PGT Innovations Inc (PGTI) 2009 Q4 法說會逐字稿

Good day and welcome to the PGT, Inc. fourth-quarter 2009 earnings conference call. Today's conference is being recorded. At this time I would like to turn the conference over to Brad West. Please go ahead, sir.

Thank you. Good morning and thank you for joining us for PGT's fourth-quarter 2009 conference call. I'm Brad West, Corporate Controller, and I'm joined today by Rod Hershberger, President and CEO, and Jeff Jackson, Executive Vice President and CFO. Rod and Jeff will represent PGT on this morning's call.

Before we begin, let me remind everyone that today's conference call may contain statements concerning the Company's future prospects, business strategies, and industry trends. Such statements are considered to be forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations and are subject to risk and uncertainty. Actual results may vary materially from those contained in the forward-looking statements. Please refer to February 11's press release, our most recent Form 10-K and other documents filed with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements.

A copy of our press release is posted on the Investor Relations section of our corporate website at www.pgtinc.com. Included in the press release are the un-audited consolidated balance sheets and statements of operations prepared in accordance with GAAP and adjusted information which was quantitatively reconciled to GAAP. Our Company uses non-GAAP measurements as key metrics for evaluating performance internally. A detailed explanation of these non-GAAP measurements can be found in our Form 8-K filed February 11 with the SEC. These non-GAAP measurements are not intended to replace the presentation of financial results in accordance with GAAP. Rather we believe these non-GAAP measurements provide additional information for investors to facilitate the comparison of past and present performance.

For today's call Rod will provide an overview of our performance for the fourth quarter, then Jeff will discuss our results in more detail. After their prepared remarks, they will take your questions.

With that, let me turn the call over to Rod Hershberger. Rod?

Thanks, Brad, and good morning, everyone. As I mentioned in our press release, new home construction remains at historically low levels as starts in our core market were down 28% in the fourth quarter compared to last year's fourth quarter. However, we did see some signs of a recovery, including a 3% increase in single-family starts over the prior year fourth quarter; a modest 6% seasonal decline in sequential quarter starts much lower than each of the previous two years where the decline was approximately 25%; a 44% increase in existing home sales compared to the prior year quarter in our primary market of Florida; and a decrease in inventory levels compared to the prior year in certain primary market cities, including 35% in Miami and 23% in Tampa.

Despite these promising trends, certain negative factors such as continued tight credit standards and unemployment, which is still around 10% nationally and nearly 12% in Florida, will likely continue to make predicting the timing and extent of a turnaround difficult. With pressures on both the R&R and new construction markets, our sales decreased 27%. Compared to the fourth quarter of 2008, sales into the repair and remodeling market were down 14%, while sales into the new construction market were down 49%. As a percentage of total sales for the fourth quarter of 2009, R&R sales accounted for 74% and new construction sales accounted for 26% of sales compared to the fourth quarter of 2008 when R&R sales accounted for 65% and new construction represented 35%.

In previous calls during 2009 I mentioned some new products we recently launched. I would like to update you on those products. We officially began taking orders on our new sliding glass door in October 2009 and totaled $1.3 million in sales during the fourth quarter, exceeding our expectations. Our customers are thrilled with the improved aesthetics, clean design, ease of installation and the many new features the door offers. The product line also includes a high performance sliding glass door. While we expect this new sliding door to eventually replace certain of our existing sliding glass door product sales, we think its new design and features put us at the forefront of technology currently in the marketplace and will drive incremental sales into the future.

We also previously discussed our acquisition of the operating assets of Hurricane Window and Door Factory located in Fort Myers. We branded this high-end energy efficient impact vinyl line PremierVue. These products provide long-term energy and structural benefits meeting the requirements of Miami-Dade for impact protection, as well as qualifying homeowners for the government's energy tax credits through the American Recovery and Reinvestment Act of 2009. This product line was developed specifically for the hurricane protection market and combines some of the highest structural ratings in the industry with excellent energy efficiency. Our official WebWeaver launch was in January of 2010, allowing our customers to order online.

Lastly, I will give an update of our SpectraGuard branded vinyl window products. We launched this non-impact R&R vinyl window line last March and enjoyed sales totaling $4.3 million for the remainder of 2009. We also continue to gain traction with our vinyl window targeted for the new construction market that was launched in 2008. We recorded $3.7 million in sales of this product compared to $1.4 million in 2008. In order to further capitalize on the success of SpectraGuard, we recently designed and launched a new construction window specifically to meet the needs of North and Central Florida markets. We continue to be pleased with the sales of our SpectraGuard vinyl product line and expect this line to continue to provide geographic sales growth as we continue to focus on increasing our distribution network in targeted states outside Florida.

Due to the success of our new vinyl products, our fourth-quarter out-of-state sales were up nearly 20% compared to last year. Out-of-state sales represented at $8.3 million or 23% of our net sales, which totaled $36 million for the fourth quarter of 2009. This growth is directly related to the introduction of our SpectraGuard vinyl product line and success in setting up new distribution outside the state of Florida. For the entire 2009 year, out of state sales were $32 million or 19% of total sales.

In the fourth quarter, actually in late November, we took further restructuring actions to better align cost with recent sales levels. These actions are expected to save us an estimated $3.4 million annually. We recognized approximately $400,000 in savings from these actions during the fourth quarter and expect to recognize the full benefit of such actions in 2010.

Comparing the fourth quarter to the third quarter of 2009, sales decreased $5.6 million, driven by both a decrease in new construction and repair and remodeling. Gross margin decreased $1.9 million from the third quarter due mainly to the decrease in sales and higher restructuring costs, offset somewhat by savings realized from restructuring activities. SG&A costs decreased $935,000 compared to the third quarter, also as a result of the same activities. Adjusted EBITDA decreased to $2.9 million in the fourth quarter of 2009. The decrease in EBITDA was driven by loss margin and operating leverage as a result of lower sales, significantly offset by restructuring savings.

Net income was $301,000 in the fourth quarter compared to a net loss of $3.4 million in the third quarter. This includes the impact of the $5.4 million tax benefit recorded in the quarter.

Excluding restructuring costs of $1.5 million and a non-cash impairment charge of $742,000 on our Lexington, North Carolina facility, there was an adjusted net income of $2.5 million in the fourth quarter. Net income per diluted share was $0.01 in the fourth quarter compared to a net loss of $0.10 in the third quarter. Adjusting for restructuring costs and the asset impairment charge, there was an adjusted net income of $0.07 in the fourth quarter.

Despite the lower sales, our actions allowed us to generate positive cash flow during the quarter, as we have done in all previous quarters during this downturn. We used cash generated during the fourth quarter and cash on hand to pre-pay $2 million of outstanding bank debt and repay $12 million of outstanding bank revolver credit facility that was drawn down in October. We continue to move forward with our new product offerings and line expansions as we pursue growth opportunities both inside and outside of Florida. With the success of our new products and the strategic focus we continue to have on our customers, we remain quite optimistic about our long-term growth opportunities.

With that, I will turn the call over to Jeff who will review the results for the quarter in greater detail.

Thank you. Let me give you a more detailed review of our fourth-quarter and full-year results.

We reported net sales of $36 million in the fourth quarter, a decrease of 27% versus the prior year quarter. This decline was driven by sales into the R&R market, down 14%, and new construction market, down 49%. Sales into the R&R market represented 74% of our total sales for the quarter. This market continues to be negatively impacted by consumer confidence, limited credit and negative home equity. New housing starts in our core market were down 28%, driven mainly by a 75% reduction in multifamily starts.

Annual sales for the year were $166 million, which represents a decrease of 24% versus the prior year. Our WinGuard products continue to lead our sales, representing approximately 61% of sales for the fourth quarter and 65% for the full-year 2009. However, this is a decline when compared to prior year's 68% for the fourth quarter and 69% for the full year of 2008.

Breaking down our sales drivers for the fourth quarter compared to 2008's fourth quarter, we have WinGuard Impact sales at $22 million versus $33.6 million, down 35%. Aluminum non-impact product sales $4.9 million versus $7.8 million, down 37%. Architectural Systems sales were $2.7 million versus $3.7 million, down 27%. Vinyl non-impact and other product sales were $6.4 million versus $4.2 million, up 52%.

Breaking down our sales drivers for the full year of 2009 compared to last year, we have WinGuard Impact sales at $108.2 million versus $152.1 million, down 29%. Aluminum non-impact product sales at $22.6 million versus $34.6 million, down 35%. Architectural Systems sales were $10.9 million versus $15.3 million, down 29%. Vinyl non-impact and other product sales were $24.3 million versus $16.6 million, up 46%.

The increase in vinyl sales is due to the introduction of new products and our continued focus on increasing our distribution network outside our targeted markets of Florida. For 2009 our percentage of sales within our core market of Florida was 81% of total sales compared to 88% in 2008. When compared to our sequential quarter, third quarter, our sales decreased 13.5% from $41.6 million to $36 million. Our new construction sales were down 22%, while our sales into the R&R market decreased 10%. Our gross margin for the quarter was 25% versus 29.5% for the fourth quarter of 2008, down 450 basis points. Our decrease in gross margin percentage was driven by our decrease in sales, which reduced our margins by 820 basis points; a change in mix and a decrease in pricing, which reduced our margins by another 200 basis points; and restructuring costs, which reduced our gross margin by 320 basis points. Adjusting for these restructuring costs, our gross margin was 28.2%.

Partially offsetting these decreases were spending reductions from all our 2009 cost savings initiatives, which improved our margins by 750 basis points, and a decrease in aluminum costs, which improved our margins by 140 basis points. Our average cost of aluminum was approximately $2100 per metric ton during the fourth quarter comprised of spot purchases averaging $1850 per metric ton for approximately 27% of our needs and hedged purchases averaging $2160 per metric ton for 73% of our needs. This compares to the fourth quarter of 2008 average price for aluminum of $2650 per metric ton.

We are currently hedged at approximately 57% of our estimated needs in 2010 at an average of $2070 per metric ton. Our selling, general and administrative expenses were $11.7 million, down $4.5 million compared to the prior year's fourth quarter, driven by lower personnel-related costs of $2.8 million, lower bad debt expense of $800,000, lower marketing costs of $700,000 and overall lower spending in various other categories of approximately $500,000. Offsetting these decreases was a restructuring cost of $300,000 in the quarter.

SG&A as a percent of sales, excluding restructuring costs, was 31.6% in the fourth quarter of 2009 compared to 32.1% in prior year's fourth quarter. Interest expense was $1.6 million compared to $2.1 million in the fourth quarter of 2008. The decrease primarily relates to lower debt compared to prior years as we have paid $22 million in prepayments of our long-term debt during 2009. At the end of the fourth quarter, the interest rate on our bank debt was 7.25% based on our credit agreement and its tiered interest rate structure.

For the fourth quarter, our effective tax rate was a benefit of 106% due to a combination of two items, a loss carryback receivable of approximately $3.6 million related to the recently passed legislation allowing companies to carry back their 2009 or 2008 losses up to five years, as well as an intra-period tax allocation of $1.8 million between current operations and other comprehensive income. This compares to an effective tax rate benefit of 15% in the fourth quarter of 2008.

As a reminder, in the fourth quarter of 2008, we provided a valuation allowance on all our deferred tax assets because their realization in these difficult economic times cannot be assured. We provide an additional valuation allowance on all deferred assets created in 2009. Excluding the impact of these valuation allowances and the impact of the carryback, the effective tax benefit rate for the fourth quarter of 2009 would be approximately 34%.

Going forward we anticipate our tax rate to be in the range of 38% to 39%, absent any further adjustments to the valuation allowance. As we become more profitable, we will be in a good position to realize our deferred tax assets by offsetting future income.

We had net income in the fourth quarter of $301,000 or $0.01 per diluted share versus a net loss of $83 million or $2.36 per diluted share in the fourth quarter of 2008. There are several unusual items included in our net results for both the 2009 and 2008 fourth quarters. The net income in the fourth quarter of 2009 included $1.5 million in restructuring costs and $742,000 for a non-cash impairment charge, while the net loss in the fourth quarter of 2008 included a non-cash intangible impairment charge of $80.3 million net of tax and $379,000 in restructuring costs. Adjusting for these items results in an adjusted net income for the fourth quarter of 2009 of $2.5 million or $0.07 per diluted share and an adjusted net loss for the fourth quarter of 2008 of $2.3 million or $0.06 per diluted share. Adjusted EBITDA was $2.9 million or 7.9% of sales for the fourth quarter versus an adjusted EBITDA of $3 million or 6.2% of sales for the fourth quarter of 2008.

As additional information, our fourth-quarter depreciation and amortization totaled $4.1 million. A reconciliation of the adjusted net loss and adjusted EBITDA is included in our earnings release for your reference.

Now turning to the balance sheet. At quarter end our net working capital excluding cash decreased by $1.4 million compared to the end of the third quarter. This decrease in net working capital was primarily driven by a decrease of $2.9 million in Accounts Receivable and $1.3 million in inventory, both relating to our decrease in sales during the fourth quarter and our year-end two week plant closure. Also, we had an increase in our Accounts Payable of $1.2 million.

Offsetting these favorable impacts was an increase in our income tax receivable carried in other current assets of $3.6 million related to the carryback mentioned a few moments ago.

In reviewing free cash flow for the fourth quarter, we had adjusted EBITDA of $2.9 million, fourth-quarter 2009 capital additions of $500,000, cash paid for interest $1.5 million. We generated $5 million from working capital, excluding the impact of the income tax receivable. We received an additional cash of approximately $200,000 from returns and margin calls and aluminum hedges due to the increase in aluminum prices versus our hedge position over the quarter. Additionally we received approximately $100,000 in cash from previously funded aluminum contract settlements, giving us free cash flow totaling $6.3 million.

As Rod mentioned earlier, we generated cash during the fourth quarter and cash on hand to prepay $2 million of outstanding bank debt, along with repayment of the draw on our revolving credit facility of $12 million. This resulted in prepayments of outstanding term bank debt in 2009 totaling $22 million, and our cash on hand was $7.4 million at the end of the fourth quarter.

Our net debt at the end of the fourth quarter of 2009 was approximately $61 million. This compares to net debt of $67 million at the end of the third quarter. We took further restructuring actions late November in the fourth quarter, which included reductions in both direct and indirect workforce. These actions are expected to provide approximately $3.4 million of annualized savings, which combined with savings already achieved through actions taken in the first and third quarters of 2009, we are on track to provide a total annualized savings of approximately $15 million.

At this time I would like to provide an update of our debt amendment and rights offering. We remain in compliance with all of our debt covenants in place under our second amendment executed back in 2008, and our projected results suggest we will remain so in the near term. However, those covenants began to tighten during 2010, which would decrease our flexibility for us to effectively manage the business as we approach the return of this market.

As a result, we entered into a third amendment of our credit facility in December 2009. This amendment among other things provides for a covenant holiday for 2010, as well as increases in maximum allowed leverage in 2011, starting at 6.2 times EBITDA. It extends our revolver due from February 2011 to December of 2011, and it adds a floor to the ABR-based interest rate of 4.25%. In order for this amendment to be effective, we were required to pay down an additional $17 million of term debt before the end of March 2010, $15 million with proceeds from the rights offering which was declared effective on February 10, 2010, and $2 million from cash on hand, which we paid in December of 2009. The details of the rights offering are available within the prospectus filed with the SEC on February 10.

These actions represent our commitment in developing and driving our long-term strength for the Company. Leadership and economic uncertainty is difficult. We have seen the US economy in its worst state since the Great Depression; however, all our employees have made the difference and made difficult decisions necessary to allow us to continue to be cash flow positive every quarter throughout this downturn, while maintaining what sets PGT apart from our competitors, our customer focus and our service.

We continue to believe in the long-term outlook of housing in both the R&R and new construction markets. We also are structured effectively to expand in our core market, Florida, as well as we are currently demonstrating to expand into new markets outside the state of Florida.

With that, let me turn the call back over to Rod.

Thanks, Jeff. We have seen some positive signs in our industry lately, but certain statistics such as housing starts are still at record lows. Single-family housing starts in Florida continue to stay around 6000 per quarter compared to 60,000 during the housing boom and a realistic average of 25,000 based on Florida population. And other economic indicators such as unemployment will hamper the rate of growth for the immediate future.

Our Company accomplished many positive items in 2009, including the acquisition of the Hurricane Window and Door assets, several successful new product launches, and a debt amendment that provides more flexibility in the future. With the added penetration of our vinyl non-impact products, as well as the PremierVue line, we have added several new geographic areas in which we can increase our market share. I thank all of our employees and our customers for continuing to believe in us, commit to our strategy and outperform our expectations.

With that, I will conclude, and Jeff and I will be happy to answer your questions. Lynn, if you can turn it over to the first question, please.

(Operator Instructions). Sam Darkatsh, Raymond James.

Two quick questions and I will defer to others. I guess the math would suggest that your impact resistant business is essentially tracking with Florida, which suggests that the 20% growth that you're getting from outside the state of Florida is, I guess, at least by math entirely coming from the non-impact resistant product lines. Help me understand what your plans are to expand WinGuard outside of Florida and how those efforts are coming about?

Well, I think we will both kind of take a shot at that, Sam. I think your math is suggesting right. Florida sales for the quarter were 77% and then, of course, for the full year were 81%. And if you just look at last year's full year, Florida sales were 88%. So that drop from 88% to 81% is related mainly through mix and is showing up in WinGuard as a percent of our total being less.

As we do expand -- and you're right, the expansion outside the state has been mostly non-impact. However, we do have a vinyl impact line that is growing as well. The expansion is geared towards the thermal side of the business, which will take -- (technical difficulty)-- and impact sales. But that will initially impact margins, especially until we fill up the North Carolina plant, which based off the numbers we are seeing and have reported here, we are well on our way to doing that.

Yes, Sam, I think the other thing, too, is for us right now it's a little bit of matter of positioning ourselves at the right place for the market return. We are seeing a little bit of additional construction in the core Florida market, but most of that construction is outside of the coastal areas. It is more affordable type building. Builders that were building $0.5 million houses a few years ago are now building $120,000 houses and able to market and move those houses a little bit. So they are serving the market correctly.

The addition of our PremierVue line and the addition of some additional vinyl impact products in our 500 series, our more competitive vinyl impact line, are going to really position us to take more market share, particularly as it comes back. They'll also, PremierVue, in particular, is set for the condo market, some of the high-rise markets, and we are seeing some of that activity. While there may not be a lot of sales from the condo market yet, we are seeing a little more activity for that coastal high-rise market now going to vinyl. In the past that has all been aluminum because of the structural integrity needed for that elevation of market.

Okay. Do you anticipate the impact-resistant mix to stabilize at some point, or strategically are you looking to expand the non-impact at a greater rate than you see WinGuard coming back?

I guess yes and yes. We do expect that the impact sales within Florida to start to stabilize, especially as we see the new housing starts and permits start to stabilize and actually increase. As we start to see inventory -- you know as Raymond James has printed several different analyses, inventory within the state of Florida is starting to move so that will obviously create more demand. We do think that will help stabilize the WinGuard impact sales side and, of course, as the economy recovers. But we are going to also at the same time grow that non-impact business.

The margins there, while again it is really overhead related at this point, because our price point is competitive and it is set to such based off volumes, we are going to make decent margins. They are not going to be the WinGuard margins, but they will be in the mid to upper 20% type margins. And our thought there is, if we can grow that business which we are doing right now, while Florida figures itself out in terms of the market, once the Florida market actually comes back, it's going to be tremendous for the Company. Because if you look at our sales quarter over quarter, last year's quarter versus this year's fourth quarter we lost $13 million in sales. But our EBITDA only changed by about a little over $100,000. So that's a combination obviously of cost-cutting, as well as that growth of that non-impact business.

So I guess my point is we are set -- we feel our cost structure is set to the point where we can grow that non-impact business, and it's going to be more profitable as we grow it because of volume, and we are strategically put here in Florida to take advantage when the market does recover, which we do feel is approaching its bottom, if not already there, and starting to show signs of bumping up.

Okay, thank you for the full answer on that. The other thing, Jeff, just as a housekeeping, you mention 38% to 39% tax rate. I'm guessing, though, it is going to be zero for a while because of the NOL shield. What is the amount of that? I'm guessing that is $6 million, $7 million, $8 million, something like that?

Yes, about $6 million, a little over $6 million of NOLs.

So you anticipate not paying tax for 2010 then I'm guessing?

Yeah, well, I would love to pay tax for 2010, but you are probably right. We probably will not pay taxes.

Michael Rehaut, JPMorgan.

It is actually Ray Huang in for Mike. The first question on your gross margin expectations, given all the commentary you guys gave on the mix shift for new products and line expansions and also the cost-cutting initiatives that you guys have done over the past year, what are you guys looking at in terms of gross margins and SG&A for 2010?

I think like we have reported an adjusted gross margin of 28%. I think it is not -- with volume and a little bit of recovery and the full benefit of the cost restructurings we have done, I think our gross margins will be in the low 30s as we go through 2010. Until mix picks up to Sam's earlier question, until that WinGuard mix picks up in Florida, it will be tough to report higher than low 30% type margins. So I'm thinking in the low 30s.

Okay. And also on the SG&A side, I guess you guys are running around like 30% for 2009. Where do you guys see that in 2010?

Not much different. It's not going to grow dollar-wise, so it depends on our top line, to be honest with you. If our top line stays about where it is, it will be in the upper 20s, you know 29%, 28.5%, 29% range. If our topline grows the dollars we've got in place, we will leverage it up pretty nicely. There are some variable components to that, you know commission and distribution type costs. But other than that, we are going to hold tight on fixed costs for the foreseeable future here, and so you will see in terms of a percent some leverage there if our topline grows.

Okay. So I guess it would be safe to assume you guys are assuming kind of flattish sales growth in 2010?

Well, again, we don't ever really give guidance. If you look at the housing stats, we do -- that is roughly 25% of our business. We look at Moody's and in various third-party data. They are all showing increases in housing starts. We are not planning on that. Would we take a flat? Sure, we would take a flat year-over-year, but all these third-party indications show increases. 75% of our business being from R&R, we don't know how this economy is going to turn and impact that piece of our business yet. So it is really tough to say. So without giving guidance, I guess that is kind of where our head is.

Yes, we are trying to balance that against some -- a lot of resets of mortgages and probably some more foreclosures in the Florida market and understand what that is going to mean to the business overall. So I guess you have heard the term I think everyone's going into 2010 cautiously optimistic. There are some good signs out there. There are some overhanging perils that may come into play, and I'm not sure that we're smart enough to predict all of those things yet.

Okay, that is helpful. And then just one last question. You guys mentioned the current level of Florida housing starts right now. Given all the cost reductions, have you guys lowered that breakeven point in terms of how many housing starts in Florida you guys need to break even?

I think it is really difficult for us to talk about what housing starts due to breakeven. Because there can be a ton of housing starts in the low-end markets that have nothing to do with impact product that really don't drive margin up at all. It may drive some sales up but it won't drive margin up, and there may be a fraction of that number along the coast line where it's all requiring impact or there may be one or two high-rise projects that drive some sales. So trying to tie the performance of the Company to the number of housing starts, it is an indicator. It is not the indicator. It is a indicator.

Yes, and remember that is only roughly 25% of our sales. So the number -- while the percentage may be high, the actual number of starts, 30-ish annualized. That is not a big impact until that number starts to really grow. Once the housing starts normalize, like Rod had mentioned, to an average of maybe 20,000 a quarter versus 30,000 for a year, then it will have a bigger impact on our breakeven. But our business model has really changed. It is more obviously focused on the R&R side now.

(Operator Instructions). Nishu Sood, Deutsche Bank.

It is actually Rob Hansen on for Nishu. I just wanted to ask about capacity relative to current sales and rebounding scenarios and how you're balancing the need to keep an eye on current profitability under the current conditions without losing sight of future growth.

Yes, that is a big question. We will both take a couple of shots at that. I can tell you from a capacity standpoint plant-wise we have plenty of capacity. Right now we are not running three shifts, and we always like to think that we are out of capacity when we are running three shifts six to seven days a week, and we are nowhere near that. So we have got room to grow. Back in the 2006 heyday, we had, what 300 million?

Yes, we ran 300 million out of this plant in 2006.

So capacity-wise we don't see an issue. Now from a capital expenditure standpoint, this year we spent about $2.3 million in CapEx, our lowest in several years, six, seven years in terms of what we actually spent. As we look into 2010, there are changes in the market we have to address. Thermal being one of them. We addressed that with the acquisition Rod had mentioned and that we've previously discussed. We will also address that with potential expanding some of our capacity in the IG-related arena, insulated glass type capacity. And we will also advance ourselves and hopefully our customers in the technology side as we try to make ease of doing business, and our focus on being customer intimacy will drive that as well. So there will be some spends around that.

Outside the state, we are set up. We are currently doing well, actually probably better than we had initially thought in that non-impact vinyl side, and we have capacity there. We would likely add there if things continue to go like they have been.

And I know there is a recent competitor bankruptcy in, I think, Texas. Have you guys been able to pick up some market share there as a result of that?

You know, it is kind of hard to address one recent bankruptcy. There's really quite a few recent bankruptcies between Texas and California and Florida. I mean we could start naming names. Some of that is just out there so they can restructure some debt and get debt off the books. But I think the easy and obvious answer is every time a competitor files bankruptcy it generally shows there is some kind of financial stress, and customers do not like dealing with companies that they are worried about their financial wherewithal, particularly when it comes to a product like we manufacture, our competitors manufacture where you need to make sure that you're able to service that product and be there for the customer in the long-term.

So I think every time something like that happens, it does help us out, and we do bump up some sales for that, or at least we bump up the questions for sales. So we are making a lot of sales calls right now.

All right. And one last quick follow-up, is just did you guys give the WinGuard gross margin?

I don't know if we did, but I can give that to you.

That would be great.

It was 41%.

There are no other questions at this time. I would like to turn the conference back to Jeff Jackson for any closing remarks.

Thank you for joining us today for our year-end and fourth-quarter call. We look forward to discussing our results with you in the future. If you have any questions, please feel free to call me. Thank you.

Thank you, everyone. That does conclude today's conference. We thank you for your participation.