PGT Inc. (PGTI, Financial) filed Quarterly Report for the period ended 2009-07-04.
PGT INDUSTRIES pioneered the U.S. impact-resistant window and door industry and today is the nation\'s leading manufacturer and supplier of residential impact-resistant windows and doors. PGT is also one of the largest window and door manufacturers in the United States. The company\'s total line of custom windows and doors is now available throughout the eastern United States the Gulf Coast and in a growing international market which includes the Caribbean South America and Australia. PGT\'s product line includes PGT Aluminum and Vinyl Windows and Doors; WinGuard Impact-Resistant Windows and Doors; PGT Architectural Systems; and Eze-Breeze Sliding Panels. PGT Industries is a wholly owned subsidiary of PGT Inc. PGT Inc. has a market cap of $80.7 million; its shares were traded at around $2.26 with and P/S ratio of 0.4.
Selling, general and administrative expenses were $12.5 million for the second quarter of 2009, a decrease of $3.6 million, from $16.2 million for the 2008 second quarter. This decrease was mainly due to a $2.6 million decrease in personnel related costs as the result of the cost saving actions, a $0.7 million decrease in fuel costs, a $0.4 million decrease in marketing and advertising costs and approximately $0.3 million of overall lower spending in other categories. These cost savings were partially offset by a $0.4 million increase in bad debt expense. As a percentage of sales, selling, general and administrative expenses were 26.8% the second quarter of 2009 compared to 26.9% for the second quarter of 2008.
Interest expense, net was $1.7 million in the second quarter of 2009, a decrease of $0.5 million, from $2.2 million for the second quarter of 2008. The decrease was due to a lower level of debt during the second quarter of 2009 compared to the second quarter of 2008 as the result of the prepayment of $40 million debt over the second and third quarters of 2008, partially offset by a higher interest rate on our debt which was a weighted average of 6.5% during the second quarter of 2009, compared to a weighted average of 6.1% during the second quarter of 2008.
Gross margin was $24.5 million, or 27.7% of sales, for the first half of 2009, a decrease of $13.0 million, or 34.7%, from $37.6 million, or 32.7% of sales, for the first half of 2008. This decrease was largely due to lower sales volumes of all of our products and the resulting loss of operating leverage against fixed costs, a change in mix and slight decrease in pricing, partially offset by spending reductions as a result of our cost savings initiatives. There were restructuring charges in cost of goods sold in each period of $1.4 million in the first half of 2009 and $1.1 million in the first half of 2008. Adjusting for these charges, gross margin was $25.9 million, or 29.3% of sales, for the first half of 2009, compared to $38.6 million, or 33.6% of sales, for the first half of 2008, mainly due to the loss of leverage from the decrease in sales.
Selling, general and administrative expenses were $27.6 million for the first half of 2009, a decrease of $4.9 million, from $32.4 million for the first half of 2008. There were restructuring charges in selling, general and administrative expenses in each period of $1.6 million in the first half of 2009 and $0.7 million in the first half of 2008. Adjusting for these charges, selling, general and administrative expenses were $25.9 million for the first half of 2009, compared to $31.8 million for the first half of 2008, a decrease of $5.8 million. This decrease was mainly due to a $4.4 million decrease in personnel related costs as the result of the cost saving actions, a $1.0 million decrease in fuel costs, a $0.8 million decrease in marketing and advertising costs and approximately $0.4 million of overall lower spending in other categories. These cost savings were partially offset by a $0.8 million increase in bad debt expense. As a percentage of sales, adjusted selling, general and administrative expenses increased during the first half of 2009 to 29.3% compared to 27.6% for the first half of 2008, mainly due to the loss of leverage from the decrease in sales.
Interest expense, net was $3.3 million in the first half of 2009, a decrease of $1.6 million, from $4.9 million for the first half of 2008. The decrease was due to a lower level of debt during the first half of 2009 compared to the first half of 2008 as the result of the prepayment of $40 million debt over the second and third quarters of 2008, and a lower interest rate on our debt which was a weighted average of 6.4% during the first half of 2009, compared to a weighted average of 7.1% during the first half of 2008.
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PGT INDUSTRIES pioneered the U.S. impact-resistant window and door industry and today is the nation\'s leading manufacturer and supplier of residential impact-resistant windows and doors. PGT is also one of the largest window and door manufacturers in the United States. The company\'s total line of custom windows and doors is now available throughout the eastern United States the Gulf Coast and in a growing international market which includes the Caribbean South America and Australia. PGT\'s product line includes PGT Aluminum and Vinyl Windows and Doors; WinGuard Impact-Resistant Windows and Doors; PGT Architectural Systems; and Eze-Breeze Sliding Panels. PGT Industries is a wholly owned subsidiary of PGT Inc. PGT Inc. has a market cap of $80.7 million; its shares were traded at around $2.26 with and P/S ratio of 0.4.
Highlight of Business Operations:
As a result of those impairment indicators, the Company updated the first step of its goodwill impairment test and determined that its carrying value exceeded its fair value, indicating that goodwill was impaired. Having determined that goodwill was impaired, we began performing the second step of the goodwill impairment test which involved calculating the implied fair value of our goodwill by allocating the fair value of the Company to all of our assets and liabilities other than goodwill (including both recognized and unrecognized intangible assets) and comparing it to the then carrying amount of goodwill. As of the date of the filing of the Company s Quarterly Report on Form 10-Q for the quarter ended June 28, 2008, the Company estimated that the implied fair value of our goodwill was less than its carrying value by approximately $92.0 million, which the Company recognized as a goodwill impairment charge in the accompanying condensed consolidated results of operations for the second quarter ended June 28, 2008. The $92.0 million goodwill impairment charge was an estimate based on the results of the preliminary allocation of fair value in the second step. We completed our impairment test in the third quarter of 2008, which resulted in an additional non-cash goodwill impairment charge of $1.3 million.Selling, general and administrative expenses were $12.5 million for the second quarter of 2009, a decrease of $3.6 million, from $16.2 million for the 2008 second quarter. This decrease was mainly due to a $2.6 million decrease in personnel related costs as the result of the cost saving actions, a $0.7 million decrease in fuel costs, a $0.4 million decrease in marketing and advertising costs and approximately $0.3 million of overall lower spending in other categories. These cost savings were partially offset by a $0.4 million increase in bad debt expense. As a percentage of sales, selling, general and administrative expenses were 26.8% the second quarter of 2009 compared to 26.9% for the second quarter of 2008.
Interest expense, net was $1.7 million in the second quarter of 2009, a decrease of $0.5 million, from $2.2 million for the second quarter of 2008. The decrease was due to a lower level of debt during the second quarter of 2009 compared to the second quarter of 2008 as the result of the prepayment of $40 million debt over the second and third quarters of 2008, partially offset by a higher interest rate on our debt which was a weighted average of 6.5% during the second quarter of 2009, compared to a weighted average of 6.1% during the second quarter of 2008.
Gross margin was $24.5 million, or 27.7% of sales, for the first half of 2009, a decrease of $13.0 million, or 34.7%, from $37.6 million, or 32.7% of sales, for the first half of 2008. This decrease was largely due to lower sales volumes of all of our products and the resulting loss of operating leverage against fixed costs, a change in mix and slight decrease in pricing, partially offset by spending reductions as a result of our cost savings initiatives. There were restructuring charges in cost of goods sold in each period of $1.4 million in the first half of 2009 and $1.1 million in the first half of 2008. Adjusting for these charges, gross margin was $25.9 million, or 29.3% of sales, for the first half of 2009, compared to $38.6 million, or 33.6% of sales, for the first half of 2008, mainly due to the loss of leverage from the decrease in sales.
Selling, general and administrative expenses were $27.6 million for the first half of 2009, a decrease of $4.9 million, from $32.4 million for the first half of 2008. There were restructuring charges in selling, general and administrative expenses in each period of $1.6 million in the first half of 2009 and $0.7 million in the first half of 2008. Adjusting for these charges, selling, general and administrative expenses were $25.9 million for the first half of 2009, compared to $31.8 million for the first half of 2008, a decrease of $5.8 million. This decrease was mainly due to a $4.4 million decrease in personnel related costs as the result of the cost saving actions, a $1.0 million decrease in fuel costs, a $0.8 million decrease in marketing and advertising costs and approximately $0.4 million of overall lower spending in other categories. These cost savings were partially offset by a $0.8 million increase in bad debt expense. As a percentage of sales, adjusted selling, general and administrative expenses increased during the first half of 2009 to 29.3% compared to 27.6% for the first half of 2008, mainly due to the loss of leverage from the decrease in sales.
Interest expense, net was $3.3 million in the first half of 2009, a decrease of $1.6 million, from $4.9 million for the first half of 2008. The decrease was due to a lower level of debt during the first half of 2009 compared to the first half of 2008 as the result of the prepayment of $40 million debt over the second and third quarters of 2008, and a lower interest rate on our debt which was a weighted average of 6.4% during the first half of 2009, compared to a weighted average of 7.1% during the first half of 2008.
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