Favorable market conditions and warm weather brought about an earlier start to the construction season this year, which helped build sales for Ply Gem Holdings Inc.
The Cary, N.C.-based manufacturer of vinyl siding, windows, fencing and other construction products reported net sales of $408.6 million for the first quarter of 2016, which is an increase of $32.6 million or 8.7 percent from the prior-year period.
Both of Ply Gem's business segments — windows and doors as well as siding, fence and stone — contributed to the strong sales, CEO and Chairman Gary Robinette said during a May 9 quarterly call with investment analysts.
“We estimate the repair and remodel activity grew over 5 percent and new construction grew low double digits,” Robinette said. “Additionally, we saw added strength for our products in the quarter due to favorable weather conditions, which allowed contractors and installers to pull forward new construction and repair and remodel projects and begin the spring building season earlier, especially in our core markets of the Midwest and Northeast.”
In the windows and doors segment, Ply Gem's sales for the first quarter increased $12.6 million or 5.8 percent to $232.2 million compared to the first quarter of 2015. Organic growth, higher prices and improved product mix contributed to the increase, said Ply Gem's Chief Financial Officer Shawn Poe.
“The overall sales increase of our U.S. window businesses was 11.7 percent, which was driven by a 14.7 percent increase in our new construction window products and a 5.6 percent increase in our repair and remodeling windows,” Poe said.
In the siding, fencing and stone segment, Ply Gem sales were up $19.9 million or 12.7 percent to $176.4 million, driven by organic growth in the U.S. and eastern Canada as well as $6.4 million of sales growth related to the Canyon Stone acquisition.
With the 2014 acquisition of Simonton Windows also factored in, Ply Gem has identified $19 million of combined synergy savings from improved procurement, product sourcing and manufacturing costs.
“During the first quarter we realized $3.1 million in synergies, which actually exceeded our expectations and brings our total realized synergies to $12.1 million,” Poe said. “We expect the remainder of the $19 million of total synergies to be realized over the balance of 2016.”
Ply Gem's balance sheet also shows a net loss of $27.5 million along with $24.7 million of adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which was up from $2.3 million in the first quarter of the prior year.
Adjusted EBITDA for the second quarter is expected to be in the range of $72 million to $77 million, Robinette said.
“At the mid-point of this range, this would result in a 20 percent year-over-year improvement of adjusted EBITDA,” he added.