PGT Innovations (PGTI) Stock Up 26.4% on Q1 Earnings Beat
PGT Innovations, Inc.’s PGTI shares jumped more than 26% on May 13, following the first-quarter earnings release. The company’s earnings and revenues not only beat the Zacks Consensus Estimate but also improved year over year, courtesy of noticeable sales growth, reflecting overall strength of its brands in the housing market.
Inside the Headline Numbers
This manufacturer of windows and doors reported adjusted earnings of 28 cents per share, surpassing the consensus mark of 13 cents by 115.4% and increasing 75% year over year. Its net sales of $220.2 million grew 27% year over year and surpassed analysts’ expectation by 16.2%. This was driven by strong organic growth of 18% in the Southeast business unit and 14% in the Western business unit, inclusive of an extra selling week in first-quarter 2020 compared with the prior year. Additionally, the acquisition of NewSouth Window Solutions contributed to the growth.
PGT Inc Price, Consensus and EPS Surprise
PGT Inc price-consensus-eps-surprise-chart | PGT Inc Quote
Margins
The company’s gross margin was 36.8% in the quarter, reflecting a 150 basis-point (bps) improvement year over year. The upside was due to higher sales, and lower direct labor and material costs.
Adjusted EBITDA improved 39.3% from the prior-year quarter to $39.4 million and adjusted EBITDA margin expanded 160 bps. This improvement reflects higher sales, and lower direct labor and material expenses resulting from diligent cost control and operating efficiencies.
Balance Sheet
As of Apr 4, 2020, PGT Innovations had cash and cash equivalents of $67.6 million compared with $97.2 million at 2019-end. Long-term debt was $421.2 million on Apr 4, 2020 compared with $369 million at 2019-end.
Overall, the company has a solid liquidity profile. In addition to the cash balance, it had undrawn revolver capacity of $76 million, which resulted in total liquidity of $144 million at first quarter-end.
Q2 Guidance
Given the challenging economic condition arising from the coronavirus pandemic, the company has taken initiatives aimed at preserving cash such as reduction in discretionary costs and carefully prioritizing capital expenditures, while continuing to deliver the products needed by customers.
Despite withdrawing its 2020 guidance, PGT Innovations provided second-quarter view. It expects second-quarter consolidated net sales, inclusive of NewSouth, to decline in the range of 7-10% year over year. This is mainly owing to a decline in orders, which began in April, on account of COVID-19.
Notably, the company's Florida markets witnessed order entry declines of 10% year over year in April. California, Texas and Nevada saw softer order patterns, down 20-30% year over year for April and more than 40% sequentially.
Zacks Rank
PGT Innovations — which shares space with Arcosa Inc. ACA, Armstrong World Industries Inc. AWI and Construction Partners Inc. ROAD in the Zacks Building Products – Miscellaneous industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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