Rodney Hershberger - Chairman and Chief Executive Officer Bradley West - Senior Vice President and Chief Financial Officer Jeffrey Jackson - President and Chief Operating Officer

Rob Hansen - Deutsche Bank Keith Hughes - SunTrust Bob Wetenhall - RBC Capital Markets Jeremy Hamblin - Dougherty & Company Steve Dyer - Craig-Hallum Michael Conti - Sidoti Ken Zener - KeyBanc

Good morning, ladies and gentlemen, and welcome to the PGT Inc. First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Brad West, Chief Financial Officer.

Good morning, everyone, and welcome to PGT's first quarter financial results conference call. I am Brad West, CFO; and I'm joined today by Rod Hershberger, our Chairman and CEO; and Jeff Jackson, our President and Chief Operating Officer. This morning we are pleased to provide an update on our first quarter results. We also have posted a presentation on the quarterly results in the Investor Relations portion of our website. Before we begin, let me remind everyone that today's conference call may contain statements concerning the company's future prospects, business strategies and market outlook, such statements are considered to be forward-looking. These statements do not relate strictly to historical or current fact, rather they are based on our current expectations and subject to risk and uncertainty. Actual results may vary materially from those contained in the forward-looking statements. Please refer to our 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.pgtindustries.com. Included in the press release, are the unaudited, condensed, consolidated balance sheet and statements of operations prepared in accordance with GAAP, adjusted information, which is 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 press release, which is included as an exhibit to our Form 8-K filed with the SEC today. 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. With that, let me turn the call over to our CEO, Rod Hershberger.

Thank you, Brad. Good morning, everyone. Jeff, Brad and I are happy to be here this morning to share the results of the first quarter with you. Sales of $100.2 million in the quarter were a first quarter record for us. This accomplishment is significant as the first quarter of last year benefited from an approximately $6 million revenue lift in advance of an announced price increase. While there were some short-term softness in the market, we achieved our first quarter growth through sales from the WinDoor acquisition which closed on February 16. WinDoor is a natural fit within our long-term strategy to augment our organic growth with select acquisitions to expand our product offerings and geographic footprint. The addition of the WinDoor product lines not only increases our sharing in the impact window and door market in Florida, it enables us to enter adjacent product lines, add new distribution channels and it offers a significant manufacturing capacity in Orlando to complement our existing production lines in North and in Miami, Florida. We could not be more pleased about the addition of such a great team and the opportunities presented by this acquisition. Later during the call, Jeff will elaborate on the integration status. In terms of our market and developments in our industry, the housing market continues to expand and we believe that 75,000 single-family housing starts in Florida is achievable in 2016, which would represent a 14% increase over 2015. The growth in the housing market in Florida continues to outpace the rest of the country as factors such as population expansion, rational pricing, low interest rates and tight inventory continues to propel demand. We are confident that these demand drivers will continue for several years to come vastly expanding the addressable market and we will use our market-leading position to capitalize on that expanding opportunity. In the near-term we will be focused on the smooth integration of WinDoor capturing cost synergies and capitalizing on revenue synergies. We continue to allocate capital to support the growth of our business and we will opportunistically pay down debt as we remain committed to strengthening our balance sheet by reducing our net leverage. Now allow me to turn the call over to Jeff to discuss our operational results in more detail. Jeff?

Thank you, Rod and good morning everyone. We are pleased with the progress we made in the first quarter and 2016 looks like another year of expansion and growth. As I'm sure you're aware, the first quarter is our seasonally lowest quarter and we were up against some tough comparisons. Nevertheless, our legacy business did achieve organic year-over-year growth. Adjusting for accretive sales in the first quarter of last year, the year-over-year organic growth would be closer to 7%. We remain confident in the long-term strength of our core Florida market due to several factors, such as increased order volume in both March and April, continued high leverage of quoting activity and more importantly, the underlying demand drivers of population expansion, low interest rates and tight inventory. Not surprisingly, for the month of April we reported an 11% year-over-year organic growth. Also as Rod had mentioned, we are actively managing the integration of WinDoor. There are numerous costs and revenue synergies which we expect to capture over the next few years. For example, WinDoor has capacity in its manufacturing plant in Orlando where some of our existing lines are working three shifts in a constrained space in Venice. There is capable and available workforce in Orlando as well and this will help us balance our production capacity to re-proficiency in our system over time. On the revenue side, WinDoor has a number of product lines that are new to the PDT family as well as a broad distribution channel which we can leverage. Looking forward, there is a significant opportunity across the PGT family of brands. The combination of PGT, CGI and WinDoor into one cohesive suite of products is powerful. We will leverage the strength of each brand across the marketplace. As the industry leader in impact resistant products and with unique experiencing in core compliance, we have a large and expanding advantage over the competition. As we've proven with CGI acquisition, we believe our customers will benefit from the strength of having all these market-leading brands in one single company. Before I turn the call over to Brad I want to touch upon our operations and sales mix in Q1. The results of the quarter demonstrate we continue to be the leader within the impact resistant markets. Approximately 81% of our revenues were driven from the impact resistant products with impact resistant vinyl products continuing to lead our growth. Our vinyl growth clearly demonstrates the success of our most recent product launch, PGT's new vinyl WinGuard which has quickly become the industry leading gold standard for vinyl impact products. Of course the addition of WinDoor only adds to that leadership position, as similar to PGT and CGI brands the significant majority of which products are comprised of profit driving impact products. Also during the quarter we invested in labor and overhead to expand our bandwidth to support the anticipated underlying market growth for the remainder of 2016. You will see some impact on our results for the first quarter, but we expect this to be short-term condition. After lower seasonal sales in the first quarter rebounding sales are expected to result in higher quarterly EBITDA margins for the remainder of the year. We are finalizing the transition to our new Enterprise Resource Planning system in which 80% of our order volume is now being entered. Although continued efforts on this transition contribute to some additional costs as we ran parallel during the quarter, we are pleased with the progress we're making during the quarter. Now I'll turn the call over to Brad to discuss the financial results for the first quarter in more detail. Brad?

Thank you, Jeff. We reported sales for first quarter of 2016 of $100.2 million, an increase of 5% over the first order of last year. On Slide 8 we give you a breakdown of net sales for the first quarter. Our growth continues to be fueled by our impact products with the strongest growth in the vinyl impact products. Non-impact products had a slight increase in sales quarter-over-quarter with growth in the non-impact vinyl lines offset by a decrease in non-impact aluminum. Also in the first quarter of 2016, 59% of our sales were from repair and remodeling and 41% from reconstructions, both of which were consistent with the first quarter of last year. Now please turn to Slide 9, I'll briefly cover a few income statement items. Gross margin dollars in the first quarter of 2016 increased $2 million over the over the first quarter 2015. Our gross margin percent of 29.9 decreased 270 basis points from 32.6% for the comparable period. The decrease in gross margin rate is a result of investment in additional headcount in anticipation of the growth of the underlying markets which resulted in labor inefficiencies compared to the 2015 first quarter impacting gross margin by 180 basis points. Gross margin was further impacted by 70 basis points as a result of running two parallel systems as we continued to finalize our Enterprise Resource Planning system and by 60 basis points due to higher depreciation and higher capital spending. These decreases were partially offset by the benefit of raw material pricing in the first quarter of 2016 versus last year which benefited gross margin by 40 basis points. With regards to aluminum our average delivered cost of aluminum was approximately $0.91 per pound during the quarter compared to $1.03 per pound during the first quarter of 2015. We are currently covered at 36% of our needs through the second quarter of 2017 at an average price of $0.87 per pound. Selling, general and administrative expenses as a percent of sales in the first quarter of 2016 finished at 20.0% increasing 150 basis points from 18.5% in the first quarter of 2015. SG&A expense in the first quarter of 2016 includes $902,000 of transaction and refinancing related expenses and $275,000 of certain product line wind down costs. SG&A also includes $449,000 of increased amortization expense due to the amortizable and tangible assets from the WinDoor requisition. Excluding these expenses SG&A as a percentage of sales was 18.4% in both periods. Interest expense was $4.1 million, an increase of $1.2 million as compared to $2.9 million in the first quarter 2015. Interest expense in the first quarter of 2016 increased as a result of a higher level of debt from the refinancing which also carries a higher interest rate as well as higher amortization of financing costs. Depreciation and amortization reported in the first quarter was $3.5 million compared to $2.4 million last year. Consistent with our expectations, first quarter depreciation and amortization expense was higher than the prior year period due to an increase in amortization expense from the acquired WinDoor intangibles as well as higher depreciation from both WinDoor and increased capital spending. Our tax expense in the first quarter was $854,000 which represents an effective income tax rate of 36.6%. This compared with the $3.8 million and 35.9% in the first quarter of last year. We reported net income in the first quarter of $1.5 million or $0.03 per diluted share compared to $6.7 million or $0.13 per diluted share. After adjusting for the transaction and refinancing related costs of the WinDoor acquisition and certain product line wind down costs we reported adjusted net income of $4.5 million or adjusted net income per diluted share of $0.09 versus first quarter of 2015 adjusted net income of $7.0 million and $0.14 per diluted share. Adjusted EBITDA was $14.5 for the first quarter of 2016 or 14.5% of sales compared to adjusted EBITDA of $16.2 million for the first quarter of 2015 or 17.0%. Now please turn to Slide 10 for a discussion of balance sheet items. We ended the quarter the quarter with a cash balance of $16.7 million. During the first quarter we invested $3.7 in capital expenditures and used $43.5 million in cash on hand combined with proceeds under our new credit facility to acquire WinDoor. Our net leverage was 3.4 times at the end of the quarter. We continue to have a strong balance sheet with the ability to make further investments and fund future needs. Let's take a moment to discuss our 2016 outlook. Please turn to Slide 11. For the second quarter of 2016 we expect sales will be approximately $120 million to $125 million. Sales at this level will result in EBITDA margin of approximately 16.5% to 17%. We continue to expect 2016 net sales to be between $460 million and $475 million which represents an increase of between 18% and 22% and we also expect that will generate consolidated EBITDA of between $80 million and $90 million. Other factors and assumptions in our outlook are also provided on Slide 11 four your reference. At this time, we would like to turn the call over to the conference operator to begin the Q&A portion. Rachel, first question please.

[Operator Instructions] Your first question comes from the line of [indiscernible] from Raymond James. Your line is open.

Good morning Rod, Jeff, Brad, how are you?

Yes, Sam [ph] good morning.

Good morning, how are you doing?

Good morning.

I'm well, thank you. A couple of questions here, first off the April 11% organic growth, can you give us a sense of what the April, May and June of last year the organic growth was? I'm just trying to get a sense of what comparisons look like in May and June versus the April trend.

Well, during the quarter last year, April and May and June was pretty consistent. We ran roughly $6.5 million during the entire quarter, but as that quarter went it was 9% organic year-over-year in April, 7% in May and then June was slightly down by 4%. As a reminder, we did have a little difference in our holiday timing last year in June, so that's a little bit misleading.

June was down 4% last year?

Over the prior year.

Okay, got it thank you. And then regarding the – and I guess a followup to the question, what would the organic growth expectation be within your guidance for both Q2 and for the fiscal year? I’m just trying to get a sense of what acquired sales versus organic would be, versus where you were this time last quarter.

Well we continue to believe organic growth will finish within a point or two plus or minus 10% and what we saw in the first quarter with the softness really didn’t impact that full year number and we're seeing that already ramp up in the second quarter, so that's what we're expecting now in the organic side.

Hey Sam, I'll just remind you that year-over-year comparisons are a little difficult because of the full forward last year with the price increase which definitely added to the first quarter, but affected the second quarter also kind of on a negative standpoint from the top line sales.

Sam, I was just going to tell you that about the second quarter as well that the 11% we saw in April should be above what we see for the rest of the quarter.

Okay and then second line of questioning then, the ERP and the headcount additions, thank you for quantifying those impacts, how did the quantification of those impacts compare versus where you thought they might be back in late February what was the variance versus plan?

The factor of running parallel that 70 bps is pretty much in line with what we expected. We've actually been doing that for a while now and has - you can kind of see how that affects our business. In terms of the 180 bps impact on the quarter, we had made the decision to begin ramping up what we expected was going to be sales for this year of $460 million to $475 million at the beginning of the year. So as the quarter went along even though that we had some softness in the first quarter we still had those costs. So by the end of February I'd say that’s pretty much in line with what we expected, but I would say that it was little bit worse than what we would have anticipated beginning of the year because that was before the softness there.

So what I'm trying to get at is your gross margin expectations for the quarter and for the year probably are not all that meaningfully different than what you are originally tagging a few months ago then? I'm just trying to get a sense of how you're feeling about that right now all in.

Well we do expect an increase in gross margin obviously in the second quarter and the rest of the year that would not necessarily be all that different than that 100 - absorbing that 180 basis points is now we started to hit the sales what we expected.

Got it, thank you very much gentlemen.

You bet, thank you, Sam.

Your next question comes from the line of Rob Hansen from Deutsche Bank. Your line is open.

Thanks. I just wanted to ask about that 11% organic growth in April. I guess, I think you mentioned you expect that to kind of continue through the quarter. What are you seeing on the ground in terms of order, quoting, and do you track that on like a on a consistent basis where you can definitively say, okay quoting is up, x percent and this is why we're going to get, why this 11% is going to continue?

Yes, I think as we look at the quarter and talk to our dealer and distributor network, which we do daily, they are busy. They are literally slammed in terms of insulation crews and getting stuff out in the home and unfortunately we're in a business work doesn't come evenly. So for instance, just last week we had $8 million plus week at the legacy PGT business. Okay? CGI is very similar. They have weekly fluctuations in that volume. While WinDoor is more long-term projects and more customized in what they do. So it is a little bit more you pay, but that necessitates that extra cost that we put into the system to handle those types of volume fluctuations. But in terms of the second quarter, our dealer network and what we see just in the pipeline, we have a pipeline right now of about $34 million already booked outside of April. So just what we see in the pipeline and with discussions with the dealer and distributor network, we're very confident in that 11% organic growth for the legacy business.

Got it and…

Yes, in terms of the order volume and entry that is something we track. We don’t necessarily have those percentages off the top of our heads here, but is something that if you'll followup with Brad he can give you a flavor on that. The overall order volume on a weekly basis has been increasing.

Got it, okay, that's very helpful. And then on the vinyl products line, can you just talk about how big vinyl is now, how fast it is growing and how large do you expect the business to become in the future?

Well in terms of the new vinyl WinGuard product itself our capacity right now is 800 units a day and that's the highest it has been. We will continue to add to that with a long-term kind of goal capacity of over a thousand. But it is marching forward very aggressively. Right now those lead times unfortunately for that product just because of the sheer demand is five weeks plus. So if we can and we are working actively to try to increase capacity we will really pull in those lead times and could have more orders. The volumes there is setting in our – the demand there is just a matter of getting the lead times and in a fashion and capacity in a fashion that we can get it out to our customers quicker.

Do you have the actual percentages?

Yes the vinyl is up to about 34% of our sales obviously growing every year and it's growing about 20% year-over-year in the first quarter. So it is definitely continues to lead the growth.

I love it, that's interesting and one other one just on the 2Q margin guidance, I think it's down year-over-year. I guess is some of that is related to the fixed cost that you've added and then maybe a little bit of the ERP issues or is it because of adding WinDoor and there is some sort of seasonality that is different this year?

Well, he ERP situation of the 70 bps does continue through the second quarter. That is one of the factors and so we are not running parallel we will see that and then the rest of the difference, you know I think the third quarter and the fourth quarter the back half of this year is looking to be stronger. And some of the jobs that we do are large jobs and the timing for this year seems to be a little bit more towards the end of the year. So I think we will see some more leverage in the back half compared what was seen in the second quarter or like last year might have been the first and second quarter had large jobs.

Okay, and these large jobs, they are, is that in like multi-family or are these large R&R projects?

They can be both. The R&R market is extremely project oriented when we get a condo retro for instance and it can be multi-family or single-family as well. So it is spread there is no particular one that dominates one or the other. It just depends on what's on the pipe.

Okay, thank you guys.

You bet.

Thanks.

Your next question comes from the line of Keith Hughes from SunTrust. Your line is open.

Thank you. Just shifting back the margins from that, as you go into the second half of the year will we have more ERP install cost and if not, when do those end?

We with the success of the ramp up that we've been seeing so far Keith this year, we actually announced to our customers that the old system would be no longer used for orders basically during the middle of May. So we anticipate that we will be substantially winding down the two system concept as we head towards the end of the second quarter. So at this point we anticipate in the back half of the year that we should be operating on one system.

And as you look at the second quarters in this margin guidance will we see gross margin still continuing to be lower year-over-year as well?

They will be a little bit lower year-over-year, but they won't be – it will be a smaller GAAP than what we saw in the first quarter.

But that was changing from the first to the second rather?

The absorbing of the 180 bps that I talked about, where we were hiring people for the full year earlier, we will see what the incremental sales we'll see that absorption in the second quarter.

Yes, and you hired hem earlier this year than past years, I guess for what reason?

Mainly because of customer service levels. We own this market, it is our core market and last year what we experienced with the significant increase in volume we weren’t able to meet the service levels we were accustomed to at PGT. And so we wanted to not impact that customer base as much and get ahead so we can meet the various demands and fluctuations that do occur. As I had mentioned earlier, this is an even keeled business when it comes to sales coming in. It can be literally $8.9 million in one week in $7.4 million the next. So we really have to be more flexible and last year we had to probably walk away in my opinion from some projects that just because of sheer lead time and we're not anticipating on doing this year.

Yes, I think when we talked about the first quarter and second quarter last year, we really benefited from that bump in sales, but we paid the price as we got middle of second quarter and rolled into third quarter with not having enough trained labor to really be as successful as we'd like to be toward the end of the year and we made a commitment that that's not going to happen again this year.

Okay, thank you.

You are welcome.

Your next question comes from the line of Bob Wetenhall from RBC Capital Markets. Your line is open.

Hey, good morning.

Hey Bob.

Hey Bob.

Just curious about your guidance for the year. You know at the low end it is 80 and the high end it is 90 and just looking at your top line guide $460 million, $475 million you are talking to EBITDA of 17.4% to 18.9%. Can you just talk to us what kind of – what's going to be the factor that puts you either at the low end or the high end of the range? And just thinking out, you guys have done a really good job of driving margin higher. What does it take to get to that magic number of 20% and when do you think that is realistic?

Yes, I would say the fluctuations within those range Bob will be surely volume and leverage. We've put the infrastructure in place to I would say if volume doesn’t come hit the low end of that percentage like you had mentioned the 17.4% or if volume comes, we’re going to be in the call it 18.9%, 19%. And that coupled with the acquisitions we have done, the margins that both WinDoor carry will have a full back half year of WinDoor in the results for the first time. all that kind of drives to that end margin and again this will be a first year experience for us with WinDoor results and integration there. So those are probably the two, leverage and integration of WinDoor will be what drives the overall yearly margin.

And the second question, the magical 20, we have two major initiatives that are ongoing right now that helped to bridge that gap. The first one is when we launched our new vinyl product line which we are still transitioning over, Jeff mentioned how many units we're up to a day on that line, that product line definitely comes at a higher margin for us than our old product line. So that is one of the benefactors. The other one is we are still in the process of being able to produce the glass for CGI in Miami here and ramping that up and we will get the benefit from doing that. So those two factors are both things that we expect to see in the next, I'd call it 6 to 12 months, so maybe once we get into the beginning of next year.

Got it, that is great. So talk me through, I’m a little confused on something else, I think you had a $6 million pull forward in the first quarter of 2015 that Rod just referenced earlier in the call and at the same time you also had, you kind of came in higher on WinDoor revenues like $4 million versus $3.5 million in the quarter and I’m just trying to understand if the way we should be looking at this is kind of like as first half to first half on a year-over-year basis as opposed to quarter-to-quarter because it’s kind of confusing with all the adjustments and what is going on. I think you guys guide for second quarter is below street estimates, but you are reaffirming full year guide which would suggest to you though the second half is better than people expect or was there some kind of pull forward of sales into the first quarter which explains why second quarter guide is a little bit light relative to consensus?

Yes I will let Brad get into some details there, but I won’t give you a color of what I think the second half is going to be higher than our first half Bob, because you will have a full six months of WinDoor in our numbers and WinDoor grows - WinDoor EBITDA margins are 23% plus. So you will have a full six months of that kind of benefit to increase the overall back half, both in terms of margin and obviously in terms of top line as well.

Yes Bob, I don’t know if I'd do a first half concept because that $6 million pull through that we saw in the first quarter of last year didn’t necessarily all come from the second quarter. Basically any R&R customer could be that price increase in our R&R season goes through with both the second and third quarter. So I don’t think that is entirely fair and in fact our April, May and June last year was very consistent each month not suggesting that it all came out of April or anything like that. So I think it comes out both the second and third quarter and I just mentioned we are expecting some improvement in sales in the back half of this year compared to the second half somewhat timing of large project and the full six months of WinDoor.

Got it. And just one final question, on the $80 million to $90 million of EBITDA, could you give me a range and I don’t need a firm range, but just kind of some bookmarks, what kind of free cash flow do you think you guys can deliver based on current plan in 2016? Thanks and good luck.

Yes we expect - after that EBITDA we expect to have capital spending of about somewhere in the neighbourhood of $18 million to $20 million as we continue to ramp up some glass equipment that we are adding for this year into our new glass operations. I think principal and interest could be running in the neighbourhood of $20 million to $22 million and I guess when you consider principal and then we should be running the cash tax rate a little bit less than our effective rate since we have some tax shield coming, but effective rates about 36.5% to 37%, this should be little softer than the cash tax side.

Sounds good gentlemen, good luck. Thank you so much.

Thanks, Bob.

Your next question comes from the line of Jeremy Hamblin from Dougherty & Company. Your line is open.

Good morning. Thanks for taking the question guys. I wanted to ask a follow up question on the pricing environment. You guys have not taken price at this point, is that something that is potentially in the cards, is that part of one of the things that's going to be a benefit in the second half of the year?

Yes, I think as we look into this year, we are actively looking at pricing across all three brands, PGT, CGI and WinDoor and timing of that pricing. What we have seen in the market is our competition came out with pricing over the last six to nine months and we’re just kind of waiting to the right time and then based off obviously demand in which areas we want to emphasize the pricing.

Fair to assume though that, that is not going to impact results until at least the middle of the third quarter?

I would say yes, if you look at order pull through the current price being $34 million walked in pricing hadn’t been announced we usually give about 45-day announcement window plus, yes you are looking at pricing benefiting starting in the third quarter, probably mid third quarter will be hopefully a conservative guess.

Okay. And then I just want to get some more confidence on the back half numbers, because I think even towards the lower end of your guidance it implies EBITDA margins of about 19% in the second half of the year. I note that as I look at Q4 in particular, you haven’t seen EBITDA margins anywhere near 19% over the last several years and just in terms of providing some confidence you typically have fewer operating days. I know you get some deleverage from that in Q4 because of holidays that the team takes off, but can you just give me some more confidence around how we should be thinking about either SG&A in the second half of the year or what else because even if you assume gross margins quick up 100 or so basis points from where it looks like you’re going to be in Q2, it has got to be a little more than that really to get to those numbers, can you just provide some additional color Brad or?

Sure and I think the impact of WinDoor cannot be understated in this case. Obviously having WinDoor and the strong margins for full back half of the year will make a big difference for us. Secondarily, I would like to point out that we did hire early and train early at this point. We try to have a full solid year of performance which might be hadn’t happened in the previous back half of the years or fourth quarter. But we do expect to get some good leverage and we do expect to start seeing some of the synergies that we have planned as well and I don’t know that if it’s 19% for the back half that it would be 19% in each of the third and fourth quarter. It would most likely be higher in the third quarter and lower in the fourth.

Okay. And then just let me come to WinDoor for a second, so is it fair for us to assume that the organic growth rate that you’re assuming for WinDoor is not that 10% that it’s something meaningfully higher than 10% even though we've kind of heard about a little bit of softness at the high end of the market in Florida?

I think at this point I think it’s still a little bit too early to tell. We do expect good growth in the WinDoor business unit, but to be able to quantify, I don’t think we’ve been in that relationship long enough. I will say that they are project driven. We saw that last year. Their back half last year was strong. The timing of when they do their project kind of lines up better with the third and fourth quarter. So I don’t know if I can – if I’m comfortable giving a number. We have obviously given you a full year guidance range of $460 million to $475 million and that allow for some WinDoor fluctuation as a percent. So at this point we’re expecting some good growth and we will see where it comes out.

Okay. But you’re not seeing softness in that business in the high end like, I mean WCI called out certainly some softness in the Florida market in the high end and obviously that’s a sweet spot for WinDoor, you guys aren’t seeing that though?

We haven’t seen a significant softness in that market for us. At least a piece of that market we serve. Obviously the beginning of this year, January was the wettest month on Florida record, so the overall construction in general just was almost none. So we did start off the beginning year soft across all markets really. But in terms of that, I guess maybe what you're referencing the WCIs [ph] calling out, it hadn’t impacted us and we don't necessarily see that at this point.

Okay. And Brad, just I want to go through those numbers from last year again did you say that April, 15 sales were up 9%, May up 7% and June down 4%, did I get that correctly?

Yes. Yes you did Jeremy.

Okay so April up 11% that would actually be your toughest comparison for the year. There's not anything unusual in terms of timing of quarter cut offs like we had last year with I think June 3, or June 4 – I'm sorry July 3 or July 4 Q2 ending.

No this year will fall similar to last year.

Okay, so does that mean one fewer operating days than you had in typical years because of the holiday?

No, no what I’m saying is we will have the same operating days this year as we had last year, 2015 was one fewer day than 2014.

Right, okay, so it's not going to be like 2014 it’s going to be like 2015 terms of number of operating days?

Yes.

And then what about in following years does that go back to 2014 number of operating days?

Yes, basically the way our calendar works about every five years we have that unique experience. I have noted the calendar to predict that to know off the top my head, but we're only in the second year of what would be a five-year cycle, so it should be the same for a while.

Okay great, thanks for taking my questions guys, best of luck.

All right. Thank you.

Your next question comes from Steve Dyer from Craig-Hallum. Your line is open.

Hey guys, sorry, mine have all been answered. Thank you.

Thanks Steve.

Thanks Steve.

Your next question comes from Michael Conti from Sidoti. Your line is open.

Hey, good morning

Good morning, Michael.

Good morning, Michael.

Yes, with WinDoor sales they came in above what you've guided during the last quarter, can you just talk about demand trends for that product on the commercial side and on their thermal product side, and how should we think of revenue for the year with WinDoor, are you guys still maintaining the $42 million guidance?

Well, I’ll talk about just demand trends in general, especially in thermally-broken side. That's obviously a new product to our portfolio and it's actually a new product to the WinDoor portfolio. So we are actively trying to grow that both within Florida and actually up the East Coast. One initiative we did part of the overhead increase for us in total. We have hired an out of state sales leader for the out of state markets and we've combined that initiative all three brands together. So we have one sales team out of state repping all three brands. In that initiative they will be pushing that thermally-broken into both commercial and up the East Coast. This individual has some great contacts and we're making good progress there already. In terms of their overall, I guess products and growth, we did exceed expectations that we set. And as I had mentioned earlier we haven't seen that softness yet in the high end market that WinDoor serves and this is all still new to us. The integration is going well, talking to their sales guys and their pipeline channel looks strong and if anything it can be timing for them at times because of the lead time on glass and the seven week plus lead time on their product. So those are all considerations we have to take into account.

And then Michael, just yes we are reaffirming the full-year or the guidance under the acquired period of $42 million.

Got it okay. And then last one just I guess pre ERP disruption you guys were running around 20% contribution margin on the EBITDA line and then as we look out to 2017 would that be a good run rate to use or I mean, just considering the addition of WinDoor talked about the new vinyl product, the fine TGI would that cause that figure to jump up maybe offset a little bit by the additional headcount in terms of modeling?

Yeah, we expect to have higher contributions on EBITDA line especially once we're past the point where our ERP systems are fully cut over we should be able to see much better result than 20% which I would definitely think would be closer to 30%.

Yes and again this contribution on incremental sales or EBITDA guidance.

And would that be, I mean obviously there's some seasonality on that number, am I right?

Yes, there could be and the timing of projects makes the difference. So it would definitely hold more true on the full year.

Yes, there's two things you've got to consider exactly, the timing of projects and seasonality. So obviously second and third quarter volume has been more heavy busy quarters and I'm talking across brands and then project timing is now into play given WinDoor’s distribution channel and as well as CGI, CGI has some projects, the larger project timings to them.

Got it, great, thank you.

Thank you.

Your next question comes from the line of Ken Zener from KeyBanc. Your line is open.

Good morning gentlemen.

Hey Ken, how are you?

Good morning, Ken.

Doing well. The 11% growth you're seeing, right we've talked about this. I kind of see slowing sale existing sales in Florida and we had spoken about how that could impact your R&R demand albeit on a lagged basis. There has been some obviously news articles and I think behind this slowing data the foreign buyers. If you, I mean you are out there, you obviously see this business day to day and a lot of builders you talked about still solid demand as of mid part of the market. So if you could maybe just respond to this question which is that, the slowing sales it seems to be in part tied to the high end also falling sales in the low end and so just core kind of mid to slightly higher market seems to be going okay on the R&R side. And then we also see some and really the permit data while it's down the growth rate that is, down year-over-year it's still growing lead by Tampa and Orlando. If you could kind of just comment specifically about R&R how – what you're seeing not only in terms of the year book, but how you think it might be playing out over the next six, nine months if this foreign buyer exodus issue is overstated, that's what I'm asking? And then on new side kind of the drivers by market, it does seem Orlando and Tampa are really driving a lot of the growth right now and in Miami it might just be too many condos that the single family is doing well, but if you can give us a little granularity there, because I'm just not sure my caution is warranted or not based on what you guys are seeing out there? Thank you so much.

Well, Ken, thanks. You're right, we do serve that middle-to-high end market and then what we go on is literally what our dealers and what we see in the market playing out. And right now, we're reaffirming our guidance for the year. Obviously if that changes we would be out telling the market that and investors that. But right now, we haven't seen that slowdown the 11% growth in April as an example. Both those markets you've mentioned Tampa, Orlando are extremely hot markets, as is South, West Florida, Fort Myers, North Port Charlotte, all those areas are growing extremely well. Has Miami slowed down some in the very, very high rise? I think we've all read those articles and, yes I think maybe some of the higher rise developments have slowed, but that has not impacted us at this point. So if and when that does impact us, we will update our guidance accordingly, but right now what we see in the pipeline we're still comfortable with the annual guidance we've given.

Yes one of the things that affects a little bit is the markets that you're talking about Orlando and Tampa are a little more of a vinyl market and some of South Florida, Miami especially is still predominantly an aluminum market and Fort Myers and Naples kind of go either way, I mean they'll go aluminum and they go vinyl both. So with our new vinyl product we anticipate growing that into that market a little bit stronger also than what we had before.

Yes Jeff, I wasn’t obviously implying that your guidance is off or anything like that. It's just I’m struggling with it because the headline volume is a little light on the existing, but when you look at the data it is all whirlwind which isn't really where you're participating so much so.

You are exactly right, and that’s what we've seen. We had seen that our end of the market necessarily still went down. At this point they're not the same market. The low end came back when the high end and middle didn't grow and we had to explain that and then once the middle to high end market took off, we took off. So again I’ll reiterate, we have necessarily seen that our dealer and distributor network is, I would, I'll use the word slammed at least in the short term here and we've already booked $34 million in sales. So we're trying to pull in lead time so we can take even more sales. But that doesn’t imply there's something out there in the future in terms of the high end Miami market, the things you've read, I’ve read the same things isn’t necessarily bubbling bubbling around there or is it true, we're just entering that yet.

And then if I could just explore this then on the new side, when we look at our permits and we do this within our job and permit analysis, it is still growing nicely in the low teens, would you say that the new growth where you guys have grown faster than the market and I'm not sure how your conversation with dealers or how much visibility you have with them on that side, would you expect your growth rate. I mean you are obviously growing 11% so that's very good, but would you expect the premium that you had for the new construction market to get into a better how is that looking from your conversation with your dealers and/or the builders that you then send to the dealers?

The premium in terms of our pricing?

Not the premium in terms of pricing, but premiums in terms of the growth rate, you had been now growing the permit side because of mix of those permits.

Yes, that's hard to tell. I think the permit activity still as far as I know and everything I've read is still robust. So there is a delay in permit versus starts and we have historically quoted.

Yes, R&R new construction there is some big differences because a lot of times like we are permit an entire subdivision knowing that they're planning on doing a lot of starts in that year and sometimes we'll just do it a month at a time. So it is really hard to get a good read on permits and starts and marry those two together.

Yes, and then also again in terms of that high rise market that we've all read about, some of that high rise market is not our product, not our core product. It is curtain wall. It is commercial grade stuff that we don’t participate in. So we're not exactly tied to it. Now do we sell into it? Most definitely we sell spot and glass doors or some of our fixed window products, but it is by no means what drives our company.

Thank you, very much gentlemen.

You are welcome.

[Operator Instructions] Your next question comes from Jeremy Hamblin from Dougherty & Company. Your line is open.

Hey guys, thanks for taking a followup. Just wanted to see if I could pin one additional thing down back half of the year. Brad, in terms of thinking about gross margin in particular, you're going to cycle past this 70 basis point drag from the ERP system redundancies. As we get into Q3 and Q4 should we be thinking that both of those quarters are to see gross margins of at least 33%?

Well, I think it is all dependent on leverage and I think the only thing I feel comfortable with that we can from the standpoint of quarter-over-quarter analysis is the depth of the ERP, the 70% of the ERP and what we should benefit from not having two systems. Other than that I think it is all going to come down to the leverage and he sales that we have and that's where we are at in the guidance range.

Yes, and also I'll just add the ERP that's spread, that's not using gross margin, that's and you know there is SG&A efficiency, transportation and SG&A. So there is other – it is spread throughout the margins if you will. To be honest with you we're focused more on EBITDA versus that gross margin and we're comfortable with that range we've given.

No, I completely understand that, but just in looking at where your SG&A was in Q1 on an adjusted basis, I think to get to those margin levels you need to be at least at 33%, I guess is the point that I'm making. Otherwise it's hard to get to those kind of 19% back half of the year EBITDA levels unless your SG&A you expect on an absolute basis to come down from where it was in Q1.

Well again, I know but that's getting kind of detail for this call Jeremy. You know we've given the sales range and the EBITDA range and you know there's a lot of different results you can get within the [indiscernible] get to those numbers. So that’s what we're going to stick with.

Okay, thanks for taking the followup guys. Good luck.

All right, thanks Jeremy.

Thanks.

I am showing no further questions at this time. I would now like to turn the conference back to Jeff Jackson, President and Chief Operations Officer.

Thank you, Rachel. Before we end the call, I want to leave you with a few closing thoughts. We are very pleased with the progress we have made in growing PGT organization. The acquisitions of CGI and WinDoor are highly complementary to our legacy business and we have an extremely strong foundation which to build in the future. We have only just begun to capitalize the synergies across our business and we're extremely excited about leveraging new products and distribution channels as we move forward. There are very strong demand drivers underpinning the growth of our addressable market. We have an industry-leading position and unique experience in co-compliance which we will continue to leverage and drive long-term profitable growth. I'd also like to take the opportunity just to thank all the members of the PGT family for their contributions to our success and to thank you who participated in today's call for your support of our organization. We look forward to keeping you up-to-date on the progress in the quarters ahead. Thank you.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may now disconnect.