Ply Gem — Investor Day (April 2007)
77 slides from Ply Gem's investor day presentation, Apr 10, 2007
Slide 1: Ply Gem's Investor Day
Ply Gem’s Investor Day: The name the world builds on
Slide 2: Ply Gem's profile
Ply Gem’s profile: The name the world builds on One of the largest manufacturers of exterior building and home improvement products in the U.S. Approximately 7500 associates Over 7 million sq. ft. of mfg. space 22 manufacturing facilities Over 1.5 billion in Sales
Slide 3: Ply Gem's market overview
Ply Gem’s market overview: The name the world builds on Provider of branded products for new construction and home improvement markets sold through many channels of distribution covering most price points #1 in Aluminum accessories #1 in Vinyl Railing Leading position In Vinyl Windows #1 market shar
Slide 4: Ply Gem's financial partner is Caxton-Iseman
Ply Gem’s financial partner is Caxton-Iseman: The name the world builds on With investments in a variety of well managed growth companies Caxton-Iseman invests private capital rather than pension or insurance funds so short term IRR’s are secondary. Conservative Growth Long term investor $2 Billion
Slide 5: Ply Gem's product mix
37% 5% 58% Ply Gem’s product mix: The name the world builds on Windows and Doors Fence and Rail Siding & Accessories New Products
Slide 6: Ply Gem's customer mix
41% 1% 58% 1% Ply Gem’s customer mix: The name the world builds on Remodel and Repair Commercial New Construction Exported
Slide 7: Ply Gem's leading brands
Ply Gem’s leading brands: The name the world builds on New Construction Windows Fence and Rail Siding & Accessories Remodel & Repair Windows
Slide 8: Ply Gem's competitive advantage
Ply Gem’s competitive advantage: The name the world builds on Customers Operational Excellence Facilities Efficient Mfg. Ply Gem • Customer focused • Recognized for outstanding service/lead times • Strongbrands....GP..Alcoa..Mastic..MW…Alenco • Siding plants most efficient in industry • Virtual faci
Slide 9: Windows
The name the world builds on Windows
Slide 10: Market Overview Windows
Market Overview Windows: The name the world builds on *Source: The Freedonia Group, Inc. Trends Impacting Window Demand
Slide 11: Market Overview Windows
Market Overview Windows: The name the world builds on Vinyl demand remains strong but differentiation between value and premium vinyl products eroding. Premium products must deliver desired features. Residential Window Market Share by Material 2009F Source: 2003 & 2006 WDMA/AAMA industry report - Du
Slide 12: Ply Gem's Window Platform
Ply Gem’s Window Platform : The name the world builds on Entry Level Aluminum Entry Level Vinyl SH Mid Range Vinyl SH/DH Top Line Vinyl SH/DH Twinseal Classic Mid Range Clad DH Mid Range Wood DH Jefferson Jefferson Freedom Freedom
Slide 13: Ply Gem's window mfg. plants
Ply Gem’s window mfg. plants: The name the world builds on
Slide 14: Ply Gem's window mfg. plants
Ply Gem’s window mfg. plants: The name the world builds on
Slide 15: Siding
The name the world builds on Siding
Slide 16: Combined Siding Overview
Combined Siding Overview: The name the world builds on • Sales of Approximately $1 Billion • 2,300 Employees • 9 Manufacturing Plants Metal Accessories 29% Vinyl Siding 65% Designer Accents 5% Decking & Railing 1%
Slide 17: US Vinyl Siding Marketshares: Leading position in Siding
US Vinyl Siding Marketshares Leading position in Siding: The name the world builds on Establishes the largest vinyl siding and aluminum accessories manufacturer in North America. Other 3% Heartland 5% Crane 6% Royal 6% Alside 11% Owens Corning 14% Certainteed 19% Kaycan 7% Ply Gem 29%
Slide 18: The future Ply Gem
The name the world builds on The future Ply Gem
Slide 19: As industry leaders we must lead change
Competition Consolidation Leverage resources As industry leaders….we must lead change: The name the world builds on Market opportunities Ply Gem A leader in the building products industry
Slide 20: Ply Gem's strategic priorities
Human Resources Customer focus Innovation Profitable Growth Continuous Improvement Ply Gem’s strategic priorities: The name the world builds on • Excellent customer • Measure • Brand management • NewProducts • Utilize technology • Improve diversity • Double digit growth • Safety • Lowcost • High qua
Slide 21: Ply Gem's Strategic Evolution
Fewer Operating Companies Simplicity Organic growth Synergy/cooperative activities Focus on Development of HR Focus on growth of sales & profits Ply Gem’s Strategic Evolution: The name the world builds on to Many Operating Companies Complexity Growth through acquisition Division autonomy Focus on RO
Slide 22: Ply Gem's strategic direction
Ply Gem’s strategic direction: The name the world builds on ® Organic ® New business ® Acquisitions Growth ® CFO ® Supply Asset Management Differentiators ® Low cost ® HR ® Sourcing ® Marketing ® Branding ® R & D ® HR Strategic planning ® Siding Group ® New Const. ® R & R Window ® Fence/Rail Busines
Slide 23: The Brand you can Build on
One Siding Company One New Const. Window One Replacement Window Co The Brand you can Build on: The name the world builds on
Slide 24: Ply Gem year sales history
Ply Gem 5 year sales history: The name the world builds on Ply Gem has more than doubled its Sales since 2004.
Slide 25: Industry fundamentals
The name the world builds on Industry fundamentals
Slide 26: Business Environment: Headwinds in 06
Business Environment…..Headwinds in 06: The name the world builds on 2006 was one of the most challenging years since 1990/91 Increased raw materials cost The “Gathering Storm" Retail/consumer spending Declining Housing starts housing starts
Slide 27: Raw Material Cost for 2006
17% 33% Raw Material Cost for 2006: The name the world builds on PVC resin Aluminum Source: Bloomberg % Increase 1/06 to 12/06
Slide 28: Key Issues that we all face in 07
Key Issues that we all face in 07: The name the world builds on ® Margin Pressures ® Price Erosion ® Cost Escalation § Labor § Benefits § Insurance § Environmental ® Acquisition and consolidation continues ® The China Price ® Generating Growth ® Protecting current markets ® Recapturing lost markets
Slide 29: The China Price - A New Reality
The China Price - A New Reality: The name the world builds on Reacting to the China Price ® Validate the China Price ® Qualify the China Price for The China dynamics ® Doubled GDP since 2000 ® Telecom #1- 300, #2 -170 ® million housing starts ® Determine the “Art of the Is China a threat or an oppor
Slide 30: Long-Term Business Outlook
Long-Term Business Outlook The name the world builds on l Still very attractive interest rates l Demographics still support strong demand from l Job creation still strong New Construction Repair and Replacement l GDP stronger than expected l Aging housing stock l Increased home ownership expected to
Slide 31: Ply Gem exceeding our customers needs
Ply Gem exceeding our customers needs: The name the world builds on i Leader in providing i Across many i Offering a national Then… Finally… i Leverage…….leverage i Innovative with new i High performer i Customer Focused First… i Strategic product i Low cost producer and brand management to meet the
Slide 32: Ply Gem New Construction Window Group Investor Day
Ply Gem New Construction Window Group Investor Day - April 10, 2007
Slide 33: Ply Gem New Construction Window Group
Phoenix, AZ Bryan,TX Tupelo, MS PeachtreeCity, GA Fayetteville, NC Rocky Mount, VA Hammonton, NJ Lineal Tech Ply Gem New Construction Window Group
Slide 34: Comprehensive Product Offering
Aluminum Aluminum Impact Vinyl Impact Vinyl Wood Comprehensive Product Offering Single Hung Double Hung Casement Shapes Patio Door Slider In-process In-process
Slide 35: Low Cost Producer
A. LOW COST PRODUCER Safety Awareness Quality Products 2. Integrated Supply Chain Procurement - Leverage Ply Gem Scale o Raw materials (resin, aluminum, glass, hardware) o Employee benefits (healthcare, insurance, 401(k)) Logistics - Leverage Ply Gem Scale o Filling empty miles (backhauling internal
Slide 36: Efficient Asset Management
B. EFFICIENT ASSET MANAGEMENT Low Cost Producer Quality Products Safety Awareness Company Operating Philosophy 1. M ake to Order o Optimize valuable floor space mitigating need for added warehouse space o Eliminate overhead by reducing non-value added handlers, cycle counter, receivers, etc. o Mitig
Slide 37: Service Intensive Culture
C. SERVICE INTENSIVE CULTURE Low Cost Producer Quality Products Safety Awareness Efficient Asset Management Company Operating Philosophy
Slide 38: Service Intensive Culture: Fill Rate, On Time, Lead Times
Fill Rate On Time Complete Lead Times C. SERVICE INTENSIVE CULTURE Low Cost Producer Efficient Asset Management Quality Products Safety Awareness MW 5 - 7 Days Patriot 5 - 7 Days Alenco 5 Days 99+ 99+ 99+ Company Operating Philosophy
Slide 39: Leading National Customers
Customer Channel # Yrs. Customer Large Chain 30+ Large Chain 30+ Large Chain 20+ Large Chain 15+ Large Chain 5+ Mod U Kraf Independent 30+ Home Center 30+ Home Builder 15+ OEM 30+ Mebane Lumber NV Ryan Home Builder 10+ Customer Channel # Yrs. Customer Ruffin and Payne Inc. Independent 30+ Independen
Slide 40: Window Industry Demand Trends
› Vinyl continues to take share in new construction › Aluminum continues to hold share in Florida, Texas and Southwest › Wood and wood clad remains in demand › Impact codes, energy codes and other requirements force manufacturers › National production builders continue to gain share › Semi-custom/cu
Slide 41: MW original Footprint
MW original Footprint 2000-2004 huerage Yearly Single Farily Building Permits Issued 5 Sansome || Sram rome agent (5 3 Number of Top Bulders by Market vaca eer expo 8 Saeee at gra parrety PLY GEM
Slide 42: Facility Footprint by Region
Region Facility Footprint
Slide 43: Alenco Update
Alenco Update Integration o Implemented December 2006 Cost Savings Plan Actual Status o Insurance 200K 200K Complete o Aluminum 300K 300K Complete o Hardware 100K 150K Complete o Extrusion 3,500K 3,500K Completed Q207 o Salaries 750K Totals $4,100K $4,900K Arizona Plant - Start up o Complete o Facil
Slide 44: (ad Dune \
(ad Dune \ Horus SE SURPLY fy, YMHC @PLY GEM
Slide 45: Ply Gem exterior products brands
SIDING| ACCESSORIES TRIM i Vinvi e WETAE EXTERIOR PRODUCTS ALCOA HOME EXTERIORS @PLY GEM
Slide 46: Ply Gem Siding Business Overview
Sales by Product Category Sales by Distribution Channel Sales by End Market Ply Gem Siding Business Overview Ply Gem is a leading manufacturer of vinyl siding and aluminum accessories serving both the new construction and remodeling markets through multiple distribution channels. Decking & Railing 1
Slide 47: Ply Gem Siding - Portfolio of Brands and Products
Wholesale 1-Step Brands Retail Brands • Vinyl Siding • Metal Accessories • Designer Accents • Decking & Railing Wholesale 1-Step • Vinyl Siding Wholesale 1-Step • Vinyl Siding • Metal Accessories Wholesale 1-Step • Vinyl Siding • Metal Accessories Wholesale 1-Step • Vinyl Siding BLUELINX • Lumberyar
Slide 48: Estimated US Vinyl Siding Market Shares
Estimated US Vinyl Siding Market Shares Top 5 manufacturers have over 80% market share Leading Market Positions Ply Gem is the largest vinyl siding and aluminum accessories manufacturer in the U.S. ♦ # 1 Vinyl siding manufacturer with an estimated 29% market share ♦ # 1 Aluminum accessories manufact
Slide 49: Leadership Positions in Each Channel of Distribution
Ply Gem Market Position Channel % of Vinyl Industry Units Estimated Ply Gem Share Ply Gem Brands Leadership Positions in Each Channel of Distribution Wholesale 1-Step 50% 36% #1 Home Centers/Lumberyards 23% 27% #1 Manufactured Housing 4% 75% #1 Manufacturer Owned Distribution 21% -- -- Direct to Con
Slide 50: Relationships with Leading Customer Base
¨ Exclusive supplier of vinyl siding and accessories to largest building products distributor in US. ¨ #1 supplier of vinyl siding and accessories to largest Wholesale 1-Step siding distributor in US. ¨ #1 supplier of vinyl siding and accessories to second largest Wholesale 1-Step siding distributor
Slide 51: Ply Gem Siding - Manufacturing Plants
Ply Gem’s manufacturing footprint is strategically situated to service customers. Key focus areas include: Vinyl Siding Plant Metal Accessories Plant Injection Molding Plant ¨ Plant capacity rationalization ¨ Low cost production ¨ High quality products ¨ High levels of service ¨ Safe work environmen
Slide 52: Ply Gem Siding Group - Competitive Advantages
Low Cost Producer Broad Product Offering Partnered with Industry Leaders Customer Service Ply Gem Siding Group - Competitive Advantages ► Low cost producer of high quality products ▪ Labor productivity among the highest in the industry ▪ Strategic sourcing yielding advantageous vinyl raw material pr
Slide 53: Key Strategic Growth Initiatives
Key Strategic Growth Initiatives Ply Gem Siding - Strategic Growth Initiatives Ply Gem’s siding business is well-positioned to take advantage of strategic growth initiatives by leveraging its low cost position, comprehensive offering of high quality products, high level of customer service, and broa
Slide 54: AHE Integration
The integration of AHE is on pace and exceeding prior expectations. ¨ No loss of customers, suppliers or unplanned employees ¨ By December-06, management has identified and is on pace to achieve $28.3mm in synergies, an increase of $6.3mm, ¨ Strategic sourcing savings substantiated through events in
Slide 55: AHE Synergy Rationalization
The Company has modeled in one-time expenses, primarily in relation to plant closures, severance and retainment bonuses, and brand transition, estimated to total $9.5 million and expected to be incurred from 2006-2009 Management believes $28.3 million in annual cost savings and synergies are readily
Slide 56: Market Share Trends by Siding Product Type
Market Share Trends by Siding Product Type Vinyl siding remains the market share leader as fiber cement grows at the expense of wood. U.S. Residential Siding Market The U.S. residential siding market is estimated at $8.5 billion, with vinyl siding representing a 47% share of total residential volume
Slide 57: U.S. Residential Siding Market - Segment Share by Product Type
Residential New Construction Market Residential Repair/Remodel Market Manufactured Housing Market Key Vinyl Siding Advantages U.S. Residential Siding Market - Segment Share by Product Type Brick 21% Vinyl 31% Stucco 19% Wood 14% Fiber Cement 14% Other 1% Other 2% Brick 2% Stucco 4% Fiber Cement 10%
Slide 58: Siding Installed Costs
New Build Installed Cost ($ / Square) $74 $113 $108 $54 $328 $613 Siding Installed Costs Average installed cost of vinyl siding is lower than all other materials $78 $61 $94 $244 $421 $858 $152 $213 $39 $44 $246 $337 $749 $1,471 $39 Source: 2006 RS Means residential cost data. Vinyl siding is betwee
Slide 59: Pro Forma Financial Results
Pro Forma Financial Results Shawn Poe , Ply Gem Industries, Inc.
Slide 60: Net Sales
Net Sales • Sales growth that outperformed our industry • Improved sales mix to 58% New Construction and 42% R&R • Reduced customer concentration largest customer = only 10% of sales • Long-term customer relationships with leaders within each channel • Demonstrated ability to manage selling price ag
Slide 61: Adjusted EBITDA
Adjusted EBITDA • Ply Gem has demonstrated history of strong earnings performance • Adjusted EBITDA Margins improved from 10.5% in 2004 to 12.6% in 2006 • Highly variable cost structure 75% variable and only 25% fixed • Low S,G&A expense of 11.3% in 2006 when adjusted for unusual items • Demonstrate
Slide 62: Capital Spending
Capital Spending • Ply Gem has had very modest Capex requirements which averaged only 1.6% • Historically approximately 25% of Ply Gem’s Capex has been maintenance • Ply Gem has demonstrated its ability to reduce Capex when appropriate
Slide 63: Adjusted EBITDA - Capex
Adjusted EBITDA - Capex • Ply Gem has a history of Strong EBITDA performance, modest Capex requirements and has been an efficient user of working capital. • Ply Gem reduced it’s Net Debt position by $49.7 million during 2005 and $66.2 million in 2006 when we take into account the cash from operation
Slide 64: Ply Gem has demonstrated Strong Financial Performance
Net Sales Adjusted EBITDA Adjusted EBITDA - CapEx Capital Expenditures Note: Historical pro forma results include MW, Alenco and AHE for all periods shown. Ply Gem’s has demonstrated Strong Financial Performance
Slide 65: Key Attributes
Demonstrated Ability to Integrate Acquisitions with Significant Synergies and Cost Savings Balance Between Repair & Remodeling and New Construction Ply Gem’s Proven and Experienced Management Team Substantial and Sustainable Free Cash Flow Generation Long-standing and Diversified Customer Relationsh
Slide 66: Questions & Answers
Questions & Answers
Slide 67: Supplemental Information
Supplemental Information
Slide 68: Computation of Non-GAAP Financial Information
Computation of Non-GAAP Financial Information ¨ Pro forma net sales - Excluding AHE ¨ Adjusted pro forma EBITDA - Excluding AHE ¨ Pro forma capital expenditures (CAPEX) - Excluding AHE ¨ Pro forma EBITDA less CAPEX - Excluding AHE ¨ Pro forma net sales - Including AHE ¨ Adjusted pro forma EBITDA - I
Slide 69: Computation of Pro Forma Net Sales - Excluding AHE
¨ Computation of Pro Forma Net Sales Supplemental Information - Excluding AHE
Slide 70: Computation of Adjusted EBITDA - Excluding AHE
Supplemental Information Computation of Adjusted EBITDA - Excluding AHE
Slide 71: Computation of Pro Forma Capital Expenditures - Excluding AHE
Supplemental Information - Excluding AHE Computation of Pro Forma Capital Expenditures (CAPEX)
Slide 72: Computation of Adjusted Pro Forma EBITDA - CAPEX - Excluding AHE
Supplemental Information - Excluding AHE Computation of Adjusted Pro Forma EBITDA - CAPEX
Slide 73: Computation of Pro Forma Net Sales - Including AHE
¨ Computation of Pro Forma Net Sales Supplemental Information - Including AHE
Slide 74: Computation of Adjusted EBITDA - Including AHE
Supplemental Information Computation of Adjusted EBITDA - Including AHE
Slide 75: Computation of Pro Forma Capital Expenditures - Including AHE
Supplemental Information - Including AHE Computation of Pro Forma Capital Expenditures (CAPEX)
Slide 76: Computation of Adjusted Pro Forma EBITDA - CAPEX - Including AHE
Supplemental Information - Including AHE Computation of Adjusted Pro Forma EBITDA - CAPEX
Slide 77: Disclaimer
Disclaimer These slides contain (and the accompanying oral discussion will contain) “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual re