Attached files
| file | filename |
|---|---|
| EX-99 - EXHIBIT_99.2 - CPG INTERNATIONAL INC. | exhibit_99-2.pdf |
| 8-K - FORM8-K_080709 - CPG INTERNATIONAL INC. | form8-k_111109.htm |
| EX-99 - EXHIBIT_99.1 - CPG INTERNATIONAL INC. | exhibit_99-1.htm |
2009 Third Quarter Earnings Call
November 13, 2009
Exhibit 99.2
Safe Harbor Statement and Use of Non-GAAP and Pro Forma Information
FORWARD LOOKING STATEMENTS
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements made in this
presentation that relate to future events or the Company’s expectations, guidance, projections, estimates, intentions, goals, targets and strategies are forward-
looking statements. You are cautioned that all forward-looking statements are based upon current expectations and estimates and the Company assumes no
obligation to update this information. Because actual results may differ materially from those expressed or implied by the forward-looking statements, the
Company cautions you not to place undue reliance on these statements. For a detailed discussion of the important factors that affect the Company and that
could cause actual results to differ from those expressed or implied by the Company’s forward-looking statements, please see “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and “Risk Factors” in the Company’s current and future Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q.
ADJUSTED EBITDA STATEMENT
We refer to the term “Adjusted EBITDA” in various places throughout this presentation. Adjusted EBITDA, or earnings (adjusted as described below) before
interest, taxes, depreciation and amortization calculated on a pro forma basis as provided herein, is a material component of the significant covenants
contained in our credit agreements and the indenture governing the notes and accordingly, is important to the Company’s liquidity and ability to borrow under
its debt instruments. Adjusted EBITDA is calculated similarly under both the credit agreements and the indenture by adding consolidated net income, income
taxes, interest expense, depreciation and amortization and other non-cash expenses, income or loss attributable to discontinued operations, amounts payable
pursuant to the management agreement with AEA Investors and the impairment charge for goodwill and other intangibles. In addition, consolidated net income
is adjusted to exclude certain items, including certain nonrecurring or unusual charges. Please see the Company’s December 31, 2008 10-K, which contains a
detailed description of our covenants and a thorough description of our use of Adjusted EBITDA, and the use of Adjusted EBITDA in connection with certain
calculations under the covenants, under our credit agreements and indenture.
While the determination of appropriate adjustments in the calculation of Adjusted EBITDA is subject to interpretation under our debt agreements, management
believes the adjustments are in accordance with the covenants in our credit agreements and indenture, as discussed above. Adjusted EBITDA should not be
considered in isolation or construed as an alternative to our net income or other measures as determined in accordance with GAAP. In addition, other
companies in our industry or across different industries may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative
measure. In future SEC filings, we may be required to change our presentation of Adjusted EBITDA in order to comply with the SEC’s rules regarding the use
of non-GAAP financial measures. In addition, you are cautioned not to place undue reliance on Adjusted EBITDA. For a reconciliation of Adjusted EBITDA to
net income, please see the Appendix to this presentation.
About CPG International
Headquartered in Scranton, Pennsylvania, CPG International is a leading supplier of premium, low-maintenance building products designed to
replace wood, metal and other materials in the residential, commercial and industrial markets. With a focus on manufacturing excellence,
proprietary technologies and quality, CPG has introduced products through distribution networks to sizable markets increasingly converting to low
maintenance materials. The Company has developed and acquired a number of branded products including AZEK® Trim, AZEK® Deck, AZEK®
Moulding, AZEK® Rail, AZEK® Porch, Comtec and Hiny Hiders® bathroom partition systems,and TuffTec™ locker systems. For additional
information on CPG please visit our web site at http:// www.cpgint.com.
Please note:
To access the conference call, please dial (866) 315-3365, and use conference ID code 38122726. An encore presentation will be available for
one week after the completion of the call. In order to access the encore presentation, please dial (800) 642-1687 or (706) 645-9291, and use the
conference ID code 38122726.
2009 Third Quarter Financial Highlights
Market Conditions: Housing starts down 32% from prior year Q3
Repair/remodel markets experiencing double digit declines
Industrial and commercial markets deteriorated in Q3
Revenue: $78.4mm Q3 2009 vs. $90.9mm in Q3 2008, down 13.7%
AZEK Deck growth only partially offset decline in all other
product lines
Gross Margin: 35.8% Q3 2009 vs. 25.3% in Q3 2008
Material cost reductions and improved operating efficiencies
offset lower production volumes
SG&A: $14.1mm Q3 2009 vs. $13.7mm in Q3 2008
Increased expenses primarily from marketing and product
development
Adjusted EBITDA: Up 20.6% to $20.0mm;
25.5% Adjusted EBITDA margin
Net
Income/Loss: $6.0mm net income in Q3 2009, up from $0.6mm net
income in Q3 2008
Quarter Highlights
CPG
Updated Segment Reporting
Quarterly Revenue
Financial Overview
YOY $(12.5)
or (13.7)%
Revenue
($ in millions)
Volume & ASP
(lbs in millions)
Quarterly Earnings
Financial Overview
Adjusted EBITDA
($ in millions)
Gross Margin and SG&A
(% of revenue)
YOY $3.5
or 20.6%
Year to Date Performance
Financial Overview
Revenue / Pro Forma
($ in millions)
Pro Forma Adj. EBITDA
($ in millions)
YOY $8.6
or 18.3%
YOY $(45.3)
or (16.9)%
Capital Expenditures
Financial Overview
YOY $0.9
or 81.8%
Quarter Cap Ex
($ in millions)
Historical Cap Ex
($ in millions)
$5-$8
Working Capital Management
Tightly managing working capital
Reduced seasonality with soft
winter buy
Focused collections effort on AR
Financial Overview
YOY $(9.6)
or (25.8)%
Inventory and Inv Days(1)
($ in millions)
AR and AR Days(1)
($ in millions)
YOY ($0.6)
or (2.1)%
Inv/AR/Prepaid less AP/Accrued
($ in millions)
Footnote:
(1)
Based on trailing three months annualized
Liquidity Position
Financial Overview
Net Debt(1)& Net Debt/Adj. EBITDA(2)
($ in millions)
Liquidity
($ in millions)
Liquidity position at $71.0mm
Focused on liquidity management
Trailing Twelve Month September 30, 2009 Adjusted EBITDA of
$56.6mm
Footnotes:
(1)
Net debt defined as total debt and capital lease obligations less cash
(2)
Trailing twelve month adjusted EBITDA as defined in Credit Agreements
Low
High
$55mm
$60mm
2009 Guidance
2009 Adjusted EBITDA Guidance(1)
Downside:
Prolonged, deep recession
Residential repair & remodel activity
New home construction
Industrial markets
Commercial markets/tax revenue
Resin prices escalate
Increased competition
Upside:
Higher than anticipated economic
activity
Increased market penetration for
AZEK products
Lower material costs
Operational efficiencies
(1) In preparation of our Adjusted EBITDA, we used a basis similar to actual interest, depreciation, amortization and taxes reported in 2009.
APPENDIX
Net Income to Adjusted EBITDA Reconciliation
Appendix
Add:
Less:
Nine
Nine
Months
Months
Twelve Months
Year Ended
Ended
Ended
Ended
(Dollars in thousands)
December 31,
September
3
0
,
September
3
0
,
,
30,
September
3
0
,
200
8
200
9
200
8
200
9
Net
(loss
) income
$
(
4
8
,
354
)
$
(
9
75
)
$
(1
2
1
)
$
(
4
9
,
2
0
8
)
Interest expense, net
3
4
,9
05
23
,
722
26
,
4
7
4
3
2
,
1
53
Income tax
(benefit)
expense
(7
,0
95
)
2
85
(
1
5
1
)
(
6
,
6
59
)
Depreciatio
n and amortization
2
1,
49
1
1
5
,
99
6
15
,
9
71
2
1
,
5
1
6
EBITDA
947
3
9
,
028
4
2
,
173
(
2
,
198
)
Impairment of goodwill and other intangibles
40,000
14
,
4
0
8
—
54
,
4
0
8
SFAS 141 inventory adjustment
1,505
—
—
1,505
Relocation and hiring costs
802
110
659
2
5
3
Composatron non
-
recurring charges
606
—
346
2
6
0
Management fee
and expenses
1,855
1
,345
1
,
4
6
7
1,7
33
Severance
costs
171
3
6
7
1
6
5
3
7
3
Settlement charges
26
—
26
—
Non
-
cash compensation charge
118
5
0
103
65
Sale of fixed assets
—
1
43
—
1
43
Registration expenses
rela
ted to Notes
309
26
2
38
97
Adjusted EBITDA
$
46,339
$
5
5
,
4
77
$
45
,
177
$
5
6
,
639
Quarterly Volume Information
Appendix
CPG