pgem q4 2014 earnings slides final

March 12, 2015

Ply Gem Holdings

Fourth Quarter and Full Year 2014 Results

Gary E. RobineCe Shawn K. Poe President & Chief ExecuKve Officer Chief Financial Officer

Legal Disclaimer

2

These slides and the accompanying oral discussion may contain “forward-‐looking statements” within the meaning of the Private Securi=es Li=ga=on Reform Act of 1995. Such statements involve known and unknown risks, uncertain=es and other factors that could cause the actual results of Ply Gem Holdings, Inc. (the “Company”) to differ materially from the results expressed or implied, including: downturns in the home repair and remodeling or the new construc=on end markets, or the economy or the availability of consumer credit; compe==on from other exterior building products manufacturers and alterna=ve building materials; inability to successfully develop new products or improve exis=ng products; changes in the costs and availability of raw materials; consolida=on and further growth of our customers; loss of, or a reduc=on in orders from, any of our significant customers; inclement weather condi=ons; increases in union organizing ac=vity and work stoppages at our facili=es or the facili=es of our suppliers; our ability to employ, train and retain qualified personnel at a compe==ve cost; claims arising from the opera=ons of our various businesses prior to our acquisi=ons; products liability claims, including class ac=on claims, rela=ng to the products we manufacture; li=ga=on outside of product liability claims; loss of certain key personnel; interrup=ons in deliveries of raw materials or finished goods; environmental costs and liabili=es; inability to realize an=cipated synergies and cost savings with respect to acquisi=ons; manufacturing or assembly realignments; threats to, or impairments of, our intellectual property rights; increases in fuel costs; changes in foreign currency exchange and interest rates; material non-‐cash impairment charges; our significant amount of indebtedness; covenants in the ABL Facility, the credit agreement governing our Senior Secured Term Loan Facility and the indenture governing the 6.50% Senior Notes; limita=ons on our net opera=ng losses and payments under the tax receivable agreement to our current stockholders; failure to successfully consummate and integrate future acquisi=ons; actual or perceived security vulnerabili=es or cyberaZacks on our networks; failure to effec=vely manage labor inefficiencies associated with increased produc=ons and new employees added to the company; failure to generate sufficient cash to service all of our indebtedness and make capital expenditures; control by the CI Partnerships; failure to maintain effec=ve internal controls over financial repor=ng; and the risks set forth in the Company’s filings with the Securi=es and Exchange Commission. Consequently such forward-‐looking statements should be regarded as the Company’s current plans, es=mates and beliefs. Except as required by law, the Company does not undertake and specifically declines any obliga=on to publicly release the results of any revisions to these forward-‐looking statements that may be made to reflect any future events or circumstances a_er the date of such statements or to reflect the occurrence of an=cipated or unan=cipated events.

In addi=on, these slides and the accompanying oral discussion reference non-‐GAAP financial measures, such as adjusted EBITDA. A reconcilia=on of non-‐GAAP financial measures to the most directly comparable GAAP financial measure is provided in the Appendix to these slides and is included in our news release issued on March 12, 2015 and posted on www.plygem.com.

3

41%

55% 45%

3

Fourth Quarter and Full Year 2014 Results Today’s PresentaKon

90%

10%

Agenda

•  Fourth Quarter Review Gary Robine3e

•  Financial Results Shawn Poe

•  Acquisi;on Synergies and Cost Savings Shawn Poe

• Margin Ini;a;ves Gary Robine3e

•  Economic Outlook Gary Robine3e

•  Ques;ons and Answers Gary Robine3e & Shawn Poe

•  Closing Remarks Gary Robine3e

4

41%

55% 45%

4

One of the Largest Manufacturers of Exterior Building and Home Improvement Products

90%

10%

Company Overview

Repair and Remodel

Leverage to New Housing Starts

New Products and InnovaKon Drive

Share Gains M&A OpportuniKes

Pla[orm Built for Growth and OperaKng Leverage

•  Leading Manufacturer of Exterior Building Products •  Comprehensive Product PorKolio with Strong Brand Recogni;on

• Mul;-‐Channel Distribu;on Network Servicing a Broad Customer Base •  Balanced End Market Exposure Driven by Diversified Product Mix

•  Highly Efficient, Low Cost Opera;ng PlaKorm •  Proven Track Record of Acquisi;on Integra;on & Cost Savings Realiza;on •  Strong Management Team with Significant Ownership

US

Canada

84%

16% (*)

Siding

Windows 45% 55%

(*)

(*) LTM December 31, 2014, Pro Forma for Simonton acquisiKon

5

Ply Gem Results

Key Highlights 2014 Results

2014 Full Year Highlights

•  Net sales increase of 14.7% due to the impact of acquisi;ons (Simonton, Mi3en and Gienow) of $145.7M and organic growth of $55.3M. Organic growth of 4.0% was driven by demand in the U.S. residen;al housing market, par;cularly during the second half of 2014, and an increase in average selling prices in both of our business segments. Organic growth was par;ally offset by a net sales decrease of $7.4M for Western Canada due to integra;on challenges and a nega;ve foreign currency impact from a weakening Canadian dollar. In addi;on, severe winter weather during the first half of 2014 nega;vely impacted our net sales. The second half of 2014 had improved weather condi;ons rela;ve to the second half of 2013, which when combined with over average selling price improvement, produced a net sales organic growth of 7.6% for the second half of 2014.

•  Gross margin expansion of 70 basis points driven by increased average selling prices and opera;ng efficiency improvements in our U.S. windows business par;ally offset by higher raw material and freight costs, integra;on and restructuring costs related to the consolida;on of our Western Canadian windows business and unfavorable foreign currency impact from a weakening Canadian dollar.

New construcKon

54%

Home repair & remodel

46%

End Market Exposure

($ in Millions) 2014 2013

Net Sales Y-O-Y Change

$1,566.6 14.7%

$1,365.6

Gross Profit Gross Profit %

$307.8 19.6%

$258.7 18.9%

Adj. EBITDA Y-O-Y Change

$124.2 5.8%

$117.5

New construcKon

49% Home repair & remodel

51%

End Market Exposure – Pro Forma Simonton (*)

(*) LTM December 31, 2014, Pro Forma Simonton acquisiKon

6

Ply Gem Results

Key Highlights Fourth Quarter Results

Fourth Quarter 2014 Highlights

•  Net sales increase of 35.2% was due to acquisi;on and organic growth. The acquisi;on of Simonton resulted in an increase in net sales of $83.8M. Organic growth of 10.0% was driven by a 6.5% increase in U.S. single-‐family housing starts, an increase in average selling prices in both of our business segments and increased demand for our products compared to the same period in 2013.

•  Gross margin expansion of 70 basis points driven by increased average selling prices in both of our business segments, opera;ng efficiency improvements in our U.S. windows business par;ally offset by integra;on and restructuring costs related to the consolida;on of our Western Canadian windows business and unfavorable foreign currency impact from a weakening Canadian dollar. Excluding the impact of our Western Canadian windows business, gross margin expanded by 130 basis points.

($ in Millions) Q4 2014 Q4 2013

Net Sales Y-O-Y Change

$450.1 35.2%

$332.9

Gross Profit Gross Profit %

$82.0 18.2%

$58.4 17.5%

Adj. EBITDA Y-O-Y Change

$26.0 62.5%

$16.0

New construcKon

49% Home repair & remodel

51%

End Market Exposure

7

Windows & Doors (W&D) Segment


Leader in Vinyl and Aluminum Windows

$217.1

$116.4

$40.8

$43.7

Q4 2014 Q4 2013

Net Sales

U.S. Canada

$160.1

$257.9

End Market Exposure (*)

•  61.1% increase in net sales due largely to the Simonton acquisi;on. Excluding Simonton, net sales increased 8.7% due to higher average selling prices, improved product mix, increased New-‐co window units due to a 6.5% increase in U.S. single-‐family housing starts in the period par;ally offset by unfavorable window unit sales to dealer customers and the weakening Canadian dollar in our Western Canada business.

•  Gross margin improved by 470 basis points driven by a 280 basis point gross margin improvement in our legacy U.S. business due to improved pricing, product mix and manufacturing efficiencies par;ally offset by gross margin contrac;on in Western Canada due to near-‐term integra;on and restructuring costs related to the consolida;on of manufacturing opera;ons and unfavorable foreign currency exchange rates.

•  SG&A expense increased by 48.7% which was a3ributed to the Simonton acquisi;on and one-‐;me integra;on costs of our Western Canadian businesses. Excluding Simonton and Western Canada integra;on costs, SG&A expense decreased 20.5%.

Q4 2014 Q4 2013

U.S. 13.3% 4.6%

Canada 11.8% 18.0%

W&D Segment 13.0% 8.3%

Gross Margin %

New construcKon

62%


38%

(*) For the three months ended December 31, 2014

Q4 2013 Gross Margin 8.3%

U.S. W&D C.M. Improvement 1.0%

Simonton Acquisi;on Impact 4.5%

Unfavorable FX -‐0.7%

Western Canada Integra;on -‐0.1%


W&D Gross Margin

Unfavorable foreign currency exchange rate.

Less operaKng leverage due to sales volume decreases driven by weather and pull-‐back in new construcKon demand

8

W&D Segment Gross Margin Bridge and Historical Performance

U.S. Windows improved contribuKon margin due to selling price increases, improved product mix and operaKonal efficiency improvements.

20.9% 15.4% 14.0% 15.4% 13.1% 13.8%

9.7% 12.9%

1,046

622

445 471 431 535

618 648

2007 2008 2009 2010 2011 2012 2013 2014

Historical Gross Margin Performance

Annual Gross Profit % U.S. SFHS (*)

Simonton favorable impact on overall segment gross margin for the quarter.

Near-‐term integraKon and restructuring costs associated with consolidaKng operaKons in Western Canada.

9

Siding, Fencing & Stone (SFS) Segment


Market Leader in Vinyl Siding

$165.3 $145.6

$26.9 $27.2

Q4 2014 Q4 2013

Net Sales

U.S. Canada

$172.8

New construcKon

32%


68%

End Market Exposure (*)

•  11.2% increase in net sales due largely to favorable market demand in metal accessories and vinyl siding with units shipped increasing 13.4% and 5.9%, respec;vely. In addi;on, higher selling prices were realized in response to increased raw material costs and freight costs.

•  Gross margin contracted 90 basis points, driven by higher commodity costs, predominately PVC and aluminum, and freight costs that were not fully offset by our selling price increases within the period. We expect addi;onal recovery through future selling price increases. The contrac;on in Mi3en gross margin is also a3ributed to a one ;me inventory buy-‐back associated with a new customer for approximately $0.4M, foreign currency and higher warranty expense within the quarter.

•  SG&A expense experienced a moderate decrease of $0.8 million. SG&A expense as a percentage of sales decreased from 13.0% in the prior year to 11.3% which is a3ributed to leveraging the fixed component of SG&A expense. Gross Margin %

Q4 2014 Q4 2013

U.S. 25.9% 26.3%

Canada 20.7% 25.2%

SFS Segment 25.2% 26.1%

$192.2

(*) For the three months ended December 31, 2014


Selling price/product mix 3.3%

Freight costs -‐0.5%

Commodity costs -‐3.8%

Mi3en margin savings/synergies 0.4%

Unfavorable FX -‐0.3%


SFS Gross Margin

ConKnued increasing freight carrier rates parKally offset by remaining impact of the Q1 2014 price increases. AddiKonal recovery through future selling price increases.

10

SFS Segment Gross Margin Bridge and Historical Performance

Reflects favorable product mix and pricing. As noted during previous price increases, the pull through of pricing changes occur over a 30 to 60 day period.

20.4% 18.4% 25.9% 25.7% 24.8% 27.4% 26.8% 26.1%

.5208 .6200 .5288 .6458

.7371 .7775

.8333 .9133

2007 2008 2009 2010 2011 2012 2013 2014

Historical Gross Margin Performance

Annual Gross Profit % PVC Resin Price (*)

MiCen gross margin improvements associated with cost savings and synergies related to raw material sourcing, material improvements, and manufacturing efficiencies parKally.

Increased raw material costs, mainly PVC and aluminum commodity costs parKally offset by remaining impact of the Q1 and Q3 2014 price increases. AddiKonal recovery through future selling price increases.

Unfavorable foreign currency exchange rate.

0.176.80

255,128,0

102,102,102

193,0,0

226,133,131

192,192,192

245,171,088

102,179,97

11

AcquisiKon Synergies

(1) Improved procurement economics as a result of increased purchasing power (2) Freight cost maximization and improved fixed overhead as a result of various manufacturing cost reductions from rationalizations (3) SG&A leverage scale and back office efficiencies (4) Expand vertical integration efficiency

EBITDA Impact of Expected Simonton Synergies and Cost Savings

$8 Million

Raw material sourcing (1) $3.6M

Mfg. efficiencies (2) $2.7M

Insourcing products (4) $1.5M

SG&A (3) $0.2M

Simonton AcquisiKon Synergies and Cost Savings

12

Margin IniKaKves

The Market Innovator

The Leading Brand

Lean through Technology

Our Future Leaders

New Channels and Markets

Selling Price Increases

ü  March 2014 price increases for window and siding products posiKvely impacted Q4 results. Expect posiKve impact of selling price increase in siding metal products and designer accent products which were effecKve in Q4 2014

ü  Q1 2015 announced price increases are in place for both business segments. W&D Segment selling price increases range from 6% to 15%. SFS Segment selling price increases range from 6% to 8%

ConKnued ImplementaKon of Enterprise Lean and Sales & OperaKons Planning (S&OP) System in U.S. Windows and Doors

ü  Enterprise Lean provides product simplificaKon and improves manufacturing flexibility. Realized approximately $4.5M of benefit in 2014 and will provide for an esKmated annual savings of approximately $10M when fully implemented in 2016

ü  S&OP system provides enhanced capacity and resource planning system which will reduce future ramp-‐up costs and maximize fixed manufacturing investments

Ply Gem Margin Enhancement IniKaKves

Cross Selling OpportuniKes

ü  ConKnue to integrate our extensive product categories across our legacy customer base and newly acquired Simonton customer base

13

Ply Gem Outlook

The Market Innovator

The Leading Brand

Lean through Technology

Our Future Leaders

New Channels and Markets

1Q 2015 Guidance

ü  Based on the current forecast of the U.S. housing market and R&R spend, the winter weather condiKons experienced in the Northeast and Midwest, and taking into account the seasonality of the Simonton business, on a currency neutral basis, we expect our EBITDA for 1Q 2015, in the range of $2 to $7 million

Economic Outlook & Guidance

Expect ConKnued Steady Growth in U.S. Housing Starts

ü  Expect conKnued overall moderate growth in U.S. housing recovery in 2015, however we expect the market to experience periods of choppiness in the growth rate

ü  Expect conKnued moderate upward trend in big Kcket R&R spend

ü  Canadian housing starts expected to be flat for 2015 with potenKal demand pressure in Western Canada due to oil pricing

Q&A

14

Appendix: Non-‐GAAP Adjusted EBITDA

ReconciliaKon

15

(amounts in thousands) For the year ended December 31, 2014

For the year ended December 31, 2013

Net loss $(31,269) ($79,520)

Interest expense, net 71,186 91,684

Provision (benefit) for income taxes (105) 298

Depreciation and amortization 48,463 45,646

EBITDA $88,275 $58,108

Non cash loss on foreign currency transactions 992 1,533

Acquisition costs 1,188 1,490

Customer inventory buybacks 1,555 4,837

Restructuring/integration expense 6,493 11,759

Non cash charge of purchase price allocated to inventories 38 2,015

Initial public offering costs - 23,527

Litigation settlement 5,000 -

Management fee (terminated in May 2013) - 410

Loss on modification or extinguishment of debt 21,364 18,948

Tax receivable agreement liability adjustment (670) (5,167)

Adjusted EBITDA $124,235 $117,460

16

Full Year Adjusted EBITDA ReconciliaKon Appendix

(amounts in thousands) For the year ended December 31, 2014

For the year ended December 31, 2013

SFS Segment W&D Segment Total SFS Segment W&D Segment Total

Non cash loss on foreign currency transactions

$427 $565 $992 $217 $1,316 $1,533

Acquisition costs - 1,188 1,188 700 790 1,490

Customer inventory buybacks

1,432 123 1,555 387 4,450 4,837

Restructuring/integration expense

723 5,620 6,343 1,407 9,982 11,389

Non cash charge of purchase price allocated to inventories

- 38 38 1,951 64 2,015

Litigation settlement - 5,000 5,000 - - -

$2,582 $12,534 $15,116 $4,662 $16,602 $21,264

17

EBITDA Adjustments By Segment(*) Appendix

(*) Does not reflect unallocated and corporate EBITDA adjustments

(amounts in thousands) For the three months ended December 31, 2014

For the three months ended December 31, 2013

Net loss $(12,476) ($17,431)

Interest expense, net 19,185 21,438

Provision (benefit) for income taxes 15,828 (1,378)

Depreciation and amortization 14,554 12,663

EBITDA $37,091 $15,292

Non cash loss on foreign currency transactions 475 778

Acquisition costs 477 -

Customer inventory buybacks 767 162

Restructuring/integration expense 2,287 6,411

Tax receivable agreement liability adjustment (15,089) (6,641)

Adjusted EBITDA $26,008 $16,002

18

Fourth Quarter Adjusted EBITDA ReconciliaKon Appendix

(amounts in thousands) For the three months ended December 31, 2014

For the three months ended December 31, 2013

SFS Segment W&D Segment Total SFS Segment W&D Segment Total

Non cash loss on foreign currency transactions

$149 $326 $475 $250 $528 $778

Acquisition costs - 477 477 - - -

Customer inventory buybacks 767 - 767 187 (25) 162

Restructuring/integration expense

689 1,448 2,137 726 5,685 6,411

$1,605 $2,251 $3,856 $1,163 $6,188 $7,351

19

EBITDA Adjustments By Segment(*) Appendix

(*) Does not reflect unallocated and corporate EBITDA adjustments

pgem q4 2014 earnings slides final

Investor Relations