, Georgia Pacific, DuraBuilt®, Richwood®, Leaf Relief®, Gutter Warrior™ and Monticello® Columns. Ply Gem windows and patio door brands include Ply Gem® Windows, Ply Gem® Canada and Great Lakes® Window. The Company's brands are sold through short-line and two-step distributors, pro dealers, home improvement dealers and big box retailers. Ply Gem employs more than 4,200 people across North America. Visit www.plygem.com for more information.

Ply Gem management will host a conference call on May 16, 2011 at 10:00 a.m. EST to report first quarter results. To participate please call 800-561-2718 and use call confirmation number 84233586.

Note: As used herein, the term “Ply Gem” or the ”Company” refers to Ply Gem Holdings, Inc. and all its subsidiaries, including Ply Gem Industries, Inc., unless the context indicates otherwise. This term is used for convenience only and is not intended as a precise description of any of the separate corporations.

This document and oral statements made from time to time by our representatives may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the Company’s current plans and expectations and involve risks and uncertainties that could cause actual future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors impacting such forward-looking statements include the availability and cost of raw materials and purchased components, the level of construction and remodeling activity, changes in general economic conditions, the rate of sales growth, product liability claims and other factors discussed in the Company’s news releases, public statements and/or filings with the Securities and Exchange Commission, including the Company’s Annual and Quarterly Reports on Forms 10-K and 10-Q. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information, please refer to the reports and filings of the Company with the Securities and Exchange Commission.

 
 
 
 
 

PLY GEM HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 
    For the three months ended
(Amounts in thousands) April 2, 2011     April 3, 2010
 
 
Net sales $ 200,107 $ 204,205
Cost of products sold   172,325     167,308  
Gross profit 27,782 36,897
Operating expenses:
Selling, general and administrative expenses 35,364 33,806
Amortization of intangible assets   6,684     6,794  
Total operating expenses   42,048     40,600  
Operating loss (14,266 ) (3,703 )
Foreign currency gain 133 104
Interest expense (26,460 ) (34,007 )
Interest income 36 53
Gain (loss) on modification or extinguishment of debt   (27,863 )   98,187  
Income (loss) before provision for income taxes (68,420 ) 60,634
Provision for income taxes   2,472     6,532  
Net income (loss) $ (70,892 ) $ 54,102  
 

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

1. The accompanying unaudited condensed consolidated statements of operations of Ply Gem Holdings, Inc. (the “Company”) do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The selected balance sheet data for the periods presented in Note 4 has been derived from the December 31, 2010 audited consolidated financial statements of the Company and the unaudited condensed consolidated financial statements of the Company as of April 2, 2011, and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

The Company’s fiscal quarters are based on periods ending on the last Saturday of the last week in the quarter. Therefore the financial results of certain fiscal quarters will not be exactly comparable to the prior and subsequent fiscal quarters.

2. We define adjusted EBITDA as net income (loss) plus interest expense (net of interest income), provision (benefit) for income taxes, depreciation and amortization, non-cash foreign currency gain/(loss), customer inventory buybacks, restructuring and integration costs, and gain/(loss) on modification or extinguishment of debt. Other companies may define adjusted EBITDA differently and, as a result, our measure of adjusted EBITDA may not be directly comparable to adjusted EBITDA of other companies. Management believes that the presentation of adjusted EBITDA included in this press release provides useful information to investors regarding our results of operations because it assists both investors and management in analyzing and benchmarking the performance and value of our business. The Company has included adjusted EBITDA because it is a key financial measure used by management to (i) assess the Company's ability to service its debt and/or incur debt and meet the Company's capital expenditure requirements; (ii) internally measure the Company's operating performance; and (iii) determine the Company's incentive compensation programs. In addition, the Company's Senior Secured asset-based revolving credit facility has certain covenants that apply ratios utilizing this measure of adjusted EBITDA. Although we use adjusted EBITDA as a financial measure to assess the performance of our business, the use of adjusted EBITDA is limited because it does not include certain material costs, such as interest and taxes, necessary to operate our business. Adjusted EBITDA included in this press release should be considered in addition to, and not as a substitute for, net earnings in accordance with GAAP as a performance measure. You are cautioned not to place undue reliance on adjusted EBITDA.

   
Ply Gem Holdings, Inc.
(Amounts in thousands)
For the three months ended
April 2, 2011     April 3, 2010
Net income (loss) $ (70,892 ) $ 54,102
Interest expense, net 26,424 33,954
Provision for income taxes 2,472 6,532
Depreciation and amortization 13,690 15,454
Non cash gain on currency transaction (133 ) (104 )
(Gain) loss on modification or extinguishment of debt 27,863 (98,187 )
Customer inventory buyback 6,692 252
Restructuring/integration expense   429     106  
Adjusted EBITDA $ 6,545   $ 12,109  
 
 

3. Long-term debt amounts in the selected balance sheets at April 2, 2011 and December 31, 2010 consisted of the following:

    April 2, 2011     December 31, 2010
(Amounts in thousands)
 
Senior secured asset based revolving credit facility $ 90,000 $ 30,000

11.75% Senior secured notes due 2013, net of unamortized discount of $0 and $7,318

- 717,682

8.25% Senior secured notes due 2018, net of unamortized early tender premium and discount of $44,426 and $0

755,574 -

13.125% Senior subordinated notes due 2014, net of unamortized discount of $3,319 and $3,519

  146,681   146,481
$ 992,255 $ 894,163
 
 

4. The following is a summary of selected balance sheet amounts at April 2, 2011 and December 31, 2010:

    April 2, 2011     December 31, 2010
(Amounts in thousands)
 
Cash and cash equivalents $ 24,000 $ 17,498
Accounts receivable, less allowances 116,878 97,859
Inventories 123,231 98,579
Prepaid expenses and other current assets 13,271 10,633
Property and equipment, net 112,611 116,712
Intangible assets, net 140,283 146,965
Goodwill 393,473 393,433
Accounts payable 75,533 54,973
Long-term debt 992,255 894,163
Stockholder's deficit (242,977 ) (173,088 )
 
 
 

Contacts

Ply Gem Holdings, Inc.
Shawn Poe, CFO, 919-677-4019

Contacts

Ply Gem Holdings, Inc.
Shawn Poe, CFO, 919-677-4019