PGT, Inc. (PGTI - Free Report) posted second-quarter 2013 adjusted earnings of 14 cents per share, up 50% year over year. The results were way ahead of the Zacks Consensus Estimate of 8 cents.
On a reported basis, earnings from continuing operations were 15 cents a share compared with 7 cents in the year-ago quarter. Reported earnings include costs associated with common stock offering and debt refinancing, discrete tax items and the tax impact of reconciling items.
Net sales in the second quarter improved 35% year over year to $63 million, surpassing the Zacks Consensus Estimate of $58 million. The increase was backed by improved market conditions in Florida markets as well as execution of innovative sales and marketing programs. Macroeconomic factors such as lower unemployment, better access to credit and lower interest rates were the other driving factors.
New construction sales were $19.1 million, up 57.8% year over year. Repaid and remodel sales were $43.7 million, reflecting an increase of 27.2% year over year. Improved consumer confidence and higher housing prices led to the expansion.
Cost of sales went up 39% year over year to $41 million. Gross profit went up 27.6% to $21 million from the year-ago quarter, driven by strong revenue growth and improved operating leverage. However, gross margin contracted 200 basis points (bps) year over year to 33.5% due to increased labor costs and scrap resulting from the hiring and training of new employees.
Selling, general and administrative expenses increased 20% to $14 million from $11.9 million in the prior-year quarter. The company posted adjusted net income of $7.7 million compared with $3.7 million in the year-ago quarter.
Cash and cash equivalents were $15.5 million as of Jun 30, 2013 compared with $18.7 million as of Dec 29, 2012. Long-term debt amounted to $75 million as of Jun 30, 2013 compared with $37.5 million as of Dec 29, 2012. The debt-to-capitalization ratio was 31.6% as of Jun 30, 2013 compared with 33.5% as of Dec 29, 2012.
PGT completed a secondary offering of 12.65 million shares from JLL Partners in the quarter. The company also repurchased 6.8 million shares for approximately $50 million.
PGT is optimistic about the opportunities to leverage sales and advertising campaigns, which will drive brand awareness in a growing market. The company also expects to sustain its momentum in the third quarter. PGT expects strong growth in both new construction and repair and remodeling markets to result in incremental sales growth.
North Venice, Fla.-based PGT is the leading U.S. manufacturer and supplier of residential impact-resistant windows and doors. PGT's product line includes a variety of aluminum and vinyl windows and doors, which are ideal for new construction and replacement projects serving the residential, commercial, high-rise and institutional markets.
PGT currently retains a Zacks Rank #3 (Hold).
Other companies in the building and construction industry with favorable Zacks Rank are James Hardie Industries plc and Masco Corporation (MAS - Free Report) carrying a Zacks Rank #2 (Buy).
Aegion Corporation (AEGN - Free Report) , one of the peers of PGT’ reported second-quarter adjusted earnings of 47 cents per share, up 57% from 30 cents in the year-earlier quarter. The results surpassed the Zacks Consensus Estimate of 38 cents.