Market Overview

PGT Innovations to Acquire Western Window Systems to Expand Product Portfolio in Premium Indoor/Outdoor Window and Door Category; Acquisition Also Provides Expansion into New Geographic Markets And Expands Adjusted EBITDA Margins


PGT Innovations Also Announces Strong Preliminary Second Quarter 2018
Net Sales and Increases Full Year 2018 Outlook

Transaction Conference Call Scheduled for July 24, 2018 at 9:00 a.m.


  • Expands Product Portfolio in Attractive and Growing Indoor/Outdoor
    Window and Door Category
  • Creates Cross-Selling Opportunities Across PGT Innovations and
    Western Window Systems Product Portfolio and Customer Base
  • Supports PGT Innovations' Expansion Outside of Florida into
    Attractive, High Growth Western and Southwestern Markets
  • Adds Another Strong Brand to PGT Innovations Brand Portfolio
  • Strong Cultural and Values Fit Across Both Companies
  • Expands PGT Innovations Margin Profile by Adding Adjusted EBITDA
    Margin Business Above 20%
  • Expected to be Immediately Accretive to Cash EPS and Gross and
    Adjusted EBITDA Margins

PGT Innovations (NYSE:PGTI), the leading U.S. manufacturer and supplier
of impact-resistant windows and doors, and Western Window Systems today
announced that they have entered into a definitive agreement under which
PGT Innovations will acquire Western Window Systems from PWP Growth
Equity, the middle market private equity group of Perella Weinberg
Partners, for $360 million in cash, subject to customary adjustments.
The transaction is expected to be completed in the third quarter of 2018.

This transaction supports PGT Innovations' expansion outside of Florida,
an important component of its strategic roadmap for growth. With the
addition of Western Window Systems, PGT Innovations expects to gain a
strategic platform in important and growing geographies throughout the
western United States, including California, Texas, Arizona, Nevada,
Colorado, Oregon, Washington and Hawaii. The strategic transaction
builds on PGT Innovations' already strong foundation, positions it to
focus on high-growth contemporary architectural designs and
indoor/outdoor living spaces and is expected to support sustainable
long-term success. The acquisition will combine the complementary
strengths of Western Window Systems and PGT Innovations, providing the
opportunity to integrate Western Window Systems' category-leading
business into PGT Innovations' portfolio.

Western Window Systems, which has sales in 40 states, is a leader in
contemporary window and door systems designed for unifying
indoor/outdoor living spaces. Western Window Systems has a strong track
record of profitability and is expected to achieve net sales of
approximately $126 million to $132 million and an adjusted EBITDA margin
of between 23 percent and 24 percent for fiscal 2018. Western Window
Systems expects to achieve a net sales compounded annual growth rate of
approximately 22 percent from 2015 through the end of 2018. Western
Window Systems ended the first six months of 2018 with record backlog
and has no history of significant seasonality. For the twelve-month
period ended December 31, 2018, on a pro forma basis, the combined
company is expected to generate approximately $706 million to $732
million in net sales and approximately $135 million to $148 million or
19 percent to 20 percent in adjusted EBITDA, including certain
anticipated pro forma cost synergies.

"We are excited to add Western Window Systems to the PGT Innovations
family of brands," said Jeff Jackson, President and Chief Executive
Officer of PGT Innovations. "This transaction unites two highly
complementary businesses to create a national leader in the premium
window and door space, with an expanded product portfolio tailored to
provide significant benefits for our collective customers. Western
Window Systems delivers growth by disrupting industry norms and adopting
non-traditional approaches to contemporary windows and doors systems.
With a developed footprint across the South and West, we believe the
combined company will be well positioned to drive profitable, sustained
growth, including opportunities to introduce our respective products to
each other's customer base. The transaction is expected to be accretive
in the first year and facilitate strong cash flow generation, enabling
us to delever quickly. We believe this transaction will accelerate our
ability to enhance value creation for our shareholders."

"PGT Innovations is an organization whose values and culture align with
our own," said Scott Gates, President and Chief Executive Officer of
Western Window Systems. "PGT Innovations' enviable understanding of, and
sales into, the repair and remodel market provides a great opportunity
for collaboration to service our customers' total business needs and the
needs of new dealer customers who have a focused presence in that
segment. We look forward to working closely with Jeff and the PGT
Innovations leadership team to continue our focus on innovation and
excellence as part of a more diversified company that we believe will be
even stronger. Additionally, we thank PWP Growth Equity for all of their
collaboration and support in helping us achieve tremendous growth over
the past few years."

Compelling Strategic and Financial Benefits

Expands Geographic Footprint and Solidifies PGT Innovations as a
Leading Company in Multiple Segments

  • This transaction is intended to advance PGT Innovations' goal of
    developing a national platform for premium windows and doors by
    providing a strong presence outside of Florida. Together, PGT
    Innovations and Western Window Systems expect to access broader and
    new customer categories in the United States and expand sales of
    Western Window Systems' products in regions PGT Innovations already
  • By selling PGT Innovations' existing brands alongside Western Window
    Systems' products across an expanded geographic footprint, PGT
    Innovations expects to strengthen brand recognition and leadership.

Strengthens Margins, Maintains Strong Balance Sheet and Enhances
Financial Flexibility

  • The combined company is expected to benefit from a robust financial
    profile and increased flexibility.
  • The transaction is expected to be immediately accretive to PGT
    Innovations' cash EPS and gross and adjusted EBITDA margins, and
    accretive to PGT Innovations' GAAP EPS in the first half of 2019. PGT
    Innovations is targeting margin improvement of 150 to 200 basis
    points, depending on brand mix, as it realizes cost synergies and
    continues to offer both companies' high-value products to an even
    broader customer base.
  • As a result of the combined company's increased scale and PGT
    Innovations' experience integrating acquisitions, PGT Innovations
    expects to achieve annual cost savings beginning in the first quarter
    of 2019, with approximately $8 million to $12 million realized by the
    end of 2019, primarily from procurement-related efficiencies,
    including reduced materials costs, SG&A efficiencies and technology
    platform rationalization.
  • PGT Innovations expects to maintain a strong balance sheet to provide
    continued flexibility for strategic investments to support innovation
    and growth initiatives.

Combining Go-to-Market Sales Strategies Creates Cross-Selling

  • This transaction is expected to advance PGT Innovations' multi-brand
    go-to-market strategy by expanding its footprint across a broader
    range of residential and commercial categories.
  • PGT Innovations has demonstrated an ability to build long-term
    relationships with dealers and distributors, and Western Window
    Systems has developed strong end-user loyalty to generate "pull
    through" product demand. Combining these two strategies is expected to
    increase overall sales and customer loyalty.
  • PGT Innovations intends to leverage its strong network of dealers and
    experience in the repair and remodel segment to increase Western
    Window Systems' working relationships with architects, custom home
    builders and designers, and help the dealers in its network become
    even more productive.

Accelerates Growth by Significantly Increasing and Diversifying
Product Offerings

  • The addition of Western Window Systems' product offerings is expected
    to enable PGT Innovations to expand its portfolio beyond primarily
    impact-resistant products to products in the fast-growing contemporary
    door and window systems segment that unify indoor/outdoor living for
    residential, commercial and multi-family customers.
  • Western Window Systems' strategic investments across its organization
    are expected to provide substantial operating leverage. Specifically,
    Western Window Systems has recently invested in its manufacturing
    capacity, automation, and sales and marketing infrastructure,
    including relocating to a new state-of-the-art facility with upgraded
    engineering and manufacturing capabilities.
  • Over the past 12 months, Western Window Systems has introduced 14 new
    products focused on energy efficiency and structural performance,
    including a full line of 7000 product series that satisfies the most
    stringent energy efficiency standards in North America. These products
    serve as a key differentiator in many of Western Window Systems'
    target markets due to increased regulations and demand for
    energy-efficient products. Since January 1, 2017, Western Window
    Systems has onboarded 186 new dealers.

Continues Shared Focus on Customer Service and Product Innovation

  • PGT Innovations and Western Window Systems share a deep commitment to
    high-quality products, robust research and development, and a focus on
    customers and consumers. Western Window Systems' unique and
    entrepreneurial culture complements PGT Innovations' focus on putting
    the customer first, continuous improvement and dedicated workforce,
    positioning the combined company to extend its track record of
    operational excellence and success in key customer metrics.
  • As a leading designer and manufacturer of innovative window and door
    systems that unify indoor/outdoor living, Western Window Systems is
    expected to contribute to continued new product development on a
    larger scale.

Delivers an Experienced Management Team with Proven Track Record

Both companies have highly experienced executive teams with proven
leaders, and the combined company will reflect the management strengths
and capabilities of both companies. Upon completion of the transaction,
Mr. Gates will join PGT Innovations' executive leadership team as Senior
Vice President of PGT Innovations and President of Western Window
Systems. The other members of Western Window Systems' leadership team
are expected to maintain leadership roles at the combined company.

"We welcome Western Window Systems' talented 330 employees into the PGT
Innovations family and look forward to working with them to build on
each company's record of growth and success," commented Mr. Jackson.

Following the close of the transaction, Western Window Systems will
become a wholly owned subsidiary of PGT Innovations. Western Window
Systems will continue to operate and manufacture products as a separate
and distinct brand under the PGT Innovations house of brands. PGT
Innovations will retain its headquarters in Florida, and the combined
company will maintain manufacturing operations in Arizona.

Transaction Financing, Approvals and Timing to Close

PGT Innovations expects to finance the transaction through a combination
of cash on hand and $315 million of incremental debt, for which it has
received financing commitments. At closing, PGT Innovations' pro forma
debt-to-EBITDA ratio is expected to be approximately 4.0x. PGT
Innovations intends to delever quickly as it has done following prior

The transaction, which was unanimously approved by the PGT Innovations
Board of Directors, is expected to be completed in the third quarter of
2018, subject to customary closing conditions.


Jones Day is serving as legal counsel and SunTrust Robinson Humphrey,
Inc. is serving as financial advisor to PGT Innovations. Duff & Phelps
LLC provided a fairness opinion to the PGT Innovations Board. Jefferies
LLC is acting as financial advisor and Latham & Watkins LLP is acting as
legal counsel to Western Window Systems.

Strong Second Quarter Sales Drives Increase in 2018 Outlook

PGT Innovations also today reported preliminary net sales for its second
quarter ended June 30, 2018 of $169 million, compared to $137 million in
the second quarter of 2017, an increase of 23 percent.

Based on these strong results, PGT Innovations today raised its guidance
for its 2018 fiscal year. The revised guidance is for legacy PGT
Innovations and does not include Western Window Systems. PGT Innovations
now expects to finish toward the high end of the following ranges, with
all comparisons to fiscal year 2017:

Net sales of $580 million to $600 million, increasing 13 percent to 17
Adjusted EBITDA of $100 million to $110 million,
increasing 19 percent to 31 percent;
Net income per diluted share
of $0.95 to $1.10; and
Free cash flow of $62 million to $72 million.

PGT Innovations will provide a comprehensive statement of its financial
results for the second quarter on July 30, 2018, as previously announced.

Conference Call

PGT Innovations and Western Window Systems will host a conference call
to discuss the transaction today at 9:00 a.m. eastern time. The
conference call will be available at the same time through the Investor
Relations section of the PGT Innovations website,

To participate in the teleconference, kindly dial into the call ten
minutes before the start time: 877-883-0383 (U.S.) and 412-902-6506
(Canada and international). The conference ID is 3739702.

A replay of the call will be available within one hour after the end of
the call on July 24, 2018, through August 7, 2018. To access the replay,
dial 877-344-7529 (U.S.), 855-669-9658 (Canada) and 412-317-0088
(international) and refer to pass code 10122540.

You may also provide your contact information in advance by using the
following link:
At the time of the call, the phone number you provided will be
automatically called and connected to the conference.

Presentation and Infographic

Associated presentation materials and an infographic regarding the
transaction will be available at

About PGT Innovations, Inc.

PGT Innovations, headquartered in North Venice, Florida, with
approximately 2,800 employees, creates value through customer
relationships, understanding the needs of the industries it serves, a
drive to create the strongest, safest impact-resistant products on the
market, and a commitment to always moving our business and products
forward. The company's trusted brands include CGI® and CGI® Commercial,
PGT® Custom Windows & Doors and WinDoor®. PGT Innovations is the
nation's largest manufacturer of impact-resistant windows and doors,
holds the leadership position in its primary market, and is part of the
S&P SmallCap 400 Index. For additional information, visit

About Western Window Systems

Founded in Phoenix in 1959, Western Window Systems designs and
manufactures door and window systems that bring indoor/outdoor spaces
together. Inspired by modern living, their high-quality products are
available in custom sizes, standardized sets, and massive dimensions for
unlimited design possibilities in residential, prefab, retail,
commercial, and educational projects. From superior craftsmanship and
timeless design to exceptional customer service, Western Window Systems
is a preferred choice of architects, builders, and homeowners throughout
North America.

Use of Non-GAAP Financial Measures

This press release includes financial measures and terms not calculated
in accordance with U.S. generally accepted accounting principles (GAAP).
We believe that presentation of non-GAAP measures such as adjusted
EBITDA and free cash flow, provides investors and analysts with an
alternative method for assessing our operating results in a manner that
enables investors and analysts to more thoroughly evaluate our current
performance compared to past performance. We also believe these non-GAAP
measures provide investors with a better baseline for assessing our
future earnings potential. The non-GAAP measures included in this
release are provided to give investors access to types of measures that
we use in analyzing our results.

Adjusted EBITDA consists of net income, adjusted for the items included
in the accompanying reconciliation. Adjusted EBITDA margin is a ratio of
adjusted EBITDA as a percentage of our total revenue. We believe that
adjusted EBITDA and adjusted EBITDA margin provide useful information to
investors and analysts about the Company's performance because they
eliminate the effects of period-to-period changes in taxes, costs
associated with capital investments and interest expense. Adjusted
EBITDA does not give effect to the cash the Company must use to service
its debt or pay its income taxes and thus does not reflect the actual
funds generated from operations or available for capital investments.
Free Cash Flow is defined as Adjusted EBITDA less capital expenditures.
Free Cash Flow is used by investors and management to analyze the
ability to service and repay debt and return value directly to

Our calculations of adjusted EBITDA, adjusted EBITDA margin and free
cash flow are not necessarily comparable to calculations performed by
other companies and reported as similarly titled measures. These
non-GAAP measures should be considered in addition to results prepared
in accordance with GAAP but should not be considered a substitute for or
superior to GAAP measures.

No reconciliation of the forecasted adjusted EBITDA, adjusted EBITDA
margin and free cash flow to the most comparable GAAP measure for future
periods is included in this press release because we are unable to
quantify certain amounts that would be required to be included in the
GAAP measure without unreasonable efforts. In addition, the company
believes such reconciliations would imply a degree of precision that
would be confusing or misleading to investors.

Forward-Looking Statements

This press release contains "forward-looking statements" within the
meaning of Section 21E of the Securities Exchange Act of 1934 (the
"Exchange Act") and the Private Securities Litigation Reform Act of
1995. These "forward-looking statements" involve risks and uncertainties
which could cause actual results to differ materially from those
contained in the forward-looking statements. Such forward-looking
statements generally can be identified by the use of forward-looking
terminology, such as "may," "expect," "expectations," "outlook,"
"forecast," "guidance," "intend," "believe," "could," "project,"
"estimate," "anticipate," "should" and similar terminology. These risks
and uncertainties include factors such as:

  • our ability to consummate the transaction on the terms or timeline
    currently contemplated, or at all;
  • the ability to successfully integrate the Western Window Systems
    operations into our existing operations and the diversion of
    management's attention from ongoing business and regular business
    responsibilities to effect such integration;
  • the effects of increased expenses or unanticipated liabilities
    incurred as a result of or due to activities related to, the
  • the risk that the anticipated cost savings, synergies, revenue
    enhancement strategies and other benefits from the acquisition may not
    be fully realized or may take longer to realize than expected or that
    our actual integration costs may exceed our estimates;
  • disruption from the acquisition making it more difficult to maintain
    relationships with customers or suppliers of Western Window Systems;
  • our level of indebtedness, which will increase in connection with the
  • adverse changes in new home starts and home remodeling trends,
    especially in Florida, where the substantial portion of our sales are
    currently generated and are expected to continue to be generated after
    the consummation of the acquisition, and in the western United States,
    where the substantial portion of Western Window Systems' sales are
  • macroeconomic conditions in Florida, where the substantial portion of
    our sales are generated, and in California, Texas, Arizona, Nevada,
    Colorado, Oregon, Washington and Hawaii, where the substantial portion
    of the sales of Western Window Systems are generated, and in the U.S.
  • raw material prices, especially for aluminum, glass and vinyl,
    including, price increases due to the implementation of tariffs and
    other trade-related restrictions;
  • our dependence on a limited number of suppliers for certain of our key
  • sales fluctuations to and changes in our relationships with key
    customers, including the customers of Western Window Systems following
    the consummation of the acquisition of Western Window Systems;
  • in addition to the acquisition, our ability to successfully integrate
    businesses we may acquire, or that any business we acquire may not
    perform as we expected at the time we acquired it;
  • transportation costs;
  • our dependence on our impact-resistant product lines and, after the
    consummation of the acquisition, contemporary indoor/outdoor window
    and door systems;
  • product liability and warranty claims brought against us;
  • federal, state and local laws and regulations, including unfavorable
    changes in local building codes and environmental and energy code
  • our dependence on our limited number of geographically concentrated
    manufacturing facilities, and on consumer preferences for those types
    and styles of products;
  • risks associated with our information technology systems, including
    cybersecurity-related risks, such as unauthorized intrusions into our
    systems by "hackers" and theft of data and information from our
    systems, and the risks that our information technology systems, and
    those of Western Window Systems following the acquisition, do not
    function as intended or experience temporary or long-term failures to
    perform as intended; and
  • the other risks and uncertainties discussed in our other filings with
    the SEC.

Statements in this press release that are forward-looking statements
include, without limitation, our expectations regarding: (1) demand for
our products going forward; (2) the benefits expected from the
heightened awareness of impact resistant window and door products
resulting from Hurricane Irma and our post-Irma advertising; (3) the
Company's ability to capture a meaningful share of any increased demand
for impact-resistant products; (4) our financial and operational
performance for our 2018 fiscal year; (5) new housing starts and housing
market conditions in 2018 and beyond, especially with respect to the
State of Florida and the states in the Western U.S. where Western Window
Systems sells most of its products; (6) the breadth and innovativeness
of our product offerings, and their attractiveness to consumers; (7) the
ability of our management team and employees to execute our strategy;
(8) our ability to deleverage our debt position following the Western
Window System Acquisition; and (9) the consummation of and the
realization of the expected benefits of the acquisition, including the
ability to sell Western Window Systems' products profitably or at all in
the repair and remodel market and in PGT Innovations' core markets, and
the ability to sell PGT Innovations' products in Western Window Systems'
core markets profitably or at all. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the
date of this press release. Except as required by law, we undertake no
obligation to update these forward-looking statements to reflect
subsequent events or circumstances after the date of this press release.

View Comments and Join the Discussion!