1. March
12,
2015
Ply
Gem
Holdings
Fourth
Quarter
and
Full
Year
2014
Results
Gary
E.
RobineCe
Shawn
K.
Poe
President
&
Chief
ExecuKve
Officer
Chief
Financial
Officer
2. Legal
Disclaimer
2
These
slides
and
the
accompanying
oral
discussion
may
contain
“forward-‐looking
statements”
within
the
meaning
of
the
Private
Securi=es
Li=ga=on
Reform
Act
of
1995.
Such
statements
involve
known
and
unknown
risks,
uncertain=es
and
other
factors
that
could
cause
the
actual
results
of
Ply
Gem
Holdings,
Inc.
(the
“Company”)
to
differ
materially
from
the
results
expressed
or
implied,
including:
downturns
in
the
home
repair
and
remodeling
or
the
new
construc=on
end
markets,
or
the
economy
or
the
availability
of
consumer
credit;
compe==on
from
other
exterior
building
products
manufacturers
and
alterna=ve
building
materials;
inability
to
successfully
develop
new
products
or
improve
exis=ng
products;
changes
in
the
costs
and
availability
of
raw
materials;
consolida=on
and
further
growth
of
our
customers;
loss
of,
or
a
reduc=on
in
orders
from,
any
of
our
significant
customers;
inclement
weather
condi=ons;
increases
in
union
organizing
ac=vity
and
work
stoppages
at
our
facili=es
or
the
facili=es
of
our
suppliers;
our
ability
to
employ,
train
and
retain
qualified
personnel
at
a
compe==ve
cost;
claims
arising
from
the
opera=ons
of
our
various
businesses
prior
to
our
acquisi=ons;
products
liability
claims,
including
class
ac=on
claims,
rela=ng
to
the
products
we
manufacture;
li=ga=on
outside
of
product
liability
claims;
loss
of
certain
key
personnel;
interrup=ons
in
deliveries
of
raw
materials
or
finished
goods;
environmental
costs
and
liabili=es;
inability
to
realize
an=cipated
synergies
and
cost
savings
with
respect
to
acquisi=ons;
manufacturing
or
assembly
realignments;
threats
to,
or
impairments
of,
our
intellectual
property
rights;
increases
in
fuel
costs;
changes
in
foreign
currency
exchange
and
interest
rates;
material
non-‐cash
impairment
charges;
our
significant
amount
of
indebtedness;
covenants
in
the
ABL
Facility,
the
credit
agreement
governing
our
Senior
Secured
Term
Loan
Facility
and
the
indenture
governing
the
6.50%
Senior
Notes;
limita=ons
on
our
net
opera=ng
losses
and
payments
under
the
tax
receivable
agreement
to
our
current
stockholders;
failure
to
successfully
consummate
and
integrate
future
acquisi=ons;
actual
or
perceived
security
vulnerabili=es
or
cyberaZacks
on
our
networks;
failure
to
effec=vely
manage
labor
inefficiencies
associated
with
increased
produc=ons
and
new
employees
added
to
the
company;
failure
to
generate
sufficient
cash
to
service
all
of
our
indebtedness
and
make
capital
expenditures;
control
by
the
CI
Partnerships;
failure
to
maintain
effec=ve
internal
controls
over
financial
repor=ng;
and
the
risks
set
forth
in
the
Company’s
filings
with
the
Securi=es
and
Exchange
Commission.
Consequently
such
forward-‐
looking
statements
should
be
regarded
as
the
Company’s
current
plans,
es=mates
and
beliefs.
Except
as
required
by
law,
the
Company
does
not
undertake
and
specifically
declines
any
obliga=on
to
publicly
release
the
results
of
any
revisions
to
these
forward-‐looking
statements
that
may
be
made
to
reflect
any
future
events
or
circumstances
a_er
the
date
of
such
statements
or
to
reflect
the
occurrence
of
an=cipated
or
unan=cipated
events.
In
addi=on,
these
slides
and
the
accompanying
oral
discussion
reference
non-‐GAAP
financial
measures,
such
as
adjusted
EBITDA.
A
reconcilia=on
of
non-‐GAAP
financial
measures
to
the
most
directly
comparable
GAAP
financial
measure
is
provided
in
the
Appendix
to
these
slides
and
is
included
in
our
news
release
issued
on
March
12,
2015
and
posted
on
www.plygem.com.
3. 3
41%
55%
45%
3
Fourth
Quarter
and
Full
Year
2014
Results
Today’s
PresentaKon
90%
10%
Agenda
• Fourth
Quarter
Review
Gary
Robine3e
• Financial
Results
Shawn
Poe
• Acquisi;on
Synergies
and
Cost
Savings
Shawn
Poe
• Margin
Ini;a;ves
Gary
Robine3e
• Economic
Outlook
Gary
Robine3e
• Ques;ons
and
Answers
Gary
Robine3e
&
Shawn
Poe
• Closing
Remarks
Gary
Robine3e
4. 4
41%
55%
45%
4
One
of
the
Largest
Manufacturers
of
Exterior
Building
and
Home
Improvement
Products
90%
10%
Company
Overview
Repair
and
Remodel
Leverage
to
New
Housing
Starts
New
Products
and
InnovaKon
Drive
Share
Gains
M&A
OpportuniKes
Pla[orm
Built
for
Growth
and
OperaKng
Leverage
• Leading
Manufacturer
of
Exterior
Building
Products
• Comprehensive
Product
PorKolio
with
Strong
Brand
Recogni;on
• Mul;-‐Channel
Distribu;on
Network
Servicing
a
Broad
Customer
Base
• Balanced
End
Market
Exposure
Driven
by
Diversified
Product
Mix
• Highly
Efficient,
Low
Cost
Opera;ng
PlaKorm
• Proven
Track
Record
of
Acquisi;on
Integra;on
&
Cost
Savings
Realiza;on
• Strong
Management
Team
with
Significant
Ownership
US
Canada
84%
16%
(*)
Siding
Windows
45%
55%
(*)
(*)
LTM
December
31,
2014,
Pro
Forma
for
Simonton
acquisiKon
5. 5
Ply
Gem
Results
Key
Highlights
2014
Results
2014
Full
Year
Highlights
• Net
sales
increase
of
14.7%
due
to
the
impact
of
acquisi;ons
(Simonton,
Mi3en
and
Gienow)
of
$145.7M
and
organic
growth
of
$55.3M.
Organic
growth
of
4.0%
was
driven
by
demand
in
the
U.S.
residen;al
housing
market,
par;cularly
during
the
second
half
of
2014,
and
an
increase
in
average
selling
prices
in
both
of
our
business
segments.
Organic
growth
was
par;ally
offset
by
a
net
sales
decrease
of
$7.4M
for
Western
Canada
due
to
integra;on
challenges
and
a
nega;ve
foreign
currency
impact
from
a
weakening
Canadian
dollar.
In
addi;on,
severe
winter
weather
during
the
first
half
of
2014
nega;vely
impacted
our
net
sales.
The
second
half
of
2014
had
improved
weather
condi;ons
rela;ve
to
the
second
half
of
2013,
which
when
combined
with
over
average
selling
price
improvement,
produced
a
net
sales
organic
growth
of
7.6%
for
the
second
half
of
2014.
• Gross
margin
expansion
of
70
basis
points
driven
by
increased
average
selling
prices
and
opera;ng
efficiency
improvements
in
our
U.S.
windows
business
par;ally
offset
by
higher
raw
material
and
freight
costs,
integra;on
and
restructuring
costs
related
to
the
consolida;on
of
our
Western
Canadian
windows
business
and
unfavorable
foreign
currency
impact
from
a
weakening
Canadian
dollar.
New
construcKon
54%
Home
repair
&
remodel
46%
End
Market
Exposure
($ in Millions) 2014 2013
Net Sales
Y-O-Y Change
$1,566.6
14.7%
$1,365.6
Gross Profit
Gross Profit %
$307.8
19.6%
$258.7
18.9%
Adj. EBITDA
Y-O-Y Change
$124.2
5.8%
$117.5
New
construcKon
49%
Home
repair
&
remodel
51%
End
Market
Exposure
–
Pro
Forma
Simonton
(*)
(*)
LTM
December
31,
2014,
Pro
Forma
Simonton
acquisiKon
6. 6
Ply
Gem
Results
Key
Highlights
Fourth
Quarter
Results
Fourth
Quarter
2014
Highlights
• Net
sales
increase
of
35.2%
was
due
to
acquisi;on
and
organic
growth.
The
acquisi;on
of
Simonton
resulted
in
an
increase
in
net
sales
of
$83.8M.
Organic
growth
of
10.0%
was
driven
by
a
6.5%
increase
in
U.S.
single-‐family
housing
starts,
an
increase
in
average
selling
prices
in
both
of
our
business
segments
and
increased
demand
for
our
products
compared
to
the
same
period
in
2013.
• Gross
margin
expansion
of
70
basis
points
driven
by
increased
average
selling
prices
in
both
of
our
business
segments,
opera;ng
efficiency
improvements
in
our
U.S.
windows
business
par;ally
offset
by
integra;on
and
restructuring
costs
related
to
the
consolida;on
of
our
Western
Canadian
windows
business
and
unfavorable
foreign
currency
impact
from
a
weakening
Canadian
dollar.
Excluding
the
impact
of
our
Western
Canadian
windows
business,
gross
margin
expanded
by
130
basis
points.
($ in Millions) Q4 2014 Q4 2013
Net Sales
Y-O-Y Change
$450.1
35.2%
$332.9
Gross Profit
Gross Profit %
$82.0
18.2%
$58.4
17.5%
Adj. EBITDA
Y-O-Y Change
$26.0
62.5%
$16.0
New
construcKon
49%
Home
repair
&
remodel
51%
End
Market
Exposure
7. 7
Windows
&
Doors
(W&D)
Segment
Key
Highlights
Fourth
Quarter
Results
Leader
in
Vinyl
and
Aluminum
Windows
$217.1
$116.4
$40.8
$43.7
Q4 2014 Q4 2013
Net Sales
U.S. Canada
$160.1
$257.9
End
Market
Exposure
(*)
• 61.1%
increase
in
net
sales
due
largely
to
the
Simonton
acquisi;on.
Excluding
Simonton,
net
sales
increased
8.7%
due
to
higher
average
selling
prices,
improved
product
mix,
increased
New-‐co
window
units
due
to
a
6.5%
increase
in
U.S.
single-‐family
housing
starts
in
the
period
par;ally
offset
by
unfavorable
window
unit
sales
to
dealer
customers
and
the
weakening
Canadian
dollar
in
our
Western
Canada
business.
• Gross
margin
improved
by
470
basis
points
driven
by
a
280
basis
point
gross
margin
improvement
in
our
legacy
U.S.
business
due
to
improved
pricing,
product
mix
and
manufacturing
efficiencies
par;ally
offset
by
gross
margin
contrac;on
in
Western
Canada
due
to
near-‐term
integra;on
and
restructuring
costs
related
to
the
consolida;on
of
manufacturing
opera;ons
and
unfavorable
foreign
currency
exchange
rates.
• SG&A
expense
increased
by
48.7%
which
was
a3ributed
to
the
Simonton
acquisi;on
and
one-‐;me
integra;on
costs
of
our
Western
Canadian
businesses.
Excluding
Simonton
and
Western
Canada
integra;on
costs,
SG&A
expense
decreased
20.5%.
Q4 2014 Q4 2013
U.S. 13.3% 4.6%
Canada 11.8% 18.0%
W&D Segment 13.0% 8.3%
Gross Margin %
New
construcKon
62%
Home
repair
&
remodel
38%
(*)
For
the
three
months
ended
December
31,
2014
8. Q4
2013
Gross
Margin
8.3%
U.S.
W&D
C.M.
Improvement
1.0%
Simonton
Acquisi;on
Impact
4.5%
Unfavorable
FX
-‐0.7%
Western
Canada
Integra;on
-‐0.1%
Q4
2014
Gross
Margin
13.0%
W&D
Gross
Margin
Unfavorable
foreign
currency
exchange
rate.
Less
operaKng
leverage
due
to
sales
volume
decreases
driven
by
weather
and
pull-‐back
in
new
construcKon
demand
8
W&D
Segment
Gross
Margin
Bridge
and
Historical
Performance
U.S.
Windows
improved
contribuKon
margin
due
to
selling
price
increases,
improved
product
mix
and
operaKonal
efficiency
improvements.
20.9%
15.4%
14.0%
15.4%
13.1%
13.8%
9.7%
12.9%
1,046
622
445
471
431
535
618
648
2007
2008
2009
2010
2011
2012
2013
2014
Historical
Gross
Margin
Performance
Annual
Gross
Profit
%
U.S.
SFHS
(*)
Simonton
favorable
impact
on
overall
segment
gross
margin
for
the
quarter.
Near-‐term
integraKon
and
restructuring
costs
associated
with
consolidaKng
operaKons
in
Western
Canada.
9. 9
Siding,
Fencing
&
Stone
(SFS)
Segment
Key
Highlights
Fourth
Quarter
Results
Market
Leader
in
Vinyl
Siding
$165.3 $145.6
$26.9
$27.2
Q4 2014 Q4 2013
Net Sales
U.S. Canada
$172.8
New
construcKon
32%
Home
repair
&
remodel
68%
End
Market
Exposure
(*)
• 11.2%
increase
in
net
sales
due
largely
to
favorable
market
demand
in
metal
accessories
and
vinyl
siding
with
units
shipped
increasing
13.4%
and
5.9%,
respec;vely.
In
addi;on,
higher
selling
prices
were
realized
in
response
to
increased
raw
material
costs
and
freight
costs.
• Gross
margin
contracted
90
basis
points,
driven
by
higher
commodity
costs,
predominately
PVC
and
aluminum,
and
freight
costs
that
were
not
fully
offset
by
our
selling
price
increases
within
the
period.
We
expect
addi;onal
recovery
through
future
selling
price
increases.
The
contrac;on
in
Mi3en
gross
margin
is
also
a3ributed
to
a
one
;me
inventory
buy-‐back
associated
with
a
new
customer
for
approximately
$0.4M,
foreign
currency
and
higher
warranty
expense
within
the
quarter.
• SG&A
expense
experienced
a
moderate
decrease
of
$0.8
million.
SG&A
expense
as
a
percentage
of
sales
decreased
from
13.0%
in
the
prior
year
to
11.3%
which
is
a3ributed
to
leveraging
the
fixed
component
of
SG&A
expense.
Gross Margin %
Q4 2014 Q4 2013
U.S. 25.9% 26.3%
Canada 20.7% 25.2%
SFS Segment 25.2% 26.1%
$192.2
(*)
For
the
three
months
ended
December
31,
2014
10. Q4
2013
Gross
Margin
26.1%
Selling
price/product
mix
3.3%
Freight
costs
-‐0.5%
Commodity
costs
-‐3.8%
Mi3en
margin
savings/synergies
0.4%
Unfavorable
FX
-‐0.3%
Q4
2014
Gross
Margin
25.2%
SFS
Gross
Margin
ConKnued
increasing
freight
carrier
rates
parKally
offset
by
remaining
impact
of
the
Q1
2014
price
increases.
AddiKonal
recovery
through
future
selling
price
increases.
10
SFS
Segment
Gross
Margin
Bridge
and
Historical
Performance
Reflects
favorable
product
mix
and
pricing.
As
noted
during
previous
price
increases,
the
pull
through
of
pricing
changes
occur
over
a
30
to
60
day
period.
20.4%
18.4%
25.9%
25.7%
24.8%
27.4%
26.8%
26.1%
.5208
.6200
.5288
.6458
.7371
.7775
.8333
.9133
2007
2008
2009
2010
2011
2012
2013
2014
Historical
Gross
Margin
Performance
Annual
Gross
Profit
%
PVC
Resin
Price
(*)
MiCen
gross
margin
improvements
associated
with
cost
savings
and
synergies
related
to
raw
material
sourcing,
material
improvements,
and
manufacturing
efficiencies
parKally.
Increased
raw
material
costs,
mainly
PVC
and
aluminum
commodity
costs
parKally
offset
by
remaining
impact
of
the
Q1
and
Q3
2014
price
increases.
AddiKonal
recovery
through
future
selling
price
increases.
Unfavorable
foreign
currency
exchange
rate.
11. 11
AcquisiKon
Synergies
(1) Improved procurement economics as a result of increased purchasing power
(2) Freight cost maximization and improved fixed overhead as a result of various manufacturing cost reductions from
rationalizations
(3) SG&A leverage scale and back office efficiencies
(4) Expand vertical integration efficiency
EBITDA
Impact
of
Expected
Simonton
Synergies
and
Cost
Savings
$8
Million
Raw
material
sourcing
(1)
$3.6M
Mfg.
efficiencies
(2)
$2.7M
Insourcing
products
(4)
$1.5M
SG&A
(3)
$0.2M
Simonton
AcquisiKon
Synergies
and
Cost
Savings
12. 12
Margin
IniKaKves
The Market Innovator
The Leading Brand
Lean through Technology
Our Future Leaders
New Channels and Markets
Selling
Price
Increases
ü March
2014
price
increases
for
window
and
siding
products
posiKvely
impacted
Q4
results.
Expect
posiKve
impact
of
selling
price
increase
in
siding
metal
products
and
designer
accent
products
which
were
effecKve
in
Q4
2014
ü Q1
2015
announced
price
increases
are
in
place
for
both
business
segments.
W&D
Segment
selling
price
increases
range
from
6%
to
15%.
SFS
Segment
selling
price
increases
range
from
6%
to
8%
ConKnued
ImplementaKon
of
Enterprise
Lean
and
Sales
&
OperaKons
Planning
(S&OP)
System
in
U.S.
Windows
and
Doors
ü Enterprise
Lean
provides
product
simplificaKon
and
improves
manufacturing
flexibility.
Realized
approximately
$4.5M
of
benefit
in
2014
and
will
provide
for
an
esKmated
annual
savings
of
approximately
$10M
when
fully
implemented
in
2016
ü S&OP
system
provides
enhanced
capacity
and
resource
planning
system
which
will
reduce
future
ramp-‐up
costs
and
maximize
fixed
manufacturing
investments
Ply
Gem
Margin
Enhancement
IniKaKves
Cross
Selling
OpportuniKes
ü ConKnue
to
integrate
our
extensive
product
categories
across
our
legacy
customer
base
and
newly
acquired
Simonton
customer
base
13. 13
Ply
Gem
Outlook
The Market Innovator
The Leading Brand
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1Q
2015
Guidance
ü Based
on
the
current
forecast
of
the
U.S.
housing
market
and
R&R
spend,
the
winter
weather
condiKons
experienced
in
the
Northeast
and
Midwest,
and
taking
into
account
the
seasonality
of
the
Simonton
business,
on
a
currency
neutral
basis,
we
expect
our
EBITDA
for
1Q
2015,
in
the
range
of
$2
to
$7
million
Economic
Outlook
&
Guidance
Expect
ConKnued
Steady
Growth
in
U.S.
Housing
Starts
ü Expect
conKnued
overall
moderate
growth
in
U.S.
housing
recovery
in
2015,
however
we
expect
the
market
to
experience
periods
of
choppiness
in
the
growth
rate
ü Expect
conKnued
moderate
upward
trend
in
big
Kcket
R&R
spend
ü Canadian
housing
starts
expected
to
be
flat
for
2015
with
potenKal
demand
pressure
in
Western
Canada
due
to
oil
pricing
16. (amounts in thousands) For the year ended
December 31, 2014
For the year ended
December 31, 2013
Net loss $(31,269) ($79,520)
Interest expense, net 71,186 91,684
Provision (benefit) for income taxes (105) 298
Depreciation and amortization 48,463 45,646
EBITDA $88,275 $58,108
Non cash loss on foreign currency transactions 992 1,533
Acquisition costs 1,188 1,490
Customer inventory buybacks 1,555 4,837
Restructuring/integration expense 6,493 11,759
Non cash charge of purchase price allocated to inventories 38 2,015
Initial public offering costs - 23,527
Litigation settlement 5,000 -
Management fee (terminated in May 2013) - 410
Loss on modification or extinguishment of debt 21,364 18,948
Tax receivable agreement liability adjustment (670) (5,167)
Adjusted EBITDA $124,235 $117,460
16
Full
Year
Adjusted
EBITDA
ReconciliaKon
Appendix
17. (amounts in thousands) For the year ended
December 31, 2014
For the year ended
December 31, 2013
SFS Segment W&D Segment Total SFS Segment W&D Segment Total
Non cash loss on foreign
currency transactions
$427 $565 $992 $217 $1,316 $1,533
Acquisition costs - 1,188 1,188 700 790 1,490
Customer inventory
buybacks
1,432 123 1,555 387 4,450 4,837
Restructuring/integration
expense
723 5,620 6,343 1,407 9,982 11,389
Non cash charge of
purchase price allocated to
inventories
- 38 38 1,951 64 2,015
Litigation settlement - 5,000 5,000 - - -
$2,582 $12,534 $15,116 $4,662 $16,602 $21,264
17
EBITDA
Adjustments
By
Segment(*)
Appendix
(*)
Does
not
reflect
unallocated
and
corporate
EBITDA
adjustments
18. (amounts in thousands) For the three months ended
December 31, 2014
For the three months ended
December 31, 2013
Net loss $(12,476) ($17,431)
Interest expense, net 19,185 21,438
Provision (benefit) for income taxes 15,828 (1,378)
Depreciation and amortization 14,554 12,663
EBITDA $37,091 $15,292
Non cash loss on foreign currency transactions 475 778
Acquisition costs 477 -
Customer inventory buybacks 767 162
Restructuring/integration expense 2,287 6,411
Tax receivable agreement liability adjustment (15,089) (6,641)
Adjusted EBITDA $26,008 $16,002
18
Fourth
Quarter
Adjusted
EBITDA
ReconciliaKon
Appendix
19. (amounts in thousands) For the three months ended
December 31, 2014
For the three months ended
December 31, 2013
SFS Segment W&D Segment Total SFS Segment W&D Segment Total
Non cash loss on foreign
currency transactions
$149 $326 $475 $250 $528 $778
Acquisition costs - 477 477 - - -
Customer inventory buybacks 767 - 767 187 (25) 162
Restructuring/integration
expense
689 1,448 2,137 726 5,685 6,411
$1,605 $2,251 $3,856 $1,163 $6,188 $7,351
19
EBITDA
Adjustments
By
Segment(*)
Appendix
(*)
Does
not
reflect
unallocated
and
corporate
EBITDA
adjustments
