Ply Gem Holdings reported today that its net loss shrank by more than half in the second quarter to $8 million from $19.5 million in the year-earlier period on a 23.6% decline in net sales to $260.6 million from $341.3 million.
Adjusted EBITDA--which Ply Gem defines as net income or loss plus interest expense (net of interest income), provisions for or benefits from income taxes, depreciation and amortization, non-cash foreign currency gain/loss, goodwill impairment charges, customer inventory buybacks, and restructuring and integration costs--were virtually unchanged in the second quarter at $41.5 million vs. $41.2 million in April through June 2008.
In a conference call with analysts, Ply Gem said its gross profit margin improved to 24.1% in the quarter from 20.8% a year earlier. It also said it believes it has gained market share from competitors. In siding, Ply Germ said its second-quarter sales by units fell 14.8% from 2Q08 while the industry was down 26.8%; in windows for new homes, Ply Gem's shipments fell 27% vs. what it said was an industry decline of 37%; and in the repair and remodeling windows segment, Ply Gem was down 5% while the industry had dropped 13% to 15%.
On windows, company officials said they think one reason why they believe Ply Gem's share widened was because the company has been selected by a "national player" that recently cut sharply the number of brands it stocks. That appears to be a reference to ProBuild.
"Despite the fact that single family housing starts were down 51.6% and 36.2% in the first and second quarters of 2009, respectively, Ply Gem demonstrated an improvement in our second quarter adjusted EBITDA compared to last year," Gary Robinette, president and CEO of the Cary, N.C.-based company, said in a statement. "Our adjusted EBITDA performance is a direct result of our continued focus on taking profitable market share and managing our overall cost structure which includes the actions that we have taken to realign our capacity during this historic housing slump."
Selling, general and administrative expenses were cut by 15.4% in the second quarter from the year before to total $36 million. In addition, the company had $93.7 million worth of inventory as of July 4 vs. $123.4 million the year before.
"We will continue to realign our cost structure as necessary for current and future market demand. At the same time, we are focused on maximizing cash flow and outperforming the market place in all business units, allowing us to emerge stronger when the housing market recovers," Robinette's statement said. Later, speaking to analysts, he said the trend so far this quarter has been consistent with the company's performance in the second quarter.
Ply Gem also announced during the analysts' call that it will restate its first-quarter earnings report to correct an error regarding its reporting of a benefit for income taxes. That change won't affect the company's adjusted EBITDA but it will add $7.1 million to the bottom line in the quarter, the company said.