Jeff Jackson – EVP and CFO Rod Hershberger – President and CEO

Jeff [ph] – Raymond James Jen Cansoly [ph] – JP Morgan Rob Hansen – Deutsche Bank Keith Hughes – SunTrust John Saik [ph] – The Mirror [ph] Robert Kelly – Sidoti Fred Taylor – MJX Asset Management

Good morning and welcome to the PGT Incorporated second quarter 2008 earnings conference. This call is being recorded. At this time, I would like to turn the conference over to Mr. Jeff Jackson. Please go ahead, sir.

Good morning and thank you for joining us for PGT’s second quarter 2008 conference call. I’m Jeff Jackson, CFO, and I’m joined today by Rod Hershberger, President and CEO. We will represent PGT on this morning’s call. Rod will provide an overview of the company’s performance for the second quarter and year-to-date, and then I’ll discuss our results in more detail. After our prepared remarks, we’ll take your questions. 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 yesterday’s press release and our most recent Form 10-K filed with the SEC. We undertake no obligations to publicly update or revise any forward-looking statements. A copy of the press release is posted on the Investor Relations section of our corporate website at www.pgtinc.com. Included in the press release are the unaudited consolidated balance sheet and statements of operations prepared in accordance with GAAP and pro forma information, which was quantitatively reconciled to GAAP. Our company uses non-GAAP measures as key metrics for evaluating performance internally. A detailed explanation of these non-GAAP measures can be found in our Form 8-K filed with the SEC. These non-GAAP measures are not intended to replace the presentation of financial results in accordance with GAAP; rather we believe the presentation of non-GAAP measures provides additional information to investors in order to facilitate the comparison of past and present operations. With that, let me turn the call over to Rod Hershberger. Rod?

Thanks, Jeff, and good morning everyone. I’m pleased with our second quarter results as our sales of $60 million yielded over $9.5 million of adjusted EBITDA or 15.9% of sales. We accomplished this in a challenging housing environment with new construction starts declining 54% in our market in the second quarter of 2008 versus the same period in 2007. However, our revenues decreased only 24.3% over that same period. Compared to the same period in 2007, sales into the repair and remodeling market were down 15%, while sales into the new construction market were down 37%. As a percentage of total sales for the second quarter of 2008, R&R accounted for 63% of sales and new construction accounted for 37% of sales compared to the 2007 second quarter where R&R accounted for 56% of sales and new construction represented 44%. As mentioned in previous calls, our plan for managing through the housing downturn includes generating incremental sales and increasing market share. We do this through our core competency of customer service and through the introduction of new products, expanding into both new adjacent markets and geographic markets while focusing on improving operational efficiencies, decreasing operating costs, and conserving our capital. We introduced our new non-impact vinyl windows and doors to the market last quarter. We expect these new vinyl products along with additional products coming out in 2009 to drive geographic sales growth as we increase our distribution network in targeted states outside of Florida. In our architectural systems market, our joint venture agreement with ASI Limited is proceeding well. To date this joint venture has substantially completed one and signed two additional curtain wall projects representing approximately 800,000 total square feet that will generate revenue for our company over the next 18 months. Also, we are getting our numerous jobs outside the State of Florida. On the cost side, we received a full quarter’s benefits from the actions taken in October 2007 and March 2008 to restructure our operations, which we have estimated will generate annual savings of approximately $24 million. As a result of our actions and due to the commitment of our dedicated employees, gross margin adjusted for restructuring charges improved 450 basis points over the first quarter of 2008 and 744 basis points over the fourth quarter of 2007. SG&A costs adjusted for restructuring charges are down over 150 basis points from the first quarter of 2008 and down over 300 basis points from the fourth quarter of 2007. And adjusted EBITDA increased $3.7 million in 2008 second quarter compared to the first to over $9.5 million and increased $6.5 million compared to the fourth quarter of 2007. Driven by a non-cash pretax goodwill impairment charge, for the second quarter we had a net loss of $76.6 million. As I commented on in yesterday’s earnings release, our decreased market capitalization, which believe has been negatively affected by the significant and prolonged downturn in the housing industry, persisted through the second quarter of 2008. This for us to conclude that our goodwill is impaired, and as a result, accounting rules required that we recognize an estimated non-cash pretax goodwill impairment charge of $92 million for the second quarter. This estimate is based on a preliminary impairment analysis that we will finalize in the third quarter. Adjusting for this charge, our net income was $1.9 million for the second quarter of 2008 compared to an adjusted net income of $3.3 million for the second quarter of 2007. Adjusted net income per diluted share was $0.07 for the quarter compared to adjusted net income of $0.12 for the second quarter of 2007. Though the impairment of our goodwill negatively impacted our bottom line, the second quarter of 2008 included some positive indicators, including an almost 10% increase in sequential quarter sales from $54.8 million in the first quarter to $60.1 million in the second, and our continued ability to generate cash internally while in the most difficult market conditions we have seen. Our ability to generate cash through operations allowed us to prepay $10 million of outstanding bank debt in June. One-third of the total required prepayments under the amendment to our credit agreement we announced in May. This amendment, which requires us to prepay a total of $30 million of outstanding bank debt by mid-August relaxes certain covenants and provides us with greater financial and operational flexibility. However, it is important to note that we passed all financial covenant requirements under our current credit agreement as of the end of the second quarter. Last week we announced a rights offering that will provide existing shareholders an opportunity to purchase additional shares of our common stock. We anticipate generating $30 million in cash proceeds from this offering, and along with cash on hand, we will make additional prepayments on our outstanding bank debt. This will position us to continue our market share gain and drive strong performance through geographic expansion, new product introductions and improved manufacturing capabilities. With that, I’ll turn the call back to Jeff who will review the results for the quarter and year-to-date and discuss the rights offering in greater detail.

Thank you, Rod. Let me give you more detail on our second quarter and year-to-date numbers. We reported net sales of $60.1 million for the second quarter of 2008, a decrease of 24.3% versus the prior year quarter. Sales for the first half of 2008 were $114.9 million, a decrease of 24.4% from the first half of 2007. Our decrease was mainly driven by new construction sales, down 37% versus prior year’s second quarter and down 39% year-to-date. We also experienced a favorable mix with our WinGuard products representing 69% of total sales for the second quarter and first half versus 68% in the prior year comparable period. With our sales being generated from both the new construction and R&R markets, we are better positioned to leverage our distribution network, as sales into the R&R market represented 63% of our second quarter sales results. Breaking down our net sales drivers for the second quarter versus prior year, we have WinGuard impact sales at $41.8 million versus $54.6 million, down 23%; aluminum non-impact product sales at $9.4 million versus $15.1 million, down 37%; Architectural Systems sales were $3.9 million versus $4.7 million, down 17%; vinyl non-impact and other product sales were $5.1 million versus $5.0 million, essentially flat. When compared to our sequential quarter, our sales increased approximately 10% from $54.8 million to $60.1 million, driven by sales into the R&R market, which increased 18%, while sales into the new construction market remained flat compared to the first quarter of 2008. We are still looking for the single family housing starts to stabilize. And it is encouraging to see a modest 5% increase compared to our first quarter of 2008. 2008 first half single family starts have averaged 3,400 per month. This has been a consistent monthly trend since November 2007. Our gross margin for the quarter was 35.8% versus 36.2% in the same period of 2007, down just 40 basis points versus the prior year quarter even though sales declined 24%. This was achieved through the focus placed on our operational cost structure, the restructuring actions taken in late 2007 and early 2008, coupled with the improvement in mix towards our WinGuard products. Both our direct labor and overhead were realigned as poor current volume needs. We are seeing the benefits of these realignments in both efficiency and quality improvement, all positively affecting our gross margins. On the material side, our average cost per metric ton of aluminum was approximately 2,840 per metric ton. This compares to a second quarter of 2007’s average of 2,800 per metric ton. At quarter end, we were hedged approximately 60% of our estimated needs through the end of August 2008 at an average of 2,775 per metric ton. In July we covered another 25% of our needs from September through December at an average of 2,970 per metric ton. When compared to the sequential quarter, we improved our operational gross margin by 450 basis points or $4.3 million after adjusting for the restructuring charge, driven by the sequential quarter volume increase and our ability to leverage fixed cost as a result of fully utilizing the benefits of our restructuring actions taken. As Rod mentioned earlier, we recognized an estimated non-cash pretax goodwill impairment charge of $92 million. As we previously discussed in our first quarter 10-Q, our goodwill was at risk or impairment because our market capitalization was below our book value. The decrease in market capitalization continued during the second quarter and accounting rules required we update our testing of goodwill. We believe the decline in our market capitalization is due to the prolonged downturn in the housing industry, driven by an adverse supply of housing, the tightening of the credit markets, and the current macroeconomic environment. The impairment charge is an estimate based on our preliminary analysis and we expect to finalize the analysis in the third quarter. The final adjustment, if any, is not expected to be material. Our operating strategies and long-term vision for PGT remain the same. We continue to believe in the long-term outlook of housing and our ability to expand both geographically and into new markets such as our relationship with ASI. And we will continue to be the dominant impact window and door company in Florida, the largest impact market in the nation. Our selling, general and administrative expenses were $16.3 million, down $4.4 million compared to the prior year second quarter driven by lower personnel related cost of $2.3 million as a result of recent restructuring initiatives, lower spending in other categories such as services and freight of $1.7 million, lower marketing expenses of $800,000, and lower professional fees of $200,000. Offsetting these lower costs were increased fuel cost of approximately $550,000. SG&A as a percent of sales in the second quarter was 26.9% compared to 28.5% in the prior year second quarter, down over 150 basis points. When compared to the fourth quarter of 2007, our SG&A was down 300 basis points, which reflects the full benefit of our cost restructuring. Interest expense for the second quarter was $2.2 million compared to $2.8 million in the second quarter of 2007. The difference relates to lower debt levels as a result of various optional debt payments and paydowns we’ve made and a lower overall interest rate. For the second quarter, our effective tax rate was a benefit of 13.8% compared to an effective tax rate of 36.8% in the second quarter of 2007. Excluding the effect of a deferred tax benefit of $13.5 million, as a result of the non-cash goodwill impairment charge, our effective tax rate for the second quarter was 39.8%. Going forward, we anticipate our tax rate to range between 37% and 38%. Driven by the $92 million non-cash impairment charge, our net loss for the second quarter was $76.6 million versus net income of $2.8 million in the prior year, resulting in a net loss of $2.75 per diluted share compared to net income of $0.10 per diluted share for the same period last year. Adjusting our second quarter for the non-cash goodwill impairment charge, our adjusted net income was $1.9 million or $0.07 per diluted share. This compares to an adjusted net income per diluted share of $0.12 for the second quarter in 2007. Adjusting for the non-cash goodwill impairment charge, EBITDA was a positive $9.5 million or 15.9% of sales for the second quarter versus $11.9 million or 15% of sales for the second quarter of 2007. As additional information, our second quarter 2008 depreciation and amortization totaled $4.3 million. A reconciliation of the adjusted net income and adjusted EBITDA that I’ve just discussed has been included in our earnings release for your reference. Now turning to the balance sheet. At quarter-end, our net working capital, excluding cash, increased $1.2 million compared to year-end 2007. The increase in net working capital was driven by an increase of $3.7 million in our inventories and accounts receivable as a result of higher sales volume through the end of June as opposed to the end of December when we were closed for the holidays. Our DSOs continue to stay in the 37 days and our credit department continues to do a great job in a tough environment. This increase in working capital was partially offset by decrease in other current assets due to $2.8 million refund of federal estimated tax payments made in 2007. In reviewing free cash flow for the second quarter, we had an adjusted EBITDA of $9.5 million, a cash-based decrease in working capital of $1.7 million, second quarter 2008 capital additions were $1 million, and cash paid for interests was $2.1 million. Net-net, we generated approximately $1.8 million in free cash in the second quarter and we used this to prepay $10 million against our outstanding bank debt in June. Our cash on hand at the end of the quarter was $17.3 million, given us net debt of approximately $103 million, down from $112 million since the end of the first quarter of 2008. As we’ve discussed on our first quarter earnings call, we amendment our current credit agreement in May. The amendment freezes certain financial covenants at the 2007 year-end requirements and changes the interest rate we are currently paying on our debt. This amendment takes effect in the third quarter. I am pleased to report we are in compliance with our current covenants at the end of the quarter and expect to remain in compliance even without consideration of the relaxed covenants. However, being proactive in freezing the covenants at year-end 2007 levels for the next two years provides increased operational flexibility during a challenging environment. Before it becomes effective, the amendment requires a paydown of at least $30 million against our current debt outstanding by no later than August 14, 2008. As I’ve mentioned earlier, in June, we prepaid $10 million of outstanding bank debt using internally generated cash. The remaining $20 million paydown on debt will come from a combination of cash on hand and proceeds received from our equity rights offering publicly announced last week on July 24. The details of equity offering are available for your view on Form 8-K filed with the SEC on July 24. We expect to file an amended S-3 registration statement for the rights offering on August 1. Each shareholder will receive one non-transferable subscription right for every four shares of common stock held as of the close of business on August 4, 2008. Each subscription right will entitle the holder to purchase one share of PGT common stock at $4.20 per share. The rights offering will expire on September 4 unless extended by our Board. Summarizing the rights offering, additional shares of 7,082,687 with an aggregate value of approximately $30 million will be issued. We will use all the proceeds of the rights offering to pay down our debt. We expect to have approximately $90 million of gross debt outstanding by the end of the third quarter. Assuming current cash on hand stays the same, our net debt will approach $70 million at the end of the third quarter. As for the restructuring initiatives, I’m pleased to report that during the second quarter we realized the full benefit of the people related savings from our restructuring of approximately $5.3 million or $21 million annualized. We are also seeing the benefits from operational initiatives with over $3 million in annualized savings identified to date in areas such as backhaul, improved material cost, and process efficiencies. We took these actions in order to be a stronger, leaner and more efficient force while weathering the current market downturn. We are at the appropriate staffing levels to support our current demand. Our employees continue to look for ways to drive operational efficiencies, reduce cost, and utilize our operational capacity. We are pleased with our results to date. With that, let me turn the call back over to Rod.

Thanks, Jeffrey. We are still on difficult market conditions that negatively affect our business. As I have previously outlined, we instituted several measures to simulate sales as well as to reduce operating cost to counteract the current market conditions, and we’ll continue to monitor these conditions closely. Long term, we believe the US impact-resistant market will continue to grow and we will expand our presence in this market. Our new products and our vinyl and architectural systems streams have been received well and are meeting expectations. And we will continue to opportunistically review acquisition candidates as they come up. I believe we have the right strategy and the right people in place to not only effectively manage through the current market downturn, but also to quickly take advantage of opportunities as market conditions improve. I thank all of our employees for believing in us, committing to our strategy, and outperforming our expectations. With that we’ll conclude, and Jeff and I will be happy to answer your questions. Operator, we’ll turn it over to you for the first question. Thanks.

Thank you. (Operator instructions) We’ll go first to Sam Darkatsh, Raymond James. Jeff – Raymond James: This is actually Jeff [ph] calling in for Sam. Good morning, Rod. Good morning, Jeff.

Good morning.

Good morning, Jeff. Jeff – Raymond James: First, congratulations on a great quarter, guys. I realize it’s a tough environment, but you finished it great [ph].

Thanks. Thanks a lot. Jeff – Raymond James: First question, your cost structure has changed a lot in the last nine months. And for those of us trying to find a base off of which to estimate forward financials, I guess my question is, was there anything in Q2 either unusual in restructuring savings or seasonality or abnormal mix or anything like that that you wouldn’t expect to continue going forward, or is this kind of mid-teens EBITDA margin what we should expect assuming sales stay flat sequentially?

I think we both may take a crack at this, but my initial comment was, assuming sales stay sequentially flat, I think you can expect – and also another input cost stay where they are at, you can expect these kind of margins. We have restructured our organization to – for the current run rate we are seeing. And absent any kind of downturn, again, in the housing industry another significant downturn, we should part [ph] along at the current results you are seeing.

Yes, I think – the only thing I’d add to that, Jeff, is that what you’ve seen from us in the past, if you go back even a couple of years, is that we get a nice benefit when sales go up and we structure our sales to be sized right for the market that we are in. I think we’ve done that, I think we are sized correctly, and I think we are positioned correctly for when the market turns around and goes up, and we should see some benefits from that. But we feel – I’m not going to mislead people. We feel that that’s a year off. Jeff – Raymond James: Okay. Just continuing off of your comments, Rod, and I’m not asking you to predict where sales are going, but I guess trying to just get a feel for how your cost structure would work theoretically, what kind of contribution margin would you expect on sales growth sequentially or modest moves from here? Sales were up 10% sequentially. I assume it would be maybe outsized because of the restructuring.

Well, let me address that real quick. We initially did our restructuring. We resized the company, realigned the company for a run rate of approximately $55 million a quarter. At that run rate, with those current input costs, we estimated we would be in the mid-teens in terms of EBITDA. Anything above that would be up to us in terms of execution and in terms of controlling input cost or increase sales. And we obviously hit $60 million sales this quarter. That’s an increase over that run rate, which we structured to. And so we did recognize the benefit of that extra, call it, $5 million of incremental sales to that run rate. The contribution margin we’ve estimated on that is about 50%. So if I had to say what was the EBITDA impact of the incremental sales is probably $2.0 million to $2.5 million. That can go either way obviously. So, as sales increase, I expect that contribution to stay at about 50% for a certain time. I’m not going to give – we’re not going to give any kind of time or a number that it would start to change, but in the foreseeable future, we think hitting a 50% contribution margin on incremental sales over that run rate is achievable. Jeff – Raymond James: That’s very helpful. It’s exactly what I was looking for. My final question is on the credit agreement. And to us it looks like the covenant that you were closest to was total funded debt-to-EBITDA. And I think under your agreement you are required to stay under 5.0 and it look to us like you are about 3.5 times in Q2. First of all, is that math correct and are those numbers correct? And then secondly, just when you were talking about the use of the proceeds from the rights offering, did I hear you say that you would pay down debt with the entire proceeds?

Yes. The plan is, by the end of the third quarter, that we would have paid an additional $30 million or so on our debt on top of the $10 million we’ve already done. So net-net, I would say our third quarter ending debt should approach $90 million gross debt. In terms of the letters you are quoting, the numbers you are quoting, the five times, that is correct in terms of our new leverage. That will take effect the third quarter and we are well under that. Your math on 3.5 is about correct. I got 3.32 or something, but yes, I think you are right on in terms of your math at approximately 3.5 times right now, which by the way was actually in compliance with our old debt too. I think that’s important to note as well.

Jeff, when we look at this, obviously we went back at the end of Q1 and ran some models to make sure that we were in compliance. We were very comfortable. Interest payment-wise we were in great shape. Covenant-wise according to our models we thought we were good. We also understand in this market there is generally great opportunity in a continued downturn to look at many opportunistic acquisition or see what’s happening in the market. And not everyone performs well in this market. We want to make sure that we are positioned to take advantage of that. We think that’s what this covenant really does, is it really positions us to take advantage of these markets. Jeff – Raymond James: Thanks a lot and congratulations.

Thanks, Jeff.

Our next question comes from Michael Rehaut, JP Morgan. Jen Cansoly – JP Morgan: :

Hi, good morning, Jen.

Hi, Jen. Jen Cansoly – JP Morgan: I just wanted to see if you guys – you mentioned it briefly in the prepared remarks, but just a little bit more color on some of the new products that you are rolling out, how they are doing particularly in the North Carolina markets? I know you guys have been ramping up over the last couple of quarters.

Yes. We rolled out our 2100 Series Vinyl in Q1. And the response that we’ve gotten on the product line is outstanding. The sales volume, we obviously wish it would be higher. It’s a new construction, primarily a new construction product. We are getting (inaudible) views on it. We are getting a lot of commitments on it. But we are still not seeing many as higher sales number as when we’ve initially started developing the product that we would have liked to see. At that time though, the market was not quite as bad as what it is right now from a new construction point of view. So, the product, from a response to the customer point of view, works well with it [ph]. From an actual sales number, we think there is some opportunity there and we think we’re going to take advantage of that. And we are looking at some products into a little more focused toward the repair and remodeling market coming out of that plant. And we also have our porch enclosure product out of that plant, which has been doing extremely. The other thing we are manufacturing in both that plant and our Florida plant that’s new is curtain wall product. And we’ve talked a little bit about the AS, Architectural Systems, product lines and the jobs that we’ve gotten in curtain wall, and we’ve got what we think are some pretty significant jobs in curtain wall with a lot of square footage involved. And that’s just ramping up right now. So I think it would be a little premature to talk about how well we’re doing or how well that’s performing. The contracts are in place, we are building product for. We’re very happy with what we’re doing. We’re very happy with where that product line is going. We’re very happy with the response we are getting and the bids that we’re getting and some of the commitments on the product line. So we think about our ability to expand geographically from those products that we’ve been choosing Jen Cansoly – JP Morgan: Okay. Just kind of following on that. As far as commercial end markets, it sounds like you guys are doing well. Are you seeing signs of slowdown in that market? And if the market was slow in the back half of the year, what is the kind of – is it like an 18-month lag for you guys as to when that flow through, or how does the dynamics of that work.

Yes, Jen, I don’t know that we are experts in that market yet, so I’ll just talk what I see in that market and definitely don’t take this as expert commentary on the commercial market. We think we’re seeing it slow some. We are seeing definitely in the South Florida market, the Miami market traditionally has been the strongest market in the nation and it has slowed down. There are other parts of the country though that are doing quite well. But my feel is that it has slow down a little bit. The flipside is that as we go into that market, it’s all incremental sales for us. And the jobs that we’re bidding – the jobs that we have and the jobs that we’re bidding, even the jobs that are starting now or starting later this year or jobs that will continue for the next 12 to 18 months, some of the jobs that we’re bidding and pretty close to I think ramping up contracts on them may start in 2009, mid to late-2009, some of them may not start until 2010. So even though that market is getting a little bit softer, there is still a lot of construction there and it’s a long-term and pretty solid backlog as we grow into that market. So again, we are pretty comfortable with where we are and how we are positioned in that market because it is incremental for us. Jen Cansoly – JP Morgan: Okay, great. And then just one last item of housekeeping. Jeff, I just want to make sure that you said that your aluminum hedges, or you tied up another 20% of your exposure and can you [ph] touch the price on that and what the time frame was?

It was another 25% from September through December at an average cost of $27.90 – yes, $29.70, I’m sorry. Jen Cansoly – JP Morgan: $29.70. All right. Great. Thank you very much.

We’ll go next to Nishu Sood, Deutsche Bank. Rob Hansen – Deutsche Bank: Hi, this is actually Rob Hansen on for Nishu. I just had a question on the – what was the WinGuard gross margin in Q2?

Gross margins for WinGuard were approximately 46% and then our other products were about 12%. Rob Hansen – Deutsche Bank: Okay. And I believe last quarter you mentioned that you guys would be generating $3.0 million to $3.5 million of free cash for the quarter, looks like you’ll obviously beat that this quarter. Do you still think you can do that, or any update on that?

Assuming the sales volume, I think yes, we’re going to still do that. We’re going to hold CapEx in check, we’re going to hold working capital in check and properly manage that. Capital has been right under $1 million the first two quarters of this year. I don’t know if it will stay there. We are still investing obviously in the marketplace. So I’m thinking CapEx will be closer to $2 million in the third quarter. So there are different dynamics that we look through and manage through. But yes, I think a $3 million target is definitely still there in the course. Rob Hansen – Deutsche Bank: Okay. One more quick one was just on the aluminum, is that – I mean, that’s already kind of baked in, but it’s going to hurt your gross margin going forward from here?

To the extent – you mean what, sequential quarter or comparison? Rob Hansen – Deutsche Bank: Yes, sequential quarter from here.

Yes, I mean – we right now are seeing about $200 per metric ton increase if I’d look at Q2 versus Q3 on average. For every $100 at our current volume, it’s roughly a $100,000 impact, little over $100,000. So, yes, it will impact us by couple of hundred thousand dollars to the extent we can’t ford by and cover that. Rob Hansen – Deutsche Bank: Okay, great. Thanks.

You bet.

The next question is from Keith Hughes, SunTrust. Keith Hughes – SunTrust: Thank you. Following up on last question on the gross margin, 46% gross margin, which is just outstanding, it’s somewhere what you did several years ago. If we get back into a gross period or just a flat period in the Florida market, do you think the WinGuard margins could exceed the historical comp that you saw in margins just a couple of years ago?

I think – again, volume has such a big play on that as well as input cost. Keith Hughes – SunTrust: Yes, I guess my point is when you get the volume back, the margins should go up pretty significantly from where we are right here, correct?

Yes, I would think it would definitely have a positive impact, but again we don’t know the input cost. Fuel is up literally 83% year-over-year. Aluminum is up. We’ve been successful in trying to hedge it, but it’s up even within our hedges. Keith Hughes – SunTrust: I understand. I understand. It’s other variables.

Yes. The petroleum part of the equation, Keith, is a pretty strong part of the equation with the impact glass and depending on whether it’s aluminum or vinyl framing material. So that’s the bit of a wildcard out there also. Keith Hughes – SunTrust: When you look at the industry the last couple of years, has pricing for your aluminum – let’s talk aluminum versus vinyl, has pricing continued to dramatically go up, has that been flat? What overall have you seen?

Over what period of time, Keith? Keith Hughes – SunTrust: Really the last couple of years, just the beginning of the downturn.

Yes. Aluminum has gone up I would say fairly dramatically. I mean, I can remember when we were doing forward buys a few years ago at $1,400 or $1,500 – Keith Hughes – SunTrust: No, I mean the price of aluminum products and the price of vinyl products.

The price of aluminum. Yes, we have not raised prices since early 2006, March of 2006. Traditionally any increases we get in cost we pass along in price and we try to work the efficiencies to make sure that we get our margins up a little higher than the average. In this downturn, we haven’t passed along some of those price increases, but we’ve gotten a lot of pushback and you’re hearing a lot of pushback in the industry. But we are seeing a few people try to put price increases through and we’ll be looking at that. Keith Hughes – SunTrust: Okay. On to terms of acquisitions, without getting too specific, what kind of things would you be interested in to do a deal? What kind of products would you want to get into?

Without being specific on products, there is really two things that we look at, and we consistently look at those. One is, if we can acquire a company within a geography market that we want to be strong in and we can get there either quicker, easier, cost-effectively by making an acquisition that is a company that’s strong in that market, or looking at an adjacent product, in the case of, say, Architectural Systems and some of the curtain wall product that we’re manufacturing, that was one that we definitely looked at and really compared some companies and said, do they have a product that would help us serve their market better or is it something that we can develop ourselves and get there just as quick or maybe even better, may not quite as quick but better, and so we make those types of choices. So we look at geographic expansion and adjacent markets and/or both when we look at acquisition candidates. Keith Hughes – SunTrust: Okay. Now your joint venture announced – you said a few months ago couple of projects, 800,000 square feet of what you are doing over the next year and a half. Is there some kind of metric you can give me in terms of (inaudible)? What is that mean in terms of revenue? How can we translate that?

Yes, Keith, that’s going to be tough because every job is going to be a little different. But if you looked at what we think our AS business can do, I think last year Architectural Systems did around $17 million in sales, look at entire year. We will in track to do about the same this year, maybe a little bit more, maybe closer to$18 million, maybe a little more – and in a friendly market. We’ve gotten into some new JVs to help that. We’ve just scratched the surface of that relationship we feel internally here and that holds a lot of potential. So, it’s easy for me to see that based on bids that are currently in the pipeline, both within Florida and outside of the State of Florida, by the way, which we find very positive in terms of getting outside the state, we think that business can be $30 million or so potentially next year. Keith Hughes – SunTrust: Okay.

Keith, the reason that’s so hard to answer is, the input costs are dramatically different. There are projects that we contract with or we manufacture, and we get paid for manufacturing. There is others where we buy the material and – or we fabricate the material depending on the type of glass and stuff that’s used. And so when you look at the net cost or the gross cost of that product, it can vary from a really high dollar per square foot to a manufacturing profit per square foot, which is still a pretty nice number. Keith Hughes – SunTrust: And every job is bid independently, correct?

That’s correct. Yes, every job – Keith Hughes – SunTrust: Or it could be all over the place depending on the job.

And the criteria behind that job is dramatically different on every job that we bid. But I will say just a general statement in terms of margins like, let’s say, an EBITDA margin on a job, both ASI and the company are obviously pleased with the margins we get. We don’t share those because, again, it’s kind of a relationship. We need to keep quiet until we figure out different components of how to bid a job. We are still new at this. But so far, we’ve been pleased with the margins and then dilutive by any means on our EBITDA. Keith Hughes – SunTrust: All right, that’s all for me. Congratulations guys.

Thanks, Keith.

We’ll go next to John Saik [ph], The Mirror [ph]. John Saik – The Mirror: Yes. Hi, guys, how are you doing?

Great, John, how are you? John Saik – The Mirror: Good. Just a quick question for you. Do you – I know it’s a bit farfetched with this market at this point, but to the degree that you do begin to experience a rebound in the business, do you feel as though given all the cost cutting you’ve done to date that it will take a lot of incremental cost to fill that demand if you get back to the demand levels that you had two years ago?

No, I really don’t feel that, John. I think the questions – the incremental portion of that is the important part of the question. Our restructuring was done – I think there was a lot of thought put into our restructuring and we are flatter organization than we were before with a lot more, I think, management leadership capabilities because of the flatness that we have. So, as we look at ramping up, we’ll have to hire direct labor obviously so we can build the product. But from an infrastructure point of view, we feel that we were very careful in our restructuring to not damage infrastructure to make sure that we heard from our customers that our customer service and what we provide to them is as good or better now than it was before, even though the number of people is not the same. So, I’m very confident going forward that we’ll be able to ramp up without adding all those incremental overhead costs back in place.

Yes. All the fixed costs, we’ve really scaled down a lot. I would see as being maybe even $70 million a quarter type company before we really looked at adding fixed cost again – or plus. Again, we’ll know when we get there. We will push it and we will do the best we can, not better [ph] our service or our expectation to the customer decline at all. Everything we did, we did with the customer in mind. And it has worked. And I’d just remind you that back in the kind of the heyday of this market, we grew for a long period of time in over 20% per year compounded growth rate. And we did throw some additional cost at it to make sure we took care of the market correctly. I would say that at that 20% rate we are smarter than we were before because we’ve learned from it. But when you start hitting those 20%, 25%, 30% growth rate that we experienced for quite a few years in the row, that grows some of the cost to a little higher level. John Saik – The Mirror: Okay. And then just I guess a little bit of a clarification. The second half free cash flow guidance were kind of what you were indicating before. Are you expecting that in the second half you will be free cash flow positive or is that –?

All other things equal. I think our cost structure, the sales volume, the input cost, I think you will see the same type results. I’m not going to go out and give you forward guidance in terms of our cash flow, but I don’t have any reason to think what we’ve seen here isn’t going to keep continue. John Saik – The Mirror: Okay.

Absent volume decreases or something. John Saik – The Mirror: And just again – just another clarification, but I think you mentioned that you are going to use all of the proceeds to repay the debt, is that right, from the rights offering?

That’s the current intent. That’s correct. John Saik – The Mirror: Okay. All right. Well, you guys are doing a good job and glad to see how proactive you’ve been with the cost side. So –

Thank you. Thanks, John. John Saik – The Mirror: Yes, take care.

Our next question is from Robert Kelly, Sidoti. Robert Kelly – Sidoti: Good morning. Thanks for taking my –

Hi, Robert. Robert Kelly – Sidoti: Excellent quarter. The question was on the run rate for sales that you had formulated to get to this new cost structure. When you get to that number, are you kind of counting this new ASI, the commercial business, as part of that or would that be just further upside?

No, I mean, it is definitely counted as part of it. AS, the Architectural Systems product stream, which is one of our three main revenue drivers, has its own support functions. We have production lines here. We have dedicated resources to that. So we have to bake in obviously revenue to support that in terms of that run rate. Now, is there upside to that? Can we leverage it more? That’s yet to be seen. We think we possibly can, but that’s when I was mentioning earlier, we are kind of new at this, so we’re still trying to figure out the cost, but we do feel we’ll be able to leverage what we’ve built in even more so. Robert Kelly – Sidoti: Okay. So when you think about $55 million run rate, you are including some sort of contribution from the commercial?

Yes. Robert Kelly – Sidoti: Yes, okay. Great. And then you talked about the contribution margin earlier, it sounded – I mean, just based on 2Q performance, it sounded somewhat conservative. Was there something going on in the variable cost side of the business that drove really – it looks like an 80% incremental margin 1Q versus 2Q. Could you just kind of touch on that?

No, I would have to go out and look at that. I was thinking it was more in line. We did have the 1Q restructuring charge, you got to account for that, in adjusting. So that might be what you are looking at. But – Robert Kelly – Sidoti: All right. And then as far as maybe just a comment on the competitive landscape, rising cost of aluminum being in a pretty tough knot to cover from your competitor’s perspective, have you seen volume fall off or competitors kind of fall by the wayside here in this downturn?

Yes. I think – we are seeing some very similar things in this downturn that we’ve seen in other downturns, although this one is a little more severe and we are hearing some anguish price a little louder maybe than we’ve seen in other downturns. The stronger folks in the market are kind of, as we say in hurricane lane, hunkering down a little bit, making sure that they are really trying to protect what we have. But we don’t see them being very aggressive going out. We see some aggressive bidding to make sure they keep the doors open. The folks are a little weaker. We are hearing – we’re seeing some people close, we’re seeing some bankruptcies, we’re seeing some distress in the market. I don’t know that we’re capable of really understanding exactly how bad that distress is. I know that we know some of the companies that we know well that they are in a lot of distress and probably won’t be around at the end of the year unless they get some kind of financial help. The national players, I think they are positioned very well, I mean, in the window and door market also. So, they may be pulling back. I think as Florida has slowed dramatically, a lot more people are – they are watching what’s happening in Florida. They may be not quite as aggressive because there is not a lot of new construction going on. So I think that’s played a little bit – I won’t say it’s played in our favor, it’s made the market little bit smaller. Robert Kelly – Sidoti: Great. Thanks guys.

You’re welcome.

(Operator instructions) We’ll go next to Fred Taylor, MJX Asset Management. Fred Taylor – MJX Asset Management: Yes. I think most of mine have been answered. Just you have a concentrated shareholder group. Have most of them, especially the large ones indicated that they will participate in the rights offering, it sounds like you’re pretty confident of the 30 million.

Yes. We’re confident of it. We are not giving details of who I’ve talked to, but I can tell you that obviously the Board of Directors voted in favor of it. And our Board has members that are majority shareholders on it. So I’m still confident that they are going to be participating and I think several other holders will be. But yes, we’re confident of that rights offering. Fred Taylor – MJX Asset Management: And then just a comment about how you almost could have squeaked by the old covenants, but the new covenants are kind of there potentially to help with an acquisition. Does that mean an acquisition would be debt financed rather than equity financed?

Yes. I don’t know that we can answer that. I think squeak by may be a little bit of a strong statement. We were pretty comfortable when we looked at some of our analysis, but I’m not comfortable is sitting here and saying how long the downturn is going to last. It could last a while or something may happen that we come of it pretty quickly. I think the important thing is that when you have an acquisition candidate, especially in a time like this, where I think there’s going to be some good candidates out there. Whether it’s the right candidate for us and it fits our criteria or not, I can’t say that. But I think there’s going to be some good candidates out there and I think that’s a terrible time to go back to the bank and start negotiating for either debt relief, covenant relief, or the ability to finance or purchase. I think you do that proactively and I think that’s what we’ve done here as to make sure that we are positioned correctly so that we are comfortable going out in either doing an acquisition or going back to the bank and saying here’s what we need. Fred Taylor – MJX Asset Management: So you think there are some – either a handful or plenty of companies that are good companies with good products, but maybe have a known [ph] financial stress and could be looking to sell?

Yes, I mean, we’ve actually seen that. I would think – and it’s also going to vary acquisition to acquisition, or company to company rather, given the size of the company. Obviously some people we talk to are smaller companies, you know, %10 million in sales, or some are larger companies. So, that would also dictate at the time the mean to financing any kind of acquisition. Fred Taylor – MJX Asset Management: Thank you. That’s all I have.

Thanks, Fred.

Ladies and gentlemen, that does conclude the question-and-answer session today. At this time, Mr. Jackson, I’ll turn the conference back over to you for any additional or closing remarks.

Well, I’d like to thank everyone for joining us today. We’re very pleased with our second quarter results and we will look forward to speaking with you all in the next quarter. If you have any further questions, please feel free to call me. Thank you.

That does conclude today’s conference. Thank you for your participation. You may now disconnect at this time.