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

Bob Wetenhall - RBC Capital Markets Alvaro Lacayo - Gabelli & CO. Keith Hughes - SunTrust Robinson Humphrey Michael Conti - Sidoti & Company Jeremy Hamblin - Dougherty & Company LLC

Good morning, ladies and gentlemen, and welcome to the PGT, Inc. Third 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, Mr. Brad West, Senior Vice President and Chief Financial Officer. You may begin.

Thank you, Julie, and good morning. Welcome to PGTI’s third quarter conference call. I’m Brad West and I’m joined today by Rod Hershberger, Chairman and CEO; and Jeff Jackson, President. Before we begin our formal comments, I like to remind you that today’s remarks contain forward-looking statements that fall within the meaning of the Private Securities Litigation Reform Act of 1995. These remarks involve a number of risks, uncertainties and other factors that could cause actual results to differ materially. These factors are detailed in the company’s financial reports. We undertake no obligation to publicly update or revise any forward-looking statements. You should also note that we will report our results using non-GAAP measures which we believe provide additional information for investors to help facilitate the comparison of past and present performance. A reconciliation of these non-GAAP measures to the GAAP counterparts is available in the investor relations section of our website. Now I’ll turn the call over to our CEO, Rod Hershberger.

Thank you, Brad. Good morning and thanks everyone for joining today’s call. I’m pleased to report our team continued to deliver solid financial and operating performance in the third quarter. We grew revenue, gross margin and net income on a year-over-year basis, which was the result of sales and profitability from both of our acquired businesses; CGI and WinDoor, as well as from our legacy business, PGT Custom Windows & Doors. The quarter had record-breaking sales of $130 million and our highest adjusted EBITDA performance of $24 million since the second quarter of 2006. It is exciting to see our three brands operating more effectively as one company and providing best-in-class solutions to our customers. Our long-term vision and strategic priorities remain focused on our three brand go-to-market strategy continuing to drive product innovation and accretive acquisition. The consistency of our strong performance is the direct result of our team’s ability to effectively execute these strategies and to capitalize on current market dynamics. As 2017 is quickly approaching, we are also hard at work preparing for the upcoming year. In January, the International Builders Show will be held at the Orlando Convention Center. Our exhibit is almost 5,000 square feet and is the first time all of our brands will be shown together as one company, including our newly formed CGI commercial business. During the show, we are also unveiling some exciting new and innovative products along with new brand position to support our three brand go-to-market strategy and long-term vision for our company. We encourage each of you to visit our booth and learn more about what is yet to come for PGTI in each of our brands. PGT Custom Windows & Doors, CGI, WinDoor and CGI Commercial. We are excited about 2017, as it promises to be a great year with a lot of exciting announcements coming your way. Now, I’d like to turn the call over to Jeff, who will review in more detail recent events, market dynamics, and our operational performance. Jeff?

Thank you, Rod. Good morning, everyone. Our core market of Florida continues to lead the nation in terms of declining unemployment, job creation, and overall economic activity. As the third largest state in the U.S., the single factor driving this improvement in Florida continues to be the recovering housing market. We still believe, Florida will finish at approximately 75,000 single-family housing starts in 2016, which is yet to return the historical long-term pace of 110,000 a year. We believe this gives us a solid runway for continued organic growth over the next several years and beyond. Our repair and remodeling sales also continue to show solid organic growth of 13% in the third quarter compared to last year. Looking to the balance of 2016, we have seen some softness in the luxury market, but steady demand continues in the mass-custom market. For example, single-family housing starts in Florida are up 21% for the year, both the PGT and CGI brands have been able to take advantage of these market dynamics, which demonstrates our ability to leverage the diversity of our brands and products to capitalize on market conditions. During the period, we’ve reduced our backlog to $47 million, shorten our lead times, and exceeded our third quarter expectations. Our strong operating cash flow generation year-to-date of $33 million, with approximately $10 million coming in the third quarter also allowed us to fund future investments for future growth and prepaid $4 million of debt. We continue to commit to driving operational efficiencies and remain focused on operational excellence, as we continue to grow. During the period, PGT Custom Windows & Doors shipped 4,300 impact units in a single day. This was an all-time record of impact units shipped from our Venice facility. Our normal daily capacity in this location is approximately 3,800 impact units per day. This record was made possible in part that increased performance from our glass plant, as well as continued increases in our new vinyl WinGuard line capacity, which is up to 800 units per day. Demand for vinyl product and insulating glass continues to drive growth in Florida. In September to that end, the first of two new Thermal Plastic Spacer systems, which is an innovative cutting-edge technology that we believe will enable us to produce better quality insulating glass became fully operational. The second is expected to become fully operational in the first quarter of 2017. A top priority, as we continue to grow, is the investment in our future by strengthening our team with a deeper bench of talent and leadership across our organizations. In August, we added a new Vice President of sales, Brent Boydston Brent heads up our sales team for all our brands. We also continue to invest in our team with comprehensive training program, as our total team members now stand at over 2,600 folks. As Rod mentioned, our top line increased 29% to $130 million versus prior year and we generated strong EBITDA of $24 million, or 18.5% of sales. Our sales growth includes 15% organic growth driven by strong mass-custom market and our ability to reduce the lead times. Also during the quarter, as I’m sure you’re aware, Hurricane Matthew was the first hurricane of its magnitude to hit the East Coast of the United States in over a decade. Thankfully, the destruction was much more limited than originally predicted. Nonetheless, our thoughts and prayers go out to all the families, communities and businesses that were impacted. Many of our East Coast customers experienced approximately two weeks destruction in their business in October. While this destruction will likely have a slightly negative impact on the fourth quarter, we do expect heightened consumer awareness and additional sales related to the awareness in 2017. The fundamental drivers of our business continue to align to our advantage, and our strategies for growth have continued to deliver pure leading operational performance and financial performance. Since the end of 2011 and the beginning of the housing – since the beginning of the housing recovery, our compound annual growth rate has exceeded 20% in sales, 29% in gross profit, and 43% in adjusted EBITDA. For the dynamics of our business, it’s especially more experiencing these growth rates can cause some unpredictable shifts from quarter-to-quarter, we continued to prove that our annual performance remains reliable. We believe the steps we’ve taken combined with our long-term vision are evolving the business and our capability and will deliver unparalleled customer experience and innovative products for years to come. At this time, I’d like to take the time to thank all of our hard-working team members for their continued efforts during the first nine months 2016. Together, we are committed to making PGTI the nation’s leading premium window and door provider of the most exceptional brands in the eyes of our customers, employees, and shareholders. Our future is bright and we continue to invent, build, and deliver. Now, I’d like to turn the call over to Brad to discuss the financial results for the third quarter in more detail. Brad?

Thank you, Jeff. We reported sales for the third quarter of $129.8 million, an increase of 29% over the third quarter of last year. Third quarter 2016 sales included $13.8 million from WinDoor. On Slide 7, we give you a breakdown of net sales for the third quarter. Our growth continues to be fueled by impact products, which grew 32%. This growth came from both our aluminum and vinyl impact products with a strong 58% growth in our vinyl impact products. Non-impact products also had a 15% sales growth quarter-over-quarter with almost all of that coming from vinyl as well. Additionally, in the third quarter, 58% of our sales were from repair and remodeling and 42% from new construction, pretty consistent with the third quarter of last year. Now, please turn to Slide 8, and I will briefly cover few income statement items. Gross margin dollars in the third quarter increased $11.7 million over the 2015 third quarter, an increase of 40%. Our gross margin of 31.7% increased 250 basis points from 29.2% for the comparable period last year. Adjusting for the costs relating to product line terminations in the 2016 third quarter totaling $833,000 and costs related to our ERP systems conversion, new product launch, and glass line installation in the 2015 third quarter totaling $2 million. Gross margin was 32.3% in the third quarter of 2016 compared to 31.2% in the third quarter 2015, an increase of 110 basis points. Gross margin ended 2016 third quarter compared to last year was favorably impacted by sales price increases, which benefited gross margin by 60 basis points, improved overhead absorption, which benefited margin by 50 basis points, and some favorable material costs, which added 20 basis points. Also, the addition of WinDoor benefited gross margin by 30 basis points. These gross margin improvements were partially offset by higher depreciation and higher capital spending, which lowered gross margin my 30 basis points and a change in product mix, which impacted gross margin by 20 basis points. With regard to aluminum, our average daily cost of aluminum was approximately $0.83 per pound during the quarter compared with $0.96 per pound during the third quarter 2015. We are currently covered at 41% of our need through the end of 2017 at an average price of $0.86 per pound, which approximates the cash price as of today. Selling, general and administrative expenses as a percent of sales in the third quarter of 2016 finished at 17.4%, increasing a 110 basis points from 16.3% in the third quarter of 2015. SG&A expense in the third quarter does include $746,000 of increased amortization expense due to the amortizable and tangible assets from the WinDoor acquisition, as well as costs totaling approximately $500,000 relating to the minor acquisition we executed in the third quarter and some other special project costs. Excluding these costs, SG&A as a percentage of sales was 16.4% in the third quarter 2016, slightly higher, but on par with the 2015 third quarter. Our income from operations for the third quarter 2016 includes $3 million relating to the reversal of a payable for contingent consideration we recorded in the WinDoor acquisition. The stock purchase agreement provides for potential additional payment to the sellers, based upon WinDoor achieving a certain minimum sales amount in 2016 calendar year. Based on WinDoor sales to the end of third quarter 2016, we concluded that it’s unlikely that WinDoor sales will reach the minimum and accordingly we reversed the payable for contingent consideration of $3 million to income from operations. Interest expense was $5.5 million, an increase of $2.6 million, as compared to $2.9 million in the third quarter 2015. Interest expense in the third quarter of 2016 increased as a result of higher level of debt from the refinancing, which also carries a higher initial interest rate, as well as higher amortization of financing costs, which represented approximately $400,000 on the quarter-over-quarter increase. Interest expense in the third quarter 2016 also includes accelerated amortization of those costs totaling $225,000 relating to the prepayment of $4 million that we made under the credit agreements on September 30. Depreciation and amortization recorded in the third quarter was $4.1 million compared to $2.6 million last year. Consistent with our expectation, third quarter depreciation and amortization expense was higher than prior-year period due to an increase in the amortization expense from WinDoor acquisition, as well as higher depreciation from both WinDoor and increased capital spending. Our tax expense in third quarter was $5.3 million and represents an effective income tax rate of 32.8%. This compare to $3.6 million and 36.5% in the third quarter of last year. Income tax expense in the third quarter of 2016 benefited from federal income tax credits recognized during the quarter of 2016 for research and development for tax years 2015 through 2015 totaling approximately $700,000, which we took on a federal income tax return for 2015 filed during the third quarter of 2016. We recorded net income in the 2016 third quarter of $10.8 million, or $0.21 per diluted share compared to $6.3 million, or $0.13 per diluted share last year. After adjusting for the reversal of the contingent consideration liability discussed earlier, as well as some other additional acquisition and corporate costs, adjusted net income in the third quarter was $9.7 million, or $0.19 per diluted share. In the third quarter 2015 after adjusting for costs related to the ERP conversion, new product launches, and glass line installation, adjusted net income of $7.9 million, or $0.16 per diluted share. EBITDA was $25.6 million for the third quarter of 2016, compared to $15.5 million for the third quarter of 2015. Adjusted EBITDA for the third quarter was $24.0 million, or 18.5% of sales compared to adjusted EBITDA of $17.9 million for the third quarter 2015, or 17.7%. Now, please turn to Slide 9, for discussion of some balance sheet items. We ended the third quarter of 2016 with the cash balance of $29.9 million, about the same level, as our cash balance at the end of the second quarter. As a reminder, during the third quarter, we did spend $4 million on a voluntary prepayment of our debt and we also invested $5.1 million in capital expenditures. This $4 million prepayment is consistent with our goal of opportunistically paying down debt to strengthen our balance sheet by reducing our net leverage. Our net leverage was 3.0 times at the end of the quarter, down from 3.3 times as of the closing of the acquisition and refinancing in February 2016. We continue to have a strong balance sheet with the ability to make further investments and fund future needs. Lastly, our fiscal year 2016 outlook for total consolidated sales is between $458 million and $460 million. Other factors and assumptions in our outlook are also provided on Slide 10 for your reference. At this time, we would like to turn the call over back to Julie to begin the Q&A portion. Operator?

[Operator Instructions] Our first question comes from the line of Bob Wetenhall from RBC Capital Markets. Bob, your line is now open.

Hey, good morning, and congratulations on a very solid quarter.

Thanks, Bob.

Thanks, Bob, Good morning, Bob.

Just you guys had a nice confluence of events in terms of weather. But I’m impressed, it looks like you navigated the glass supply issues deftly. And I wanted to see if you could give a little bit more color regarding your remarks about shortening lead times and your backlogs dramatically lowered 22% lower quarter-over-quarter. Can you talk about what you did operationally, and kind of where the backlog sits, and what you learned in terms of managing the supply issues?

Yes, I think, Bob, I think the highlights of those points that we were able to do during the quarter to drive better performance, we continue to hire and train our folks. Training has now become probably one of the most top priorities that we take, as well as safety on the floor. We hired a new safety leader to go throughout the plant to make sure all our folks are working safely. The glass supply and fixing our supply from our internal glass operations to our assembly plant has taken major strides forward. I think we still have some work to go there. But we are definitely on the right path to consistently supplying glass to our lines for assembly side. On the counter third-party supplier side, Cardinal has stepped up with their ability to supply both IG and insulated glass for us as well, and just the overall plan is running much smoother, both from a leadership we’ve added, perspective, and the processes we’ve been able to put in place.

Hey, Bob, and just to jump in a little bit on the backlog, we had announced the price increase in the quarter and that kind of drove up people those coming that drove up backlog and then, of course, a little bit of the glass supply issues. If you look at our typical lead time of three to four weeks in our products and what we ship for a week, you would think our backlog would typically be in that $30 million range or so. And we’re getting back into that $30 million to $35 million backlog range. So that’s where it should sit most of the time depending on weekly sales.

The other thing, Bob, that also freed up capacity with the acquisition of U.S. impact, the store front fabricator, we were able to move some of our existing store front lines to South Miami to their facility in the location there. That freed up poor space for us to be able to expand our vinyl line. And so we’re adding capacity there, also driving that backlog down.

And Bob, the PGT backlog has reported a $35 million, that’s the backlog that we’re referring to when we say between the low-30s. The total backlog was $47 million, includes $12 million from the other two brands.

Yes, projects from the other brands typically are a little bit more unpredictable. So we can’t really control at that point.

It sounds like you’re making a lot of operational progress on the manufacturing side and now you’re finished with the ERP system. So congratulations on that progress. Could you comment or elaborate a little bit on a comments about softness in the luxury marketing what you’re seeing with respect to R&R spending trends in the Florida market?

Yes, I mean, from an R&R side, Bob, we had very strong third quarter growth. Year-to-date growth, Brad was working on.

The 7% year-to-date.

Yes, but in third – in Q3, it was 13%...

13%.

…R&R growth for us. So definitely that market has been a nice solid tailwind this year. In terms of that luxury market, we have seen a softening in there. Typically, that we’ve seen in the past happened around uncertainty in the market. I think this reflected in various commentaries I’ve read either Presidential election-related to future interest rate hikes related. In our main areas while we’re not up year-over-year in our high-end brands, we’re – it’s basically costing us in the third quarter to be flat year-over-year in high-end brands. And the margins that flow through on the high-end brands are obviously a little bit more attractive to us there anywhere, Brad, from 45% to 50% on some of the higher-end brands we sell. So from a mix standpoint, we obviously want that luxury market to grow. We don’t think it’s a trend that’s going to continue. We do think at the beginning of 2017, we’re going to see a shift in that market. It will continue to regain the growth we’ve seen.

Yes, Bob, we’ve seen that same typical trend of that every four years during the Presidential election. But we never know how deep it’s going to be. It’s a little different. It seems like every election year. But there are always seems to be a little bit of softness in the high-end market coming into the election. And then once people know what’s going to happen, whether they like it or not, when they know what’s going to happen, the market generally recovers pretty well.

One final question then I’ll hand it off. You’ve largely consolidated the Florida market that leverage is now below three times. Can you maybe comment about your priorities for capital allocation, how should we be thinking about what PGTI looks like in 2017 is the free cash flow where it starts to escalate. Thanks and good luck. Nice quarter, gentlemen?

Thanks, Bob. I think, as you look, we have captured the Florida market in terms of what we wanted to do to the high-end – middle to high-end luxury market here in Florida. We’re continuing to execute on those three brands to your point. I think what’s next for PGT is, we’ve laid out a acquisition strategy with our board that will basically be looking at – to acquire something outside the state with a very similar profile as PGT higher-end margins, a great brand, niche player, high service levels, we’re not going to go out and acquire mass volume type window and door company. But we are looking for what’s that next brand we can add to our, call it a, house of luxury brand that we can add to our umbrella and make it accretive for our shareholders.

Yes, and while we’re doing that, we’ll continue to invest in our business, invest in our glass plant, invest in our production facilities, expand – move some products around, expand our Miami market, expand our Orlando market, and make sure that the right products at the right place with the right tools in place to make sure that people are successful.

And then we’ve also demonstrated. Obviously, in this quarter, we paid down debt. So we do plan on to deleverage in the interim.

Our next question comes from the line of Sam Darkatsh from Raymond James. Sam, your line is now open.

Thank you. This is Josh filling in for Sam. Congratulations on a quarter.

Thanks, Josh.

Thanks, Josh.

Could you tell us how October sales looked year-on-year?

Yes, October sales finished up 7% year-over-year.

Got it. And any color you can give us on the price increase and how that’s going?

Well, it was announced during the third quarter, as Rod mentioned, basically, given our lead times, we started to see some of that come into effect in September. Again, the R&R business will come in faster than new constructions is in effect, we have set pricing with some of our builders. So right now, I’d say, it’s going as expected, which is – we announced it at 3% to 7%. We expect to realize and it’s all spend and done something close to 3%. But again, that will bleed in over time with the new construction sales taken longer than the R&R sales.

Got it. And any updated thoughts or concerns on WinDoor given the adjustment in the outlook?

Well, I think, we mentioned that WinDoor is obviously a very luxury premium brand. So really the softness that we’ve seen in the high-end is kind of drove what happened this year what delayed the WinDoor, but the three brand strategy that we have placed, the products that we are developing and we’re very excited about that market and what we’re going to be able to do with it.

Yes, their EBITDA margin is mid-20s even without the more volume and as we grow our out-of-state push with that brand, we’re actively trying to get into all the way through the Texas market with various customers we currently have to get that brand into their hands. We see a lot of good leverage in the future with that.

Yeah, product innovation is coming along really well also and we’re seeing that with our WinDoor brand.

Thank you. Good luck with the next quarter.

Thank you.

Thank you.

Your next question comes from the line of Alvaro Lacayo from Gabelli & Co. Alvaro, your line is now open.

Good morning, guys. Just a quick question on gross profit. It was – the improvement was very nice. Maybe if you can – you mentioned sort of the puts and takes on what drove the improvement in some of the offsets. Maybe if you can comment on sort of the puts and takes on what sort of was based on what you expected and what was better than expected and maybe was it a little bit lighter, just a little more color on those puts and takes would be great?

Yes, really most of the puts and takes were pretty close to what we expected. Obviously, aluminum costs have been pretty consistent and we had our coverage. So really I think the only variance on our gross margin came to how much sales we’re able to get through in the backlog and the increase in production and the leverage that we got from that. So I would say that’s really the only major gross margin bent is on the leverage side.

Got you. And then just on the glass supply, you guys talked about improving efficiency internally and getting some support from your third-party suppliers. How would you sort of categorize that constraint today versus what is – what you guys have talked about in the past and how visitors is still sort of an issue that you guys are working through?

The glass supply is not a constraint as we said today. Obviously, if we continue the 20% plus top line growth rate that we had compounded over the last few years, we got to continually push that envelope with our supplier, but as we said today, we are fine on glass, it’s not a constraint and I don’t see it as a constraint for the foreseeable next few quarters.

Okay. Thank you very much.

Thank you.

Thank you.

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

Thank you. A couple of follow-ups on some of the information on the call. First the 7% in October, is that an organic number or is that a total company number?

Now that’s just an organic number.

Organic number. And then within the – you just talked about the high-end weakness, about how much of your business under your definition be to consider high-end?

It’s effectively the WinDoor business and then if you look at CGI, they have an estate line, which also serves that high-end. So when you look on the total year-to-date or full-year number, you’re talking roughly $70 million to $75 million out of the total $460 million that’s out there.

So that’s…

A little less than 20%.

20, okay, I will see the numbers. Okay. And then I guess, final question, I thought your comments on the last Presidential election slowdown demand was interesting. How – last election, how quickly did that snap back, right after the election or was it – did we have to get into the next building stage and how does that work?

Everyone has been different and I think the last election, there was probably a little more certainty around the election then there was around this one, so it’s hard to predict. That market seems to suffer more from unpredictability than it does from who wins or who loses.

Yes, Keith, I would just add, you remember the last election we’re still in a very, very beginning of recovery that – we were still coming out of a downturn, so very different dynamics more in. And also we’ve acquired two luxury brands both WinDoor and the Estate Series through CGI in the last two years. So we don’t have – last election, we didn’t have the high-end market that we have it now

Okay. Thank you.

Our next question comes from the line of Michael Conti from Sidoti. Michael, your line is now open.

Hey, good morning.

Hey, good morning, Mike.

Good morning, Mike.

Yes, just one question. Can you just bridge for us how demand was disrupted for two weeks in the fourth quarter, yet the backlog declined sequentially 25%. And then how should we think of backlog going forward just given that TPS is operational and the easing of some of your external constraints?

Yes, I think if you look at the decline in backlog that really happened in the beginning of the quarter, July, August, September, kind of tapered off at the end because of the disruption from the storm. So that would kind of layer out, while the backlog could decline yet, we had the storm and it kind of at the end kind of stayed steady exponentially.

Yes, a couple of things happened during the storm too that didn’t really dramatically affect our backlog. We couldn’t deliver product. We had – in one day, we had 24 trucks here that truckload to Windows that we couldn’t deliver. But instead of backlog building, we also couldn’t get orders, because note everything was closed. So it doesn’t change your backlog a whole lot. It just really is disruptive and causes your SG&A costs.

Got it, perfect. And then, I guess, how should we think of backlog going forward just given with the TPS and the easing of some of your glass constraints?

Well, I think, our business is custom manufacturing. So we typically have a pretty short lead times, three to four-week lead times, people place the orders when there’s a hole waiting for the window, not just the stock stuff. So our backlog should be fairly consistent with our shipments per week times, times four, and then you layer in a couple of projects on top of that that are typically six to eight to 12-week lead times, sometimes a little bit longer than that and that will generally control our backlog. So we’re not necessarily a backlog-driven company like you would see a true commercial player be a backlog-driven company.

Got it. Perfect, thanks.

[Operator Instructions] Our next question comes from the line of Jeremy Hamblin from Dougherty & Company. Jeremy, your line is now open.

Good morning, guys, and I’d add my congratulations on the strong results. Want to just come back and think about the context of the commentary around the luxury market and reflect on where your kind of final guidance for the year on sales $458 million to $460 and compare that to $460 million versus $475 million initial guidance back nine months ago. Where do we think of it in terms of that downside? How much of this is really softness in the luxury market versus not making as much progress for the year on production capabilities, because it sounds like you’ve gotten your backlog into a spot, where you think it’s relatively normalized?

Yes, Jeremy, if you go back to the $460 million to $475 million, I would make the case that up come in at the bottom of the range versus the top of the range entirely the softness of the high-end market. The mass-custom market has actually been pretty close to our expectation represented there by the PGT brand. So from that standpoint that softness is pretty much the entire result.

Okay. And to that end, I think, what we can infer is that the WinDoor contribution of sales this year is going to be right around $40 million. And I think that would inclusive of that starting point on mid-February. Is that pretty accurate?

Yes, that would be the acquired period, I add a couple of more million to that for the full-year.

Right. But they’re not going to get to that $46 million level. And presumably, it sounds like you were thinking, they could be closer to high 40s, maybe even up to 50 if things sell right?

Yes, I mean, the growth that they’ve seen in 2015 compared to 2014 would have suggested something like that. So, again, ending up flat directly result to the high-end softness.

Okay. And then I just want to come to margin opportunities. As we look at the Q4, you guys have made really nice progress here on the production side. In terms of gross margins, typically, you would see Q4 down versus the 32.3 you just delivered and I assume that that’s going to continue to be the case especially since you have a lower level of sales. And then second part of this question is, looking forward you have these opportunities to really improve on the vinyl margins, you’re up to 800 units per day on that, which I think is a modest step up from where you were last quarter, but I also know you are looking towards CGI supply internally as another thing that’s a margin opportunity going forward. When can we – so first part is related to Q4? The second part is, as we look forward in to 2017, when should we start to see some of those inflection points on either supply to plastic CGI or really seen a marked difference in the final business making up that gap versus your aluminum business on margin?

Well, Jeremy, I think, for the fourth quarter of 2016, you are correct. The lower sales will absolutely results in lower margin, we will get that leverage on the lower sales. That will affect gross margin and Rod did also mention that you we will probably see some SG&A pressure only because we had some disruption in our distribution network during those couple of weeks of the storm. So we do absolutely anticipate having a lower margin as we typically do in the fourth quarter. As it relates to 2017, it was two initiatives. Adding these TPF lines gives us the IT capacity to kind of help grow and we continue to look at making more glass for CGI as we talked about with the acquisition, but we will continue to serve PGT needs first and PGT is where we saw the most growth this year. So we still – we do more – every week that goes by we do more and more, but we will look to continue to ramp that up. In terms of the vinyl product, we have made some product relocations within the Venice facility that are helping get to that point. We are up 800 today, but we have a pretty meaningful jump coming in the first part of next year.

I mean, strategically or tactically, we moved a few lines around, we freed up some space, we are able to give that line a considerable amount of more room and it will take time to production lines and make that work and we do that over weekends usually, so we don’t disrupt the flow. So you won’t see a disruption in low, but it will take him probably till the end of first quarter to get everything moved around and really free up space for that line and you should see a meaningful jump in capacity on the vinyl line at that time.

Okay. So I – you can interpret that we should be really seeing a jump in gross margins until at least some point in Q2 and probably more likely the – really the second-half of the year for 2017?

Yes, that would be correct.

Okay, great, guys. Thanks for taking my questions and best of luck to you.

Thanks, Jeremy.

Your next question comes from the line is from Keith Hughes from SunTrust. Keith, you line is now open.

Just following up one of the previous questions on margins, I understand sequentially margins go down. Given the revenue view and obviously some of the issues with the hurricane, are you still – do you think you are going to be able to see EBITDA improve in the year-over-year in the fourth quarter – EBITDA margin – excuse me – improve year-over-year?

I think so. And remember we will have WinDoor, so their margins will bring our margins up. So it just might be more of a modest improvement because the sales growth year-over-year will likely be a little bit flatter than it was in the third quarter when it was so robust.

Okay, thank you.

I’m showing no further questions at this time. I’d now like to turn the conference back to Mr. West.

Thank you. I appreciate everyone’s time today. If you have any questions don’t hesitate to give me call and we look forward to talking to you next quarter.

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