Goodman Global, Inc. (NYSE:GGL) today announced results for the
first quarter of 2007. The Company reported net sales of $380.3
million, net income of $4.6 million and earnings per share of $0.07
for the three months ended March 31, 2007. Net income and earnings
per share included a $0.4 million and $0.01 gain, respectively,
from the sale of a building and associated land used in the
Company-operated distribution network. �Our business performed well
during the first quarter,� said Charles Carroll, President and
Chief Executive Officer. �With outstanding teamwork throughout our
organization, we were able to temper the impact of slow industry
conditions on sales and operations and improve factory productivity
beyond our initial expectations.� He went on to say, �Our efforts
were aided by a pick-up in demand late in the quarter, as our
stepped-up investment in dealer recruitment delivered some sales
momentum.� First quarter 2007 net sales of $380.3 million were
impacted by mild winter weather and the continued decline in
residential new construction. This was almost completely offset by
the benefits of the continuing mix shift to higher-efficiency
cooling products, the Company�s 2006 price increases and a sales
pick-up from dealer recruitment activities. As a result, net sales
for the period were nearly equal to the prior year�s first quarter
net sales of $380.7 million. The Company generated net income of
$4.6 million in the 2007 first quarter, compared with $8.4 million
for the first quarter of 2006. Net income for the first quarter of
2007 included, net of tax, a $0.4 million gain from the sale of a
building and associated land used in the Company-operated
distribution network. Net income for the first quarter of 2006
included, net of tax, a $0.4 million non-recurring expense for
monitoring fees related to the Apollo transaction. The decrease in
net income was primarily the result of lower volumes, increased
commodities costs net of realized price increases and higher
depreciation expense, offset somewhat by the impact of the
continuing mix shift to higher-efficiency cooling products,
improved productivity, lower interest expense and a lower tax
provision. Earnings per share, diluted, for the first quarter of
2007 was $0.07, compared with $0.05 for the comparable period of
2006. Earnings per share for the first quarter of 2007 included a
$0.01 gain from the sale of a building and associated land. First
quarter 2006 earnings per share available to common shareholders
included the impact of monitoring fees related to the Apollo
transaction and were reduced by the dividend on the Company�s
Series A Preferred Stock. As a result of the Company�s IPO in April
2006, the monitoring fee-related agreement was terminated and the
Series A Preferred Stock redeemed. Adjusted to exclude the
non-recurring expense and to treat the redemption of the preferred
stock as though it had occurred at the beginning of the year,
pro-forma adjusted earnings per share for the first quarter of 2006
was $0.12. For the first quarter of 2007, the Company reported
EBITDA of $32.2 million, compared with $40.5 million for the first
quarter of 2006. EBITDA for the first quarter of 2007 included the
$0.6 million gain from the sale of a building and associated land,
and EBITDA for the first quarter of 2006 included a $0.6 million
non-recurring expense for monitoring fees related to the Apollo
transaction. Adjusted for these items, 2007 first quarter EBITDA
was $31.6 million and 2006 first quarter EBITDA was $41.1 million.
See �Non-GAAP Financial Measures� for definitions of EBITDA and
adjusted EBITDA and management�s purposes in presenting these and
other non-GAAP financial measures. Goodman concluded the quarter
with total debt of $837.2 million, a $157.3 million reduction from
March 31, 2006 total debt of $994.5 million. The debt decrease was
achieved through strong operating cash flow, and by utilizing a
portion of the proceeds from the Company�s April 2006 IPO and
applying the net proceeds from the recent property sale. Outlook �I
am encouraged by the success of our sales growth activities and the
improvements our operations continue to deliver,� said Mr. Carroll.
�We are reaffirming our full-year forecast for EBITDA of between
$255 million and $265 million and diluted earnings per share of
between $1.30 and $1.40, excluding the gain from the property sale.
Despite slow residential new construction and rising commodity
costs, I believe our solid value offering and focused business
model will lead to strong sales growth and operating leverage in
2007, and I expect another year of double-digit growth in EBITDA
and share earnings,� he concluded. Conference Call The Company will
host a conference call on Thursday, April 26, 2007 at 11:00 a.m.
Eastern to review first quarter performance. The call may be
accessed by telephone or the Internet. To access the call by
telephone, dial 800-561-2731 and use the pass code 84930580.
International callers should dial 617-614-3528 and use the same
pass code. An Internet link to the call may be found on the
Company�s Web site, www.goodmanglobal.com, in the �Management
Presentations� section. A replay of the call will be available
starting approximately one hour after the conclusion of the call
and continuing until May 10, 2007. The replay may be accessed by
dialing 888-286-8010 and using the pass code 46748815.
International callers should dial 617-801-6888 and use the same
pass code. An Internet link to a replay of the call will also be
posted on the Company�s Web site, www.goodmanglobal.com.
Informational exhibits related to the Company�s performance will be
available on the Goodman Web site in the �Management Presentations�
section and may be referred to during the conference call. Initial
Public Offering On April 11, 2006, the Company completed the
initial public offering of the Company�s common stock. The Company
offered 20.9 million shares, and selling shareholders sold an
additional 6.1 million shares, including the exercise of the
underwriters� over-allotment option. Goodman received proceeds of
approximately $354.5 million after underwriting discounts and
before expenses. The proceeds were used to redeem all of the
outstanding Series A Preferred Stock, including accrued dividends;
to pay Apollo for termination of the management agreement; and to
redeem a portion of the Company�s floating rate notes. Acquisition
by Apollo On Dec. 23, 2004, the Company was acquired under an Asset
Purchase Agreement by an affiliate of Apollo Management, L.P.,
Company senior management and certain trusts associated with
members of the Goodman family. Non-GAAP Financial Measures In
addition to reporting financial results that are determined in
accordance with GAAP, Goodman also reports EBITDA, adjusted EBITDA,
adjusted net income, adjusted earnings per share and pro-forma
adjusted earnings per share, all of which are non-GAAP measures.
Management believes that the presentation of these non-GAAP
financial measures enables investors to better understand the
Company�s underlying operational and financial performance and
facilitates comparison of results between periods by eliminating
the effects of unusual and non-recurring events that are not part
of Goodman�s core operations. These measures should be considered
in addition to, not as substitutes for, GAAP measures. They should
not be considered as an alternative to operating income, net income
or earnings per share, determined in accordance with GAAP; as an
indicator of Goodman�s operating performance; as an alternative to
cash flows from operating activities, determined in accordance with
GAAP; or as a measure of liquidity. EBITDA, or earnings before
interest, taxes, depreciation and amortization, is calculated as
net income plus interest, taxes, depreciation and amortization.
Adjusted EBITDA, adjusted net income and adjusted earnings per
share are calculated to exclude the income and expenses of one-time
and non-recurring events. These include, primarily, costs
associated with the December 2004 Apollo transaction and the April
2006 IPO. Pro-forma adjusted earnings per share is calculated as
though the IPO had been completed by the beginning of 2006 and a
portion of the proceeds used at that time to redeem all of the
outstanding Series A Preferred Stock, including accrued dividends.
EBITDA is commonly used in the financial community, and Goodman
presents EBITDA to enhance the understanding of its operating
performance. Goodman uses EBITDA as one criterion for evaluating
its performance relative to that of its peers. The Company�s credit
agreement and bond indentures have certain covenants that use
ratios utilizing a measure called adjusted EBITDA. In addition,
EBITDA may be used to determine incentive compensation for
employees. Goodman believes that EBITDA is an operating performance
measure, not a liquidity measure, and that EBITDA provides
investors and analysts with a measure of operating results
unaffected by differences in capital structures, capital investment
cycles and ages of related assets among otherwise comparable
companies. However, EBITDA is not a measurement of financial
performance under accounting principles generally accepted in the
United States, and Goodman�s EBITDA may not be comparable to
similarly titled measures of other companies. The supplementary
adjustments to EBITDA, net income and earnings per share to derive
adjusted EBITDA, adjusted net income, adjusted earnings per share
and pro-forma adjusted earnings per share may not be in accordance
with current SEC practices or the rules and regulations adopted by
the SEC that apply to periodic reports filed under the Securities
Exchange Act of 1934. Accordingly, the SEC may require that these
measures be presented differently in filings made with the SEC than
as presented in this release, or not be presented at all. Safe
Harbor for Forward-Looking and Cautionary Statements Certain
statements in this press release are �forward-looking statements�
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These
statements involve a number of risks, uncertainties and other
factors that could cause actual results, performance or
achievements of Goodman to be materially different from any future
results, performance or achievements expressed or implied by these
forward-looking statements. The words �believe,� �expect,�
�anticipate,� �intend,� �estimate,� and other expressions that are
predictions of or indicate future events and trends and that do not
relate to historical matters identify forward-looking statements.
Forward-looking statements also include statements about the
following subjects: changes in weather patterns and seasonal
fluctuations; changes to the 13 SEER federally mandated minimum
efficiency standard; the maturation of Goodman�s new
company-operated distribution centers; increased competition and
technological changes and advances; increases in the cost of raw
materials and components; Goodman�s relations with its independent
distributors; and damage or injury caused by Goodman�s products.
Goodman undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events, changed circumstances or otherwise. These
forward-looking statements are subject to numerous risks and
uncertainties, including, but not limited to, the impact of general
economic conditions in the regions in which Goodman does business;
general industry conditions, including competition and product, raw
material and energy prices; the realization of expected tax
benefits; changes in exchange rates and currency values; capital
expenditure requirements; access to capital markets and the risks
and uncertainties described under �Risk Factors� contained in
Goodman�s Annual Report on Form 10-K filed with the Securities and
Exchange Commission. About Goodman Houston-based Goodman Global,
Inc. is the second-largest domestic unit manufacturer of heating,
ventilation and air conditioning products for residential and
light-commercial use. Goodman�s products are predominantly marketed
under the Goodman�, Amana� and Quietflex� brand names, and are sold
through company-operated and independent distribution networks with
approximately 800 total distribution points throughout North
America. For more information about Goodman, visit
www.goodmanglobal.com. Amana� is a trademark of Maytag Corporation
and is used under license to Goodman Company, L.P. All rights
reserved. GOODMAN GLOBAL, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) � � Three Months Ended March 31, 2007� 2006�
(in thousands, except share and per share amounts) Sales, net $
380,274� $ 380,688� Costs and expenses: Cost of good sold 303,262�
294,636� Selling, general and administrative expenses 45,926�
45,659� Depreciation and amortization expense 8,311� 7,453�
Operating profit 22,775� 32,940� Interest expense, net 16,907�
19,741� Other income, net (1,127) (157) Earnings before taxes
6,995� 13,356� Provision for income taxes 2,364� 4,942� Net income
$ 4,631� $ 8,414� Preferred stock dividends --� 5,892� Net income
available to common shareholders $ 4,631� $ 2,522� Net income per
share available to common shareholders, diluted $ 0.07� $ 0.05�
Average outstanding common shares, diluted 70,703,098� 49,624,273�
GOODMAN GLOBAL, INC. RECONCILIATION OF NET INCOME TO EBITDA(1) AND
ADJUSTED EBITDA(1) (Unaudited) � � Three Months Ended March 31,
2007� 2006� (in thousands) Net income $ 4,631� $ 8,414� Add:
Provision for income taxes 2,364� 4,942� Interest expense, net
16,907� 19,741� Depreciation and amortization expense 8,311� 7,453�
EBITDA $ 32,213� $ 40,550� Adjustments: Monitoring fees --� 552�
Gain on sale of property (642) --� Adjusted EBITDA $ 31,571� $
41,102� � � (1) EBITDA and Adjusted EBITDA are non-GAAP financial
measures. For more information regarding EBITDA and non-GAAP
financial measures, generally, see �Non-GAAP Financial Measures.�
GOODMAN GLOBAL, INC. RECONCILIATION OF NET INCOME TO ADJUSTED NET
INCOME(2) (Unaudited) � � Three Months Ended March 31, 2007� 2006�
(in thousands, except share and per share amounts) Net income $
4,631� $ 8,414� Adjustments, net of tax: Monitoring fees --� 348�
Gain on sale of property (398) --� Adjusted net income $ 4,233� $
8,762� Preferred stock dividends --� 5,892� Adjusted net income
available to common shareholders $ 4,233� $ 2,870� Adjusted net
income per share available to common shareholders, diluted $ 0.06�
$ 0.06� Pro-forma adjusted net income per share, diluted $ 0.06� $
0.12� Average outstanding common shares, diluted 70,703,098�
49,624,273� Pro-forma average outstanding common shares, diluted
70,703,098� 70,541,920� � � (2) Adjusted net income is a non-GAAP
financial measure. For more information regarding adjusted net
income and non-GAAP financial measures, generally, see "Non-GAAP
Financial Measures." GOODMAN GLOBAL, INC. SELECTED BALANCE SHEET
AMOUNTS (Unaudited) � � Periods Ended March 31, 2007� 2006� (in
thousands) Cash and cash equivalents (including restricted cash) $
10,710� $ 9,063� � Accounts receivable, net 232,584� 218,621�
Inventories 349,108� 369,294� Trade accounts payable 139,272�
160,514� Accrued liabilities 116,717� 152,523� � Total debt
837,175� 994,500� GOODMAN GLOBAL, INC. SELECTED CASH FLOW AMOUNTS
(Unaudited) � � Three Months Ended March 31, 2007� 2006� (in
thousands) Changes in operating working capital, net of effects of
acquisitions: Accounts receivable, net $ (32,498) $ 1,502�
Inventories (3,049) (65,999) Accounts payable and accrued
liabilities 24,614� 7,731� Changes in operating working capital $
(10,933) $ (56,766) � Free cash flow: � � Net cash provided by
operating activities $ 2,425� $ (38,966) Purchases of property,
plant and equipment (10,282) (11,709) Proceeds from sale of
property, plant and equipment 5,273� 13� Free cash flow $ (2,584) $
(50,662)
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