Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K 080510 - CPG INTERNATIONAL INC. | form8-k_080510.htm |
| EX-99.2 - EXHIBIT 99.2 EARNINGS CALL PRESENTATION - CPG INTERNATIONAL INC. | exhibit_99-2.htm |
Exhibit
99.1
For
Immediate Release
CPG
International Inc. Posts Second Quarter Results
Friday,
August 6, 2010
CPG
International Inc. (CPG) a leading manufacturer of premium, low maintenance
building products for residential, commercial, and industrial markets today
announced second quarter 2010 financial results. CPG’s products
include AZEK Trim, AZEK Deck, AZEK Porch, AZEK Moulding, and AZEK Rail for
residential housing markets; bathroom and locker systems sold under the brand
names Comtec Industries, Hiny Hider and TuffTec, used in commercial building
markets; and Vycom which extrudes plastic sheet products under the names of
Celtec, Seaboard® and Flametec® and other non-fabricated products for special
applications in industrial markets.
Second
Quarter Highlights
|
|
·
|
Second
quarter sales were $85.7 million, up 37.5% from the second quarter
2009. 64.3% revenue growth at AZEK Deck, Rail and Trim and
74.3% volume growth at Vycom offset softness in the commercial
market.
|
|
|
·
|
Gross
margin decreased to 30.9% from 35.6% in the second quarter of 2009 driven
primarily by higher material costs.
|
|
|
·
|
Net
income was $2.8 million for the second quarter of 2010, compared to $0.1
million in the second quarter of
2009.
|
|
|
·
|
EBITDA
increased to $16.6 million in the second quarter of
2010. Adjusted EBITDA was $17.3 million in the second quarter
of 2010, up from $14.5 million in the second quarter of
2009.
|
Year-to-Date
Highlights
|
|
·
|
Sales
for the first six months of 2010 were $180.4 million, up 25.5% from
2009. Revenue growth at AZEK Deck, driven by new product
offerings and a stabilizing residential repair and remodel market, and
volume growth at Vycom offset softness in the commercial
market.
|
|
|
·
|
Gross
margin decreased to 31.1% in the first six months of 2010 from 34.9%
driven primarily by higher material
costs.
|
|
|
·
|
Net
income was $6.0 million for 2010, compared to a net loss of $(7.0) million
in 2009.
|
|
|
·
|
EBITDA
increased to $36.7 million year-to-date in 2010. Adjusted
EBITDA was $38.5 million in the first six months of 2010, up from $35.5
million in the first six months of
2009.
|
“We are
very excited about our second quarter results,” commented Eric Jungbluth, CPG’s
President and Chief Executive Officer. “Our new product initiatives
and marketing efforts continue to differentiate us in the market place and are
accelerating the conversion to our lower maintenance product
offering.”
-1-
EBITDA
Guidance
(See the
accompanying financial schedules for full financial details and a reconciliation
of non-GAAP financial measures to their GAAP equivalents.)
CPG
raised earnings guidance for 2010 with Adjusted EBITDA guidance of $57 million
to $67 million. Scott Harrison, Executive Vice President and Chief
Financial Officer, said “Based on our second quarter results, we are slightly
increasing our Adjusted EBITDA guidance for the year. We continue to
expect revenue growth driven by new products and marketing initiatives, being
partially offset by higher material costs and a challenging commercial
market. To help meet the demand for growth with AZEK Deck, we are
increasing the expected range for capital expenditures in 2010 to $15 million to
$20 million.”
Investor
Call
CPG will
hold an investor conference call to discuss Second Quarter 2010 financial
results at 9 AM Eastern time on Friday, August 6, 2010. Eric
Jungbluth, President and Chief Executive Officer and Scott Harrison, Executive
Vice President and Chief Financial Officer, will host the call.
To access
the conference call, please dial (866) 863-6818, and use conference ID code
80981126. 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 80981126.
Forward-looking
Statements
Statements
in this investor release and the schedules hereto which are not purely
historical facts or which necessarily depend upon future events, including
statements about forecasted financial performance, guidance or other statements
about anticipations, beliefs, expectations, hopes, intentions or strategies for
the future, may be forward-looking statements within the meaning of Section 21E
of the Securities and Exchange Act of 1934, as amended. Readers are
cautioned not to place undue reliance on forward-looking
statements. All forward-looking statements are based upon information
available to CPG on the date this release was submitted. CPG
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. Any forward-looking statements involve risks and
uncertainties that could cause actual events or results to differ materially
from the events or results described in the forward-looking statements,
including risks or uncertainties related to CPG’s revenues and operating results
being highly dependent on, among other things, the homebuilding industry, the
commercial building industry, raw material prices, competition, the economy and
the financial markets. CPG may not succeed in addressing these and
other risks. Further information regarding factors that could affect
our financial and other results can be found in the risk factors section of
CPG’s most recent annual report on Form 10-K and quarterly report on Form 10-Q
filed with the Securities and Exchange Commission. Consequently, all
forward-looking statements in this release are qualified by the factors, risks
and uncertainties contained therein.
About
CPG International
Headquartered
in Scranton, Pennsylvania, CPG International is a manufacturer of market-leading
brands of highly engineered, premium, low-maintenance, building products for
residential and commercial markets designed to replace wood, metal and other
traditional materials in a variety of construction applications. The
Company’s products are marketed under several brands including AZEK® Trim and
Moulding, AZEK® Deck, AZEK® Rail, Santana Products, Comtec Industries, Capitol,
TuffTec™, Hiny Hider® and Celtec®, as well as many other brands. For
additional information on CPG please visit our web site at
www.cpgint.com.
-2-
Financial
Schedules
CPG
International Inc. and Subsidiaries
Consolidated
Balance Sheets
June 30,
2010 and December 31, 2009
(unaudited)
(dollars
in thousands)
|
June
30,
|
December
31,
|
|||||||
|
2010
|
2009
|
|||||||
|
ASSETS:
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$
|
48,263
|
$
|
44,501
|
||||
|
Receivables:
|
||||||||
|
Trade,
less allowance for doubtful accounts of $1,281 and $964 in 2010 and 2009,
respectively
|
30,381
|
14,219
|
||||||
|
Inventories
|
37,249
|
45,922
|
||||||
|
Deferred
income taxes—current
|
2,325
|
2,414
|
||||||
|
Prepaid
expenses and other
|
2,575
|
3,097
|
||||||
|
Total
current assets
|
120,793
|
110,153
|
||||||
|
Property
and equipment—net
|
81,677
|
84,332
|
||||||
|
Goodwill
|
246,763
|
246,842
|
||||||
|
Intangible
assets —net
|
90,315
|
92,699
|
||||||
|
Deferred
financing costs—net
|
3,987
|
5,079
|
||||||
|
Other
assets
|
259
|
299
|
||||||
|
Total
assets
|
$
|
543,794
|
$
|
539,404
|
||||
|
LIABILITIES
AND SHAREHOLDER’S EQUITY:
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$
|
27,222
|
$
|
24,263
|
||||
|
Current
portion of capital lease
|
825
|
1,747
|
||||||
|
Current
portion of long-term debt obligations
|
250
|
250
|
||||||
|
Accrued
interest
|
13,356
|
13,049
|
||||||
|
Accrued
rebates
|
3,589
|
3,916
|
||||||
|
Accrued
expenses
|
12,828
|
14,527
|
||||||
|
Total
current liabilities
|
58,070
|
57,752
|
||||||
|
Deferred
income taxes
|
38,313
|
35,067
|
||||||
|
Capital
lease obligation—less current portion
|
3,321
|
3,316
|
||||||
|
Long-term
debt—less current portion
|
302,019
|
302,042
|
||||||
|
Accrued
warranty—less current portion
|
3,167
|
3,183
|
||||||
|
Other
liabilities
|
35
|
35
|
||||||
|
Commitments
and contingencies
|
||||||||
|
Shareholder’s
equity:
|
||||||||
|
Common
shares, $0.01 par value: 1,000 shares authorized; 10 issued and
outstanding at June 30,
|
||||||||
|
2010
and December 31, 2009
|
—
|
—
|
||||||
|
Additional
paid-in capital
|
212,229
|
212,152
|
|
|||||
|
Accumulated
deficit
|
(56,943
|
)
|
(62,899
|
)
|
||||
|
Note
receivable – CP Holdings
|
(13,902
|
)
|
(8,872
|
)
|
||||
|
Accumulated
other comprehensive loss
|
(2,515
|
)
|
(2,372
|
)
|
||||
|
Total
shareholder’s equity
|
138,869
|
138,009
|
||||||
|
Total
liabilities and shareholder’s equity
|
$
|
543,794
|
$
|
539,404
|
||||
-3-
CPG
International Inc.
and
Subsidiaries
Consolidated
Statements of Operations
Three
Months Ended June 30, 2010 and 2009
(unaudited)
(dollars
in thousands)
|
Three
|
Three
|
||||||
|
Months
Ended
|
Months
Ended
|
||||||
|
June
30,
|
June
30,
|
||||||
|
2010
|
2009
|
||||||
|
Net
sales
|
$
|
85,730
|
$
|
62,358
|
|||
|
Cost
of sales
|
(59,225
|
)
|
(40,135
|
)
|
|||
|
Gross
margin
|
26,505
|
22,223
|
|||||
|
Selling,
general and administrative expenses
|
(14,851
|
)
|
(14,087
|
)
|
|||
|
Loss
on disposal of property
|
(240
|
)
|
(126
|
)
|
|||
|
Operating
income
|
11,414
|
8,010
|
|
||||
|
Other
income (expenses):
|
|||||||
|
Interest
expense
|
(8,272
|
)
|
(7,940
|
)
|
|||
|
Interest
income
|
—
|
33
|
|||||
|
Miscellaneous
– net
|
2
|
(27
|
)
|
||||
|
Foreign
currency (loss) gain
|
(99
|
)
|
143
|
||||
|
Total
other expenses-net
|
(8,369
|
)
|
(7,791
|
)
|
|||
|
Income
before income taxes
|
3,045
|
219
|
|||||
|
Income
tax expense
|
(277
|
)
|
(127
|
)
|
|||
|
Net
income
|
$
|
2,768
|
$
|
92
|
-4-
CPG
International Inc.
and
Subsidiaries
Consolidated
Statements of Operations
Six
Months Ended June 30, 2010 and 2009
(unaudited)
(dollars
in thousands)
|
Six
|
Six
|
||||||
|
Months
Ended
|
Months
Ended
|
||||||
|
June
30,
|
June
30,
|
||||||
|
2010
|
2009
|
||||||
|
Net
sales
|
$
|
180,397
|
$
|
143,774
|
|||
|
Cost
of sales
|
(124,324
|
)
|
(93,579
|
)
|
|||
|
Gross
margin
|
56,073
|
50,195
|
|||||
|
Selling,
general and administrative expenses
|
(29,235
|
)
|
(26,915
|
)
|
|||
|
Impairment
of goodwill and long-lived assets
|
(599
|
)
|
(14,408
|
)
|
|||
|
Loss
on disposal of property
|
(251
|
)
|
(126
|
)
|
|||
|
Operating
income
|
25,988
|
8,746
|
|
||||
|
Other
income (expenses):
|
|||||||
|
Interest
expense
|
(15,744
|
)
|
(16,139
|
)
|
|||
|
Interest
income
|
—
|
53
|
|||||
|
Miscellaneous
– net
|
6
|
(13
|
)
|
||||
|
Foreign
currency (loss) gain
|
(21
|
)
|
116
|
||||
|
Total
other expenses-net
|
(15,759
|
)
|
(15,983
|
)
|
|||
|
Income
(loss) before income taxes
|
10,229
|
(7,237
|
)
|
||||
|
Income
tax (expense) benefit
|
(4,273
|
)
|
274
|
||||
|
Net
income (loss)
|
$
|
5,956
|
$
|
(6,963
|
)
|
-5-
CPG
International Inc. and Subsidiaries
Calculation
of Earnings before Interest, Taxes, Depreciation and Amortization
Three
Months Ended June 30, 2010 and 2009
(unaudited)
(dollars
in thousands)
|
Three
|
Three
|
||||||
|
Months
Ended
|
Months
Ended
|
||||||
|
June
30,
|
June
30,
|
||||||
|
2010
|
2009
|
||||||
|
Net
income
|
$
|
2,768
|
$
|
92
|
|||
|
Interest
expense, net
|
8,272
|
7,907
|
|||||
|
Income
tax expense
|
277
|
127
|
|||||
|
Depreciation
and amortization
|
5,254
|
5,340
|
|||||
|
EBITDA
|
$
|
16,571
|
$
|
13,466
|
|||
|
Reconciliation
to Adjusted EBITDA:
|
|||||||
|
EBITDA
|
$
|
16,571
|
$
|
13,466
|
|||
|
Allowable
adjustments:
|
|||||||
|
Relocation
and hiring costs
|
6
|
29
|
|||||
|
Severance
costs
|
–
|
312
|
|||||
|
Management
fee and expenses
|
393
|
492
|
|||||
|
Non-cash
compensation charge
|
13
|
4
|
|||||
|
Loss
on disposal of fixed assets
|
240
|
126
|
|||||
|
Lease
termination fees
|
1
|
|
–
|
||||
|
Registration
expenses related to Notes
|
38
|
58
|
|||||
|
Adjusted
EBITDA
|
$
|
17,262
|
$
|
14,487
|
-6-
CPG
International Inc. and Subsidiaries
Calculation
of Earnings before Interest, Taxes, Depreciation and Amortization
Six
Months Ended June 30, 2010 and 2009
(unaudited)
(dollars
in thousands)
|
Six
|
Six
|
||||||
|
Months
Ended
|
Months
Ended
|
||||||
|
June
30,
|
June
30,
|
||||||
|
2010
|
2009
|
||||||
|
Net
income (loss)
|
$
|
5,956
|
$
|
(6,963
|
)
|
||
|
Interest
expense, net
|
15,744
|
16,086
|
|||||
|
Income
tax expense (benefit)
|
4,273
|
(274
|
)
|
||||
|
Depreciation
and amortization
|
10,764
|
10,665
|
|||||
|
EBITDA
|
$
|
36,737
|
$
|
19,514
|
|||
|
Reconciliation
to Adjusted EBITDA:
|
|||||||
|
EBITDA
|
$
|
36,737
|
$
|
19,514
|
|||
|
Allowable
adjustments:
|
|||||||
|
Impairment
of goodwill and long-lived assets
|
599
|
14,408
|
|||||
|
Relocation
and hiring costs
|
55
|
73
|
|||||
|
Severance
costs
|
13
|
337
|
|||||
|
Management
fee and expenses
|
784
|
891
|
|||||
|
Non-cash
compensation charge
|
27
|
35
|
|||||
|
Disposal
of fixed assets
|
251
|
126
|
|||||
|
Lease
termination fees
|
19
|
|
–
|
||||
|
Registration
expenses related to Notes
|
51
|
111
|
|||||
|
Adjusted
EBITDA
|
$
|
38,536
|
$
|
35,495
|
-7-