PGT Innovations, Inc.

Good morning and welcome to PGT Innovation's second quarter 2022 earnings conference call. All participants are in listen-only mode. Today's call is being recorded. I'd now like to turn the conference over to PGT Innovation's Senior Vice President of Corporate Development and Treasurer, Brad West. Please go ahead.

Thank you. Good morning and welcome to the PGT Innovations second quarter 2022 investor conference call. With me on the call today, our president and CEO, Jeff Jackson, and our chief financial officer, John Coons. On the investor section of our company website, you will find the earnings press release issued earlier today, as well as the slide presentation we have posted to accompany today's discussion. This webcast is being recorded and will be available for replay on the company's website. Before we begin our prepared remarks, please direct your attention to the disclosure statement on slide two of the presentation, as well as the disclaimers included in the earnings press release and our SEC filings that discuss forward-looking statements. Today's remarks contain forward-looking statements, including statements about our 2022 financial performance outlook. Those statements involve risks, uncertainties, and other factors that could cause actual results to differ materially. Additional information on factors that could cause actual results to differ from expected results is available on the company's most recent SEC filings. Additionally, on slide three, note that we report results using non-GAAP financial measures, which we believe provide additional information to help investors compare performance between reporting periods. Our reconciliation to the most directly comparable GAAP measures is included in the tables attached to the earnings release and the slide presentation appendix. At this time, I will now hand over the call for our company's CEO and President, Jeff Jackson.

Jeff Jackson Thank you, Brad, and good morning, everyone, and thank you for joining us on today's call. Our very strong financial results was a testament to PGT Innovation's value proposition and our team's ability to execute on a number of challenges over the past 12 months. These challenges included labor, capacity, and supply chain constraints. However, we stayed focused on executing our long-term strategy of adding talent, effectively scaling our operations, and investing our cash flow in growing markets. Let's discuss today's key messages for the quarter on slide four. We achieved record second quarter results as revenues of $407 million surpassed both prior year and our internal forecast. Multiple drivers during the quarter led to these results. First, our expanded footprint placed us in growing markets. Second, our marketing strategy drove continued customer awareness of our product offerings. Third, our ability to secure materials through our supply chain kept the factories operating efficiently. And fourth, our ongoing efforts to increase capacity through process automation, as well as further training of our team members, has improved our operational efficiency, allowing us to ship higher product volumes. I am very proud of how our PGT innovation team continues to improve, deliver strong growth, and provide first-class customer service each and every day. We continue to make significant gains in margin with adjusted EBITDA margin improving 680 basis points compared to the second quarter of 2021 and sequentially by 280 basis points versus the first quarter of 2022. These results reflect the success of our business model to grow our top line and improve our operational performance while managing inflationary pressures. Pricing actions implemented over the last several quarters have offset the majority of the inflationary pressures we have experienced. In addition, we have announced new price increases to offset the escalating costs we continue to face. Since the beginning of the year, our gains in operational efficiencies have reduced our lead times. This continued in Q2 with average lead times for key brands improving 40% to 50% versus prior year quarter. We also worked to control costs whenever possible through a constant focus on investing, quality, and manufacturing process enhancements. Additionally, our supply chain team has continued to do an outstanding job to minimize disruption, allowing us to support higher production levels a driving force behind our improved performance over the past few quarters. These factors contributed to our strong cash flow in the quarter and allowed us to end Q2 with a cash balance of $159 million and leverage well within our targeted range. John will provide more detail, but in summary, our balance sheet strength provides the flexibility necessary to effectively allocate capital by continuing to execute our business model. as we look to drive long-term shareholder value through reinvestment in our business and strategic accretive acquisitions. As the first half results well exceeded our expectations and the sales and margin trends remain favorable, we are raising our full year guidance for revenue and adjusted EBITDA. While we recognize the uncertainty surrounding the microeconomic environment, our backlog manufacturing execution, and margin performance gives us a high level of confidence in our revised guidance. Next, on slide five, let's take a closer look at sales trends. Total organic growth was 29 percent, reflecting the strength of our brand portfolio and demand in our markets. In our southeast region, organic sales for the quarter grew 27 percent versus the prior year quarter. reflecting strength in our core PGT and New South brands. The migration into Florida, our largest market, will continue to support demand in the coming years. The challenging market dynamics has led one of our larger competitors in the Southeast region to discontinue their aluminum product lines, allowing us to pick up market share. In addition, during the first half of the year, we signed five separate large home builders to three-year supply agreements, which further strengthens our view on near-term and long-term outlook. In our western region, organic growth was 41% versus the prior year quarter, reflecting strength from our production builder business. This sector has outperformed for the past two years as demand to upgrade indoor-outdoor living areas remains strong. We're also seeing the benefit from our capacity expansion in Phoenix, which has allowed us to better serve the custom market demands and our recently opened showroom in San Diego will position us well to serve the growth we are seeing in the Southern California's home and renovation markets. NewSelf continues to perform very well with sales growth of 41% that benefited from three stores opening in 2021. We're in various stages of opening new stores in Atlanta, Dallas, Fort Worth, and San Antonio for a total of 17 stores at the end of the year. Our Dallas and Fort Worth stores have signed leases, and those store operators are busy training their new team members in anticipation of opening. Our Atlanta store is celebrating its official ribbon cutting on August 3rd. In the Florida region, we saw strong sequential order growth of 13% versus Q1 of 2022. Our PGT and New South brands drove this growth, which was balanced across both new construction and repairing and remodeling. As we shared last quarter, our governor recently signed a home hardening bill to make impact windows and doors more affordable by granting a two-year sales tax exemption for Floridians. Our focus on improving manufacturing performance and customer service has allowed us to decrease our average lead times and improve our on-time and in-pool metrics to meet continued strong demand. As a result, our backlog was $359 million at the end of Q2, up slightly from $356 million at the start of the year. Slide 6 summarizes our strategic and operational framework that drives profitable growth. by delivering best-in-class products and services to our customers while creating a goal-oriented environment for our team members. Our first pillar is customer-centric innovation, which drives us to deliver products with features, performance, and value demanded by our builders and our customers. We're expanding our product offerings to improve thermal performance and improve sightlines, delivering improved energy efficiency, and improving indoor outdoor living spaces. Our second pillar is investing in talent. Over the last year, we have been incredibly successful at growing our talent base with high quality team members who help us achieve our growth targets. Our third pillar is transforming our manufacturing operations to scale in line with our growth. Our operational flexibility and tenacity have well positioned us to focus on improving our manufacturing processes to reduce or prevent back orders and maintain efficient warehousing operations. Our fourth pillar is allocating our strong free cash flow to achieve profitable growth. As we seek to generate long-term value creation for our shareholders, We are always on the lookout for organic and inorganic opportunities to improve our product offerings and production capabilities. That being said, as we navigate this inflationary environment, disciplined capital deployment will remain a top priority as we look for creative opportunities to grow our business while delivering above market results. Now I'd like to turn the call over to John to review our second quarter results in greater detail. John?