PGTI to Acquire NewSouth Window Solutions
PGT Innovations, Inc. (“PGT Innovations” or “PGTI”), a national leader in premium windows and doors, including impact-resistant products and products designed to unify indoor/outdoor living spaces, today announced it has signed a definitive agreement to acquire NewSouth Window Solutions (“NewSouth”) for a purchase price of $92 million in cash, subject to adjustments. NewSouth is a manufacturer and installer of factory-direct, energy-efficient windows and doors, including both impact-resistant and non-impact residential products. NewSouth has eight retail showrooms in several locations throughout Florida, with an additional showroom in Charleston, South Carolina, and is the only vertically integrated window dealer in Florida.
“This transaction is expected to support our diversification into growing segments in the window and door industry, by enabling us to enter the direct-to-consumer channel, where NewSouth is a market leader in Florida,” said Jeff Jackson, President and Chief Executive Officer of PGT Innovations. “NewSouth’s direct-to-consumer model is supported by its showrooms and in-home sales. With the addition of NewSouth, we expect to continue our strategy to grow in geographic areas outside of our core markets, with showroom openings planned for northern Florida and coastal states in the South. The acquisition is expected to provide PGT Innovations with the opportunity to serve a broader residential market segment, primarily driven by replacement projects, and relatively smaller order sizes that PGT Innovations’ strong dealer network typically does not target or serve.”
“NewSouth has a strong track record of sales growth and is forecasted to achieve net sales for 2019 in the range of approximately $82 million to $85 million and EBITDA margin in the mid-teens, inclusive of acquisition synergies, with retail margins similar to PGTI’s legacy business, including solid margins in NewSouth’s non-impact product line,” said Sherri Baker, Senior Vice President and Chief Financial Officer of PGT Innovations. “NewSouth expects to achieve a net sales compounded annual growth rate of approximately 29 percent from 2015 through the end of 2019.”
“We are excited to be joining the NewSouth team with PGT Innovations and are thrilled to become part of the PGT Innovations family. After successfully executing our growth plan in Florida, we expect this combination to provide growth opportunities to better serve the southern coastal markets and beyond,” said Earl Rahn, Chief Executive Officer of NewSouth.
Strategic and Financial Benefits
NewSouth provides access to a new channel that markets directly to consumers
– NewSouth’s direct-to-consumer model gives us a new type of customer which we expect to be incremental and complementary to our existing dealer channel
– The addition of NewSouth expands our footprint with new showroom locations planned for northern Florida and throughout the southern coastal states
NewSouth drives brand awareness with successful methods for advertising and marketing
– NewSouth has gained extensive brand awareness throughout Florida, with successful advertising and marketing programs, including television, digital media and direct mail
– PGTI expects to benefit from NewSouth’s market intelligence through more effective marketing and promotional campaigns that should benefit PGTI’s legacy brands and dealer network
Opportunities exist for supply chain synergies with the addition of NewSouth
– By leveraging our manufacturing expertise, we expect to drive efficiencies across the entire supply chain, including in the areas of procurement savings and production efficiencies
– Expected synergies of $2 million anticipated to be achieved by leveraging PGTI’s size and scale on raw material purchases and applying efficient practices to NewSouth’s production operations
Existing NewSouth leadership will continue with the business
– Committed, experienced leadership expected to remain with the NewSouth business, supporting our integration efforts
We expect to maintain strong margins, and remain committed to a strong balance sheet, and financial flexibility
– The combined company is expected to generate strong gross and EBITDA margins
– We expect our post-acquisition net leverage ratio to remain below 2.6 times
– We expect to continue to focus on our long-standing strategy of deleveraging following acquisitions, because we are committed to maintaining our financial flexibility and strong balance sheet
Transaction Financing, Approvals, and Timing to Close
PGTI expects to finance the transaction through a combination of cash on hand and with an additional $50 million of long-term debt. We have received financing commitments for the entire purchase price, and therefore the acquisition is not subject to a financing condition.
The transaction is expected to be completed in the first quarter of 2020, subject to customary closing conditions. The HSR waiting period has expired and obtaining HSR approval of the transaction is not a condition to closing.
Jones Day is serving as legal counsel and SunTrust Robinson Humphrey, Inc. is serving as financial advisor to PGT Innovations. Raymond James is acting as financial advisor and Foley & Lardner LLP is acting as legal counsel to NewSouth Window Solutions.
Pre-Recorded Conference Call
PGT Innovations will post a pre-recorded conference call, along with a presentation, at 8:10 a.m. on Tuesday, December 10, 2019, each of which will be available through the Investor Relations section of the PGT Innovations, Inc. website, http://ir.pgtinnovations.com/events.cfm.
You may also access the pre-recorded conference call online by using the following link: https://choruscall.sharefile.com/d-9349ec44f1194a29
About PGT Innovations, Inc.
PGT Innovations manufactures and supplies premium windows and doors. Its highly-engineered and technically-advanced products can withstand some of the toughest weather conditions on earth and unify indoor/outdoor living spaces. PGT Innovations creates value through deep customer relationships, understanding the unstated needs of the markets it serves and a drive to develop category-defining products. PGT Innovations is also the nation’s largest manufacturer of impact-resistant windows and doors, holds the leadership position in its primary markets, and is part of the S&P SmallCap 400 Index. The PGT Innovations’ family of brands include CGI®, PGT® Custom Windows & Doors, WinDoor®, Western Window Systems®, CGI Commercial® and Eze-Breeze®. The Company’s brands, in their respective markets, are a preferred choice of architects, builders, and homeowners throughout North America and the Caribbean. The Company’s high-quality products are available in custom and standard sizes with multiple dimensions that allow for greater design possibilities in residential, multi-family, and commercial projects. For additional information, visit www.pgtinnovations.com.
Sherri Baker – Senior Vice President & CFO – firstname.lastname@example.org – (941) 480-1600
Source: PGT Innovations, Inc.