10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 1, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-37971

PGT Innovations, Inc.

1070 Technology Drive

North Venice, FL 34275

Registrant’s telephone number: 941-480-1600

State of Incorporation	IRS Employer Identification No.
Delaware	020-0634715

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company☐ Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes ☐ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

Common Stock, $0.01 par value, outstanding was 59,997,679 shares, as of October 31, 2022.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	PGTI	New York Stock Exchange, Inc.

PGT INNOVATIONS, INC.

TABLE OF CONTENTS

Form 10-Q for the Three and Nine Months Ended October 1, 2022

			Page
			Number
Part I.	Financial Information		3
	Item 1.	Condensed Consolidated Financial Statements (unaudited):	3
		Condensed Consolidated Statements of Operations	3
		Condensed Consolidated Statements of Comprehensive Income	4
		Condensed Consolidated Balance Sheets	5
		Condensed Consolidated Statements of Cash Flows	6
		Condensed Consolidated Statements of Shareholders’ Equity	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
	Item 4.	Controls and Procedures	48
Part II.	Other Information		49
	Item 1.	Legal Proceedings	49
	Item 1A.	Risk Factors	49
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
	Item 6.	Exhibits	50
		Signature	51

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PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
	(unaudited)						(unaudited)
Net sales	$	385,837		$	300,431		$	1,151,020		$	857,023
Cost of sales		236,035			196,228			701,495			561,849
Gross profit		149,802			104,203			449,525			295,174
Selling, general and administrative expenses		102,399			78,595			307,786			224,106
Income from operations		47,403			25,608			141,739			71,068
Interest expense, net		6,889			7,686			21,124			22,968
Debt extinguishment costs		—			25,472			—			25,472
Income (loss) before income taxes		40,514			(7,550	)		120,615			22,628
Income tax expense (benefit)		10,100			(2,410	)		29,910			4,260
Net income (loss)		30,414			(5,140	)		90,705			18,368
Less: Net income attributable to redeemable    non-controlling interest ("RNCI")		(373	)		(677	)		(1,334	)		(1,656	)
Net income (loss) attributable to the Company	$	30,041		$	(5,817	)	$	89,371		$	16,712
Calculation of net income (loss) per common share attributable    to common shareholders:
Net income (loss) attributable to the Company	$	30,041		$	(5,817	)	$	89,371		$	16,712
Decrease (increase) in redemption value of RNCI		271			(965	)		(1,514	)		(4,528	)
Net income (loss) attributable to common shareholders	$	30,312		$	(6,782	)	$	87,857		$	12,184
Net income (loss) per common share attributable to common shareholders:
Basic	$	0.51		$	(0.11	)	$	1.47		$	0.20
Diluted	$	0.50		$	(0.11	)	$	1.46		$	0.20
Weighted average number of common shares outstanding:
Basic		59,964			59,590			59,908			59,475
Diluted		60,402			59,590			60,201			60,035

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
	(unaudited)						(unaudited)
Net income (loss)	$	30,414		$	(5,140	)	$	90,705		$	18,368
Other comprehensive income (loss) before tax:
Increase (decrease) in fair value of derivatives		(2,633	)		6,549			(9,487	)		23,910
Reclassification to earnings		2,416			(6,696	)		(3,344	)		(12,604	)
Other comprehensive income   (loss) before tax		(217	)		(147	)		(12,831	)		11,306
Income tax expense (benefit) related to   other comprehensive income (loss)		(56	)		(37	)		(3,296	)		2,806
Other comprehensive income   (loss), net of tax		(161	)		(110	)		(9,535	)		8,500
Comprehensive income (loss)		30,253			(5,250	)		81,170			26,868
Less: Comprehensive income attributable to    redeemable non-controlling interest		(373	)		(677	)		(1,334	)		(1,656	)
Comprehensive income (loss) attributable to the Company	$	29,880		$	(5,927	)	$	79,836		$	25,212

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

	October 1,			January 1,
	2022			2022
ASSETS
Current assets:
Cash and cash equivalents	$	218,841		$	96,146
Accounts receivable, net		166,885			141,221
Inventories		112,257			91,440
Contract assets, net		56,313			55,239
Prepaid expenses		12,456			8,727
Other current assets		15,865			28,985
Total current assets		582,617			421,758
Property, plant and equipment, net		185,305			185,266
Operating lease right-of-use asset, net		93,020			91,162
Intangible assets, net		369,000			394,525
Goodwill		370,115			364,598
Other assets, net		2,547			3,301
Total assets	$	1,602,604		$	1,460,610
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST    AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	180,543		$	122,681
Current portion of operating lease liability		15,247			13,180
Total current liabilities		195,790			135,861
Long-term debt, net		626,576			625,655
Operating lease liability, less current portion		84,894			83,903
Deferred income taxes		34,193			37,489
Other liabilities		7,980			11,742
Total liabilities		949,433			894,650
Commitments and contingencies
Redeemable non-controlling interest		39,711			36,863
Shareholders' equity:
Preferred stock; par value $.01 per share; 10,000 shares   authorized; no shares outstanding		—			—
Common stock; par value $.01 per share; 200,000 shares authorized; 63,912 and   63,516 shares issued and 59,978 and 58,696 shares outstanding at   October 1, 2022 and January 1, 2022, respectively		639			635
Additional paid-in capital		439,773			433,347
Accumulated other comprehensive income (loss)		(2,529	)		7,006
Retained earnings		193,866			106,398
Treasury stock at cost		(18,289	)		(18,289	)
Total shareholders' equity		613,460			529,097
Total liabilities, redeemable non-controlling interest and shareholders' equity	$	1,602,604		$	1,460,610

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Nine Months Ended
	October 1,			October 2,
	2022			2021
	(unaudited)
Cash flows from operating activities:
Net income	$	90,705		$	18,368
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		25,359			22,290
Amortization		19,725			15,174
Provision for credit losses		7,395			3,309
Stock-based compensation		7,638			5,748
Amortization of deferred financing costs, debt discount and premium		921			674
Asset impairment charges		2,131			—
Debt extinguishment costs, including call premium classified as financing activity		—			25,472
(Gain) loss on sales of assets		(166	)		105
Change in operating assets and liabilities (net of effects of acquisitions):
Accounts receivable		(35,166	)		(45,997	)
Inventories		(21,145	)		(11,607	)
Contract assets, net, prepaid expenses, other current and other assets		6,213			(22,843	)
Accounts payable, accrued and other liabilities		48,531			9,074
Net cash provided by operating activities		152,141			19,767
Cash flows from investing activities:
Purchases of property, plant and equipment		(24,741	)		(25,663	)
Investment in and acquisitions of business		(787	)		(106,480	)
Proceeds from sales of assets		41			183
Net cash used in investing activities		(25,487	)		(131,960	)
Cash flows from financing activities:
Payment of fair value of contingent consideration in Anlin Acquisition		(2,362	)		—
Proceeds from issuance of senior notes		—			638,300
Payments of senior notes		—			(425,000	)
Payment of call premium on redemption of senior notes		—			(21,518	)
Payments of long-term debt		—			(54,000	)
Payments of financing costs		—			(10,361	)
Purchases of common stock relating to tax withholdings on employee equity awards		(1,888	)		(1,159	)
Proceeds from exercise of stock options		—			138
Proceeds from issuance of common stock under employee stock purchase plan (ESPP)		291			191
Net cash (used in) provided by financing activities		(3,959	)		126,591
Net increase in cash and cash equivalents		122,695			14,398
Cash and cash equivalents at beginning of period		96,146			100,320
Cash and cash equivalents at end of period	$	218,841		$	114,718
Non-cash activity:
Issuance of common stock in Eco Acquisition	$	—		$	6,108
Additions to right-of-use asset	$	13,625		$	47,838
Additions to operating lease liability	$	(13,625	)	$	(47,838	)
Property, plant and equipment additions in accounts payable	$	79		$	268

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PGT INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except shares)(unaudited)

	PGT Innovations, Inc. Shareholders' Equity
										Accumulated
							Additional			Other
	Common stock						Paid-in			Comprehensive			Retained			Treasury
	Shares			Amount			Capital			Income (Loss)			Earnings			Stock			Total
THREE MONTHS ENDED OCTOBER 2, 2021
Balance at July 3, 2021		59,587,128		$	632		$	429,268		$	11,330		$	98,681		$	(18,289	)	$	521,622
Vesting of restricted stock		32,258			—			—			—			—			—			—
Grants of restricted stock		—			4			(4	)		—			—			—			—
Purchases of treasury stock		(7,852	)		—			—			—			—			(154	)		(154	)
Retirement of treasury stock		—			(1	)		(125	)		—			(28	)		154			—
Stock-based compensation		—			—			2,254			—			—			—			2,254
Common stock issued under ESPP		853			—			14			—			—			—			14
Net income attributable to the Company		—			—			—			—			(5,817	)		—			(5,817	)
Increase in value of RNCI		—			—			—			—			(965	)		—			(965	)
Other comprehensive loss,   net of tax benefit of $37		—			—			—			(110	)		—			—			(110	)
Balance at October 2, 2021		59,612,387		$	635		$	431,407		$	11,220		$	91,871		$	(18,289	)	$	516,844
NINE MONTHS ENDED OCTOBER 2, 2021
Balance at January 2, 2021		58,998,711		$	625		$	420,202		$	2,720		$	79,896		$	(18,309	)	$	485,134
Vesting of restricted stock		221,724			—			—			—			—			—			—
Grants of restricted stock		—			7			(7	)		—			—			—			—
Forfeitures of restricted stock		—			(1	)		1			—			—			—			—
Purchases of treasury stock		(50,266	)		—			—			—			—			(1,159	)		(1,159	)
Retirement of treasury stock		—			(1	)		(969	)		—			(189	)		1,159			—
Issuance of treasury stock		4,600			—			—			—			(20	)		20			—
Stock-based compensation		—			—			5,748			—			—			—			5,748
Exercise of stock options		67,797			1			137			—			—			—			138
Common stock issued under ESPP		12,024			—			191			—			—			—			191
Issuance in acquisition of Eco		357,797			4			6,104			—			—			—			6,108
Net income attributable to the Company		—			—			—			—			16,712			—			16,712
Increase in value of RNCI		—			—			—			—			(4,528	)		—			(4,528	)
Other comprehensive income,   net of taxes of $2,806		—			—			—			8,500			—			—			8,500
Balance at October 2, 2021		59,612,387		$	635		$	431,407		$	11,220		$	91,871		$	(18,289	)	$	516,844
THREE MONTHS ENDED OCTOBER 1, 2022
Balance at July 2, 2022		59,946,691		$	639		$	437,207		$	(2,368	)	$	163,616		$	(18,289	)	$	580,805
Vesting of restricted stock		42,258			—			—			—			—			—			—
Purchases of treasury stock		(10,509	)		—			—			—			—			(225	)		(225	)
Retirement of treasury stock		—			—			(163	)		—			(62	)		225			—
Stock-based compensation		—			—			2,729			—			—			—			2,729
Net income attributable to the Company		—			—			—			—			30,041			—			30,041
Decrease in value of RNCI		—			—			—			—			271			—			271
Other comprehensive loss,   net of tax benefit of $56		—			—			—			(161	)		—			—			(161	)
Balance at October 1, 2022		59,978,440		$	639		$	439,773		$	(2,529	)	$	193,866		$	(18,289	)	$	613,460
NINE MONTHS ENDED OCTOBER 1, 2022
Balance at January 1, 2022		59,696,117		$	635		$	433,347		$	7,006		$	106,398		$	(18,289	)	$	529,097
Vesting of restricted stock		359,360			—			—			—			—			—			—
Grants of restricted stock		—			6			(6	)		—			—			—			—
Forfeitures of restricted stock		—			(1	)		1			—			—			—			—
Purchases of treasury stock		(95,001	)		—			—			—			—			(1,888	)		(1,888	)
Retirement of treasury stock		—			(1	)		(1,498	)		—			(389	)		1,888			—
Stock-based compensation		—			—			7,638			—			—			—			7,638
Common stock issued under ESPP		17,964			—			291			—			—			—			291
Net income attributable to the Company		—			—			—			—			89,371			—			89,371
Increase in value of RNCI		—			—			—			—			(1,514	)		—			(1,514	)
Other comprehensive loss,   net of tax benefit of $3,296		—			—			—			(9,535	)		—			—			(9,535	)
Balance at October 1, 2022		59,978,440		$	639		$	439,773		$	(2,529	)	$	193,866		$	(18,289	)	$	613,460

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PGT INNOVATIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

About PGT Innovations, Inc.

PGT Innovations, Inc. (“PGTI,” “we,” or the “Company”) is a leading manufacturer of impact-resistant aluminum and vinyl-framed windows and doors and offers a broad range of fully customizable window and door products. The majority of our sales are to customers in the state of Florida; however, we also sell products in many other states. Our acquisition of Eco Enterprises (“Eco Acquisition”) in February 2021 expanded our range of product offerings in our major market of southeast Florida. We also have sales of products that are designed to unify indoor and outdoor living spaces, through our Western Windows Systems’ (“WWS”) division, and most of its sales are in the western United States. Our acquisition of Anlin Windows and Doors in October 2021 expanded our presence in the west. Products are sold primarily through an authorized dealer and distributor network. However, with our acquisition of NewSouth Window Solutions in February 2020, we also sell window products in the direct-to-consumer channel through a “factory-direct” sales model.

We were incorporated in the state of Delaware on December 16, 2003, as JLL Window Holdings, Inc., with primary operations in North Venice, Florida. On February 15, 2006, our Company was renamed PGT, Inc. On December 14, 2016, we announced that we changed our name to PGT Innovations, Inc. and, effective on December 28, 2016, the listing of our common stock was transferred to the New York Stock Exchange (“NYSE”) from the NASDAQ Global Market, and began trading on the NYSE under its existing ticker symbol of “PGTI”. As of October 1, 2022, we had major manufacturing operations in Florida, in North Venice, Tampa, and in the greater Miami area. We also have manufacturing operations in Phoenix, Arizona and Clovis, California. Additionally, we have two glass tempering and laminating plants, one in North Venice, Florida and one in Medley, Florida, and one insulation glass plant located in North Venice, Florida. With the acquisition of Martin Door, a manufacturer of residential and commercial garage doors, effective as of October 14, 2022, we have a manufacturing operation in Salt Lake City, Utah. See Note 18, "Subsequent Events".

All references to PGTI or our Company apply to the consolidated financial statements of PGT Innovations, Inc. unless otherwise noted.

COVID-19

During March 2020, a global pandemic (the “Pandemic”) was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The Pandemic resulted in a significant number of infections, hospitalizations and deaths around the world, including in the United States, and in several of our key markets. COVID-19 and its effects will likely continue to impact market conditions and business operations across industries worldwide. Therefore, we remain cautious about how the economy might behave for the next few years and continue to monitor potential impact on our operations. The extent to which the circumstances of the aftermath of the Pandemic, including the continued existence of the many variants of COVID-19 in society, could affect our future business, operations and financial results will depend upon numerous factors that we are not able to accurately predict. As such, we are unable to accurately predict the future impacts of COVID-19 on the U.S. and global economies. The impact to our customers’ and suppliers’ businesses and other factors are identified in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K/A, filed with the United States Securities and Exchange Commission on June 10, 2022.

Basis of Presentation

These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnotes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. Our condensed consolidated financial statements are unaudited; however, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for the remainder of the current year or for any future periods. The Company’s fiscal three and nine months ended October 1, 2022, and October 2, 2021 consisted of 13 and 39 weeks, respectively.

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The condensed consolidated balance sheet as of January 1, 2022, is derived from the audited consolidated financial statements, but does not include all disclosures required by GAAP. The condensed consolidated balance sheet as of January 1, 2022, and the unaudited condensed consolidated financial statements as of and for the periods ended October 1, 2022 and October 2, 2021, should be read in conjunction with the more detailed audited consolidated financial statements for the year ended January 1, 2022, included in the Company’s most recent Annual Report on Form 10-K/A. The accounting policies used in the preparation of these unaudited condensed consolidated financial statements are consistent with the accounting policies described in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K/A.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

We have two reportable segments: the Southeast segment and the Western segment. The Southeast reporting segment, which is also an operating segment, is composed of sales from our facilities in Florida. The Western reporting segment, also an operating segment, is composed of sales from our facilities in Arizona and California. See Note 16 for segment disclosures.

Recently Adopted Accounting Pronouncements

Business Combinations - Contracts Assets and Liabilities

On October 28, 2021, the FASB issued ASU 2021-08, which amends ASC 805-20 to “require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.” Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. This standard was effective beginning January 1, 2022. Early adoption was permitted and was adopted by the Company in the period beginning January 3, 2021. The adoption of this standard did not have any impact on our consolidated financial statements.

NOTE 2. REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS

Revenue Recognition Accounting Policy

The Company primarily manufactures fully customized windows and doors based on design specifications, measurements, colors, finishes, framing materials, glass-types, and other options selected by the customer at the point in time an order is received. The Company has an enforceable right to payment at the time an order is received and accepted at the agreed-upon sales prices contained in our agreements with our customers for all manufacturing efforts expended on behalf of its customers. Due to the customized build-to-order nature of these products, the Company’s assessment is that the substantial portion of its finished goods and certain unused glass components have no alternative use, and that control of these products and components passes to the customer over time during the manufacturing of the products in an order, or upon our receipt of certain pre-cut glass components from our supplier attributed to specific customer orders.

Based on these factors, the Company recognizes a substantial portion of revenue over time during the manufacturing process once customization begins, and for certain unused glass components on hand, at the end of a reporting period. Revenue on work-in-process at the end of a reporting period is recognized in proportion to costs incurred to total estimated cost of the product being manufactured. Except for the Western segment’s volume products, discussed in the section titled Disaggregation of Revenue from Contracts with Customers below, revenue recognized at a point in time is immaterial.

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Disaggregation of Revenue from Contracts with Customers

As discussed in Note 1, we have two reportable segments: our Southeast segment and our Western segment. See Note 16 for more information. The following table provides information about our net sales by reporting segment, product category and market for the three and nine months ended October 1, 2022 and October 2, 2021:

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
Disaggregation of revenue (in millions):	2022		2021		2022		2021
Reporting segment:
Southeast	$	288.2	$	255.1	$	867.5	$	731.2
Western		97.6		45.3		283.5		125.8
Total net sales	$	385.8	$	300.4	$	1,151.0	$	857.0
Product category:
Impact-resistant window and door products	$	227.7	$	207.8	$	688.5	$	596.7
Non-impact window and door products		158.1		92.6		462.5		260.3
Total net sales	$	385.8	$	300.4	$	1,151.0	$	857.0
Market:
New construction	$	160.9	$	120.5	$	484.3	$	365.0
Repair and remodel		224.9		179.9		666.7		492.0
Total net sales	$	385.8	$	300.4	$	1,151.0	$	857.0

The Company’s Western segment includes both custom and volume products. This segment’s volume products are not made-to-order and are of standardized sizes and design specifications. Therefore, the Company’s assessment is that the Western segment’s volume products have alternative uses, and that control of these products passes to the customer at a point in time, which is typically when the product has been delivered to the customer. For the three months ended October 1, 2022 and October 2, 2021, the Western segment’s net sales of its volume products were $26.6 million and $21.9 million, respectively. For the nine months ended October 1, 2022 and October 2, 2021, the Western segment’s net sales of its volume products were $82.6 million and $62.5 million, respectively.

Contract Balances

Contract assets represent sales recognized in excess of billings related to finished goods not yet shipped and certain unused glass components not yet placed into the production process for which revenue is recognized over time as noted above. Contract liabilities relate to customer deposits at the end of reporting periods. At October 1, 2022 and January 1, 2022, those contract liabilities totaled $42.9 million and $45.2 million, respectively, of which $34.4 million and $37.0 million, respectively, are classified within accrued liabilities, and $8.5 million and $8.2 million, respectively, are classified as a reduction to the contract assets to which they relate. Contract assets, net, totaled $56.3 million at October 1, 2022 and $55.2 million at January 1, 2022, in the accompanying condensed consolidated balance sheets.

Because of the short-term nature of our performance obligations, as discussed below, substantially all of our performance obligations are satisfied within the quarter following the end of a reporting period. As such, we expect substantially all of the contract liabilities at January 1, 2022 were satisfied in the first quarter of 2022, and contract assets at January 1, 2022 were transferred to accounts receivable in the first quarter of 2022. We expect substantially all of the contract liabilities at October 1, 2022 will be satisfied in the fourth quarter of 2022, and contract assets at October 1, 2022 will be transferred to accounts receivable in the fourth quarter of 2022. Contract liabilities at October 1, 2022 represents cash received during the three-month period ended October 1, 2022, excluding amounts recognized as revenue during that period. Contract assets at October 1, 2022 represents revenue recognized during the three-month period ended October 1, 2022, excluding amounts transferred to accounts receivable during that period. Contract liabilities at January 1, 2022 represents cash received during the three-month period ended January 1, 2022, excluding amounts recognized as revenue during that period. Contract assets at January 1, 2022 represents revenue recognized during the three-month period ended January 1, 2022, excluding amounts transferred to accounts receivable during that period.

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Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue as the performance obligation is satisfied. Our contracts with our customers generally represent an approved purchase order together with our standard terms and conditions. Our custom product contracts include distinct goods that are substantially the same and have the same pattern of transfer to the customer over time, and therefore represent a series of distinct goods accounted for as a single performance obligation. For volume products, we allocate the contract’s transaction price to each distinct performance obligation based on the estimated relative standalone selling price of each distinct good. Observable standalone sales are used to determine the standalone selling price. Certain customers are eligible for rebates based on their volume or purchases during an annual period. Rebates are recorded as a reduction to sales and were immaterial in all periods presented.

Performance obligations are satisfied over time, generally for our custom products, and as of a point in time for our volume products. Performance obligations are supported by contracts with customers, and we have elected not to disclose our unsatisfied performance obligations as of October 1, 2022 under the short-term contract exemption as we expect such performance obligations will be satisfied within the quarter following the end of a reporting period.

Policies Regarding Shipping and Handling Costs and Commissions on Contract Assets

The Company has made a policy election to continue to recognize shipping and handling costs as a fulfillment activity. Treating shipping and handling as a fulfillment activity requires estimated shipping and handling costs for undelivered products and certain glass components on which we have recognized revenue and created a contract asset, to be accrued to match this cost with the recognized revenue. Sales taxes collected from customers are recorded on a net basis.

The Company utilizes the practical expedient which permits the current expensing of costs to obtain a contract when the expected amortization period is one year or less, which typically results in expensing commissions paid to employees. We expense sales commissions paid to employees as sales are recognized, including sales from the creation of contract assets, as the expected amortization period is less than one year.

Allowance for Credit Losses

The Company adopted Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” (“Topic 326”) on December 29, 2019 (the first day of our 2020 fiscal year). Topic 326 requires us to measure all expected credit losses for financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. In the ordinary course of business, we extend credit to qualified dealers and distributors, generally on a non-collateralized basis. The Company maintains an allowance for credit losses which is based on management’s assessments of the amount which may become uncollectible in the future and is determined through consideration of our write-off history, specific identification of uncollectible accounts based in part on the customer’s past due balance (based on contractual terms), and consideration of prevailing economic and industry conditions, and may include anticipated unfavorable impacts of the COVID-19 pandemic on the businesses of our customers, such as dealers and distributors.

As of October 1, 2022 and January 1, 2022, we had gross accounts receivable of $177.2 million and $145.9 million, respectively, and an allowance for credit losses of $10.3 million and $4.7 million, respectively. During the second quarter of 2022, a customer with whom we have had a long-term relationship experienced financial difficulties. As such, we determined to cease taking orders and provide additional reserves of approximately $3.0 million against our existing exposure to this customer. During the nine-months ended October 1, 2022, we recorded provisions for credit losses totaling $7.4 million, including the provision relating to this customer.

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NOTE 3. WARRANTY

Most of our manufactured products are sold with warranties. Warranty periods, which vary by product components, generally range from 1 to 10 years; however, the warranty period for a limited number of specifically identified components in certain applications is a lifetime. The majority of the products sold have warranties on components which range from 1 to 3 years. The amount charged to expense for warranties is based on management’s assessment of the cost per service call and the number of service calls expected to be incurred to satisfy warranty obligations on the current net sales.

During the three months ended October 1, 2022, we recorded warranty expense at a rate of approximately 1.8% of sales, which was slightly lower than the rate during the three months ended October 2, 2021 of 1.9% of sales. Our warranty expense rate in the three months ended October 1, 2022 is a result of a decrease in the use of higher-cost contract labor we had used in the first half of 2022 to respond to warranty claims due to a currently tight labor market.

During the nine months ended October 1, 2022, we recorded warranty expense at a rate of approximately 2.0% of sales, which was slightly lower than the rate during the nine months ended October 2, 2021 of 2.1% of sales. Our warranty expense rate in the nine months ended October 1, 2022 was affected by the use of higher-cost contract labor during the first quarter of 2022 to respond to warranty claims in a currently tight labor market. The rate in the nine months ended October 2, 2021 includes the effect of wind-down of certain commercial business in the first quarter of 2021, which resulted in warranty costs higher than those we would incur in the normal course of business.

The following table summarizes current period charges, adjustments to previous estimates, as well as settlements, which represent actual costs incurred during the period for the three and nine months ended October 1, 2022 and October 2, 2021. The reserve is determined through assessing our claims history. Of the accrued warranty reserve of $15.5 million at October 1, 2022, $12.5 million is classified within accrued expenses as current liabilities on the condensed consolidated balance sheet at October 1, 2022, with the remainder classified within other liabilities as non-current liabilities. Of the accrued warranty reserve of $13.5 million at January 1, 2022, $11.8 million is classified within accrued expenses as current liabilities on the condensed consolidated balance sheet at January 1, 2022, with the remainder classified within other liabilities as non-current liabilities.

	Beginning		Acquisition-			Charged								End of
Accrued Warranty	of Period		Related			to Expense		Adjustments			Settlements			Period
(in thousands)
Three months ended October 1, 2022	$	16,151	$	(2,537	)	$	6,880	$	750		$	(5,763	)	$	15,481
Three months ended October 2, 2021	$	9,459	$	347		$	5,706	$	(531	)	$	(5,505	)	$	9,476
Nine months ended October 1, 2022	$	13,504	$	(2,537	)	$	22,872	$	1,263		$	(19,621	)	$	15,481
Nine months ended October 2, 2021	$	8,001	$	536		$	18,015	$	(890	)	$	(16,186	)	$	9,476

NOTE 4. INVENTORIES

Inventories consist principally of raw materials purchased for the manufacture of our products. We have limited finished goods inventory since the substantial majority of our products are custom, made-to-order and the revenue on these products, as well as the related cost, has been fully recognized upon completion of the manufacturing process. Finished goods inventory and work-in-progress costs include direct materials, direct labor, and overhead. All inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. Inventories consisted of the following:

	October 1,		January 1,
	2022		2022
	(in thousands)
Raw materials	$	107,005	$	87,164
Work-in-progress		2,729		3,248
Finished goods		2,523		1,028
Inventories	$	112,257	$	91,440

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NOTE 5. STOCK BASED-COMPENSATION

Stock-Based Compensation Expense

We record stock compensation expense over an equity award’s vesting period based on the award’s fair value at the date of grant. We recorded compensation expense for stock-based awards of $2.7 million for the three months ended October 1, 2022 and $2.3 million for the three months ended October 2, 2021. We recorded compensation expense for stock-based awards of $7.6 million for the nine months ended October 1, 2022 and $5.7 million for the nine months ended October 2, 2021. As of October 1, 2022, there was $11.9 million in total unrecognized compensation cost related entirely to restricted share awards, including time-vesting and those with performance conditions. These costs are expected to be recognized in earnings on an accelerated basis over the weighted average remaining vesting period of 1.7 years at October 1, 2022.

Of the $2.7 million and $2.3 million in stock-based compensation expense in the three months ended October 1, 2022 and October 2, 2021, respectively, $2.3 million and $1.9 million, respectively, are classified within selling, general and administrative expense in the accompanying condensed consolidated statements of operations, with the remainders classified within cost of sales. Of the $7.6 million and $5.7 million in stock-based compensation expense in the nine months ended October 1, 2022 and October 2, 2021, respectively, $6.6 million and $4.9 million, respectively, are classified within selling, general and administrative expense in the accompanying condensed consolidated statements of operations, with the remainders classified within cost of sales.

Issuance

On February 14, 2022, we issued 468,518 shares of restricted stock to certain executive and non-executive employees of the Company, under the Company’s 2022 long-term incentive plan (“2022 LTIP”). Half of the shares awarded under the 2022 LTIP, or 234,259 shares, are subject to adjustment based on the performance of the Company for the 2022 fiscal year. A portion of the 234,259 performance shares issued under the 2022 LTIP are also subject to a total shareholder return ("TSR") component, which will not be finalized until the third anniversary of the February 14, 2022 grant date. Specifically, 37.5% of the one-half of the restricted stock awarded in the 2022 LTIP are performance restricted shares which will not be earned unless certain financial performance metrics are met by the Company for the 2022 fiscal year. The performance criteria, as defined in the share awards, provide for a graded awarding of shares based on the percentage by which the Company meets earnings before interest, taxes, depreciation and amortization ("EBITDA") as defined in our 2022 business plan. The percentages, ranging from less than 80% to greater than 120% of the target amount of that EBITDA metric, provide for the awarding of shares ranging from 0% to 200% of the target amount of shares with respect to 37.5% of half of the 234,259 shares, or 87,849 shares. The remaining 62.5% of the one-half of the restricted stock awarded in the 2022 LTIP, or 146,410 shares, are subject to the same EBITDA metric, but are also subject to a TSR component which stratifies the performance of the Company's common stock price compared to a defined peer group of companies over the three-year period subsequent to February 14, 2022, such that if the Company's TSR falls at the 75th percentile or higher compared to the peer group, grantees will receive an additional 25% of performance shares. If the Company's TSR falls at the 25th percentile or lower compared to the peer group, grantees will forfeit 25% of performance shares. If the Company's TSR falls within the 75th and 25th percentiles, there will be no additional adjustment and grantees will receive their performance shares as per the EBITDA metric previously discussed. The final award is also affected by forfeitures upon the termination of a grantee’s employment with the Company. The remaining 234,259 shares from the 2022 LTIP are not subject to adjustment based on any performance or other criteria, but rather, vest in three equal installments on each of the first, second and third anniversaries of the grant date, assuming the grantee is employed by the Company on those vesting dates.

The grant date fair value of the 2022 LTIP was $18.27 per share for those shares not subject to adjustment based on any performance or other criteria except the passage of time, and the 37.5% of shares subject only to the EBITDA criteria of Company performance. For the 62.5% of performance shares subject to both the EBITDA criteria of Company performance and the TSR component, the grant date fair value was $20.79 per share as determined by a third-party valuation specialist engaged by the Company, which used Monte Carlo simulation techniques to determine the fair value of such shares, which we consider to be a Level 3 input. As such, the weighted-average fair value of the 234,259 shares subject to the performance of the Company for the 2022 fiscal year, including those shares subject to the TSR, is $19.84 per share.

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NOTE 6. ACQUISITIONS

See Note 18, Subsequent Events, for a discussion of events relating to an acquisition that occurred after October 1, 2022.

ANLIN WINDOWS & DOORS

On October 25, 2021, we completed the acquisition of Anlin Windows & Doors. The acquisition was done by Western Window Holding LLC, a Delaware limited liability company, indirectly wholly-owned by PGT Innovations, Inc., which acquired substantially all of the assets, properties and rights owned, used or held for use in the business, as operated by Anlin Industries, a California corporation, of manufacturing vinyl windows and doors for the replacement market and the new construction market, and all activities conducted in connection therewith (the "Anlin Acquisition"), pursuant to that certain Asset Purchase Agreement dated as of September 1, 2021 (the “Anlin Purchase Agreement”), by and among the Company, and Anlin Industries. The fair value of consideration transferred in the Anlin Acquisition was $121.7 million, composed of $115.0 million in cash, including $113.5 million for purchase price and $1.5 million in working capital adjustments, including $0.8 million paid during the three months ended October 1, 2022, and fair value of contingent consideration of $6.7 million, discussed in greater detail below.

The cash portion of the Anlin Acquisition of $115.0 million was financed with borrowings under the fourth amendment of our 2016 Credit Agreement due 2024 of $60.0 million, which resulted in net proceeds after fees of $59.4 million, with the remaining $55.6 million from cash on hand. Cash on hand for the Anlin Acquisition was ultimately provided by the issuance of $575.0 million of 4.375% senior notes due 2029 and related transactions, further explained in Note 9, Long-Term Debt, as well as cash generated through operations.

The estimated fair value of assets acquired, and liabilities assumed as of the closing date of the Anlin Acquisition, are as follows:

	Initial Allocation			Adjustments to Allocation			Final Allocation
Accounts receivable	$	10,803		$	—		$	10,803
Inventories		7,633			(327	)		7,306
Contract assets, net		7,027			—			7,027
Prepaid expenses and other assets		1,626			(954	)		672
Property and equipment		22,800			1,509			24,309
Operating lease right-of-use asset		3,450			14			3,464
Intangible assets		77,800			(5,800	)		72,000
Total assets acquired		131,139			(5,558	)		125,581
Accounts payable		(5,175	)		593			(4,582	)
Accrued and other liabilities		(7,993	)		2,537			(5,456	)
Operating lease liability		(3,450	)		(14	)		(3,464	)
Total liabilities assumed		(16,618	)		3,116			(13,502	)
Net assets acquired		114,521			(2,442	)		112,079
Goodwill		5,596			4,017			9,613
Fair value of consideration transferred	$	120,117		$	1,575		$	121,692
Consideration:
Cash	$	114,196		$	786		$	114,982
Contingent consideration		5,921			789			6,710
Fair value of consideration transferred	$	120,117		$	1,575		$	121,692

The fair value of certain working capital related items, including Anlin’s accounts receivable, prepaid expenses and other assets, and accounts payable and accrued liabilities, approximated their book values at the date of the Anlin Acquisition. The fair value of inventory was estimated by major category, at net realizable value, which we believe approximates the price a market participant could achieve in a current sale. Inventories at the acquisition date was primarily composed of raw materials. Further review during the first quarter of 2022 resulted in an adjustment to decrease the estimated net realizable value of inventory. The fair value of property and equipment and remaining useful lives were estimated by management, with the assistance of a third-party valuation firm, using the cost approach. During the first quarter of 2022, additional value was assigned to acquired property and equipment, primarily due to an increase in the estimate of the fair value of acquired land.

Valuations of the intangible assets were done using income and royalty relief approaches based on projections provided by management, which we consider to be Level 3 inputs, with the assistance of a third-party valuation firm. During the first quarter of 2022, we made several adjustments to the estimated fair value of the initial valuation of certain intangible assets. Additionally, we determined that a portion of the customer relationship asset we acquired related to Anlin's backlog, which had an estimated useful life of less than three months, resulting in its estimated fair value of $2.2 million becoming fully amortized in the first quarter of 2022, discussed below, classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine-month period ended October 1, 2022.

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We incurred acquisition costs totaling $1.8 million relating to legal expenses, representations and warranties insurance, diligence, accounting and printing services in the Anlin Acquisition, incurred during the year ended January 1, 2022, primarily during the third and fourth quarters.

The Anlin Purchase Agreement provides for the potential for earn-out contingency payments to sellers should Anlin achieve a certain level of earnings before interest, taxes, depreciation and amortization, ("Anlin EBITDA"), as defined in the Anlin Purchase Agreement, for its fiscal years of 2021 and 2022, of up to $3.2 million to be paid out by March 31, 2022, and of up to $9.5 million to be paid out by March 31, 2023, respectively. We had recorded a preliminary earn-out contingent liability of $5.9 million as of our year ended January 1, 2022, which represented its then estimated fair value based on probability adjusted levels of estimated Anlin EBITDA. Estimated Anlin EBITDA is a significant input that is not observable in the market, which ASC 820 considers to be a Level 3 input. In the first quarter of 2022, we finalized the fair value of the earn-out contingency, which we adjusted by an additional $0.8 million, to a total of $6.7 million of estimated fair value of contingent consideration as of the effective date of the Anlin Acquisition. This amount included $2.4 million for the contingent consideration relating to 2021 Anlin EBITDA and $4.3 million for the contingent consideration relating to the 2022 Anlin EBITDA.

The first contingent consideration payment was agreed to be $2.7 million, which exceeded its estimated fair value by $0.3 million. This excess is classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine months ended October 1, 2022. The payment was made during the second quarter of 2022 after both parties agreed to extend the deadline for the first payment past the March 31, 2022 due date stated in the Anlin Purchase Agreement.

During the third quarter of 2022, we updated our estimate of the fair value of the contingent consideration relating to 2022 Anlin EBITDA, which was estimated to be $9.1 million. As such, we recognized an expense of approximately $4.8 million, representing the difference between this updated estimated fair value, and the fair value estimated in our purchase price allocation, classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine months ended October 1, 2022. We will continue to update our estimate of the fair value of the contingent consideration relating to 2022 Anlin EBITDA each reporting period, as required by ASC 805, and record any adjustments within operating income until finalized by March 31, 2023.

Regarding the allocation of the fair value of consideration transferred in the Anlin Acquisition, as discussed in Note 5 of our Annual Report on Form 10-K/A for the year ended January 1, 2022, specific items being finalized are our calculations of contingencies assumed in the Anlin acquisition, including the earn-out contingencies and reserves for warranty obligations. During the three months ended October 1, 2022, we finalized our calculation of the reserves for warranty obligations assumed in the Anlin Acquisition. As a result, we recorded a decrease in accrued and other liabilities of $2.5 million, resulting in an equal decrease in goodwill.

For tax purposes, contingent consideration does not become part of tax goodwill until paid. As such, the amount of goodwill deductible for tax purposes will not be finalized until the outcome of both earn-out contingency payments are known. As of October 1, 2022, the initial estimated fair value of the contingent consideration in the allocation relating to the remaining payment was $4.3 million, and goodwill according to the current allocation of consideration is $9.6 million. As such, as of October 1, 2022, the amount of goodwill estimated to be tax deductible is the difference of $5.3 million. Anlin's goodwill is included as part of the Western reporting. We believe Anlin's goodwill relates to the expansion of our footprint in a key, strategic market we have identified as a geographic area of growth for our Company. Our estimate of the amount of tax deductible goodwill may change as the amounts of the payments of contingent consideration are finalized.

As discussed above, we made changes to the initial estimated fair values of the trade name and customer relationships assets in the Anlin Acquisition, and we determined that a portion of our customer relationships intangible asset relates to the backlog acquired in the acquisition, which we estimated to be $2.2 million. Due to the short useful life of the customer-related backlog, its estimated fair value of $2.2 million was fully amortized by the end of the first quarter of 2022, which is classified within selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine-month period ended October 1, 2022.

The Anlin Purchase Agreement has a post-closing working capital calculation we were required to prepare, and delivered to sellers during the second quarter of 2022. This resulted in an additional payment of consideration to the seller of $0.8 million, made during the second quarter of 2022.

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Valuation of Identified Intangible Assets

The valuation of the identifiable intangible assets acquired in the Anlin Acquisition and our estimate of their respective useful lives are as follows:

								Initial
	Initial		Adjustment to			Preliminary		Useful Life
	Valuation		Valuation			Valuation		(in years)
(in thousands)
Trade name	$	35,400	$	(3,700	)	$	31,700	indefinite
Customer relationships		42,100		(4,300	)		37,800	15
Customer-related backlog		—		2,200			2,200	<1
Developed technology		300		—			300	9
Intangible assets, net	$	77,800	$	(5,800	)	$	72,000

Pro Forma Financial Information

The following unaudited pro forma financial information assumes the acquisition had occurred at the beginning of the earliest period presented that does not include Anlin's actual results for the entire period. The following unaudited pro forma financial information has been prepared by adjusting our historical results to include the results of Anlin adjusted for the following: amortization expense related to the intangible assets arising from the acquisition and interest expense to reflect the refinancing of the 2018 Senior Notes due 2026 and the third amendment of the 2016 Credit Agreement due 2024 into the 2021 Senior Notes due 2029 (the "2021 Senior Notes") and the fourth amendment of the 2016 Credit Agreement due 2024. The unaudited pro forma results below do not necessarily reflect the results of operations that would have resulted had the acquisition been completed at the beginning of the earliest periods presented, nor does it indicate the results of operations in future periods. The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future market conditions which could alter the following unaudited pro forma results.

	Three Months Ended			Nine Months Ended
Pro Forma Results (unaudited)	October 2, 2021			October 2, 2021
(in thousands, except per share amounts)	(unaudited)
Net sales	$	329,613		$	939,395
Net income (loss) attributable to common shareholders	$	(3,326	)	$	18,410
Net income (loss) per common share attributable to common shareholders:
Basic	$	(0.06	)	$	0.31
Diluted	$	(0.06	)	$	0.31

Net sales of Anlin included in the condensed consolidated statement of operations for the three and nine months ended October 1, 2022, was $35.0 million and $106.2 million, respectively. The net income of Anlin in the condensed consolidated statement of operations for the three and nine months ended October 1, 2022, was $4.4 million and $14.6 million, respectively.

CRI SOCAL, INC.

On May 2, 2021, pursuant to an asset purchase agreement dated April 9, 2021, we acquired substantially all of the assets and assumed certain liabilities of CRi SoCal, Inc. (“CRi”), a California corporation doing business in California as Combined Resources (the “CRi Acquisition”). CRi is engaged in the sales, distribution and installation of window and door products, and related design services, to homebuilders in the residential new construction market from its leased facility in Rancho Santa Margarita, California. Until its acquisition by the Company, CRi was a customer of the Company’s western business unit.

The fair value of consideration transferred in the acquisition of CRi totaled $12.5 million, and included $12.1 million in cash, funded from cash on hand, and $0.4 million in accounts receivable owed by CRi to the Company’s western business unit relating to sales prior to the acquisition, which are considered settled as a result of the acquisition. The preliminary estimated fair value of assets acquired and liabilities assumed totaled $17.6 million and $5.1 million, respectively, which included offsetting operating lease right of use assets and operating lease liabilities totaling $2.6 million. The estimated fair value of assets acquired also included current assets totaling $4.1 million, primarily accounts receivable, identifiable intangible assets totaling $7.0 million, goodwill of $3.7 million, all of which we believe is tax deductible, and a small amount of property and equipment. Liabilities assumed included the aforementioned operating lease liability, as well as a total of $2.5 million in trade accounts payable and customer deposits. Valuations of the intangible assets have been estimated using income and royalty relief approaches based on projections, which we consider to be Level 3 inputs, with the assistance of a third-party valuation firm. We believe goodwill in the acquisition relates to the expansion of our footprint in an existing market, in a way that we believe will enhance our long-term profitability in that market of our Western business. Sales and net income from CRi included in the three and nine months ended October 1, 2022 was immaterial.

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ECO WINDOW SYSTEMS

On February 1, 2021, we completed the acquisition of a 75% ownership stake in Eco Enterprises and its related companies, Eco Windows Systems, LLC, Eco Glass Production, LLC, and Unity Windows, LLC (together “Eco”). Eco is a manufacturer and installer of aluminum, impact-resistant windows and doors, serving the South Florida region since 2009. Eco is headquartered in Medley, Florida, near Miami, Florida, and has three manufacturing locations in the region, including a glass processing facility.

The fair value consideration for Eco was $102.0 million, including $94.4 million in cash, after favorable adjustments totaling $5.6 million relating to working capital and customer deposits which were agreed to and settled in the second quarter of 2021, and estimated contingent consideration of $1.5 million recorded in the second quarter of 2022, which was required by the purchase agreement. During the third quarter of 2022, the amount of the contingent consideration was finalized and determined to be $1.9 million, with the difference of $427 thousand classified as selling, general and administrative expense in the three and nine months ended October 1, 2022. The fair value of consideration also included PGT Innovations, Inc. common stock with a then estimated fair value of $6.1 million. The cash portion of the purchase price was financed by a second add-on issuance of $60.0 million aggregate principal amount of 6.75% senior notes to the 2018 Senior Notes due 2026 on January 25, 2021 (the “Additional Senior Notes”), issued at 105.5% of their principal amount, resulting in a premium to us of $3.3 million, together with cash on hand of $31.1 million.

The common stock portion of the purchase price was represented by the issuance of 357,797 shares of PGT Innovations, Inc. common stock on February 1, 2021, with a closing price value of $21.34 per share on that date, or approximately $7.6 million based on that price. However, the seller of Eco, who is also the holder of the 25% redeemable non-controlling interest in Eco Enterprises, is restricted from selling these shares for a three-year period from the date of the acquisition. As such, we estimated that there was an approximately 20% discount for the lack of marketability of the shares. The fair value of the redeemable non-controlling interest in the acquisition has been estimated to be $28.5 million, resulting in total fair value of the Eco business in the acquisition, including the redeemable non-controlling interest, of $130.4 million. The fair value of the redeemable non-controlling interest has been calculated as 25% of the initial estimated fair value of the entity at the acquisition date, less a discount for seller’s lack of control in the new entity, estimated to be 5%, and a discount for the seller’s lack of marketability of the minority stake, estimated to be 10%. See Note 17 for more information regarding the redeemable non-controlling interest.

The estimated fair value of assets acquired, and liabilities assumed as of the closing date of the Eco Acquisition, are as follows:

	Initial Allocation			Adjustments to Allocation			Final Allocation
Accounts receivable	$	5,031		$	(241	)	$	4,790
Inventories		7,728			(684	)		7,044
Contract assets, net		4,312			(123	)		4,189
Prepaid expenses and other assets		1,706			(759	)		947
Property and equipment		24,009			(191	)		23,818
Operating lease right-of-use asset		27,864			(1,049	)		26,815
Intangible assets		72,700			1,600			74,300
Total assets acquired		143,350			(1,447	)		141,903
Accounts payable		(6,809	)		(116	)		(6,925	)
Accrued and other liabilities, including customer deposits		(4,215	)		(604	)		(4,819	)
Operating lease liability		(27,864	)		1,049			(26,815	)
Total liabilities assumed		(38,888	)		329			(38,559	)
Net assets acquired		104,462			(1,118	)		103,344
Redeemable non-controlling interest		(34,084	)		5,620			(28,464	)
Net assets acquired, net of redeemable non-controlling interest		70,378			4,502			74,880
Goodwill		30,051			(2,967	)		27,084
Fair value of consideration transferred	$	100,429		$	1,535		$	101,964
Consideration:
Cash	$	94,321		$	35		$	94,356
PGTI common stock		6,108			—			6,108
Contingent consideration		—			1,500			1,500
Fair value of consideration transferred	$	100,429		$	1,535		$	101,964

- 17 -

The fair value of certain working capital related items, including Eco’s accounts receivable, prepaid and other expenses, and accounts payable and accrued liabilities, approximated their book values at the date of the Eco Acquisition. Subsequent to our initial allocation, we adjusted the fair value of certain acquired commercial receivable accounts based on a further post-acquisition assessment of their collectability. The fair value of inventory was estimated by major category, at net realizable value, which we believe approximates the price a market participant could achieve in a current sale. Substantially all of inventories at the acquisition date was composed of raw materials. The fair value of property and equipment was estimated with the assistance of a third-party valuation firm, using the indirect cost approach, which we consider to be Level 3 in the fair value hierarchy. Valuations of the intangible assets have been estimated using income and royalty relief approaches based on projections, which we consider to be Level 3 inputs, with the assistance of a third-party valuation firm.

We incurred acquisition costs totaling $1.7 million relating to legal expenses, representations and warranties insurance, diligence, accounting and printing services in the Eco Acquisition, which includes $1.0 million in the fourth quarter of 2020, and $0.7 million in first three months of 2021, classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine months ended October 2, 2021.

The remaining consideration, after identified intangible assets and the net assets and liabilities recorded at fair value, has currently been estimated to be $27.1 million, classified as part of the Southeast reporting unit goodwill, which we expect the portion of goodwill relating to our 75% investment to be deductible for tax purposes.

We believe goodwill represents the strengthening of our supply chain for glass through faster glass production, as well as diversification and expansion of product offerings in the high-growth commercial market, and an expansion of our dealer network with minimal overlap with our existing deal network.

Valuation of Identified Intangible Assets in the Eco Acquisition

The valuation of the identifiable intangible assets acquired in the Eco Acquisition and our estimate of their respective useful lives are as follows:

								Initial
	Initial		Adjustment to			Final		Useful Life
	Valuation		Valuation			Valuation		(in years)
(in thousands)
Trade names	$	36,000	$	(1,100	)	$	34,900	indefinite
Customer relationships		36,700		2,700			39,400	5 - 15
Intangible assets, net	$	72,700	$	1,600		$	74,300

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NOTE 7. NET INCOME PER COMMON SHARE

Basic earnings per share (“EPS”) available to PGT Innovations, Inc. common stockholders is computed using the two-class method by dividing net income attributable to common shareholders, after deducting the redemption adjustment related to the redeemable noncontrolling interest, by the average number of common shares outstanding during the period. Diluted EPS available to PGT Innovations, Inc. common stockholders is computed using the two-class method by dividing net income attributable to common shareholders, after deducting the redemption adjustment related to the redeemable noncontrolling interest, by the average number of common shares outstanding, including the dilutive effect of common stock equivalents computed using the treasury stock method and the average share price during the period.

Dilutive shares from equity plans in the three months ended October 2, 2021 was zero, as we had a net loss attributable to common shareholders during this period which, by adding such dilutive shares would have resulted in anti-dilution to net loss per common share. Dilutive shares from equity plans for the three months ended October 2, 2021 would have been 510 thousand shares.

There were no anti-dilutive securities excluded from the calculation of weighted average shares outstanding for the three- or nine-month periods ended October 1, 2022, or October 2, 2021.

The table below presents the calculation of EPS and a reconciliation of weighted average common shares used in the calculation of basic and diluted EPS:

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
	(in thousands, except per share amounts)
Net income (loss)	$	30,414		$	(5,140	)	$	90,705		$	18,368
Less: Net income attributable to RNCI		(373	)		(677	)		(1,334	)		(1,656	)
Net income (loss) attributable to the Company		30,041			(5,817	)		89,371			16,712
Decrease (increase) in redemption value of RNCI		271			(965	)		(1,514	)		(4,528	)
Net income (loss) attributable to common shareholders	$	30,312		$	(6,782	)	$	87,857		$	12,184
Weighted-average number of common shares outstanding - Basic		59,964			59,590			59,908			59,475
Add: Dilutive shares from equity plans		438			—			293			560
Weighted-average number of common shares outstanding - Diluted		60,402			59,590			60,201			60,035
Net income (loss) per common share attributable to common shareholders:
Basic	$	0.51		$	(0.11	)	$	1.47		$	0.20
Diluted	$	0.50		$	(0.11	)	$	1.46		$	0.20

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NOTE 8. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and intangible assets are as follows:

							Initial
	October 1,			January 1,			Useful Life
	2022			2022			(in years)
	(in thousands)
Goodwill	$	370,115		$	364,598		indefinite
Other intangible assets:
Trade names (indefinite-lived)	$	208,441		$	212,141		indefinite
Customer relationships and customer-related assets		286,947			289,047		<1-15
Trade name (amortizable)		22,200			22,200		15
Developed technology		5,900			5,900		6-10
Non-compete agreement		3,338			3,338		2-5
Software license		590			590		2
Less: Accumulated amortization		(158,416	)		(138,691	)
Subtotal		160,559			182,384
Other intangible assets, net	$	369,000		$	394,525
Goodwill at January 1, 2022	$	364,598
Increase in Anlin Acquisition contingent consideration		789
Decrease in Anlin Acquisition trade name		3,700
Decrease in Anlin Acquisition customer relationships		4,300
Increase in Anlin Acquisition customer-related backlog asset		(2,200	)
Final net working capital payment in Anlin Acquisition		786
Estimated contingent consideration in Eco Acquisition		1,500
Decrease in estimated warranty reserve in Anlin Acquisition		(2,537	)
Net other measurement period changes in Anlin Acquisition		(821	)
Goodwill at October 1, 2022	$	370,115
Trade names (indefinite-lived) at January 1, 2022	$	212,141
Decrease in Anlin Acquisition trade name		(3,700	)
Trade names (indefinite-lived) at October 1, 2022	$	208,441

Estimated amortization of our amortizable intangible assets for future years is as follows:

(in thousands)	Total
Remainder of 2022	$	5,162
2023		20,520
2024		20,474
2025		20,299
2026		16,906
Thereafter		77,198
Total	$	160,559

Amortization expense relating to amortizable intangible assets for the three months ended October 1, 2022 and October 2, 2021, was $5.8 million and $5.3 million, respectively. Amortization expense relating to amortizable intangible assets for the nine months ended October 1, 2022 and October 2, 2021, was $19.7 million and $15.2 million, respectively. See Note 6 for discussion of the amortization of the customer-related backlog asset of $2.2 million during the nine-month period ended October 1, 2022.

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We perform our annual goodwill and indefinite-lived intangible asset impairment testing on the first day of our fiscal fourth quarter of each year, and at interim periods if needed based on occurrence of triggering events. During the nine months ended October 1, 2022, we did not identify any events which we believe would trigger the need for tests for impairments of our indefinite-lived intangibles assets. As of October 1, 2022 and January 1, 2022, the carrying value of our Southeast reporting unit goodwill is $228.3 million and $226.8 million, respectively. As of October 1, 2022 and January 1, 2022, the carrying value of our Western reporting unit goodwill is $141.8 million and $137.8 million, respectively. Goodwill of our Southeast reporting unit includes the goodwill relating to Eco. Goodwill of our Western reporting unit includes the goodwill relating to both Anlin and CRi.

NOTE 9. LONG-TERM DEBT

	October 1,			January 1,
	2022			2022
	(in thousands)
2021 Senior Notes due 2029, maturing in October 2029	$	575,000		$	575,000
2016 Credit Agreement due 2024, maturing in October 2024		60,000			60,000
Long-term debt		635,000			635,000
Deferred financing costs		(8,424	)		(9,345	)
Long-term debt, net	$	626,576		$	625,655

2021 Senior Notes due 2029

On September 24, 2021, we completed the issuance of $575.0 million aggregate principal amount of 4.375% senior notes (“2021 Senior Notes”), issued at 100% of their principal amount. The 2021 Senior Notes are jointly and severally and fully and unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future restricted subsidiaries, other than any restricted subsidiary of the Company that does not guarantee the existing senior secured credit facilities or any permitted refinancing thereof. The 2021 Senior Notes are senior unsecured obligations of the Company and the guarantors, respectively, and rank pari passu in right of payment with all existing and future senior debt and senior to all existing and future subordinated debt of the Company and the guarantors. The 2021 Senior Notes were offered under Rule 144A of the Securities Act, and in transactions outside the United States under Regulation S of the Securities Act, and have not been, and will not be, registered under the Securities Act.

The 2021 Senior Notes mature on October 1, 2029. Interest on the 2021 Senior Notes is payable semi-annually, in arrears, beginning on April 1, 2022, with interest accruing at a rate of 4.375% per annum from September 24, 2021. We incurred financing costs relating to bank fees and professional services costs relating to the offering and issuance of the 2021 Senior Notes totaling $8.7 million, which included a 1.25% lender spread on the total principal value of the 2021 Senior Notes, or $7.2 million, and $1.5 million of other costs, all of which are being amortized under the effective interest method. See “Deferred Financing Costs” below.

As of October 1, 2022, the face value of debt outstanding under the 2021 Senior Notes was $575.0 million, and accrued interest was $12.6 million. Proceeds from the 2021 Senior Notes were used, in part, to redeem in full the $425.0 million of 2018 Senior Notes due 2026, including the related fees, costs, and the prepayment call premium of $21.5 million, representing 5.063% of the $425.0 million face value then outstanding, prepay the outstanding term loan borrowings under the 2016 Credit Agreement of $54.0 million and the related fees and costs, and finance the Anlin Acquisition in the fourth quarter of 2021. See Note 6, Acquisitions, for a discussion of the Anlin Acquisition.

The indenture for the 2021 Senior Notes gives us the option to redeem some or all of the 2021 Senior Notes at the redemption prices and on the terms specified in the indenture governing the 2021 Senior Notes. The indenture governing the 2021 Senior Notes does not require us to make any mandatory redemptions or sinking fund payments. However, upon the occurrence of a change of control, as defined in the indenture, the Company is required to offer to repurchase the notes at 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. We also may make optional redemptions at various premiums including a make-whole call at the then current treasury rate plus 50 basis points prior to October 1, 2024, then 102.188% on or after August 1, 2024, 101.094% on or after August 2025, then at 100.000% on or after August 1, 2026.

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The indenture for the 2021 Senior Notes includes certain covenants limiting the ability of the Company and any guarantors to, (i) incur additional indebtedness; (ii) pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments; (iii) enter into agreements that restrict distributions from restricted subsidiaries; (iv) sell or otherwise dispose of assets; (v) enter into transactions with affiliates; (vi) create or incur liens; merge, consolidate or sell all or substantially all of the Company’s assets; (vii) place restrictions on the ability of subsidiaries to pay dividends or make other payments to the Company; and (viii) designate the Company’s subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications.

2016 Credit Agreement due 2024

See Note 18, Subsequent Events, for a discussion of events relating to the 2016 Credit Agreement that occurred after October 1, 2022.

On February 16, 2016, we entered into the 2016 Credit Agreement due 2024, among us, the lending institutions identified in the 2016 Credit Agreement due 2024, and Truist Financial Corporation (formerly known as SunTrust Bank), as Administrative Agent and Collateral Agent. The 2016 Credit Agreement due 2024 establishes senior secured credit facilities in an aggregate amount of $310.0 million, consisting of a $270.0 million Term B term loan facility originally maturing in February 2022 that amortizes on a basis of 1% annually during its six-year term, and a $40.0 million revolving credit facility originally maturing in February 2021 that included a swing line facility and a letter of credit facility. Our obligations under the 2016 Credit Agreement due 2024 are, subject to exceptions, guaranteed by substantially all of our wholly-owned direct and indirect subsidiaries that are restricted subsidiaries and secured by substantially all of our assets as well as our direct and indirect restricted subsidiaries’ assets.

On March 16, 2018, we entered into an amendment of our 2016 Credit Agreement due 2024 (the “Second Amendment”). The Second Amendment, among other things, decreased the applicable interest rate margins for the Initial Term Loans (as defined in the 2016 Credit Agreement due 2024) from (i) 3.75% to 2.50%, in the case of the Base Rate Loans (as defined in the 2016 Credit Agreement due 2024), and (ii) 4.75% to 3.50%, in the case of the Eurodollar Loans (as defined in the 2016 Credit Agreement due 2024). On February 17, 2017, we entered into the first amendment to our 2016 Credit Agreement due 2024, which also resulted in decreases in the applicable margins, but which, unlike the Second Amendment, did not include any changes in lender positions.

On October 31, 2019, we entered into an amendment of our 2016 Credit Agreement due 2024 (“Third Amendment”). The Third Amendment provided for, among other things, (i) a three-year Term A loan in the then aggregate principal amount of $64.0 million (the “Initial Term A Loan”), maturing in October 2022, which refinanced in full our existing Term B term loan facility under the 2016 Credit Agreement, and had no regularly scheduled amortization, and (ii) a new five-year revolving credit facility in an aggregate principal amount of up to $80.0 million (the “Revolving Facility”), maturing in October 2024, which replaced our then existing $40.0 million revolving credit facility under the 2016 Credit Agreement, and includes a swing-line facility and letter of credit facility. Our obligations under the 2016 Credit Agreement continue to be secured by substantially all of our assets, as well as our direct and indirect subsidiaries’ assets, and is senior in position to the 2021 Senior Notes.

On October 25, 2021, we entered into an amendment of our 2016 Credit Agreement ("Fourth Amendment"). The Fourth Amendment provided for, among other things, a three-year Term A loan in the aggregate maximum available amount of $60.0 million (the "Incremental Term A Loan"), proceeds from which were used to fund the Anlin Acquisition. The Fourth Amendment does not change any terms relating to the Revolving Facility, under which we paid quarterly fees on the unused portion of the revolving credit facility equal to a percentage spread (ranging from 0.25% to 0.35%) based on our first lien net leverage ratio. As of October 1, 2022, there were $5.7 million in letters of credit outstanding and $74.3 million available under the Revolving Facility.

The weighted average all-in interest rate for borrowings under the term-loan portion of the 2016 Credit Agreement due 2024 was 5.12% as of October 1, 2022, and was 2.10% at January 1, 2022.

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Deferred Financing Costs

The activity relating to deferred financing costs, composed of third-party fees and costs, and lender fees, for the nine months ended October 1, 2022, are as follows. All deferred financing costs are classified as a reduction of the carrying value of long-term debt:

(in thousands)	Total
At beginning of year	$	9,345
Less: Amortization expense		(921	)
At end of period	$	8,424

Estimated amortization expense relating to deferred financing costs for the years indicated as of October 1, 2022, is as follows:

(in thousands)	Total
Remainder of 2022	$	312
2023		1,282
2024		1,282
2025		1,083
2026		1,114
Thereafter		3,351
Total	$	8,424

We have no scheduled payments of outstanding debt until the contractual maturity of the 2016 Credit Agreement in October 2024. Our contractual future maturities of long-term debt are as follows (at face value):

(in thousands)
Remainder of 2022	$	—
2023		—
2024		60,000
2025		—
2026		—
Thereafter		575,000
Total	$	635,000

NOTE 10. LEASES

We lease certain of our manufacturing facilities under operating leases. We also lease production equipment, vehicles, computer equipment, storage units and office equipment under operating leases. Our leases have remaining lease terms of 1 year to 10 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year. All of our leases are operating leases. We did not recognize right-of-use assets or lease liabilities for certain short-term leases that are month-to-month leases. The lease expense relating to these leases is not significant.

The components of lease expense for the three and nine months ended October 1, 2022 and October 2, 2021, are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2022		2021		2022		2021
Operating lease cost	$	5,101	$	4,213	$	14,941	$	10,990
Short-term lease cost		2,668		2,280		7,488		6,696
Total lease cost	$	7,769	$	6,493	$	22,429	$	17,686

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Other information relating to leases for the three and nine months ended October 1, 2022 and October 2, 2021, are as follows (in thousands, except years and percentages):

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
Supplemental cash flows information
Cash paid for amounts included in the   measurement of lease liabilities:
Operating cash flows relating to   operating leases	$	(4,913	)	$	(3,435	)	$	(14,230	)	$	(9,503	)
Right-of-use assets obtained in exchange   for lease obligations:
Operating leases	$	1,363		$	933		$	13,625		$	47,838
Weighted average remaining lease term in years
Operating leases		6.39			6.39			6.39			6.39
Weighted average discount rate
Operating leases		5.4	%		5.5	%		5.4	%		5.5	%

Future maturities under operating leases were as follows at October 1, 2022 and January 1, 2022 (in thousands):

	October 1,			January 1,
	2022			2022
Remainder of 2022	$	5,005		$	17,929
2023		19,735			17,577
2024		19,140			16,990
2025		17,998			15,987
2026		16,799			15,025
2027		15,847			14,358
Thereafter		22,978			17,891
Total future minimum lease payments		117,502			115,757
Less: Imputed interest		(17,361	)		(18,674	)
Operating lease liability - total	$	100,141		$	97,083
Reported as of October 1, 2022 and January 2, 2021:
Current portion of operating lease liability	$	15,247		$	13,180
Operating lease liability, less current portion		84,894			83,903
Operating lease liability - total	$	100,141		$	97,083

As of October 1, 2022, we had no additional operating or finance leases that have not yet commenced. Our operating leases expire at various times through 2032. Lease expense was $7.8 million for the three months ended October 1, 2022 and was $6.5 million for the three months ended October 2, 2021. Of the $7.8 million for the three months ended October 1, 2022, $4.0 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses. Of the $6.5 million for the three months ended October 2, 2021, $0.5 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses. Lease expense was $22.4 million for the nine months ended October 1, 2022 and was $17.7 million for the nine months ended October 2, 2021. Of the $22.4 million for the nine months ended October 1, 2022, $11.4 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses. Of the $17.7 million for the nine months ended October 2, 2021, $6.9 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses.

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NOTE 11. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Our Company is a party to various legal proceedings in the ordinary course of business. Although the ultimate disposition of those proceedings cannot be predicted with certainty, management believes the outcome of any claim that is pending or threatened, either individually or in the aggregate, will not have a material adverse effect on our operations, financial position or cash flows.

NOTE 12. INCOME TAXES

We had income tax expense of $10.1 million for the three months ended October 1, 2022, compared with income tax benefit of $2.4 million for the three months ended October 2, 2021. Our effective tax rate for the three months ended October 1, 2022, was 24.9%, compared with 31.9% for the three months ended October 2, 2021. Our income tax expense for the three months ended October 1, 2022, and income tax benefit for the three months ended October 2, 2021, includes income tax expenses of $291 thousand and $449 thousand, respectively, relating to our 75% share of the pre-tax earnings of Eco. We had an income tax expense of $29.9 million for the nine months ended October 1, 2022, compared with income tax expense of $4.3 million for the nine months ended October 2, 2021. Our effective tax rate for the nine months ended October 1, 2022, was 24.8%, compared with 18.8% for the nine months ended October 2, 2021. Our income tax expense for the nine months ended October 1, 2022, and October 2, 2021, includes $1.0 million and $1.2 million, respectively, relating to our 75% share of the pre-tax earnings of Eco.

Income tax expense in the three months ended October 1, 2022 includes discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $60 thousand, and from research and development tax credits true-up adjustments, which totaled $472 thousand. The income tax benefit in the three months ended October 2, 2021 included discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards totaling $14 thousand, and other true-up adjustments totaling less than $0.1 million. Income tax expense in the nine months ended October 1, 2022 includes discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $156 thousand, from research and development tax credits true-up adjustments, which totaled $472 thousand, and a refund from the state of Florida, received by the Company in the second quarter of 2022, relating to excess taxes received by the state in 2021, which was $584 thousand, benefiting tax expense by $462 thousand, net of its Federal tax effect. Income tax expense in the nine months ended October 2, 2021 include discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $714 thousand. Excluding discrete items of income tax, the effective tax rates for the three months ended October 1, 2022 and October 2, 2021, would have been an income tax expense rate of 26.2% and an income tax benefit rate of 30.8%, respectively. Excluding discrete items of income tax, the effective tax rates for the nine months ended October 1, 2022 and October 2, 2021, would have been income tax expense rates of 25.7% and 21.9%, respectively.

In September 2021, the state of Florida announced that the corporate income tax rate for the 2021 tax year was being lowered from its then current level of 4.458% to 3.535%. However, for 2022, Florida's corporate income tax rate returned to its statutory level before the passage of the Tax Cuts and Jobs Act, which is 5.5%. As such, we adjusted our annual effective tax rate for 2022 to include this increase in rate in Florida, where a substantial portion of our business is apportioned, to an estimated combined statutory federal and state rate of 25.7%, from our estimate in 2021 of 24.2%. During the first nine months of 2022, we made payments of estimated taxes totaling $21.7 million, which included $20.8 million in Federal estimated income taxes with the remainder to various states, primarily Florida. During the first nine months of 2021, we made payments of estimated taxes totaling $12.4 million, which included $8.3 million in Federal estimated income taxes with the remainder to various states, primarily Florida. As a result of Hurricane Ian, a large and destructive Category 4 Atlantic hurricane, which made landfall on the southwest Florida coastline at Cayo Costa on September 28, 2022, the U.S. Internal Revenue Service and the state of Florida have both extended their deadlines for payment of the fourth quarter 2022 estimated tax payment, originally due December 15, 2022, to February 15, 2023.

NOTE 13. FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A three-tier fair value hierarchy is used to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The three levels of the fair value hierarchy are as follows:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

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The accounting guidance concerning fair value allows us to elect to measure financial instruments at fair value and report the changes in fair value through earnings. This election can only be made at certain specified dates and is irrevocable once made. We do not have a policy regarding specific assets or liabilities to elect to measure at fair value, but rather we make the election on an instrument-by-instrument basis as they are acquired or incurred.

During the three or nine months ended October 1, 2022 or October 2, 2021, we did not make any transfers between Level 2 and Level 3 financial assets. We conduct reviews on a quarterly basis to verify pricing, assess liquidity, and determine if significant inputs have changed that would impact the fair value hierarchy disclosure.

Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, accounts and notes receivable, and accounts payable and accrued liabilities, whose carrying amounts approximate their fair values due to their short-term nature. Our financial instruments also include borrowings under the 2016 Credit Agreement, as well as the 2021 Senior Notes, all classified as long-term debt. The fair value of borrowings under the 2016 Credit Agreement due 2024 approximated its carrying value due to its variable-rate nature, and was approximately $60.0 million as of October 1, 2022, and January 1, 2022, compared to a principal outstanding value of $60.0 million at those dates, respectively. The fair value of the 2021 Senior Notes is based on debt with similar terms and characteristics and was approximately $475.8 million as of October 1, 2022, compared to a principal outstanding value of $575.0 million, and the fair value was approximately $578.2 million as of January 1, 2022, compared to a principal outstanding value of $575.0 million.

Items Measured at Fair Value

The following are measured in the condensed consolidated financial statements at fair value on a recurring basis and are categorized in the table below based upon the lowest level of significant input to the valuation (in thousands):

	Fair Value Measurements
	Assets (Liabilities)
				Quoted		Significant
				Prices in		Other			Significant
				Active		Observable			Unobservable
				Markets		Inputs			Inputs
October 1, 2022	Total			(Level 1)		(Level 2)			(Level 3)
Description
Aluminum contracts	$	(4,001	)	$	—	$	(4,001	)	$	—
MTP contracts		598			—		598			—
	$	(3,403	)	$	—	$	(3,403	)	$	—

	Fair Value Measurements
	Assets (Liabilities)
			Quoted		Significant
			Prices in		Other		Significant
			Active		Observable		Unobservable
			Markets		Inputs		Inputs
January 1, 2022	Total		(Level 1)		(Level 2)		(Level 3)
Description
Aluminum contracts	$	4,829	$	—	$	4,829	$	—
MTP contracts		4,599		—		4,599		—
	$	9,428	$	—	$	9,428	$	—

See Note 14 for a description of the methods and assumptions used in the determination of the fair values of our aluminum forward and Midwest Transaction Premium (“MTP”) contracts, as well as the basis for classifying these assets and liabilities as Level 2.

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NOTE 14. DERIVATIVES

Aluminum Contracts and Midwest Transaction Premium

We enter into aluminum forward contracts to hedge the fluctuations in the purchase price of aluminum extrusion we use in production, and to hedge the fluctuations in the price of the delivery component of our aluminum extrusion purchases, known as the Midwest Transaction Premium, or MTP. Our contracts are designated as cash flow hedges since they are highly effective in offsetting changes in the cash flows attributable to forecasted purchases of aluminum and the related MTP.

We record our aluminum hedge contracts at fair value, based on trading values for aluminum forward contracts. Aluminum forward contracts identical to those held by us trade on the London Metal Exchange (“LME”). The LME provides a transparent forum and is the world’s largest center for the trading of futures contracts for non-ferrous metals. The prices are used by the metals industry worldwide as the basis for contracts for the movement of physical material throughout the production cycle. Based on this high degree of volume and liquidity in the LME, we believe the valuation price at any measurement date for contracts with identical terms as to prompt date, trade date and trade price as those we hold at any time represents a contract’s exit price to be used for purposes of determining fair value.

We record our MTP hedge contracts at fair value, based on the Platts MW US Transaction price per pound assessment, which has been a benchmark for decades in the North American aluminum industry. Platts surveys the North American market daily to capture trades, bids and offers on a delivered Midwest basis. Data is normalized to reflect the typical price per pound between the largest number of market participants, for delivery within 7 to 30 days from date of publication, net-30-day payment terms, for typical order quantities, chemistries and freight allowances. The survey is extensive and encompasses both domestic and offshore producers, traders and brokers that are varied in scope. Based on the extensive nature of this pricing mechanism, we believe the Platts MW US Transaction price at any time represents a contract’s exit price to be used for purposes of determining fair value.

Guidance under the Financial Instruments Topic 825 of the Codification requires us to record our hedge contracts at fair value and consider our credit risk for contracts in a liability position, and our counter-party’s credit risk for contracts in an asset position, in determining fair value. We assess our counter-party’s risk of non-performance when measuring the fair value of financial instruments in an asset position by evaluating their financial position, including cash on hand, as well as their credit ratings. We assess our risk of non-performance when measuring the fair value of our financial instruments in a liability position by evaluating our credit ratings, our current liquidity including cash on hand and availability under our revolving credit facility as compared to the maturities of the financial liabilities. We do not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting arrangement.

At October 1, 2022, the fair value of our aluminum forward contracts was in a liability position of $4.0 million. We had 8 outstanding forward contracts for the purchase of 11.5 million pounds of aluminum through December 2022, at an average price of $1.33 per pound, which excludes the Midwest premium, with maturity dates of between one and three months. At October 1, 2022, the fair value of our MTP contracts was in an asset position of $0.6 million. We had 2 outstanding MTP contracts to hedge the Platt US MW Transaction price per pound for the delivery of 5.3 million pounds of aluminum through December 2022, at an average price of $0.11 per pound, with maturity dates of between one and three months. We assessed the risk of non-performance of the Company and our counterparty to these contracts, as applicable, and determined it was immaterial and, therefore, did not record any adjustment to their fair values as of October 1, 2022.

We assess the effectiveness of our aluminum forward and MTP contracts by comparing the change in the fair value of the forward contract to the change in the expected cash to be paid for the hedged item. The effective portion of the gain or loss on our aluminum forward contracts is reported as a component of accumulated other comprehensive income (loss) and is reclassified into earnings in the same line item in the income statement as the hedged item in the same period or periods during which the transaction affects earnings. We expect the amount of accumulated other comprehensive loss of approximately $3.4 million in the accompanying condensed consolidated balance sheet as of October 1, 2022, to be reclassified to earnings within the next twelve months.

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The fair values of our aluminum hedges and MTP contracts are classified in the accompanying condensed consolidated balance sheets at October 1, 2022 and January 1, 2022, as follows (in thousands):

	Derivative Assets			Derivative Liabilities
	October 1, 2022			October 1, 2022
Derivatives designated as hedging
instruments under Subtopic 815-20:	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivative instruments:
Aluminum contracts	Other current assets	$	—	Accrued liabilities	$	(4,001	)
MTP contracts	Other current assets		598	Accrued liabilities		—
Aluminum contracts	Other assets		—	Other liabilities		—
MTP contracts	Other assets		—	Other liabilities		—
Total derivative instruments	Total derivative assets	$	598	Total derivative liabilities	$	(4,001	)
	Derivative Assets			Derivative Liabilities
	January 1, 2022			January 1, 2022
Derivatives designated as hedging
instruments under Subtopic 815-20:	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivative instruments:
Aluminum contracts	Other current assets	$	4,829	Accrued liabilities	$	—
MTP contracts	Other current assets		4,599	Accrued liabilities		—
Aluminum contracts	Other assets		—	Other liabilities		—
MTP contracts	Other assets		—	Other liabilities		—
Total derivative instruments	Total derivative assets	$	9,428	Total derivative liabilities	$	—

The ending accumulated balance for the aluminum forward and MTP contracts included in accumulated other comprehensive income (losses), net of tax, was an accumulated other comprehensive loss of $2.5 million as of October 1, 2022, and was an accumulated other comprehensive income of $7.0 million at January 1, 2022. The income tax effects of accumulated comprehensive income (losses) are released as amounts are reclassified out of accumulated comprehensive income (losses) at the income tax rate used at the time those income tax effects were provided, which generally represents our blended statutory income tax rate.

The following represents the gains (losses) on derivative financial instruments, and their classifications within the accompanying condensed consolidated financial statements, for the three and nine months ended October 1, 2022 and October 2, 2021 (in thousands):

	Derivatives in Cash Flow Hedging Relationships
	Amount of Gain or (Loss) Recognized in OCI(L) on Derivatives					Location of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income
	Three Months Ended						Three Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
Aluminum contracts	$	(2,012	)	$	4,194	Cost of sales	$	(3,185	)	$	4,271
MTP contracts	$	(621	)	$	2,355	Cost of sales	$	769		$	2,425
	Derivatives in Cash Flow Hedging Relationships
	Amount of Gain or (Loss) Recognized in OCI(L) on Derivatives					Location of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income
	Nine Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
Aluminum contracts	$	(9,427	)	$	13,385	Cost of sales	$	(597	)	$	8,423
MTP contracts	$	(60	)	$	10,525	Cost of sales	$	3,941		$	4,181

We classify cash flows related to derivative instruments as operating activities in the condensed consolidated statements of cash flows.

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NOTE 15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table shows the components of accumulated other comprehensive income (loss) for the three and nine months ended October 1, 2022 and October 2, 2021 (in thousands):

Three months ended October 1, 2022	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at July 2, 2022	$	(3,846	)	$	1,478		$	(2,368	)
Increase (decrease) in fair value of derivatives		(2,012	)		(621	)		(2,633	)
Amounts reclassified from accumulated other comprehensive income (loss)		3,185			(769	)		2,416
Tax effect		(279	)		335			56
Net current-period other comprehensive loss		894			(1,055	)		(161	)
Balance at October 1, 2022	$	(2,952	)	$	423		$	(2,529	)
Nine months ended October 1, 2022	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at January 1, 2022	$	3,610		$	3,396		$	7,006
Increase (decrease) in fair value of derivatives		(9,427	)		(60	)		(9,487	)
Amounts reclassified from accumulated other comprehensive income		597			(3,941	)		(3,344	)
Tax effect		2,268			1,028			3,296
Net current-period other comprehensive loss		(6,562	)		(2,973	)		(9,535	)
Balance at October 1, 2022	$	(2,952	)	$	423		$	(2,529	)

Three months ended October 2, 2021	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at July 3, 2021	$	6,191		$	5,139		$	11,330
Increase in fair value of derivatives		4,194			2,355			6,549
Amounts reclassified from accumulated other comprehensive income		(4,271	)		(2,425	)		(6,696	)
Tax effect		20			17			37
Net current-period other comprehensive loss		(57	)		(53	)		(110	)
Balance at October 2, 2021	$	6,134		$	5,086		$	11,220
Nine months ended October 2, 2021	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at January 2, 2021	$	2,403		$	317		$	2,720
Increase in fair value of derivatives		13,385			10,525			23,910
Amounts reclassified from accumulated other comprehensive income		(8,423	)		(4,181	)		(12,604	)
Tax effect		(1,231	)		(1,575	)		(2,806	)
Net current-period other comprehensive income		3,731			4,769			8,500
Balance at October 2, 2021	$	6,134		$	5,086		$	11,220

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NOTE 16. SEGMENTS

We have two reportable segments: the Southeast segment, and the Western segment.

The Southeast reporting segment, which is also an operating segment, is composed of sales from our facilities in Florida. The Western reporting segment, also an operating segment, is composed of sales from our facilities in Arizona and California.

Centralized financial and operational oversight, including resource allocation and assessment of performance on an income from operations basis, is performed by our CEO, whom we have determined to be our chief operating decision maker (“CODM”), with oversight by the Board of Directors.

The following table represents summary financial data attributable to our operating segments for the three and nine months ended October 1, 2022, and October 2, 2021. Results of the Southeast segment for the three and nine months ended October 1, 2022 includes the results of Eco for the entire three- and nine-month periods, whereas for the three and nine months ended October 2, 2021, the three months ended October 2, 2021 includes the results of Eco for the entire three-month period, but the nine months ended October 2, 2021 includes only its post-acquisition period from February 1, 2021. Results of the Western segment for the three and nine months ended October 1, 2022 includes the results of CRi, acquired May 1, 2021, and Anlin, acquired October 25, 2021. Results of the Western segment for the three and nine months ended October 2, 2021, includes CRi's results for the post acquisition period from May 1, 2021, and no results from Anlin. Corporate overhead has been allocated to each segment using an allocation method we believe is reasonable (in thousands):

	Three Months Ended					Nine Months Ended
	October 1,		October 2,			October 1,		October 2,
	2022		2021			2022		2021
Net sales:
Southeast segment	$	288,246	$	255,170		$	867,505	$	731,257
Western segment		97,591		45,261			283,515		125,766
Total net sales	$	385,837	$	300,431		$	1,151,020	$	857,023
Income from operations:
Southeast segment	$	30,037	$	20,713		$	96,607	$	54,977
Western segment		17,366		4,895			45,132		16,091
Total income from operations		47,403		25,608			141,739		71,068
Interest expense, net		6,889		7,686			21,124		22,968
Debt extinguishment costs		—		25,472			—		25,472
Total income (loss) before income taxes	$	40,514	$	(7,550	)	$	120,615	$	22,628

Depreciation expense for the three months ended October 1, 2022 and October 2, 2021, was $6.7 million and $7.0 million for our Southeast segment, respectively, and $1.6 million and $0.9 million for our Western segment, respectively. Depreciation expense for the nine-months ended October 1, 2022 and October 2, 2021, was $20.6 million and $19.7 million for our Southeast segment, respectively, and $4.7 million and $2.6 million for our Western segment, respectively. Amortization expense for the three months ended October 1, 2022 and October 2, 2021, was $2.7 million, and $2.7 million for our Southeast segment, respectively, and $3.1 million and $2.6 million for our Western segment, respectively. Amortization expense for the nine months ended October 1, 2022 and October 2, 2021, was $8.1 million, and $7.9 million for our Southeast segment, respectively, and $11.6 million and $7.3 million for our Western segment, respectively.

Total assets of our Southeast segment as of October 1, 2022 and January 1, 2022 were $995.3 million and $911.3 million, respectively. Total assets of our Western segment as of October 1, 2022 and January 1, 2022 were $607.3 million and $549.3 million, respectively.

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NOTE 17. REEDEMABLE NON-CONTROLLING INTEREST

On February 1, 2021, we completed an acquisition of a 75% ownership stake in Eco. The seller of Eco obtained the remaining equity interest in the newly formed company, Eco Enterprises. The seller’s redeemable non-controlling interest ("RNCI") was initially established at fair value.

The agreement between PGT Innovations, Inc. and the seller provides the Company with a call right for seller’s equity interest in the third year following the acquisition date. If the Company does not exercise its right to call by the third anniversary, the agreement provides the seller with a put right which can be exercised during the 15-day period following the third anniversary. Upon exercise of the put or call right, the purchase price is calculated based on a future agreed performance metric. The put option makes the non-controlling interest redeemable and, therefore, the redeemable non-controlling interest is classified as temporary equity outside of shareholders’ equity.

The Company calculates the estimated future redemption value of the non-controlling interest on a quarterly basis. The redeemable non-controlling interest is accreted to the future redemption value using the effective interest method up to the date on which the put-right becomes effective. Any accretion adjustment in the current reporting period of the redeemable non-controlling interest is offset against retained earnings and impacts earnings used in the calculation of earnings per share attributable to common shareholders in the reporting period. Based on the formula in the operating agreement governing this transaction, the future redemption value of the redeemable non-controlling interest was estimated to be $47.5 million, which we accreted to $39.7 million as of October 1, 2022.

The following table presents the changes in the Company’s redeemable non-controlling interest for the period presented:

	Nine Months Ended
	October 1,		October 2,
(in thousands)	2022		2021
Balance at beginning of period	$	36,863	$	—
RNCI in Eco at initially estimated fair value		—		28,464
Net income attributable to redeemable non-controlling interest		1,334		1,656
Change in value of redeemable non-controlling interest		1,514		4,528
Balance at end of period	$	39,711	$	34,648

NOTE 18. SUBSEQUENT EVENTS

Acquisition and Refinancing

On October 14, 2022, pursuant to a Share Purchase Agreement ("SPA"), WWS Acquisition LLC (“Buyer”), a Missouri limited liability company and indirect wholly owned subsidiary of the Company, completed the acquisition ("Martin Acquisition") of all of the issued and outstanding shares of capital of Martin Door Holdings Inc., a Utah corporation (“Seller” or "Martin") headquartered in Salt Lake City, and manufacturer of premium overhead garage doors and hardware serving the Western U.S. residential and commercial markets.

The total fair value of consideration transferred at closing for the Martin Acquisition, was approximately $187.8 million, subject to certain adjustments as set forth in the SPA, which included an enterprise value of $185.0 million, and a payment of approximately $2.8 million for estimated net working capital in excess of target net working capital. The purchase price is subject to a post-closing true-up mechanism as set forth in the SPA, which is expected to be determined within ninety days from the date of the closing of the Martin Acquisition. Martin's assets include those typical to the operation of the business including accounts receivable, inventories, property and equipment, as well as intangibles assets which we expect will include one or more Martin trade names, customer relationships, developed technology, and possibly other yet to be identified intangible assets. We expect to engage a third-party valuation firm to assist with the valuation of such assets.

On October 13, 2022, the Company entered into an amendment of the 2016 Credit Agreement (the “Fifth Amendment”). The Fifth Amendment provides for, among other things, a new five-year revolving credit facility in an aggregate principal amount of $250.0 million (the “New Revolving Credit Facility”). The New Revolving Credit Facility refinances and replaces the previously existing $80.0 million revolving credit facility under the 2016 Credit Agreement. The Company’s obligations under the 2016 Credit Agreement continue to be secured by substantially all of its and its direct and indirect subsidiaries’ assets.

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Interest on borrowings under the New Revolving Credit Facility is payable either quarterly or at the expiration of any Secured Overnight Financing Rate ("SOFR") interest period applicable thereto. Borrowings under the New Revolving Credit Facility accrue interest at a rate equal to, at our option, a base rate (with a floor of 100 basis points) plus a percentage spread (ranging from 0.75% to 1.75%) based on our first lien net leverage ratio or SOFR (with a floor of 0 basis points) plus a percentage spread (ranging from 1.75% to 2.75%) based on our first lien net leverage ratio. After giving effect to the Fifth Amendment, we will pay quarterly fees on the unused portion of the New Revolving Credit Facility equal to a percentage spread (ranging from 0.25% to 0.35%) based on our first lien net leverage ratio. The Fifth Amendment also modifies the financial covenant under the 2016 Credit Agreement such that it will be tested on a quarterly basis, commencing with the fiscal quarter ending December 31, 2022.

The Martin Acquisition was financed with the $250.0 million available under the New Revolving Credit Facility provided by the Fifth Amendment of our 2016 Credit Agreement, under which we drew $160.0 million on October 14, 2022, the proceeds of which were used to pay $98.4 million of the $187.8 million total fair value of consideration transferred, and to pay $61.6 million to prepay our $60.0 million Term A Loan under the Fourth Amendment of our 2016 Credit Agreement, plus $1.6 million in fees, costs and accrued interest. The remainder of the total fair value of consideration transferred totaling $89.4 million was funded with cash and cash equivalents on hand previously generated through operations. We also paid buyer fees and costs relating to the Martin Acquisition, which we are analyzing for proper accounting treatment. We accrued an estimated $1.25 million of acquisition-related expenses in the three months ended October 1, 2022 for services received prior to the closing of the Martin Acquisition, classified as selling, general and administrative expenses in the accompanying condensed consolidated statements of operations for the three and nine months ended October 1, 2022.

Cyberattack

On November 5, 2022, the Company detected a ransomware infection that impacted portions of its network and caused disruption to daily business operations. Immediately, upon discovery, the Company engaged outside cybersecurity experts familiar with these types of incidents to conduct a forensic investigation and assess the extent and scope of the incident. As of the date of the filing of this Quarterly Report on Form 10-Q, the investigation is in its early stages and ongoing. To date, there is no evidence of personal information being accessed or acquired.

Security is a top priority for the Company, and the Company continues to work to take a series of measures to safeguard the integrity of its information technology systems. Upon detecting the security event, the Company took immediate steps designed to contain the incident and implement its business continuity plans to restore and support continued operations. The Company has notified appropriate law enforcement authorities.

The Company is also working closely with cybersecurity experts and legal counsel. The Company is in the early stages of its investigation and assessment of the security event and cannot determine, at this time, the extent of the impact from such event on its business, results of operations or financial condition or whether such impact will have a material adverse effect. The Company carries insurance, including cyber insurance, commensurate with the size and the nature of its operations. Further, while the Company is communicating with its customers regarding this disruption, it cannot guarantee that its customer relationships will not be harmed as a result of this event. In addition to these risks and other information set forth in this report, one should carefully consider the discussion on the other risks and uncertainties that cybersecurity incidents may have on us, contained in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K/A for the year ended January 1, 2022.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations and quantitative and qualitative disclosures should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and with our audited consolidated financial statements included in our Annual Report on Form 10-K/A for the year ended January 1, 2022, as filed with the Securities and Exchange Commission. Management's Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements that reflect our plans, estimates, and beliefs, all of which are based on our current expectations and could be affected by certain uncertainties, risks, and other factors described under Cautionary Note Regarding Forward-Looking Statements and elsewhere throughout this Quarterly Report, as well as the factors described in our Annual Report on Form 10-K/A for the year ended January 1, 2022, and subsequent periodic reports filed with the Securities and Exchange Commission, particularly under "Risk Factors." Our actual results could differ materially from those discussed in the forward-looking statements.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “assume,” “believe,” “could,” “estimate,” “guidance,” “may,” “outlook,” “forecast,” “intend,” “could,” “project,” “estimate,” “anticipate,” “should,” “plan,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our acquisitions of Anlin Windows & Doors ("Anlin"), and Martin Door Holdings, Inc. ("Martin"); pricing actions benefiting margins; effects of Hurricane Ian and other economic headwinds such as increasing interest rates and rising inflation; improvement of our operations and business integration; and our net sales guidance.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

•the impact of the COVID-19 pandemic (the "COVID-19 pandemic" or "Pandemic") and related measures taken by governmental or regulatory authorities to combat the Pandemic, including the impact of the Pandemic and these measures on the economies and demand for our products in the states where we sell them, and on our customers, suppliers, labor force, business, operations and financial performance;

•unpredictable weather and macroeconomic factors that may negatively impact the repair and remodel and new construction markets and the construction industry generally, especially in the state of Florida and the western United States, where the substantial portion of our sales are currently generated, and in the U.S. generally;

•changes in raw material prices, especially for aluminum, glass and vinyl, including price increases due to the implementation of tariffs and other trade-related restrictions, Pandemic-related supply chain interruptions, or supply-chain interruptions from the conflict in Ukraine;

•our dependence on a limited number of suppliers for certain of our key materials;

•our dependence on our impact-resistant product lines, which increased with the Eco Acquisition, and contemporary indoor/outdoor window and door systems, and on consumer preferences for those types and styles of products;

•the effects of increased expenses or unanticipated liabilities incurred as a result of, or due to activities related to, our recent acquisitions, including our acquisitions of Martin, Anlin and Eco;

•our level of indebtedness, which increased in connection with our recent acquisitions, including our acquisitions of Martin, Anlin and Eco;

•increases in credit losses from obligations owed to us by our customers in the event of a downturn in the home repair and remodel or new home construction channels in our core markets and our inability to collect such obligations from such customers;

•the risks that the anticipated cost savings, synergies, revenue enhancement strategies and other benefits expected from our acquisitions of Martin, Anlin, and Eco, may not be fully realized or may take longer to realize than expected or that our actual integration costs may exceed our estimates;

•increases in transportation costs, including increases in fuel prices;

•our dependence on our limited number of geographically concentrated manufacturing facilities, which increased further due to our acquisition of Eco;

•sales fluctuations to and changes in our relationships with key customers;

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•federal, state and local laws and regulations, including unfavorable changes in local building codes and environmental and energy code regulations;

•risks associated with our information technology systems, including cybersecurity-related risks, such as unauthorized intrusions into our systems by “hackers” and theft of data and information from our systems, and the risks that our information technology systems do not function as intended or experience temporary or long-term failures to perform as intended;

•product liability and warranty claims brought against us;

•in addition to our acquisitions of Martin, Anlin, and Eco, our ability to successfully integrate businesses we may acquire in the future, or that any business we acquire may not perform as we expected at the time we acquire it; and

•the other risks and uncertainties discussed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K/A for the year ended January 1, 2022 and our other filings with the Securities and Exchange Commission.

Any forward-looking statement made by us in this Quarterly Report on Form 10-Q is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

EXECUTIVE OVERVIEW

Hurricane Ian

Hurricane Ian, a large and destructive Category 4 Atlantic hurricane, made landfall on the southwest Florida coastline at Cayo Costa on September 28, 2022, moving slowly to the northeast across the entire state causing widespread damage to property from high winds and severe flooding. Three of PGT’s manufacturing facilities and many of our team were directly in the path of Hurricane Ian. Even though the Company’s manufacturing facilities did not sustain any meaningful damage from the storm, many of our team members live in the areas that were hardest hit.

We closed our west Florida facilities on Tuesday, September 27th, and did not open them until Monday, October 3rd. Our facilities did not sustain any significant physical damage, but disruption caused by the storm resulted in us having limited ability to produce at our facilities as our team members could not safely travel to work due to road closures caused by subsequent flooding and downed trees and power lines. Hurricane Ian caused disruption to our ability to manufacture and distribute our products as our team members were unable to safely travel to our impacted facilities. Production in the first week after Ian was only a single shift with lower than usual productivity caused by using makeshift labor teams for our various production lines. Also, Hurricane Ian affected our customers’ ability to accept deliveries of our products. We estimate that storm-related disruptions caused approximately $12.0 million of third-quarter 2022 sales to be deferred. In addition to the impact to profits from lost sales, we incurred disruption and recovery costs as a result of the storm totaling $1.8 million in the three and nine months ended October 1, 2022, of which $1.1 million is classified as cost of sales, and $0.7 million is classified as selling, general and administrative expenses in the accompanying condensed consolidated statements of operations for the three and nine months ended October 1, 2022.

As we continued through the month of October, we were able to increase the number of shifts and gradually improve on our productivity from the first week of the month, and are just now reaching productivity levels that we were delivering before the storm. As we work through the remainder of the fourth quarter, we will be taking further actions that should allow us to get back to more reasonable productivity levels.

While we will continue to address the challenges presented by the hurricane, we may also be impacted by the current macro-economic environment, which includes rising interest rates, a slowdown in new home sales, inflationary conditions in building products, and the looming threat of a recession. These conditions have resulted in a high degree of uncertainty facing the U.S. economy. After Hurricane Irma in September 2017, we saw an increase in demand for our impact products as the effects of the storm resulted in our products being viewed with a high degree of favorable sentiment. While it is too early to forecast any increase in demand as a result of Hurricane Ian, we would expect the benefit of any increase in demand to assist with offsetting potential softening from a slowdown in the economy.

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Sales and Operations

During the third quarter of 2022, we grew at both our Southeast and Western segments, as the momentum of growth we experienced last year continues in 2022. Additionally, we continue to make strategic marketing investments which are paying dividends through customer awareness during the repair and remodeling season. Of our total net sales for the third quarter of 2022 of $385.8 million, which increased 28.4% compared to $300.4 million in the third quarter of 2021, and which included organic sales growth of 16.8%. Sales growth at our Southeast segment was entirely organic, while sales growth at our Western segment was both organic and from acquisitions.

Our Southeast segment's net sales were $288.2 million in the third quarter of 2022, compared to $255.1 million in the third quarter of 2021, an increase of $33.1 million, or 13.0%. We believe some of this organic growth is being driven by gaining market share as the changing market dynamics in our largest market of Florida has led one of our larger competitors in our southeast region to discontinue its aluminum product line, allowing us to pick up market share. Our NewSouth brand continues to perform well, and is benefitting from organic growth in our main market of Florida, but also the expansion of our direct-to-consumer footprint in markets outside of Florida as we are in various stages of adding new retail locations to our existing list of stores.

As discussed above, although Hurricane Ian negatively impacted our third quarter of 2022, and may also negatively impact our fourth quarter of 2022, one of the biggest events that occurred recently was the passage of Florida House Bill 7071, signed into law in May 2022. This bill provides two-year tax relief to Florida residences who choose to "harden" their homes against the damaging effects of storms by investing in impact-resistant windows, doors, and other product categories. We're excited about this great benefit for Florida homeowners which we believe will provide them with the incentive needed to improve the safety and value of their homes, and that their materials of choice will include impact-resistant windows and doors from our Company's portfolio of Florida impact-resistant brands. Going forward, we believe our Florida operations will benefit from this home-hardening legislation. The main highlight of the bill includes a sales tax exemption for Floridians that harden their homes against natural disasters using impact-resistant products like those sold by the Company, which is available through June 2024.

Our Western segment's net sales were $97.6 million in the third quarter of 2022, compared to $45.3 million in the third quarter of 2021, an increase of $52.3 million, or 115.6%. While sales for the third quarter of 2022 of our Western segment includes acquisition growth from Anlin, our existing business grew organically by 38.3% compared to the third quarter of last year. We believe the strength in our Western segment is due to our production builder business as this sector has performed well for several quarters, as we believe that demand for conversion to indoor/outdoor living continues to be strong. We believe we are also benefitting from our capacity expansion in the Phoenix, Arizona area and our new San Diego showroom in Southern California. We believe the organic growth we had in the third of 2022 reflects the strength of our portfolio of brands across our entire geographic footprint.

Our gross profit increased to $149.8 million in the third quarter of 2022, producing a gross margin of 38.8%, compared to $104.2 million in the 2021 third quarter, and a gross margin of 34.7%, an improvement in gross margin of 410 basis points from the third quarter of 2021 to the third quarter of 2022. Additionally, cash from operations during the first nine months of 2022 was $152.1 million, compared to $19.8 million in the first nine months of 2021, an increase in cash from operations of $132.3 million, or 669.7%. We were able to produce this operational and cash generation improvement, despite headwinds of inflationary pressure being felt on material and labor costs. We also benefitted from price increases implemented earlier in the year to offset such inflationary headwinds. During the 2022 third quarter, we continued to focus on improving our manufacturing processes in order to reduce lead-times to meet the continued growing demand. Prior to Hurricane Ian, during the third quarter of 2022, we were able to reduce our average lead times by 40% to 50% in our primary brands compared to the third quarter of last year. Recent investments in our team to help achieve higher talent levels have also helped generate improved operational efficiencies across our entire portfolio of brands. We believe the combination of improved operational performance we achieved prior to Hurricane Ian, reduced lead times and previously implemented price increases will continue to benefit our gross margin through the balance of 2022.

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Performance Summary

The following table presents financial data derived from our unaudited condensed consolidated statements of operations as a percentage of total net sales for the periods indicated. The three- and nine-month periods ended October 1, 2022 and October 2, 2021 are composed of 13 weeks and 39 weeks, respectively (in thousands, except percentages):

	Three Months Ended
	October 1, 2022				October 2, 2021
	(unaudited)
Net sales	$	385,837		100.0 %	$	300,431		100.0 %
Cost of sales		236,035		61.2 %		196,228		65.3 %
Gross profit		149,802		38.8 %		104,203		34.7 %
Selling, general and administrative expenses		102,399		26.5 %		78,595		26.2 %
Income from operations		47,403		12.3 %		25,608		8.5 %
Interest expense, net		6,889		1.8 %		7,686		2.6 %
Debt extinguishment costs		—		-		25,472		8.5 %
Income (loss) before income taxes		40,514		10.5 %		(7,550	)	(2.5)%
Income tax expense (benefit)		10,100		2.6 %		(2,410	)	(0.8)%
Net income (loss)		30,414		7.9 %		(5,140	)	(1.7)%
Less: Net income attributable to redeemable RNCI		(373	)	(0.1)%		(677	)	(0.2)%
Net income (loss) attributable to the Company		30,041		7.8 %		(5,817	)	(1.9)%
Decrease (increase) in redemption value of RNCI		271		0.1 %		(965	)	(0.3)%
Net income (loss) attributable to common shareholders	$	30,312		7.9 %	$	(6,782	)	(2.3)%

	Nine Months Ended
	October 1, 2022				October 2, 2021
	(unaudited)
Net sales	$	1,151,020		100.0 %	$	857,023		100.0 %
Cost of sales		701,495		60.9 %		561,849		65.6 %
Gross profit		449,525		39.1 %		295,174		34.4 %
Selling, general and administrative expenses		307,786		26.7 %		224,106		26.1 %
Income from operations		141,739		12.3 %		71,068		8.3 %
Interest expense, net		21,124		1.8 %		22,968		2.7 %
Debt extinguishment costs		—		-		25,472		3.0 %
Income before income taxes		120,615		10.5 %		22,628		2.6 %
Income tax expense		29,910		2.6 %		4,260		0.5 %
Net income		90,705		7.9 %		18,368		2.1 %
Less: Net income attributable to redeemable RNCI		(1,334	)	(0.1)%		(1,656	)	(0.2)%
Net income attributable to the Company		89,371		7.8 %		16,712		2.0 %
Decrease in redemption value of RNCI		(1,514	)	(0.1)%		(4,528	)	(0.5)%
Net income attributable to common shareholders	$	87,857		7.6 %	$	12,184		1.4 %

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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED OCTOBER 1, 2022 AND OCTOBER 2, 2021

The three-month periods ended October 1, 2022 and October 2, 2021 are each composed of 13 weeks.

Net sales

	Three Months Ended
	October 1, 2022			October 2, 2021
	Net Sales		% of sales	Net Sales		% of sales	% change
By segment:
Southeast segment	$	288.2	74.7%	$	255.1	84.9%	13.0%
Western segment		97.6	25.3%		45.3	15.1%	115.6%
Total net sales	$	385.8	100.0%	$	300.4	100.0%	28.4%

Net sales for the third quarter of 2022 were $385.8 million, a $85.4 million, or 28.4%, increase in sales, including 16.8% of organic growth, from $300.4 million in the third quarter of the prior year.

During the third quarter of 2022, we experienced strong growth at both our Southeast and Western segments, as the momentum of growth we experienced over last year continued in 2022. Additionally, we continue to make strategic marketing investments which are paying dividends through customer awareness during the repair and remodeling season. Of our total net sales for the third quarter of 2022 of $385.8 million, which increased 28.4% compared to $300.4 million in the third quarter of 2021, growth was both organic and from acquisitions. Our Southeast segment's net sales were $288.2 million in the third quarter of 2022, compared to $255.1 million in the third quarter of 2021, an increase of $33.1 million, or 13.0%. This growth was entirely organic, but we believe was adversely impacted by Hurricane Ian in late-September 2022. As previously discussed, Hurricane Ian was a large and destructive Category 4 Atlantic hurricane, that made landfall on the southwest Florida coastline at Cayo Costa on September 28, 2022, disrupting our ability to manufacture and distribute our products. We estimate that storm-related disruptions caused approximately $12.0 million of third-quarter 2022 sales to be deferred.

Our Western segment's net sales were $97.6 million in the third quarter of 2022, compared to $45.3 million in the third quarter of 2021, an increase of $52.3 million, or 115.6%. While sales for the third quarter of 2022 of our Western segment includes acquisition growth from Anlin, our existing Western segment's sales grew organically by 38.3% compared to last year's third quarter. We believe the strength in our Western segment is due to our production builder business as this sector has performed well for several quarters, as we believe that demand for conversion to indoor/outdoor living continues to be strong. We believe we are also benefitting from our capacity expansion in the Phoenix, Arizona area and our new San Diego showroom in Southern California.

Gross profit and gross margin

Gross profit was $149.8 million in the third quarter of 2022, an increase of $45.6 million, or 43.8%, from $104.2 million in the third quarter of 2021. Our gross margin was 38.8% in the third quarter of 2022, compared to 34.7% in the prior year third quarter, an increase of 4.1%. Adjusting for costs relating to Hurricane Ian that impacted our gross profit totaling $1.1 million, our gross margin in the third quarter of 2022 was 39.1%, compared to 34.7% in the prior year third quarter, and increase of 4.4%. The increases in gross profit and gross margin include the effects of price increase actions we took to offset the impacts of labor and material cost headwinds we have experienced for several quarters. Also, during the third quarter of 2022, we maintained a high degree of focus on our supply chain to minimize disruptions, which helped us maintain a high level of operational efficiency which lead to reduced delivery lead-times. We also continued to invest in our labor talent which helped generate operational efficiencies across all our businesses in response to increasing demand and believe these actions will continue to benefit our gross margin as we try to offset the impacts of rising costs for materials and labor, and will continue to grow our company with high-quality talent.

Selling, general and administrative expenses

Selling, general and administrative (“SG&A”) expenses were $102.4 million in the third quarter of 2022, an increase of $23.8 million, from $78.6 million in the third quarter of 2021. SG&A in the third quarter of 2022 was 26.5% of net sales, compared to 26.2% of net sales in the third quarter of 2021. The increase in SG&A in the third quarter of 2022, compared to last year's third quarter is partially due to the inclusion of SG&A from our 2021 acquisition of Anlin, which added $8.5 million of SG&A in the 2022 second quarter, and included $0.6 million of non-cash amortization expense relating to its intangible assets. However, the year-over-year increase in SG&A was also driven by increasing distribution and variable overhead costs due to the increase in sales. Increasing fuel costs and the inflationary conditions we have experienced over the last few quarters have also impacted SG&A year-over-year. SG&A expenses in the third quarter of 2022 includes $0.7 million of costs related to disruptions and recovery efforts caused by Hurricane Ian.

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Income from operations

Income from operations was $47.4 million in the third quarter of 2022, an increase of $21.8 million, or 85.2%, from $25.6 million in the third quarter of 2021. Income from operations in the third quarter of 2022 includes $30.0 million from our Southeast segment and $17.4 million from our Western segment, compared to $20.7 million and $4.9 million from our Southeast and Western segments, respectively, in the third quarter of 2021, all after allocation of corporate operating costs in both periods. Income from operations in the third quarter of 2022, was adversely impacted by $1.8 million due to disruptions and recovery costs caused by Hurricane Ian.

The increase in income from operations was related to the benefit from higher sales in the third quarter of 2022 compared to last year’s third quarter, as well as the benefits of the continued efficiency improvements at both our Southeast and Western segments, more than offsetting the rising costs for materials in aluminum and glass, including the increasing costs of distribution being passed onto us by our vendors, and the continuing costs of attracting, training and retaining an experienced labor force.

Interest expense, net

Interest expense was $6.9 million in the third quarter of 2022, a decrease of $0.8 million, or 10.4%, from $7.7 million in the third quarter of 2021. The redemption of the $425.0 million of higher rate 6.75% 2018 Senior Notes due 2026, with the $575.0 million of lower rate 4.375% 2021 Senior Notes in 2021 primarily resulted in a lower level of interest expense in the third quarter of 2022 compared to the third quarter of 2021.

Debt Extinguishment Costs

Debt extinguishment costs totaled $25.5 million in the three months ended October 2, 2021. On September 24, 2021, we completed the issuance of $575.0 million aggregate principal amount of 4.375% 2021 Senior Notes due 2029, issued at 100% of their principal amount. Redemption in-full of the $575.0 million of 2018 Senior Notes due 2026, including accrued and unpaid interest through September 27, 2021, also included a pre-payment call premium of 105.063% of face value, which totaled $21.5 million and is classified as debt extinguishment costs in the accompanying condensed consolidated statement of operations for the nine months ended October 2, 2021. The remainder of debt extinguishment costs of $4.0 million is composed of $9.4 million of unamortized third-party deferred costs and lender fees relating to the 2021 Senior Notes due 2026, including the First and Second Add-On Notes, offset by $5.4 million of unamortized premiums we received from the First and Second Add-On Notes.

Income tax expense

We had income tax expense of $10.1 million for the three months ended October 1, 2022, compared with income tax benefit of $2.4 million for the three months ended October 2, 2021. Our effective tax rate for the three months ended October 1, 2022, was 24.9%, compared with 31.9% for the three months ended October 2, 2021. Our income tax expense for the three months ended October 1, 2022, and income tax benefit for the three months ended October 2, 2021, includes income tax expenses of $291 thousand and $449 thousand, respectively, relating to our 75% share of the pre-tax earnings of Eco.

Income tax expense in the three months ended October 1, 2022 includes discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $60 thousand, and from research and development tax credits true-up adjustments, which totaled $472 thousand. The income tax benefit in the three months ended October 2, 2021 included discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards totaling $14 thousand, and other true-up adjustments totaling less than $0.1 million. Excluding discrete items of income tax, the effective tax rates for the three months ended October 1, 2022 and October 2, 2022, would have been an income tax expense rate of 26.2% and an income tax benefit rate of 30.8%, respectively.

In September 2021, the state of Florida announced that the corporate income tax rate for the 2021 tax year was being lowered from its then current level of 4.458% to 3.535%. However, for 2022, Florida's corporate income tax rate returned to its statutory level before the passage of the Tax Cuts and Jobs Act, which is 5.5%. As such, we adjusted our annual effective tax rate for 2022 to include this increase in rate in Florida, where a substantial portion of our business is apportioned, to an estimated combined statutory federal and state rate of 25.7%, from our estimate in 2021 of 24.2%. During the third quarter of 2022, we made payments of estimated taxes totaling $12.1 million, which included $12.0 million in Federal estimated income taxes with the remainder to various states, primarily Florida. During the third quarter of 2021, we made payments of estimated taxes totaling $1.4 million, which included $0.7 million in Federal estimated income taxes with the remainder to various states, primarily Florida. As a result of Hurricane Ian, a large and destructive Category 4 Atlantic hurricane, which made landfall on the southwest Florida coastline at Cayo Costa on September 28, 2022, the U.S. Internal Revenue Service and the state of Florida have both extended their deadlines for payment of the fourth quarter 2022 estimated tax payment, originally due December 15, 2022, to February 15, 2023.

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Net income attributable to redeemable non-controlling interest

Net income attributable to redeemable non-controlling interest for the three months ended October 1, 2022, was $0.4 million, compared to $0.7 million for the three months ended October 2, 2021, and represents the share of the net income of Eco for the period, attributable to the 25% interest of Eco not acquired by the Company.

Change in redemption value of redeemable non-controlling interest

The change in the redemption value of the redeemable non-controlling interest for the three-month period ended October 1, 2022, was a decrease of $0.3 million, compared to an increase of $1.0 million in the three months ended October 2, 2021. See Note 17 in Part I, Item 1, for a further discussion of the change in the redemption value of the redeemable non-controlling interest.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED OCTOBER 1, 2022 AND OCTOBER 2, 2021

The nine-month periods ended October 1, 2022 and October 2, 2021 are each composed of 39 weeks.

Net sales

	Nine Months Ended
	October 1, 2022			October 2, 2021
	Net Sales		% of sales	Net Sales		% of sales	% change
By segment:
Southeast segment	$	867.5	75.4%	$	731.2	85.3%	18.6%
Western segment		283.5	24.6%		125.8	14.7%	125.4%
Total net sales	$	1,151.0	100.0%	$	857.0	100.0%	34.3%

Net sales for the first nine months of 2022 were $1,151.0 million, a $294.0 million, or 34.3%, increase in sales, including 20.4% of organic growth, from $857.0 million in the first nine months of the prior year.

During the first nine months of 2022, we experienced strong growth at both our Southeast and Western segments, as the momentum of growth we experienced over last year continued in 2022. Additionally, we continue to make strategic marketing investments which are paying dividends through customer awareness during the repair and remodeling season. Of our total net sales for the first nine months of 2022 of $1,151.0 million, which increased 34.3% compared to $857.0 million in the first nine months of 2021, growth was both organic and from acquisitions. Our Southeast segment's net sales were $867.5 million in the first nine months of 2022, compared to $731.2 million in the first nine months of 2021, an increase of $136.3 million, or 18.6%. This growth included 17.8% of organic growth, but we believe was adversely impacted by Hurricane Ian in late-September 2022. As previously discussed, Hurricane Ian was a large and destructive Category 4 Atlantic hurricane, that made landfall on the southwest Florida coastline at Cayo Costa on September 28, 2022, disrupting our ability to manufacture and distribute our products. We estimate that Hurricane Ian-related disruptions caused approximately $12.0 million of third-quarter 2022 sales to be deferred.

Our Western segment's net sales were $283.5 million in the first nine months of 2022, compared to $125.8 million in the first nine months of 2021, an increase of $157.7 million, or 125.4%. While sales for the first nine months of 2022 of our Western segment includes acquisition growth from Anlin and CRi, our existing business grew organically by 38.4% compared to the first nine months of last year. We believe the strength in our Western segment is due to our production builder business as this sector has performed well for several quarters, as we believe that demand for conversion to indoor/outdoor living continues to be strong. We believe we are also benefitting from our capacity expansion in the Phoenix, Arizona area and our new San Diego showroom in Southern California.

Gross profit and gross margin

Gross profit was $449.5 million in the first nine months of 2022, an increase of $154.3 million, or 52.3%, from $295.2 million in the first nine months of 2021. Our gross margin was 39.1% in the first nine months of 2022, compared to 34.4% in the first nine months of last year, an increase of 4.7%. Adjusting for costs relating to Hurricane Ian that impacted our gross profit totaling $1.1 million, our gross margin in the first nine months of 2022 was 39.2%, compared to 34.4% in the prior year third quarter, and increase of 4.8%. The increases in gross profit and gross margin include the effects of price increase actions we took to offset the impacts of labor and material cost headwinds we have experienced for several quarters. Also, during the first nine months of 2022, we maintained a high degree of focus on our supply chain to minimize disruptions, which helped us maintain a high level of operational efficiency which lead to reduced delivery lead-times. We also continued to invest in our labor talent which helped generate operational efficiencies across all our businesses in response to increasing demand and believe these actions will continue to benefit our gross margin as we try to offset the impacts of rising costs for materials and labor, and will continue to grow our company with high-quality talent.

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Selling, general and administrative expenses

SG&A expenses were $307.8 million in the first nine months of 2022, an increase of $83.7 million, from $224.1 million in the first nine months of 2021. SG&A in the first nine months of 2022 was 26.7% of net sales, compared to 26.1% of net sales in the first nine months of 2021. The increase in SG&A in the first nine months of 2022, compared to the first nine months of last year is partially due to the inclusion of SG&A from our 2021 acquisition of Anlin, which added $25.9 million of SG&A in the 2022 first nine months, and included $4.1 million of non-cash amortization expense relating to its intangible assets. However, the year-over-year increase in SG&A was also driven by increasing distribution and variable overhead costs due to the increase in sales. Increasing fuel costs and the inflationary conditions we have experienced over the last few quarters have also impacted SG&A year-over-year. SG&A expenses in the first nine months of 2022 includes $0.7 million of costs related to disruptions and recovery efforts caused by Hurricane Ian.

Income from operations

Income from operations was $141.7 million in the first nine months of 2022, an increase of $70.6 million, or 99.4%, from $71.1 million in the first nine months of 2021. Income from operations in the first nine months of 2022 includes $96.6 million from our Southeast segment and $45.1 million from our Western segment, compared to $55.0 million and $16.1 million from our Southeast and Western segments, respectively, in the first nine months of 2021, all after allocation of corporate operating costs in both periods. Income from operations in the first nine months of 2022, was adversely impacted by $1.8 million due to disruptions and recovery costs caused by Hurricane Ian.

The increase in income from operations was related to the benefit from higher sales in the first nine months of 2022 compared to the first nine months of last year, as well as the benefits of the continued efficiency improvements at both our Southeast and Western segments, more than offsetting the rising costs for materials in aluminum and glass, including the increasing costs of distribution being passed onto us by our vendors, and the continuing costs of attracting, training and retaining an experienced labor force.

Interest expense, net

Interest expense was $21.1 million in the first nine months of 2022, a decrease of $1.8 million, or 8.0%, from $23.0 million in the first nine months of 2021. The redemption of the $425.0 million of higher rate 6.75% 2018 Senior Notes due 2026, with the $575.0 million of lower rate 4.375% 2021 Senior Notes due 2029 in 2021 primarily resulted in a lower level of interest expense in the first nine months of 2022 compared to the first nine months of 2021.

Debt Extinguishment Costs

Debt extinguishment costs totaled $25.5 million in the nine months ended October 2, 2021. On September 24, 2021, we completed the issuance of $575.0 million aggregate principal amount of 4.375% 2021 Senior Notes due 2029, issued at 100% of their principal amount. Redemption in-full of the $575.0 million of 2018 Senior Notes due 2026, including accrued and unpaid interest through September 27, 2021, also included a pre-payment call premium of 105.063% of face value, which totaled $21.5 million and is classified as debt extinguishment costs in the accompanying condensed consolidated statement of operations for the nine months ended October 2, 2021. The remainder of debt extinguishment costs of $4.0 million is composed of $9.4 million of unamortized third-party deferred costs and lender fees relating to the 2021 Senior Notes due 2026, including the First and Second Add-On Notes, offset by $5.4 million of unamortized premiums we received from the First and Second Add-On Notes.

Income tax expense

We had an income tax expense of $29.9 million for the nine months ended October 1, 2022, compared with income tax expense of $4.3 million for the nine months ended October 2, 2021. Our effective tax rate for the nine months ended October 1, 2022, was 24.8%, compared with 18.8% for the nine months ended October 2, 2021. Our income tax expense for the nine months ended October 1, 2022, and October 2, 2021, includes $1.0 thousand and $1.2 thousand, respectively, relating to our 75% share of the pre-tax earnings of Eco.

Income tax expense in the nine months ended October 1, 2022 includes discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $156 thousand, from research and development tax credits true-up adjustments, which totaled $472 thousand, and a refund from the state of Florida, received by the Company in the second quarter of 2022, relating to excess taxes received by the state in 2021, which was $584 thousand, benefiting tax expense by $462 thousand, net of its Federal tax effect. Income tax expense in the nine months ended October 2, 2021 include discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $714 thousand. Excluding discrete items of income tax, the effective tax rates for the nine months ended October 1, 2022 and October 2, 2021, would have been income tax expense rates of 25.7% and 21.9%, respectively.

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In September 2021, the state of Florida announced that the corporate income tax rate for the 2021 tax year was being lowered from its then current level of 4.458% to 3.535%. However, for 2022, Florida's corporate income tax rate returned to its statutory level before the passage of the Tax Cuts and Jobs Act, which is 5.5%. As such, we adjusted our annual effective tax rate for 2022 to include this increase in rate in Florida, where a substantial portion of our business is apportioned, to an estimated combined statutory federal and state rate of 25.7%, from our estimate in 2021 of 24.2%. During the first nine months of 2022, we made payments of estimated taxes totaling $21.7 million, which included $20.8 million in Federal estimated income taxes with the remainder to various states, primarily Florida. During the first nine months of 2021, we made payments of estimated taxes totaling $12.4 million, which included $8.3 million in Federal estimated income taxes with the remainder to various states, primarily Florida. As a result of Hurricane Ian, a large and destructive Category 4 Atlantic hurricane, which made landfall on the southwest Florida coastline at Cayo Costa on September 28, 2022, the U.S. Internal Revenue Service and the state of Florida have both extended their deadlines for payment of the fourth quarter 2022 estimated tax payment, originally due December 15, 2022, to February 15, 2023.

Net income attributable to redeemable non-controlling interest

Net income attributable to redeemable non-controlling interest for the nine months ended October 1, 2022, was $1.3 million, compared to $1.7 million for the nine months ended October 2, 2021, and represents the share of the net income of Eco for the period, attributable to the 25% interest of Eco not acquired by the Company.

Change in redemption value of redeemable non-controlling interest

The change in the redemption value of the redeemable non-controlling interest for the nine-month period ended October 1, 2022, was an increase of $1.5 million, compared to an increase of $4.5 million in the nine months ended October 2, 2021. See Note 17 in Part I, Item 1, for a further discussion of the change in the redemption value of the redeemable non-controlling interest.

LIQUIDITY AND CAPITAL RESOURCES

Consolidated Cash Flows

Our principal source of liquidity is cash flow generated by operations, supplemented by borrowings under our credit facilities. We expect that this cash generating capability will provide us with financial flexibility in meeting operating and investing needs, but there can be no assurance that will be the case in future periods. Our primary capital requirements are to fund working capital needs, meet required debt service payments on our credit facilities and fund capital expenditures.

The following table summarizes our cash flow results for the first nine months of 2022 and 2021:

	Components of Cash Flows
	Nine Months Ended
	October 1,			October 2,
(in millions)	2022			2021
Cash provided by operating activities	$	152.1		$	19.8
Cash used in investing activities		(25.5	)		(132.0	)
Cash (used in) provided by financing activities		(4.0	)		126.6
Increase in cash and cash equivalents	$	122.6		$	14.4

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Operating activities. Cash provided by operating activities during the first nine months of 2022 was $152.1 million, compared to cash provided in operating activities of $19.8 million in the first nine months of 2021. The increase in cash provided by operating activities for the first nine months of 2022, as compared to the first nine months of 2021, was $132.3 million, and was due to the factors set forth in the table below.

Direct cash flows from operations for the first nine months of 2022 and 2021 are as follows:

	Direct Operating Cash Flows
	Nine Months Ended
	October 1,			October 2,
(in millions)	2022			2021
Collections from customers	$	1,145.8		$	806.8
Other collections of cash		12.2			9.5
Disbursements to vendors		(681.1	)		(537.9	)
Personnel related disbursements		(289.1	)		(213.9	)
Income taxes paid, net of refunds		(20.9	)		(12.2	)
Debt service payments		(14.7	)		(32.4	)
Other cash activity, net		(0.1	)		(0.1	)
Cash provided by operations	$	152.1		$	19.8

During the second quarter of 2022, a customer with whom we have had a long-term relationship experienced financial difficulties. As such, we determined to cease taking orders and provide additional reserves of approximately $3.0 million against our existing exposure to this customer. During the nine-months ended October 1, 2022, we recorded provisions for credit losses totaling $7.4 million, including the provision relating to this customer.

Inventory as of October 1, 2022, was $112.3 million, compared to $91.4 million at January 1, 2022, an increase of $20.9 million. We monitor and evaluate raw material inventory levels based on the need for each discrete item to fulfill short-term requirements calculated from current order patterns and to provide appropriate safety stock. Because a significant portion of our products are made-to-order, which requires us to relieve inventory and recognize revenue over time, we have a low amount of work-in-process and finished goods inventories. As such, we believe the value of our inventories will be realized through sales.

Investing activities. Cash used in investing activities was $25.5 million for the first nine months of 2022, compared to cash used in investing activities of over $132.0 million for the first nine months of 2021, a decrease in cash used in investing activities of $106.5 million. There was cash used to acquire businesses in the first nine months of 2022 relating to the finalization of the Anlin acquisition working capital adjustment, resulting in a final payment to sellers of $0.8 million. Cash used to acquire businesses in the first nine months of 2021 totaled $106.5 million, which included $94.4 million related to our acquisition of Eco, and $12.1 million relating to our acquisition of CRi. There was an decrease in cash used in capital expenditures of $1.0 million which went from $25.7 million in the first nine months of 2021, to $24.7 million in the first nine months of 2022. Proceeds from the sales of assets was less than $0.1 million in the first nine months of 2022, compared with $0.2 million in the first nine months of 2021.

Financing activities. Cash used in financing activities was $4.0 million in the first nine months of 2022, compared to cash provided in financing activities of $126.6 million in the first nine months of 2021, a decrease in cash provided of $130.6 million. In the first nine months of 2022, we made payments of contingent consideration relating to our acquisition of Anlin totaling $2.7 million, representing the first payment we were required to make under the Anlin purchase agreement based on their 2021 EBITDA, as defined in the agreement. Because these payments were not required to be made within a reasonably short period of time after the effective date of the acquisition, we classified the portion of these payments representing the fair value of the first payment, which was $2.4 million, as a financing activity, with the difference classified within operating activities.

Taxes paid relating to common stock withheld from employees to satisfy tax withholding obligations in connection with the vesting of restricted stock awards were $1.9 million in the first nine months of 2022, versus $1.2 million in the first nine months of 2021, an increase in cash used of $0.7 million. There were proceeds from stock issued under our 2019 Employee Stock Purchase Plan of $0.3 million during the first nine months of 2022, compared to $0.2 million during the first nine months of 2021. Proceeds from the exercises of stock options for the first nine months of 2021 was $0.1 million,

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In the first nine months of 2021, we issued $575.0 million in 4.375% 2021 Senior Notes due 2029, as well as the $60.0 million of Second Additional Senior Notes, including a premium of $3.3 million with the Second Additional Notes, which provided proceeds from issuances of senior notes in the nine months ended October 2, 2021 totaling $638.3 million. Proceeds from the 2021 Senior Notes due 2029 were used, in part, to redeem in full the $425.0 million of 2018 Senior Notes due 2026, plus a pre-payment call premium of 105.063% of face value, which totaled $21.5 million, classified as debt extinguishment costs in the accompanying condensed consolidated statement of operations for the three and nine months ended October 2, 2021. We also prepaid the outstanding term loan borrowings under the 2016 Credit Agreement of $54.0 million. We paid financing costs totaling $10.4 million in the first nine months of 2021, including financing costs relating to bank fees and professional services costs relating to the offering and issuance of the 2021 Senior Notes due 2026.

Capital Resources and Debt Covenant

2021 Senior Notes due 2029

On September 24, 2021, we completed the issuance of $575.0 million aggregate principal amount of 4.375% senior notes (“2021 Senior Notes”), issued at 100% of their principal amount. The 2021 Senior Notes are jointly and severally and fully and unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future restricted subsidiaries, other than any restricted subsidiary of the Company that does not guarantee the existing senior secured credit facilities or any permitted refinancing thereof. The 2021 Senior Notes are senior unsecured obligations of the Company and the guarantors, respectively, and rank pari passu in right of payment with all existing and future senior debt and senior to all existing and future subordinated debt of the Company and the guarantors. The 2021 Senior Notes were offered under Rule 144A of the Securities Act, and in transactions outside the United States under Regulation S of the Securities Act, and have not been, and will not be, registered under the Securities Act.

The 2021 Senior Notes mature on October 1, 2029. Interest on the 2021 Senior Notes is payable semi-annually, in arrears, beginning on April 1, 2022, with interest accruing at a rate of 4.375% per annum from September 24, 2021. We incurred financing costs relating to bank fees and professional services costs relating to the offering and issuance of the 2021 Senior Notes totaling $8.7 million, which included a 1.25% lender spread on the total principal value of the 2021 Senior Notes, or $7.2 million, and $1.5 million of other costs, all of which are being amortized under the effective interest method.

As of October 1, 2022, the face value of debt outstanding under the 2021 Senior Notes was $575.0 million, and accrued interest was $12.6 million. Proceeds from the 2021 Senior Notes were used, in part, to redeem in full the $425.0 million of 2018 Senior Notes due 2026, including the related fees, costs and the prepayment call premium of $21.5 million, representing 5.063% of the $425.0 million face value then outstanding, prepay the outstanding term loan borrowings under the 2016 Credit Agreement of $54.0 million and the related fees and costs, and finance the Anlin Acquisition in the fourth quarter of 2021. See Note 6, Acquisitions, for a discussion of the Anlin Acquisition.

The indenture for the 2021 Senior Notes gives us the option to redeem some or all of the 2021 Senior Notes at the redemption prices and on the terms specified in the indenture governing the 2021 Senior Notes. The indenture governing the 2021 Senior Notes does not require us to make any mandatory redemptions or sinking fund payments. However, upon the occurrence of a change of control, as defined in the indenture, the Company is required to offer to repurchase the notes at 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. We also may make optional redemptions at various premiums including a make-whole call at the then current treasury rate plus 50 basis points prior to October 1, 2024, then 102.188% on or after August 1, 2024, 101.094% on or after August 2025, then at 100.000% on or after August 1, 2026.

The indenture for the 2021 Senior Notes includes certain covenants limiting the ability of the Company and any guarantors to, (i) incur additional indebtedness; (ii) pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments; (iii) enter into agreements that restrict distributions from restricted subsidiaries; (iv) sell or otherwise dispose of assets; (v) enter into transactions with affiliates; (vi) create or incur liens; merge, consolidate or sell all or substantially all of the Company’s assets; (vii) place restrictions on the ability of subsidiaries to pay dividends or make other payments to the Company; and (viii) designate the Company’s subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications.

2016 Credit Agreement due 2024

On February 16, 2016, we entered into the 2016 Credit Agreement due 2024, among us, the lending institutions identified in the 2016 Credit Agreement due 2024, and Truist Financial Corporation (formerly known as SunTrust Bank), as Administrative Agent and Collateral Agent. The 2016 Credit Agreement due 2024 establishes senior secured credit facilities in an aggregate amount of $310.0 million, consisting of a $270.0 million Term B term loan facility originally maturing in February 2022 that amortizes on a basis of 1% annually during its six-year term, and a $40.0 million revolving credit facility originally maturing in February 2021 that included a swing line facility and a letter of credit facility. Our obligations under the 2016 Credit Agreement due 2024 are, subject to exceptions, guaranteed by substantially all of our wholly-owned direct and indirect subsidiaries that are restricted subsidiaries and secured by substantially all of our assets as well as our direct and indirect restricted subsidiaries’ assets.

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On March 16, 2018, we entered into an amendment of our 2016 Credit Agreement due 2024 (the “Second Amendment”). The Second Amendment, among other things, decreased the applicable interest rate margins for the Initial Term Loans (as defined in the 2016 Credit Agreement due 2024) from (i) 3.75% to 2.50%, in the case of the Base Rate Loans (as defined in the 2016 Credit Agreement due 2024), and (ii) 4.75% to 3.50%, in the case of the Eurodollar Loans (as defined in the 2016 Credit Agreement due 2024). On February 17, 2017, we entered into the first amendment to our 2016 Credit Agreement due 2024, which also resulted in decreases in the applicable margins, but which, unlike the Second Amendment, did not include any changes in lender positions.

On October 31, 2019, we entered into an amendment of our 2016 Credit Agreement due 2024 (“Third Amendment”). The Third Amendment provided for, among other things, (i) a three-year Term A loan in the then aggregate principal amount of $64.0 million (the “Initial Term A Loan”), maturing in October 2022, which refinanced in full our existing Term B term loan facility under the 2016 Credit Agreement, and had no regularly scheduled amortization, and (ii) a new five-year revolving credit facility in an aggregate principal amount of up to $80.0 million (the “Revolving Facility”), maturing in October 2024, which replaced our then existing $40.0 million revolving credit facility under the 2016 Credit Agreement, and includes a swing-line facility and letter of credit facility. Our obligations under the 2016 Credit Agreement continue to be secured by substantially all of our assets, as well as our direct and indirect subsidiaries’ assets, and is senior in position to the 2021 Senior Notes.

On October 25, 2021, we entered into an amendment of our 2016 Credit Agreement ("Fourth Amendment"). The Fourth Amendment provides for, among other things, a three-year Term A loan in the aggregate maximum available amount of $60.0 million (the "Incremental Term A Loan"), proceeds from which were used to fund the Anlin Acquisition. The Fourth Amendment did not change any terms relating to the Revolving Facility, under which we paid quarterly fees on the unused portion of the revolving credit facility equal to a percentage spread (ranging from 0.25% to 0.35%) based on our first lien net leverage ratio. As of October 1, 2022, there were $5.7 million in letters of credit outstanding and $74.3 million available under the Revolving Facility.

The weighted average all-in interest rate for borrowings under the term-loan portion of the 2016 Credit Agreement due 2024 was 5.12% as of October 1, 2022, and was 2.10% at January 1, 2022.

On October 14, 2022, the Company entered into a Fifth Amendment (the “Fifth Amendment”) to the Credit Agreement (the “Credit Agreement”) dated as of February 16, 2016, by and among the Company, the other credit parties party thereto, the lending institutions party thereto and Truist Bank, as Administrative Agent, Collateral Agent, an LC Issuer and Swing Line Lender. The Fifth Amendment provides for, among other things, a new five-year revolving credit facility in an aggregate principal amount of $250.0 million (the “New Revolving Credit Facility”). The New Revolving Credit Facility refinances and replaces the previously existing $80.0 million revolving credit facility under the Credit Agreement. The Company’s obligations under the Credit Agreement continue to be secured by substantially all of its and its direct and indirect subsidiaries’ assets.

Interest on borrowings under the New Revolving Credit Facility is payable either quarterly or at the expiration of any Secured Overnight Financing Rate ("SOFR") interest period applicable thereto. Borrowings under the New Revolving Credit Facility accrue interest at a rate equal to, at our option, a base rate (with a floor of 100 basis points) plus a percentage spread (ranging from 0.75% to 1.75%) based on our first lien net leverage ratio or SOFR (with a floor of 0 basis points) plus a percentage spread (ranging from 1.75% to 2.75%) based on our first lien net leverage ratio. After giving effect to the Fifth Amendment, we will pay quarterly fees on the unused portion of the New Revolving Credit Facility equal to a percentage spread (ranging from 0.25% to 0.35%) based on our first lien net leverage ratio. The Fifth Amendment also modifies the financial covenant such that it will be tested on a quarterly basis, commencing with the fiscal quarter ending December 31, 2022.

The Martin Acquisition was financed with the $250.0 million available under the New Revolving Credit Facility provided by the Fifth Amendment of our 2016 Credit Agreement, under which we drew $160.0 million on October 14, 2022, the proceeds of which were used to pay $98.4 million of the $187.8 million total fair value of consideration transferred, and to pay $61.6 million to prepay our $60.0 million Term A Loan under the Fourth Amendment of our 2016 Credit Agreement, plus $1.6 million in fees, costs and accrued interest. The remainder of the total fair value of consideration transferred totaling $89.4 million was funded with cash and cash equivalents on hand previously generated through operations. We also paid buyer fees and costs relating to the Martin Acquisition, which we are analyzing for proper accounting treatment. We accrued an estimated $1.25 million of acquisition-related expenses in the three months ended October 1, 2022 for services received prior to the closing of the Martin Acquisition, classified as selling, general and administrative expenses in the accompanying condensed consolidated statements of operations for the three and nine months ended October 1, 2022. Since the end of the third quarter of 2022, we have made payments of borrowings under the New Revolving Credit Facility totaling $61.6 million, resulting in borrowings outstanding under the New Revolving Credit Facility as of the date of the filing of this Current Report on Form 10-Q of $98.4 million. Since the end of the third quarter of 2022, we have made payments of borrowings under the New Revolving Credit Facility totaling $61.6 million, resulting in borrowings outstanding under the New Revolving Credit Facility as of the date of the filing of this Current Report on Form 10-Q of $98.4 million.

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Deferred Financing Costs

The activity relating to deferred financing costs, composed of third-party fees and costs, and lender fees, for the nine months ended October 1, 2022, are as follows. All deferred financing costs are classified as a reduction of the carrying value of long-term debt:

(in thousands)	Total
At beginning of year	$	9,345
Less: Amortization expense		(921	)
At end of period	$	8,424

Estimated amortization expense relating to deferred financing costs for the years indicated as of October 1, 2022, is as follows:

(in thousands)	Total
Remainder of 2022	$	312
2023		1,282
2024		1,282
2025		1,083
2026		1,114
Thereafter		3,351
Total	$	8,424

We have no scheduled payments of outstanding debt until the contractual maturity of the 2016 Credit Agreement in October 2024. Our contractual future maturities of long-term debt are as follows (at face value):

(in thousands)
Remainder of 2022	$	—
2023		—
2024		60,000
2025		—
2026		—
Thereafter		575,000
Total	$	635,000

Capital Expenditures. Capital expenditures vary depending on prevailing business factors, including current and anticipated market conditions. For the first nine months of 2022, capital expenditures were $24.7 million, compared to $25.7 million for the first nine months of 2021. Our capital expenditure program is directed towards making investments in capital assets that we believe will increase both gross sales and margins, but also includes capital expenditures for maintenance.

Aluminum Forward and Midwest Transaction Premium Contracts. We enter into aluminum forward contracts to hedge the fluctuations in the purchase price of aluminum extrusions we use in production. We also enter into forward contracts to hedge the fluctuations in the price of the delivery component of our aluminum extrusion purchases, known as the Midwest Transaction Premium (MTP).

At October 1, 2022, the fair value of our aluminum forward contracts was in a liability position of $4.0 million. We had 8 outstanding forward contracts for the purchase of 11.5 million pounds of aluminum through December 2022, at an average price of $1.33 per pound, which excludes the Midwest premium, with maturity dates of between one and three months.

At October 1, 2022, the fair value of our MTP contracts was in an asset position of $0.6 million. We had 2 outstanding MTP contracts to hedge the Platt US MW Transaction price per pound for the delivery of 5.3 million pounds of aluminum through December 2022, at an average price of $0.11 per pound, with maturity dates of between one and three months.

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We assess the effectiveness of our aluminum forward contracts by comparing the change in the fair value of the forward contract to the change in the expected cash to be paid for the hedged item. The effective portion of the gain or loss on our aluminum forward contracts is reported as a component of accumulated other comprehensive income (loss) and is reclassified into earnings in the same line item in the income statement as the hedged item in the same period or periods during which the transaction affects earnings. We assessed the risk of non-performance of the Company and our counterparty to these contracts, as applicable, and determined it was immaterial and, therefore, did not record any adjustment to their fair values as of October 1, 2022. We expect the amount of accumulated other comprehensive loss of approximately $3.4 million in the accompanying condensed consolidated balance sheet as of October 1, 2022, to be reclassified to earnings within the next twelve months.

Significant Accounting Policies and Critical Accounting Estimates. Our consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Significant accounting policies are those that are both important to the accurate portrayal of a Company’s financial condition and results, and those that require subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Certain estimates are particularly sensitive due to their significance to the condensed consolidated financial statements and the possibility that future events may be significantly different from our expectations. We identified our significant accounting policies in our Annual Report on Form 10-K/A for the year ended January 1, 2022. There have been no changes to our critical accounting policies during the first nine months of 2022.

Recently Issued Accounting Pronouncements. Reference Rate Reform. In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and in March 2021, a subsequent amendment to the initial guidance, ASU 2021-01, “Reference Rate Reform (Topic 848): Scope” (collectively, “Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. We have not elected adoption of this optional guidance and do not intend to elect this guidance before the sunset date of December 31, 2022, as there is no material impact on our consolidated financial statements.

Subsequent Events - Acquisition and Refinancing. On October 14, 2022, pursuant to a Share Purchase Agreement ("SPA"), WWS Acquisition LLC (“Buyer”), a Missouri limited liability company and indirect wholly owned subsidiary of the Company, completed the acquisition ("Martin Acquisition") of all of the issued and outstanding shares of capital of Martin Door Holdings Inc., a Utah corporation (“Seller” or "Martin") headquartered in Salt Lake City, and manufacturer of premium overhead garage doors and hardware serving the Western U.S. residential and commercial markets.

The total fair value of consideration transferred at closing for the Martin Acquisition, was approximately $187.8 million, subject to certain adjustments as set forth in the SPA, which included an enterprise value of $185.0 million, and a payment of approximately $2.8 million for estimated net working capital in excess of target net working capital. The purchase price is subject to a post-closing true-up mechanism as set forth in the SPA, which is expected to be determined within ninety days from the date of the closing of the Martin Acquisition. Martin's assets include those typical to the operation of the business including accounts receivable, inventories, property and equipment, as well as intangibles assets which we expect will include one or more Martin trade names, customer relationships, developed technology, and possibly other yet to be identified intangible assets, and which we expect to engage a third-party valuation firm to assist with the valuation of such assets.

On October 13, 2022, the Company entered into the Fifth Amendment of the 2016 Credit Agreement. The Fifth Amendment provides for, among other things, the New Revolving Credit Facility, which is a new five-year revolving credit facility in an aggregate principal amount of $250.0 million. The New Revolving Credit Facility refinances and replaces the previously existing $80.0 million revolving credit facility under the 2016 Credit Agreement. The Company’s obligations under the 2016 Credit Agreement continue to be secured by substantially all of its and its direct and indirect subsidiaries’ assets.

Interest on borrowings under the New Revolving Credit Facility is payable either quarterly or at the expiration of any SOFR interest period applicable thereto. Borrowings under the New Revolving Credit Facility accrue interest at a rate equal to, at our option, a base rate (with a floor of 100 basis points) plus a percentage spread (ranging from 0.75% to 1.75%) based on our first lien net leverage ratio or SOFR (with a floor of 0 basis points) plus a percentage spread (ranging from 1.75% to 2.75%) based on our first lien net leverage ratio. After giving effect to the Fifth Amendment, we will pay quarterly fees on the unused portion of the New Revolving Credit Facility equal to a percentage spread (ranging from 0.25% to 0.35%) based on our first lien net leverage ratio. The Fifth Amendment also modifies the financial covenant under the 2016 Credit Agreement such that it will be tested on a quarterly basis, commencing with the fiscal quarter ending December 31, 2022.

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The Martin Acquisition was financed with the $250.0 million available under the New Revolving Credit Facility provided by the Fifth Amendment of our 2016 Credit Agreement, under which we drew $160.0 million on October 14, 2022, the proceeds of which were used to pay $98.4 million of the $187.8 million total fair value of consideration transferred, and to pay $61.6 million to prepay our $60.0 million Term A Loan under the Fourth Amendment of our 2016 Credit Agreement, plus $1.6 million in fees, costs and accrued interest. The remainder of the total fair value of consideration transferred totaling $89.4 million was funded with cash and cash equivalents on hand previously generated through operations. We also paid buyer fees and costs relating to the Martin Acquisition, which we are analyzing for proper accounting treatment. We accrued an estimated $1.25 million of acquisition-related expenses in the three months ended October 1, 2022 for services received prior to the closing of the Martin Acquisition, classified as selling, general and administrative expenses in the accompanying condensed consolidated statements of operations for the three and nine months ended October 1, 2022. Since the end of the third quarter of 2022, we have made payments of borrowings under the New Revolving Credit Facility totaling $61.6 million, resulting in borrowings outstanding under the New Revolving Credit Facility as of the date of the filing of this Current Report on Form 10-Q of $98.4 million.

Subsequent Events - Cyberattack. On November 5, 2022, the Company detected a ransomware infection that impacted portions of its network and caused disruption to daily business operations. Immediately, upon discovery, the Company engaged outside cybersecurity experts familiar with these types of incidents to conduct a forensic investigation and assess the extent and scope of the incident. As of the date of the filing of this Quarterly Report on Form 10-Q, the investigation is in its early stages and ongoing. To date, there is no evidence of personal information being accessed or acquired.

Security is a top priority for the Company, and the Company continues to work to take a series of measures to safeguard the integrity of its information technology systems. Upon detecting the security event, the Company took immediate steps designed to contain the incident and implement its business continuity plans to restore and support continued operations. The Company has notified appropriate law enforcement authorities.

The Company is also working closely with cybersecurity experts and legal counsel. The Company is in the early stages of its investigation and assessment of the security event and cannot determine, at this time, the extent of the impact from such event on its business, results of operations or financial condition or whether such impact will have a material adverse effect. The Company carries insurance, including cyber insurance, commensurate with the size and the nature of its operations. Further, while the Company is communicating with its customers regarding this disruption, it cannot guarantee that its customer relationships will not be harmed as a result of this event. In addition to these risks and other information set forth in this report, one should carefully consider the discussion on the other risks and uncertainties that cybersecurity incidents may have on us, contained in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K/A for the year ended January 1, 2022.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We utilize derivative financial instruments to hedge price movements in aluminum materials used in our manufacturing process and to hedge the delivery component of our aluminum needs, known as the Midwest Transaction Premium (“MTP”). As of October 1, 2022, we are covered for approximately 80% of our anticipated aluminum needs for the remainder of 2022 at an average price of $1.33 per pound. These calculations are based only on the LME price of aluminum and excludes an estimate for the MTP, which we hedge separately. As of October 1, 2022, we are covered for approximately 37% of our anticipated MTP costs for the remainder of 2022 at an average price of $0.11 per pound. As of the date of this report, we had not added any further coverage since October 1, 2022. However, we may add more coverage for our anticipated aluminum needs during the rest of 2022 and/or 2023, as we deem necessary.

Regarding our aluminum hedging instruments for the purchase of aluminum, as of October 1, 2022, a 10% decrease in the price of aluminum per pound would decrease the fair value of our forward contracts of aluminum by an estimated $1.1 million. This calculation utilizes our actual commitment of 11.5 million pounds under contract (to be settled through December 2022) and the market price of aluminum as of October 1, 2022. This calculation is based only on the LME price of aluminum and excludes an estimate for the MTP. Regarding our MTP contracts for hedging of the delivery component of our aluminum needs, as of October 1, 2022, a 10% decrease in the Platts MW US Transaction price per pound would decrease the fair value of our MTP contracts an estimated $0.1 million. This calculation utilizes our actual commitment of 5.3 million pounds under contract (to be settled through December 2022) and the then current Platts MW US Transaction price per pound as of October 1, 2022.

We experience changes in interest expense when market interest rates change. Changes in our debt could also increase these risks. Based on debt outstanding with a variable rate as of the date of filing of this Quarterly Report on Form 10-Q of $98.4 million, a 100 basis-point increase in interest rate would result in approximately $1.0 million of additional interest costs annually.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

A control system, however, no matter how well conceived and operated, can at best provide reasonable, not absolute, assurance that the objectives of the control system are met. Additionally, a control system reflects the fact that there are resource constraints, and the benefits of controls must be considered relative to costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, within our Company have been detected, and due to these inherent limitations, misstatements due to error or fraud may occur and not be detected.

Our chief executive officer and chief financial officer, with the assistance of management, evaluated the design, operation and effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report (“Evaluation Date”). Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective for the purposes of ensuring that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting.

During the period covered by this report, there have been no changes in our internal control over financial reporting identified in connection with the evaluation described above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. However, during the year ended January 1, 2022, we acquired Eco and Anlin. We are currently integrating Eco and Anlin into our operations, compliance programs and internal control processes. As such Eco and Anlin were not included in our assessment of internal control over financial reporting as of January 1, 2022. We will include Eco and Anlin into our assessment of internal controls as of December 31, 2022, the end of our 2022 fiscal year. Eco Enterprises and Anlin Industries were included in the 2021 consolidated financial statements of the Company and constituted 22.0% of total assets as of January 1, 2022 and 9.2% of revenues for the fiscal year then ended.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in various claims and lawsuits incidental to the conduct of our business in the ordinary course. We carry insurance coverage in such amounts in excess of our self-insured retention as we believe to be reasonable under the circumstances and that may or may not cover any or all of our liabilities with respect to claims and lawsuits. We do not believe that the ultimate resolution of the matters pending or threatened against us at this time will have a material adverse impact on our financial position or results of operations.

Although our business and facilities are subject to federal, state, and local environmental regulation, environmental regulation does not have a material impact on our operations. We believe that our facilities are in material compliance with such laws and regulations. As owners and lessees of real property, we can be held liable for the investigation or remediation of contamination on such properties, in some circumstances without regard to whether we knew of or were responsible for such contamination. Our current expenditures with respect to environmental investigation and remediation at our facilities are minimal, although no assurance can be provided that more significant remediation may not be required in the future as a result of spills or releases of petroleum products or hazardous substances, or the discovery of previously unknown environmental conditions.

ITEM 1A. RISK FACTORS

Our operations are subject to a number of risks. When considering an investment in our securities, you should carefully read and consider these risks, together with all other information in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission, including the risk factors set forth in Part 1, “Item 1A. Risk Factors” of our Annual Report on Form 10-K/A for the year ended January 1, 2022. If any of the events described in the risk factors actually occur, our business, financial condition or operating results, as well as the market price of our securities, could be materially adversely affected.

We may not realize the anticipated benefits from the Martin Acquisition, and the Martin Acquisition could adversely impact our

business and our operating results.

We may not be able to achieve the full potential strategic and financial benefits that we expect to achieve from the Martin Acquisition. We may not achieve the anticipated benefits from the Martin Acquisition for a variety of reasons, including, among others, unanticipated costs, charges and expenses. In addition, we may not achieve the anticipated unrealized benefits of operational initiatives. If we fail to achieve some or all of the benefits expected to result from the Martin Acquisition, or if such benefits are delayed, our business could be harmed.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None during the quarter cover by this report.

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ITEM 6. EXHIBITS

2.1	Share Purchase Agreement dated as of October 14, 2022 among WWS Acquisition, LLC, Martin Door Holdings, Inc., Martin Door Sellers’ Representative, LLC and the shareholders and warrantholders parties thereto (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on October 19, 2022)
10.1	Fifth Amendment to Credit Agreement, dated as of October 13, 2022, by and among PGT Innovations, Inc., the other Credit Parties party thereto, the financial institutions party thereto and Truist Bank, as Administrative Agent, Collateral Agent and Swing Line Lender incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on October 19, 2022)
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
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*Filed herewith.

**Furnished herewith.

- 50 -

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PGT INNOVATIONS, INC.
	(Registrant)
Date: November 10, 2022	By: /s/ John Kunz
	Name: John Kunz
	Title: Senior Vice President and Chief Financial Officer

- 51 -

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jeffrey T. Jackson, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended October 1, 2022, of PGT Innovations, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Jeffrey T. Jackson

Jeffrey T. Jackson

President and Chief Executive Officer

Date: November 10, 2022

EX-31.2

Exhibit 31.2

CERTIFICATION

I, John Kunz, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended October 1, 2022, of PGT Innovations, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ John Kunz

John Kunz

Senior Vice President and Chief Financial Officer

Date: November 10, 2022

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350

(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the quarterly report on Form 10-Q of PGT Innovations, Inc. (the “Company”) for the quarterly period ended October 1, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey T. Jackson, as President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey T. Jackson

Jeffrey T. Jackson

President and Chief Executive Officer

Date: November 10, 2022

A signed original of this written statement required by Section 906 has been provided to PGT Innovations, Inc. and will be retained by PGT Innovations, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350

(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the quarterly report on Form 10-Q of PGT Innovations, Inc. (the “Company”) for the quarterly period ended October 1, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Kunz, as Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John Kunz

John Kunz

Senior Vice President and Chief Financial Officer

Date: November 10, 2022

A signed original of this written statement required by Section 906 has been provided to PGT Innovations, Inc. and will be retained by PGT Innovations, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Oct. 01, 2022	Oct. 31, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 01, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Trading Symbol	PGTI
Entity Registrant Name	PGT Innovations, Inc.
Entity Central Index Key	0001354327
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity File Number	001-37971
Entity Tax Identification Number	20-0634715
Entity Address, Address Line One	1070 Technology Drive
Entity Address, City or Town	North Venice
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	34275
City Area Code	941
Local Phone Number	480-1600
Entity Common Stock, Shares Outstanding		59,997,679
Title of 12(b) Security	Common stock, par value $0.01 per share
Security Exchange Name	NYSE
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	DE
Document Quarterly Report	true
Document Transition Report	false

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Income Statement [Abstract]
Net sales	$ 385,837	$ 300,431	$ 1,151,020	$ 857,023
Cost of sales	236,035	196,228	701,495	561,849
Gross profit	149,802	104,203	449,525	295,174
Selling, general and administrative expenses	102,399	78,595	307,786	224,106
Income from operations	47,403	25,608	141,739	71,068
Interest expense, net	6,889	7,686	21,124	22,968
Debt extinguishment costs		25,472		25,472
Income (loss) before income taxes	40,514	(7,550)	120,615	22,628
Income tax expense (benefit)	10,100	(2,410)	29,910	4,260
Net income (loss)	30,414	(5,140)	90,705	18,368
Less: Net income attributable to redeemable non-controlling interest ("RNCI")	(373)	(677)	(1,334)	(1,656)
Net income (loss) attributable to the Company	30,041	(5,817)	89,371	16,712
Calculation of net income (loss) per common share attributable to common shareholders:
Net income (loss) attributable to the Company	30,041	(5,817)	89,371	16,712
Decrease (increase) in redemption value of RNCI	271	(965)	(1,514)	(4,528)
Net income (loss) attributable to common shareholders	$ 30,312	$ (6,782)	$ 87,857	$ 12,184
Net income (loss) per common share attributable to common shareholders:
Basic	$ 0.51	$ (0.11)	$ 1.47	$ 0.20
Diluted	$ 0.50	$ (0.11)	$ 1.46	$ 0.20
Weighted average number of common shares outstanding:
Basic	59,964	59,590	59,908	59,475
Diluted	60,402	59,590	60,201	60,035

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 30,414	$ (5,140)	$ 90,705	$ 18,368
Other comprehensive income (loss) before tax:
Increase (decrease) in fair value of derivatives	(2,633)	6,549	(9,487)	23,910
Reclassification to earnings	2,416	(6,696)	(3,344)	(12,604)
Other comprehensive income (loss) before tax	(217)	(147)	(12,831)	11,306
Income tax expense (benefit) related to other comprehensive income (loss)	(56)	(37)	(3,296)	2,806
Other comprehensive income (loss), net of tax	(161)	(110)	(9,535)	8,500
Comprehensive income (loss)	30,253	(5,250)	81,170	26,868
Less: Comprehensive income attributable to redeemable non-controlling interest	(373)	(677)	(1,334)	(1,656)
Comprehensive income (loss) attributable to the Company	$ 29,880	$ (5,927)	$ 79,836	$ 25,212

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Oct. 01, 2022	Jan. 01, 2022
Current assets:
Cash and cash equivalents	$ 218,841	$ 96,146
Accounts receivable, net	166,885	141,221
Inventories	112,257	91,440
Contract assets, net	56,313	55,239
Prepaid expenses	12,456	8,727
Other current assets	15,865	28,985
Total current assets	582,617	421,758
Property, plant and equipment, net	185,305	185,266
Operating lease right-of-use asset, net	93,020	91,162
Intangible assets, net	369,000	394,525
Goodwill	370,115	364,598
Other assets, net	2,547	3,301
Total assets	1,602,604	1,460,610
Current liabilities:
Accounts payable and accrued liabilities	180,543	122,681
Current portion of operating lease liability	15,247	13,180
Total current liabilities	195,790	135,861
Long-term debt, net	626,576	625,655
Operating lease liability, less current portion	84,894	83,903
Deferred income taxes	34,193	37,489
Other liabilities	7,980	11,742
Total liabilities	949,433	894,650
Commitments and contingencies
Redeemable non-controlling interest	39,711	36,863
Shareholders' equity:
Preferred stock; par value $.01 per share; 10,000 shares authorized; no shares outstanding
Common stock; par value $.01 per share; 200,000 shares authorized; 63,912 and 63,516 shares issued and 59,978 and 58,696 shares outstanding at October 1, 2022 and January 1, 2022, respectively	639	635
Additional paid-in-capital	439,773	433,347
Accumulated other comprehensive income (loss)	(2,529)	7,006
Retained earnings	193,866	106,398
Treasury stock at cost	(18,289)	(18,289)
Total shareholders' equity	613,460	529,097
Total liabilities, redeemable non-controlling interest and shareholders' equity	$ 1,602,604	$ 1,460,610

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Oct. 01, 2022	Jan. 01, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, Shares authorized	10,000,000	10,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, Shares authorized	200,000,000	200,000,000
Common stock, shares issued	63,912,000	63,516,000
Common stock, shares outstanding	59,978,000	58,696,000

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021
Cash flows from operating activities:
Net income	$ 90,705	$ 18,368
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	25,359	22,290
Amortization	19,725	15,174
Provision for credit losses	7,395	3,309
Stock-based compensation	7,638	5,748
Amortization of deferred financing costs, debt discount and premium	921	674
Asset impairment charges	2,131
Debt extinguishment costs, including call premium classified as financing activity		25,472
(Gain) loss on sales of assets	(166)	105
Change in operating assets and liabilities (net of effects of acquisition):
Accounts receivable	(35,166)	(45,997)
Inventories	(21,145)	(11,607)
Contract assets, net, prepaid expenses, other current and other assets	6,213	(22,843)
Accounts payable, accrued and other liabilities	48,531	9,074
Net cash provided by operating activities	152,141	19,767
Cash flows from investing activities:
Purchases of property, plant and equipment	(24,741)	(25,663)
Investment in and acquisitions of business	(787)	(106,480)
Proceeds from sales of assets	41	183
Net cash used in investing activities	(25,487)	(131,960)
Cash flows from financing activities:
Payment of fair value of contingent consideration in Anlin Acquisition	(2,362)
Proceeds from issuance of senior notes		638,300
Payments of senior notes		(425,000)
Payment of call premium on redemption of senior notes		(21,518)
Payments of long-term debt		(54,000)
Payments of financing costs		(10,361)
Purchases of common stock relating to tax withholdings on employee equity awards	(1,888)	(1,159)
Proceeds from exercise of stock options		138
Proceeds from issuance of common stock under employee stock purchase plan (ESPP)	291	191
Net cash (used in) provided by financing activities	(3,959)	126,591
Net increase (decrease) in cash and cash equivalents	122,695	14,398
Cash and cash equivalents at beginning of period	96,146	100,320
Cash and cash equivalents at end of period	218,841	114,718
Non-cash activity:
Issuance of common stock in Eco Acquisition		6,108
Additions to right-of-use asset	13,625	47,838
Additions to operating lease liability	(13,625)	(47,838)
Property, plant and equipment additions in accounts payable	$ 79	$ 268

XML

Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income [Member]	Retained Earnings [Member]	Treasury Stock [Member]
Beginning Balance at Jan. 02, 2021	$ 485,134	$ 625	$ 420,202	$ 2,720	$ 79,896	$ (18,309)
Beginning Balance, Shares at Jan. 02, 2021		58,998,711
Vesting of restricted stock, Shares		221,724
Grants of restricted stock		$ 7	(7)
Forfeitures of restricted stock		$ (1)	1
Purchases of treasury stock	(1,159)					(1,159)
Purchases of treasury stock, Shares		(50,266)
Retirement of treasury stock		$ (1)	(969)		(189)	1,159
Issuance of treasury stock, Shares		4,600
Issuance of treasury stock					(20)	20
Stock-based compensation	5,748		5,748
Exercise of stock options, Shares		67,797
Exercise of stock options	138	$ 1	137
Common stock issued under ESPP, Shares		12,024
Common stock issued under ESPP	191		191
Issuance in acquisition of Eco	6,108	$ 4	6,104
Issuance in acquisition of Eco, Shares		357,797
Net income (loss) attributable to the Company	16,712				16,712
Decrease (increase) in value of RNCI	(4,528)				(4,528)
Other comprehensive income (loss), net of tax expense	8,500			8,500
Ending Balance at Oct. 02, 2021	516,844	$ 635	431,407	11,220	91,871	(18,289)
Ending Balance, Shares at Oct. 02, 2021		59,612,387
Beginning Balance at Jul. 03, 2021	521,622	$ 632	429,268	11,330	98,681	(18,289)
Beginning Balance, Shares at Jul. 03, 2021		59,587,128
Vesting of restricted stock, Shares		32,258
Grants of restricted stock		$ 4	(4)
Purchases of treasury stock	(154)					(154)
Purchases of treasury stock, Shares		(7,852)
Retirement of treasury stock		$ (1)	(125)		(28)	154
Stock-based compensation	2,254		2,254
Common stock issued under ESPP, Shares		853
Common stock issued under ESPP	14		14
Net income (loss) attributable to the Company	(5,817)				(5,817)
Decrease (increase) in value of RNCI	(965)				(965)
Other comprehensive income (loss), net of tax expense	(110)			(110)
Ending Balance at Oct. 02, 2021	516,844	$ 635	431,407	11,220	91,871	(18,289)
Ending Balance, Shares at Oct. 02, 2021		59,612,387
Beginning Balance at Jan. 01, 2022	529,097	$ 635	433,347	7,006	106,398	(18,289)
Beginning Balance, Shares at Jan. 01, 2022		59,696,117
Vesting of restricted stock, Shares		359,360
Grants of restricted stock		$ 6	(6)
Forfeitures of restricted stock		$ (1)	1
Purchases of treasury stock	(1,888)					(1,888)
Purchases of treasury stock, Shares		(95,001)
Retirement of treasury stock		$ (1)	(1,498)		(389)	1,888
Stock-based compensation	7,638		7,638
Common stock issued under ESPP, Shares		17,964
Common stock issued under ESPP	291		291
Net income (loss) attributable to the Company	89,371				89,371
Decrease (increase) in value of RNCI	(1,514)				(1,514)
Other comprehensive income (loss), net of tax expense	(9,535)			(9,535)
Ending Balance at Oct. 01, 2022	613,460	$ 639	439,773	(2,529)	193,866	(18,289)
Ending Balance, Shares at Oct. 01, 2022		59,978,440
Beginning Balance at Jul. 02, 2022	580,805	$ 639	437,207	(2,368)	163,616	(18,289)
Beginning Balance, Shares at Jul. 02, 2022		59,946,691
Vesting of restricted stock, Shares		42,258
Purchases of treasury stock	(225)					(225)
Purchases of treasury stock, Shares		(10,509)
Retirement of treasury stock			(163)		(62)	225
Stock-based compensation	2,729		2,729
Net income (loss) attributable to the Company	30,041				30,041
Decrease (increase) in value of RNCI	271				271
Other comprehensive income (loss), net of tax expense	(161)			(161)
Ending Balance at Oct. 01, 2022	$ 613,460	$ 639	$ 439,773	$ (2,529)	$ 193,866	$ (18,289)
Ending Balance, Shares at Oct. 01, 2022		59,978,440

XML

Condensed Consolidated Statements of Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Statement of Stockholders' Equity [Abstract]
Income tax expense (benefit) related to other comprehensive income (loss)	$ (56)	$ (37)	$ (3,296)	$ 2,806

XML

Description of Business and Basis of Presentation

9 Months Ended

Oct. 01, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Basis of Presentation

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

About PGT Innovations, Inc.

PGT Innovations, Inc. (“PGTI,” “we,” or the “Company”) is a leading manufacturer of impact-resistant aluminum and vinyl-framed windows and doors and offers a broad range of fully customizable window and door products. The majority of our sales are to customers in the state of Florida; however, we also sell products in many other states. Our acquisition of Eco Enterprises (“Eco Acquisition”) in February 2021 expanded our range of product offerings in our major market of southeast Florida. We also have sales of products that are designed to unify indoor and outdoor living spaces, through our Western Windows Systems’ (“WWS”) division, and most of its sales are in the western United States. Our acquisition of Anlin Windows and Doors in October 2021 expanded our presence in the west. Products are sold primarily through an authorized dealer and distributor network. However, with our acquisition of NewSouth Window Solutions in February 2020, we also sell window products in the direct-to-consumer channel through a “factory-direct” sales model.

We were incorporated in the state of Delaware on December 16, 2003, as JLL Window Holdings, Inc., with primary operations in North Venice, Florida. On February 15, 2006, our Company was renamed PGT, Inc. On December 14, 2016, we announced that we changed our name to PGT Innovations, Inc. and, effective on December 28, 2016, the listing of our common stock was transferred to the New York Stock Exchange (“NYSE”) from the NASDAQ Global Market, and began trading on the NYSE under its existing ticker symbol of “PGTI”. As of October 1, 2022, we had major manufacturing operations in Florida, in North Venice, Tampa, and in the greater Miami area. We also have manufacturing operations in Phoenix, Arizona and Clovis, California. Additionally, we have two glass tempering and laminating plants, one in North Venice, Florida and one in Medley, Florida, and one insulation glass plant located in North Venice, Florida. With the acquisition of Martin Door, a manufacturer of residential and commercial garage doors, effective as of October 14, 2022, we have a manufacturing operation in Salt Lake City, Utah. See Note 18, "Subsequent Events".

All references to PGTI or our Company apply to the consolidated financial statements of PGT Innovations, Inc. unless otherwise noted.

COVID-19

During March 2020, a global pandemic (the “Pandemic”) was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The Pandemic resulted in a significant number of infections, hospitalizations and deaths around the world, including in the United States, and in several of our key markets. COVID-19 and its effects will likely continue to impact market conditions and business operations across industries worldwide. Therefore, we remain cautious about how the economy might behave for the next few years and continue to monitor potential impact on our operations. The extent to which the circumstances of the aftermath of the Pandemic, including the continued existence of the many variants of COVID-19 in society, could affect our future business, operations and financial results will depend upon numerous factors that we are not able to accurately predict. As such, we are unable to accurately predict the future impacts of COVID-19 on the U.S. and global economies. The impact to our customers’ and suppliers’ businesses and other factors are identified in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K/A, filed with the United States Securities and Exchange Commission on June 10, 2022.

Basis of Presentation

These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnotes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. Our condensed consolidated financial statements are unaudited; however, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for the remainder of the current year or for any future periods. The Company’s fiscal three and nine months ended October 1, 2022, and October 2, 2021 consisted of 13 and 39 weeks, respectively.

The condensed consolidated balance sheet as of January 1, 2022, is derived from the audited consolidated financial statements, but does not include all disclosures required by GAAP. The condensed consolidated balance sheet as of January 1, 2022, and the unaudited condensed consolidated financial statements as of and for the periods ended October 1, 2022 and October 2, 2021, should be read in conjunction with the more detailed audited consolidated financial statements for the year ended January 1, 2022, included in the Company’s most recent Annual Report on Form 10-K/A. The accounting policies used in the preparation of these unaudited condensed consolidated financial statements are consistent with the accounting policies described in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K/A.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

We have two reportable segments: the Southeast segment and the Western segment. The Southeast reporting segment, which is also an operating segment, is composed of sales from our facilities in Florida. The Western reporting segment, also an operating segment, is composed of sales from our facilities in Arizona and California. See Note 16 for segment disclosures.

Recently Adopted Accounting Pronouncements

Business Combinations - Contracts Assets and Liabilities

On October 28, 2021, the FASB issued ASU 2021-08, which amends ASC 805-20 to “require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.” Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. This standard was effective beginning January 1, 2022. Early adoption was permitted and was adopted by the Company in the period beginning January 3, 2021. The adoption of this standard did not have any impact on our consolidated financial statements.

XML

Revenue Recognition and Contracts with Customers

9 Months Ended

Oct. 01, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition and Contracts with Customers

NOTE 2. REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS

Revenue Recognition Accounting Policy

The Company primarily manufactures fully customized windows and doors based on design specifications, measurements, colors, finishes, framing materials, glass-types, and other options selected by the customer at the point in time an order is received. The Company has an enforceable right to payment at the time an order is received and accepted at the agreed-upon sales prices contained in our agreements with our customers for all manufacturing efforts expended on behalf of its customers. Due to the customized build-to-order nature of these products, the Company’s assessment is that the substantial portion of its finished goods and certain unused glass components have no alternative use, and that control of these products and components passes to the customer over time during the manufacturing of the products in an order, or upon our receipt of certain pre-cut glass components from our supplier attributed to specific customer orders.

Based on these factors, the Company recognizes a substantial portion of revenue over time during the manufacturing process once customization begins, and for certain unused glass components on hand, at the end of a reporting period. Revenue on work-in-process at the end of a reporting period is recognized in proportion to costs incurred to total estimated cost of the product being manufactured. Except for the Western segment’s volume products, discussed in the section titled Disaggregation of Revenue from Contracts with Customers below, revenue recognized at a point in time is immaterial.

Disaggregation of Revenue from Contracts with Customers

As discussed in Note 1, we have two reportable segments: our Southeast segment and our Western segment. See Note 16 for more information. The following table provides information about our net sales by reporting segment, product category and market for the three and nine months ended October 1, 2022 and October 2, 2021:

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
Disaggregation of revenue (in millions):	2022		2021		2022		2021
Reporting segment:
Southeast	$	288.2	$	255.1	$	867.5	$	731.2
Western		97.6		45.3		283.5		125.8
Total net sales	$	385.8	$	300.4	$	1,151.0	$	857.0
Product category:
Impact-resistant window and door products	$	227.7	$	207.8	$	688.5	$	596.7
Non-impact window and door products		158.1		92.6		462.5		260.3
Total net sales	$	385.8	$	300.4	$	1,151.0	$	857.0
Market:
New construction	$	160.9	$	120.5	$	484.3	$	365.0
Repair and remodel		224.9		179.9		666.7		492.0
Total net sales	$	385.8	$	300.4	$	1,151.0	$	857.0

The Company’s Western segment includes both custom and volume products. This segment’s volume products are not made-to-order and are of standardized sizes and design specifications. Therefore, the Company’s assessment is that the Western segment’s volume products have alternative uses, and that control of these products passes to the customer at a point in time, which is typically when the product has been delivered to the customer. For the three months ended October 1, 2022 and October 2, 2021, the Western segment’s net sales of its volume products were $26.6 million and $21.9 million, respectively. For the nine months ended October 1, 2022 and October 2, 2021, the Western segment’s net sales of its volume products were $82.6 million and $62.5 million, respectively.

Contract Balances

Contract assets represent sales recognized in excess of billings related to finished goods not yet shipped and certain unused glass components not yet placed into the production process for which revenue is recognized over time as noted above. Contract liabilities relate to customer deposits at the end of reporting periods. At October 1, 2022 and January 1, 2022, those contract liabilities totaled $42.9 million and $45.2 million, respectively, of which $34.4 million and $37.0 million, respectively, are classified within accrued liabilities, and $8.5 million and $8.2 million, respectively, are classified as a reduction to the contract assets to which they relate. Contract assets, net, totaled $56.3 million at October 1, 2022 and $55.2 million at January 1, 2022, in the accompanying condensed consolidated balance sheets.

Because of the short-term nature of our performance obligations, as discussed below, substantially all of our performance obligations are satisfied within the quarter following the end of a reporting period. As such, we expect substantially all of the contract liabilities at January 1, 2022 were satisfied in the first quarter of 2022, and contract assets at January 1, 2022 were transferred to accounts receivable in the first quarter of 2022. We expect substantially all of the contract liabilities at October 1, 2022 will be satisfied in the fourth quarter of 2022, and contract assets at October 1, 2022 will be transferred to accounts receivable in the fourth quarter of 2022. Contract liabilities at October 1, 2022 represents cash received during the three-month period ended October 1, 2022, excluding amounts recognized as revenue during that period. Contract assets at October 1, 2022 represents revenue recognized during the three-month period ended October 1, 2022, excluding amounts transferred to accounts receivable during that period. Contract liabilities at January 1, 2022 represents cash received during the three-month period ended January 1, 2022, excluding amounts recognized as revenue during that period. Contract assets at January 1, 2022 represents revenue recognized during the three-month period ended January 1, 2022, excluding amounts transferred to accounts receivable during that period.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue as the performance obligation is satisfied. Our contracts with our customers generally represent an approved purchase order together with our standard terms and conditions. Our custom product contracts include distinct goods that are substantially the same and have the same pattern of transfer to the customer over time, and therefore represent a series of distinct goods accounted for as a single performance obligation. For volume products, we allocate the contract’s transaction price to each distinct performance obligation based on the estimated relative standalone selling price of each distinct good. Observable standalone sales are used to determine the standalone selling price. Certain customers are eligible for rebates based on their volume or purchases during an annual period. Rebates are recorded as a reduction to sales and were immaterial in all periods presented.

Performance obligations are satisfied over time, generally for our custom products, and as of a point in time for our volume products. Performance obligations are supported by contracts with customers, and we have elected not to disclose our unsatisfied performance obligations as of October 1, 2022 under the short-term contract exemption as we expect such performance obligations will be satisfied within the quarter following the end of a reporting period.

Policies Regarding Shipping and Handling Costs and Commissions on Contract Assets

The Company has made a policy election to continue to recognize shipping and handling costs as a fulfillment activity. Treating shipping and handling as a fulfillment activity requires estimated shipping and handling costs for undelivered products and certain glass components on which we have recognized revenue and created a contract asset, to be accrued to match this cost with the recognized revenue. Sales taxes collected from customers are recorded on a net basis.

The Company utilizes the practical expedient which permits the current expensing of costs to obtain a contract when the expected amortization period is one year or less, which typically results in expensing commissions paid to employees. We expense sales commissions paid to employees as sales are recognized, including sales from the creation of contract assets, as the expected amortization period is less than one year.

Allowance for Credit Losses

The Company adopted Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” (“Topic 326”) on December 29, 2019 (the first day of our 2020 fiscal year). Topic 326 requires us to measure all expected credit losses for financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. In the ordinary course of business, we extend credit to qualified dealers and distributors, generally on a non-collateralized basis. The Company maintains an allowance for credit losses which is based on management’s assessments of the amount which may become uncollectible in the future and is determined through consideration of our write-off history, specific identification of uncollectible accounts based in part on the customer’s past due balance (based on contractual terms), and consideration of prevailing economic and industry conditions, and may include anticipated unfavorable impacts of the COVID-19 pandemic on the businesses of our customers, such as dealers and distributors.

As of October 1, 2022 and January 1, 2022, we had gross accounts receivable of $177.2 million and $145.9 million, respectively, and an allowance for credit losses of $10.3 million and $4.7 million, respectively. During the second quarter of 2022, a customer with whom we have had a long-term relationship experienced financial difficulties. As such, we determined to cease taking orders and provide additional reserves of approximately $3.0 million against our existing exposure to this customer. During the nine-months ended October 1, 2022, we recorded provisions for credit losses totaling $7.4 million, including the provision relating to this customer.

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Warranty

9 Months Ended

Oct. 01, 2022

Guarantees and Product Warranties [Abstract]

Warranty

NOTE 3. WARRANTY

Most of our manufactured products are sold with warranties. Warranty periods, which vary by product components, generally range from 1 to 10 years; however, the warranty period for a limited number of specifically identified components in certain applications is a lifetime. The majority of the products sold have warranties on components which range from 1 to 3 years. The amount charged to expense for warranties is based on management’s assessment of the cost per service call and the number of service calls expected to be incurred to satisfy warranty obligations on the current net sales.

During the three months ended October 1, 2022, we recorded warranty expense at a rate of approximately 1.8% of sales, which was slightly lower than the rate during the three months ended October 2, 2021 of 1.9% of sales. Our warranty expense rate in the three months ended October 1, 2022 is a result of a decrease in the use of higher-cost contract labor we had used in the first half of 2022 to respond to warranty claims due to a currently tight labor market.

During the nine months ended October 1, 2022, we recorded warranty expense at a rate of approximately 2.0% of sales, which was slightly lower than the rate during the nine months ended October 2, 2021 of 2.1% of sales. Our warranty expense rate in the nine months ended October 1, 2022 was affected by the use of higher-cost contract labor during the first quarter of 2022 to respond to warranty claims in a currently tight labor market. The rate in the nine months ended October 2, 2021 includes the effect of wind-down of certain commercial business in the first quarter of 2021, which resulted in warranty costs higher than those we would incur in the normal course of business.

The following table summarizes current period charges, adjustments to previous estimates, as well as settlements, which represent actual costs incurred during the period for the three and nine months ended October 1, 2022 and October 2, 2021. The reserve is determined through assessing our claims history. Of the accrued warranty reserve of $15.5 million at October 1, 2022, $12.5 million is classified within accrued expenses as current liabilities on the condensed consolidated balance sheet at October 1, 2022, with the remainder classified within other liabilities as non-current liabilities. Of the accrued warranty reserve of $13.5 million at January 1, 2022, $11.8 million is classified within accrued expenses as current liabilities on the condensed consolidated balance sheet at January 1, 2022, with the remainder classified within other liabilities as non-current liabilities.

	Beginning		Acquisition-			Charged								End of
Accrued Warranty	of Period		Related			to Expense		Adjustments			Settlements			Period
(in thousands)
Three months ended October 1, 2022	$	16,151	$	(2,537	)	$	6,880	$	750		$	(5,763	)	$	15,481
Three months ended October 2, 2021	$	9,459	$	347		$	5,706	$	(531	)	$	(5,505	)	$	9,476
Nine months ended October 1, 2022	$	13,504	$	(2,537	)	$	22,872	$	1,263		$	(19,621	)	$	15,481
Nine months ended October 2, 2021	$	8,001	$	536		$	18,015	$	(890	)	$	(16,186	)	$	9,476

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Inventories

9 Months Ended

Oct. 01, 2022

Inventory Disclosure [Abstract]

Inventories

NOTE 4. INVENTORIES

Inventories consist principally of raw materials purchased for the manufacture of our products. We have limited finished goods inventory since the substantial majority of our products are custom, made-to-order and the revenue on these products, as well as the related cost, has been fully recognized upon completion of the manufacturing process. Finished goods inventory and work-in-progress costs include direct materials, direct labor, and overhead. All inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. Inventories consisted of the following:

	October 1,		January 1,
	2022		2022
	(in thousands)
Raw materials	$	107,005	$	87,164
Work-in-progress		2,729		3,248
Finished goods		2,523		1,028
Inventories	$	112,257	$	91,440

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Stock Based Compensation

9 Months Ended

Oct. 01, 2022

Share-Based Payment Arrangement [Abstract]

Stock Based Compensation

NOTE 5. STOCK BASED-COMPENSATION

Stock-Based Compensation Expense

We record stock compensation expense over an equity award’s vesting period based on the award’s fair value at the date of grant. We recorded compensation expense for stock-based awards of $2.7 million for the three months ended October 1, 2022 and $2.3 million for the three months ended October 2, 2021. We recorded compensation expense for stock-based awards of $7.6 million for the nine months ended October 1, 2022 and $5.7 million for the nine months ended October 2, 2021. As of October 1, 2022, there was $11.9 million in total unrecognized compensation cost related entirely to restricted share awards, including time-vesting and those with performance conditions. These costs are expected to be recognized in earnings on an accelerated basis over the weighted average remaining vesting period of 1.7 years at October 1, 2022.

Of the $2.7 million and $2.3 million in stock-based compensation expense in the three months ended October 1, 2022 and October 2, 2021, respectively, $2.3 million and $1.9 million, respectively, are classified within selling, general and administrative expense in the accompanying condensed consolidated statements of operations, with the remainders classified within cost of sales. Of the $7.6 million and $5.7 million in stock-based compensation expense in the nine months ended October 1, 2022 and October 2, 2021, respectively, $6.6 million and $4.9 million, respectively, are classified within selling, general and administrative expense in the accompanying condensed consolidated statements of operations, with the remainders classified within cost of sales.

Issuance

On February 14, 2022, we issued 468,518 shares of restricted stock to certain executive and non-executive employees of the Company, under the Company’s 2022 long-term incentive plan (“2022 LTIP”). Half of the shares awarded under the 2022 LTIP, or 234,259 shares, are subject to adjustment based on the performance of the Company for the 2022 fiscal year. A portion of the 234,259 performance shares issued under the 2022 LTIP are also subject to a total shareholder return ("TSR") component, which will not be finalized until the third anniversary of the February 14, 2022 grant date. Specifically, 37.5% of the one-half of the restricted stock awarded in the 2022 LTIP are performance restricted shares which will not be earned unless certain financial performance metrics are met by the Company for the 2022 fiscal year. The performance criteria, as defined in the share awards, provide for a graded awarding of shares based on the percentage by which the Company meets earnings before interest, taxes, depreciation and amortization ("EBITDA") as defined in our 2022 business plan. The percentages, ranging from less than 80% to greater than 120% of the target amount of that EBITDA metric, provide for the awarding of shares ranging from 0% to 200% of the target amount of shares with respect to 37.5% of half of the 234,259 shares, or 87,849 shares. The remaining 62.5% of the one-half of the restricted stock awarded in the 2022 LTIP, or 146,410 shares, are subject to the same EBITDA metric, but are also subject to a TSR component which stratifies the performance of the Company's common stock price compared to a defined peer group of companies over the three-year period subsequent to February 14, 2022, such that if the Company's TSR falls at the 75th percentile or higher compared to the peer group, grantees will receive an additional 25% of performance shares. If the Company's TSR falls at the 25th percentile or lower compared to the peer group, grantees will forfeit 25% of performance shares. If the Company's TSR falls within the 75th and 25th percentiles, there will be no additional adjustment and grantees will receive their performance shares as per the EBITDA metric previously discussed. The final award is also affected by forfeitures upon the termination of a grantee’s employment with the Company. The remaining 234,259 shares from the 2022 LTIP are not subject to adjustment based on any performance or other criteria, but rather, vest in three equal installments on each of the first, second and third anniversaries of the grant date, assuming the grantee is employed by the Company on those vesting dates.

The grant date fair value of the 2022 LTIP was $18.27 per share for those shares not subject to adjustment based on any performance or other criteria except the passage of time, and the 37.5% of shares subject only to the EBITDA criteria of Company performance. For the 62.5% of performance shares subject to both the EBITDA criteria of Company performance and the TSR component, the grant date fair value was $20.79 per share as determined by a third-party valuation specialist engaged by the Company, which used Monte Carlo simulation techniques to determine the fair value of such shares, which we consider to be a Level 3 input. As such, the weighted-average fair value of the 234,259 shares subject to the performance of the Company for the 2022 fiscal year, including those shares subject to the TSR, is $19.84 per share.

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Acquisitions

9 Months Ended

Oct. 01, 2022

Business Combinations [Abstract]

Acquisitions

NOTE 6. ACQUISITIONS

See Note 18, Subsequent Events, for a discussion of events relating to an acquisition that occurred after October 1, 2022.

ANLIN WINDOWS & DOORS

On October 25, 2021, we completed the acquisition of Anlin Windows & Doors. The acquisition was done by Western Window Holding LLC, a Delaware limited liability company, indirectly wholly-owned by PGT Innovations, Inc., which acquired substantially all of the assets, properties and rights owned, used or held for use in the business, as operated by Anlin Industries, a California corporation, of manufacturing vinyl windows and doors for the replacement market and the new construction market, and all activities conducted in connection therewith (the "Anlin Acquisition"), pursuant to that certain Asset Purchase Agreement dated as of September 1, 2021 (the “Anlin Purchase Agreement”), by and among the Company, and Anlin Industries. The fair value of consideration transferred in the Anlin Acquisition was $121.7 million, composed of $115.0 million in cash, including $113.5 million for purchase price and $1.5 million in working capital adjustments, including $0.8 million paid during the three months ended October 1, 2022, and fair value of contingent consideration of $6.7 million, discussed in greater detail below.

The cash portion of the Anlin Acquisition of $115.0 million was financed with borrowings under the fourth amendment of our 2016 Credit Agreement due 2024 of $60.0 million, which resulted in net proceeds after fees of $59.4 million, with the remaining $55.6 million from cash on hand. Cash on hand for the Anlin Acquisition was ultimately provided by the issuance of $575.0 million of 4.375% senior notes due 2029 and related transactions, further explained in Note 9, Long-Term Debt, as well as cash generated through operations.

The estimated fair value of assets acquired, and liabilities assumed as of the closing date of the Anlin Acquisition, are as follows:

	Initial Allocation			Adjustments to Allocation			Final Allocation
Accounts receivable	$	10,803		$	—		$	10,803
Inventories		7,633			(327	)		7,306
Contract assets, net		7,027			—			7,027
Prepaid expenses and other assets		1,626			(954	)		672
Property and equipment		22,800			1,509			24,309
Operating lease right-of-use asset		3,450			14			3,464
Intangible assets		77,800			(5,800	)		72,000
Total assets acquired		131,139			(5,558	)		125,581
Accounts payable		(5,175	)		593			(4,582	)
Accrued and other liabilities		(7,993	)		2,537			(5,456	)
Operating lease liability		(3,450	)		(14	)		(3,464	)
Total liabilities assumed		(16,618	)		3,116			(13,502	)
Net assets acquired		114,521			(2,442	)		112,079
Goodwill		5,596			4,017			9,613
Fair value of consideration transferred	$	120,117		$	1,575		$	121,692
Consideration:
Cash	$	114,196		$	786		$	114,982
Contingent consideration		5,921			789			6,710
Fair value of consideration transferred	$	120,117		$	1,575		$	121,692

The fair value of certain working capital related items, including Anlin’s accounts receivable, prepaid expenses and other assets, and accounts payable and accrued liabilities, approximated their book values at the date of the Anlin Acquisition. The fair value of inventory was estimated by major category, at net realizable value, which we believe approximates the price a market participant could achieve in a current sale. Inventories at the acquisition date was primarily composed of raw materials. Further review during the first quarter of 2022 resulted in an adjustment to decrease the estimated net realizable value of inventory. The fair value of property and equipment and remaining useful lives were estimated by management, with the assistance of a third-party valuation firm, using the cost approach. During the first quarter of 2022, additional value was assigned to acquired property and equipment, primarily due to an increase in the estimate of the fair value of acquired land.

Valuations of the intangible assets were done using income and royalty relief approaches based on projections provided by management, which we consider to be Level 3 inputs, with the assistance of a third-party valuation firm. During the first quarter of 2022, we made several adjustments to the estimated fair value of the initial valuation of certain intangible assets. Additionally, we determined that a portion of the customer relationship asset we acquired related to Anlin's backlog, which had an estimated useful life of less than three months, resulting in its estimated fair value of $2.2 million becoming fully amortized in the first quarter of 2022, discussed below, classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine-month period ended October 1, 2022.

We incurred acquisition costs totaling $1.8 million relating to legal expenses, representations and warranties insurance, diligence, accounting and printing services in the Anlin Acquisition, incurred during the year ended January 1, 2022, primarily during the third and fourth quarters.

The Anlin Purchase Agreement provides for the potential for earn-out contingency payments to sellers should Anlin achieve a certain level of earnings before interest, taxes, depreciation and amortization, ("Anlin EBITDA"), as defined in the Anlin Purchase Agreement, for its fiscal years of 2021 and 2022, of up to $3.2 million to be paid out by March 31, 2022, and of up to $9.5 million to be paid out by March 31, 2023, respectively. We had recorded a preliminary earn-out contingent liability of $5.9 million as of our year ended January 1, 2022, which represented its then estimated fair value based on probability adjusted levels of estimated Anlin EBITDA. Estimated Anlin EBITDA is a significant input that is not observable in the market, which ASC 820 considers to be a Level 3 input. In the first quarter of 2022, we finalized the fair value of the earn-out contingency, which we adjusted by an additional $0.8 million, to a total of $6.7 million of estimated fair value of contingent consideration as of the effective date of the Anlin Acquisition. This amount included $2.4 million for the contingent consideration relating to 2021 Anlin EBITDA and $4.3 million for the contingent consideration relating to the 2022 Anlin EBITDA.

The first contingent consideration payment was agreed to be $2.7 million, which exceeded its estimated fair value by $0.3 million. This excess is classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine months ended October 1, 2022. The payment was made during the second quarter of 2022 after both parties agreed to extend the deadline for the first payment past the March 31, 2022 due date stated in the Anlin Purchase Agreement.

During the third quarter of 2022, we updated our estimate of the fair value of the contingent consideration relating to 2022 Anlin EBITDA, which was estimated to be $9.1 million. As such, we recognized an expense of approximately $4.8 million, representing the difference between this updated estimated fair value, and the fair value estimated in our purchase price allocation, classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine months ended October 1, 2022. We will continue to update our estimate of the fair value of the contingent consideration relating to 2022 Anlin EBITDA each reporting period, as required by ASC 805, and record any adjustments within operating income until finalized by March 31, 2023.

Regarding the allocation of the fair value of consideration transferred in the Anlin Acquisition, as discussed in Note 5 of our Annual Report on Form 10-K/A for the year ended January 1, 2022, specific items being finalized are our calculations of contingencies assumed in the Anlin acquisition, including the earn-out contingencies and reserves for warranty obligations. During the three months ended October 1, 2022, we finalized our calculation of the reserves for warranty obligations assumed in the Anlin Acquisition. As a result, we recorded a decrease in accrued and other liabilities of $2.5 million, resulting in an equal decrease in goodwill.

For tax purposes, contingent consideration does not become part of tax goodwill until paid. As such, the amount of goodwill deductible for tax purposes will not be finalized until the outcome of both earn-out contingency payments are known. As of October 1, 2022, the initial estimated fair value of the contingent consideration in the allocation relating to the remaining payment was $4.3 million, and goodwill according to the current allocation of consideration is $9.6 million. As such, as of October 1, 2022, the amount of goodwill estimated to be tax deductible is the difference of $5.3 million. Anlin's goodwill is included as part of the Western reporting. We believe Anlin's goodwill relates to the expansion of our footprint in a key, strategic market we have identified as a geographic area of growth for our Company. Our estimate of the amount of tax deductible goodwill may change as the amounts of the payments of contingent consideration are finalized.

As discussed above, we made changes to the initial estimated fair values of the trade name and customer relationships assets in the Anlin Acquisition, and we determined that a portion of our customer relationships intangible asset relates to the backlog acquired in the acquisition, which we estimated to be $2.2 million. Due to the short useful life of the customer-related backlog, its estimated fair value of $2.2 million was fully amortized by the end of the first quarter of 2022, which is classified within selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine-month period ended October 1, 2022.

The Anlin Purchase Agreement has a post-closing working capital calculation we were required to prepare, and delivered to sellers during the second quarter of 2022. This resulted in an additional payment of consideration to the seller of $0.8 million, made during the second quarter of 2022.

Valuation of Identified Intangible Assets

The valuation of the identifiable intangible assets acquired in the Anlin Acquisition and our estimate of their respective useful lives are as follows:

								Initial
	Initial		Adjustment to			Preliminary		Useful Life
	Valuation		Valuation			Valuation		(in years)
(in thousands)
Trade name	$	35,400	$	(3,700	)	$	31,700	indefinite
Customer relationships		42,100		(4,300	)		37,800	15
Customer-related backlog		—		2,200			2,200	<1
Developed technology		300		—			300	9
Intangible assets, net	$	77,800	$	(5,800	)	$	72,000

Pro Forma Financial Information

The following unaudited pro forma financial information assumes the acquisition had occurred at the beginning of the earliest period presented that does not include Anlin's actual results for the entire period. The following unaudited pro forma financial information has been prepared by adjusting our historical results to include the results of Anlin adjusted for the following: amortization expense related to the intangible assets arising from the acquisition and interest expense to reflect the refinancing of the 2018 Senior Notes due 2026 and the third amendment of the 2016 Credit Agreement due 2024 into the 2021 Senior Notes due 2029 (the "2021 Senior Notes") and the fourth amendment of the 2016 Credit Agreement due 2024. The unaudited pro forma results below do not necessarily reflect the results of operations that would have resulted had the acquisition been completed at the beginning of the earliest periods presented, nor does it indicate the results of operations in future periods. The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future market conditions which could alter the following unaudited pro forma results.

	Three Months Ended			Nine Months Ended
Pro Forma Results (unaudited)	October 2, 2021			October 2, 2021
(in thousands, except per share amounts)	(unaudited)
Net sales	$	329,613		$	939,395
Net income (loss) attributable to common shareholders	$	(3,326	)	$	18,410
Net income (loss) per common share attributable to common shareholders:
Basic	$	(0.06	)	$	0.31
Diluted	$	(0.06	)	$	0.31

Net sales of Anlin included in the condensed consolidated statement of operations for the three and nine months ended October 1, 2022, was $35.0 million and $106.2 million, respectively. The net income of Anlin in the condensed consolidated statement of operations for the three and nine months ended October 1, 2022, was $4.4 million and $14.6 million, respectively.

CRI SOCAL, INC.

On May 2, 2021, pursuant to an asset purchase agreement dated April 9, 2021, we acquired substantially all of the assets and assumed certain liabilities of CRi SoCal, Inc. (“CRi”), a California corporation doing business in California as Combined Resources (the “CRi Acquisition”). CRi is engaged in the sales, distribution and installation of window and door products, and related design services, to homebuilders in the residential new construction market from its leased facility in Rancho Santa Margarita, California. Until its acquisition by the Company, CRi was a customer of the Company’s western business unit.

The fair value of consideration transferred in the acquisition of CRi totaled $12.5 million, and included $12.1 million in cash, funded from cash on hand, and $0.4 million in accounts receivable owed by CRi to the Company’s western business unit relating to sales prior to the acquisition, which are considered settled as a result of the acquisition. The preliminary estimated fair value of assets acquired and liabilities assumed totaled $17.6 million and $5.1 million, respectively, which included offsetting operating lease right of use assets and operating lease liabilities totaling $2.6 million. The estimated fair value of assets acquired also included current assets totaling $4.1 million, primarily accounts receivable, identifiable intangible assets totaling $7.0 million, goodwill of $3.7 million, all of which we believe is tax deductible, and a small amount of property and equipment. Liabilities assumed included the aforementioned operating lease liability, as well as a total of $2.5 million in trade accounts payable and customer deposits. Valuations of the intangible assets have been estimated using income and royalty relief approaches based on projections, which we consider to be Level 3 inputs, with the assistance of a third-party valuation firm. We believe goodwill in the acquisition relates to the expansion of our footprint in an existing market, in a way that we believe will enhance our long-term profitability in that market of our Western business. Sales and net income from CRi included in the three and nine months ended October 1, 2022 was immaterial.

ECO WINDOW SYSTEMS

On February 1, 2021, we completed the acquisition of a 75% ownership stake in Eco Enterprises and its related companies, Eco Windows Systems, LLC, Eco Glass Production, LLC, and Unity Windows, LLC (together “Eco”). Eco is a manufacturer and installer of aluminum, impact-resistant windows and doors, serving the South Florida region since 2009. Eco is headquartered in Medley, Florida, near Miami, Florida, and has three manufacturing locations in the region, including a glass processing facility.

The fair value consideration for Eco was $102.0 million, including $94.4 million in cash, after favorable adjustments totaling $5.6 million relating to working capital and customer deposits which were agreed to and settled in the second quarter of 2021, and estimated contingent consideration of $1.5 million recorded in the second quarter of 2022, which was required by the purchase agreement. During the third quarter of 2022, the amount of the contingent consideration was finalized and determined to be $1.9 million, with the difference of $427 thousand classified as selling, general and administrative expense in the three and nine months ended October 1, 2022. The fair value of consideration also included PGT Innovations, Inc. common stock with a then estimated fair value of $6.1 million. The cash portion of the purchase price was financed by a second add-on issuance of $60.0 million aggregate principal amount of 6.75% senior notes to the 2018 Senior Notes due 2026 on January 25, 2021 (the “Additional Senior Notes”), issued at 105.5% of their principal amount, resulting in a premium to us of $3.3 million, together with cash on hand of $31.1 million.

The common stock portion of the purchase price was represented by the issuance of 357,797 shares of PGT Innovations, Inc. common stock on February 1, 2021, with a closing price value of $21.34 per share on that date, or approximately $7.6 million based on that price. However, the seller of Eco, who is also the holder of the 25% redeemable non-controlling interest in Eco Enterprises, is restricted from selling these shares for a three-year period from the date of the acquisition. As such, we estimated that there was an approximately 20% discount for the lack of marketability of the shares. The fair value of the redeemable non-controlling interest in the acquisition has been estimated to be $28.5 million, resulting in total fair value of the Eco business in the acquisition, including the redeemable non-controlling interest, of $130.4 million. The fair value of the redeemable non-controlling interest has been calculated as 25% of the initial estimated fair value of the entity at the acquisition date, less a discount for seller’s lack of control in the new entity, estimated to be 5%, and a discount for the seller’s lack of marketability of the minority stake, estimated to be 10%. See Note 17 for more information regarding the redeemable non-controlling interest.

The estimated fair value of assets acquired, and liabilities assumed as of the closing date of the Eco Acquisition, are as follows:

	Initial Allocation			Adjustments to Allocation			Final Allocation
Accounts receivable	$	5,031		$	(241	)	$	4,790
Inventories		7,728			(684	)		7,044
Contract assets, net		4,312			(123	)		4,189
Prepaid expenses and other assets		1,706			(759	)		947
Property and equipment		24,009			(191	)		23,818
Operating lease right-of-use asset		27,864			(1,049	)		26,815
Intangible assets		72,700			1,600			74,300
Total assets acquired		143,350			(1,447	)		141,903
Accounts payable		(6,809	)		(116	)		(6,925	)
Accrued and other liabilities, including customer deposits		(4,215	)		(604	)		(4,819	)
Operating lease liability		(27,864	)		1,049			(26,815	)
Total liabilities assumed		(38,888	)		329			(38,559	)
Net assets acquired		104,462			(1,118	)		103,344
Redeemable non-controlling interest		(34,084	)		5,620			(28,464	)
Net assets acquired, net of redeemable non-controlling interest		70,378			4,502			74,880
Goodwill		30,051			(2,967	)		27,084
Fair value of consideration transferred	$	100,429		$	1,535		$	101,964
Consideration:
Cash	$	94,321		$	35		$	94,356
PGTI common stock		6,108			—			6,108
Contingent consideration		—			1,500			1,500
Fair value of consideration transferred	$	100,429		$	1,535		$	101,964

The fair value of certain working capital related items, including Eco’s accounts receivable, prepaid and other expenses, and accounts payable and accrued liabilities, approximated their book values at the date of the Eco Acquisition. Subsequent to our initial allocation, we adjusted the fair value of certain acquired commercial receivable accounts based on a further post-acquisition assessment of their collectability. The fair value of inventory was estimated by major category, at net realizable value, which we believe approximates the price a market participant could achieve in a current sale. Substantially all of inventories at the acquisition date was composed of raw materials. The fair value of property and equipment was estimated with the assistance of a third-party valuation firm, using the indirect cost approach, which we consider to be Level 3 in the fair value hierarchy. Valuations of the intangible assets have been estimated using income and royalty relief approaches based on projections, which we consider to be Level 3 inputs, with the assistance of a third-party valuation firm.

We incurred acquisition costs totaling $1.7 million relating to legal expenses, representations and warranties insurance, diligence, accounting and printing services in the Eco Acquisition, which includes $1.0 million in the fourth quarter of 2020, and $0.7 million in first three months of 2021, classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine months ended October 2, 2021.

The remaining consideration, after identified intangible assets and the net assets and liabilities recorded at fair value, has currently been estimated to be $27.1 million, classified as part of the Southeast reporting unit goodwill, which we expect the portion of goodwill relating to our 75% investment to be deductible for tax purposes.

We believe goodwill represents the strengthening of our supply chain for glass through faster glass production, as well as diversification and expansion of product offerings in the high-growth commercial market, and an expansion of our dealer network with minimal overlap with our existing deal network.

Valuation of Identified Intangible Assets in the Eco Acquisition

The valuation of the identifiable intangible assets acquired in the Eco Acquisition and our estimate of their respective useful lives are as follows:

								Initial
	Initial		Adjustment to			Final		Useful Life
	Valuation		Valuation			Valuation		(in years)
(in thousands)
Trade names	$	36,000	$	(1,100	)	$	34,900	indefinite
Customer relationships		36,700		2,700			39,400	5 - 15
Intangible assets, net	$	72,700	$	1,600		$	74,300

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Net Income Per Common Share

9 Months Ended

Oct. 01, 2022

Earnings Per Share [Abstract]

Net Income Per Common Share

NOTE 7. NET INCOME PER COMMON SHARE

Basic earnings per share (“EPS”) available to PGT Innovations, Inc. common stockholders is computed using the two-class method by dividing net income attributable to common shareholders, after deducting the redemption adjustment related to the redeemable noncontrolling interest, by the average number of common shares outstanding during the period. Diluted EPS available to PGT Innovations, Inc. common stockholders is computed using the two-class method by dividing net income attributable to common shareholders, after deducting the redemption adjustment related to the redeemable noncontrolling interest, by the average number of common shares outstanding, including the dilutive effect of common stock equivalents computed using the treasury stock method and the average share price during the period.

Dilutive shares from equity plans in the three months ended October 2, 2021 was zero, as we had a net loss attributable to common shareholders during this period which, by adding such dilutive shares would have resulted in anti-dilution to net loss per common share. Dilutive shares from equity plans for the three months ended October 2, 2021 would have been 510 thousand shares.

There were no anti-dilutive securities excluded from the calculation of weighted average shares outstanding for the three- or nine-month periods ended October 1, 2022, or October 2, 2021.

The table below presents the calculation of EPS and a reconciliation of weighted average common shares used in the calculation of basic and diluted EPS:

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
	(in thousands, except per share amounts)
Net income (loss)	$	30,414		$	(5,140	)	$	90,705		$	18,368
Less: Net income attributable to RNCI		(373	)		(677	)		(1,334	)		(1,656	)
Net income (loss) attributable to the Company		30,041			(5,817	)		89,371			16,712
Decrease (increase) in redemption value of RNCI		271			(965	)		(1,514	)		(4,528	)
Net income (loss) attributable to common shareholders	$	30,312		$	(6,782	)	$	87,857		$	12,184
Weighted-average number of common shares outstanding - Basic		59,964			59,590			59,908			59,475
Add: Dilutive shares from equity plans		438			—			293			560
Weighted-average number of common shares outstanding - Diluted		60,402			59,590			60,201			60,035
Net income (loss) per common share attributable to common shareholders:
Basic	$	0.51		$	(0.11	)	$	1.47		$	0.20
Diluted	$	0.50		$	(0.11	)	$	1.46		$	0.20

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Goodwill and Other Intangible Assets

9 Months Ended

Oct. 01, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

NOTE 8. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and intangible assets are as follows:

							Initial
	October 1,			January 1,			Useful Life
	2022			2022			(in years)
	(in thousands)
Goodwill	$	370,115		$	364,598		indefinite
Other intangible assets:
Trade names (indefinite-lived)	$	208,441		$	212,141		indefinite
Customer relationships and customer-related assets		286,947			289,047		<1-15
Trade name (amortizable)		22,200			22,200		15
Developed technology		5,900			5,900		6-10
Non-compete agreement		3,338			3,338		2-5
Software license		590			590		2
Less: Accumulated amortization		(158,416	)		(138,691	)
Subtotal		160,559			182,384
Other intangible assets, net	$	369,000		$	394,525
Goodwill at January 1, 2022	$	364,598
Increase in Anlin Acquisition contingent consideration		789
Decrease in Anlin Acquisition trade name		3,700
Decrease in Anlin Acquisition customer relationships		4,300
Increase in Anlin Acquisition customer-related backlog asset		(2,200	)
Final net working capital payment in Anlin Acquisition		786
Estimated contingent consideration in Eco Acquisition		1,500
Decrease in estimated warranty reserve in Anlin Acquisition		(2,537	)
Net other measurement period changes in Anlin Acquisition		(821	)
Goodwill at October 1, 2022	$	370,115
Trade names (indefinite-lived) at January 1, 2022	$	212,141
Decrease in Anlin Acquisition trade name		(3,700	)
Trade names (indefinite-lived) at October 1, 2022	$	208,441

Estimated amortization of our amortizable intangible assets for future years is as follows:

(in thousands)	Total
Remainder of 2022	$	5,162
2023		20,520
2024		20,474
2025		20,299
2026		16,906
Thereafter		77,198
Total	$	160,559

Amortization expense relating to amortizable intangible assets for the three months ended October 1, 2022 and October 2, 2021, was $5.8 million and $5.3 million, respectively. Amortization expense relating to amortizable intangible assets for the nine months ended October 1, 2022 and October 2, 2021, was $19.7 million and $15.2 million, respectively. See Note 6 for discussion of the amortization of the customer-related backlog asset of $2.2 million during the nine-month period ended October 1, 2022.

We perform our annual goodwill and indefinite-lived intangible asset impairment testing on the first day of our fiscal fourth quarter of each year, and at interim periods if needed based on occurrence of triggering events. During the nine months ended October 1, 2022, we did not identify any events which we believe would trigger the need for tests for impairments of our indefinite-lived intangibles assets. As of October 1, 2022 and January 1, 2022, the carrying value of our Southeast reporting unit goodwill is $228.3 million and $226.8 million, respectively. As of October 1, 2022 and January 1, 2022, the carrying value of our Western reporting unit goodwill is $141.8 million and $137.8 million, respectively. Goodwill of our Southeast reporting unit includes the goodwill relating to Eco. Goodwill of our Western reporting unit includes the goodwill relating to both Anlin and CRi.

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Long-Term Debt

9 Months Ended

Oct. 01, 2022

Debt Disclosure [Abstract]

Long-Term Debt

NOTE 9. LONG-TERM DEBT

	October 1,			January 1,
	2022			2022
	(in thousands)
2021 Senior Notes due 2029, maturing in October 2029	$	575,000		$	575,000
2016 Credit Agreement due 2024, maturing in October 2024		60,000			60,000
Long-term debt		635,000			635,000
Deferred financing costs		(8,424	)		(9,345	)
Long-term debt, net	$	626,576		$	625,655

2021 Senior Notes due 2029

On September 24, 2021, we completed the issuance of $575.0 million aggregate principal amount of 4.375% senior notes (“2021 Senior Notes”), issued at 100% of their principal amount. The 2021 Senior Notes are jointly and severally and fully and unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future restricted subsidiaries, other than any restricted subsidiary of the Company that does not guarantee the existing senior secured credit facilities or any permitted refinancing thereof. The 2021 Senior Notes are senior unsecured obligations of the Company and the guarantors, respectively, and rank pari passu in right of payment with all existing and future senior debt and senior to all existing and future subordinated debt of the Company and the guarantors. The 2021 Senior Notes were offered under Rule 144A of the Securities Act, and in transactions outside the United States under Regulation S of the Securities Act, and have not been, and will not be, registered under the Securities Act.

The 2021 Senior Notes mature on October 1, 2029. Interest on the 2021 Senior Notes is payable semi-annually, in arrears, beginning on April 1, 2022, with interest accruing at a rate of 4.375% per annum from September 24, 2021. We incurred financing costs relating to bank fees and professional services costs relating to the offering and issuance of the 2021 Senior Notes totaling $8.7 million, which included a 1.25% lender spread on the total principal value of the 2021 Senior Notes, or $7.2 million, and $1.5 million of other costs, all of which are being amortized under the effective interest method. See “Deferred Financing Costs” below.

As of October 1, 2022, the face value of debt outstanding under the 2021 Senior Notes was $575.0 million, and accrued interest was $12.6 million. Proceeds from the 2021 Senior Notes were used, in part, to redeem in full the $425.0 million of 2018 Senior Notes due 2026, including the related fees, costs, and the prepayment call premium of $21.5 million, representing 5.063% of the $425.0 million face value then outstanding, prepay the outstanding term loan borrowings under the 2016 Credit Agreement of $54.0 million and the related fees and costs, and finance the Anlin Acquisition in the fourth quarter of 2021. See Note 6, Acquisitions, for a discussion of the Anlin Acquisition.

The indenture for the 2021 Senior Notes gives us the option to redeem some or all of the 2021 Senior Notes at the redemption prices and on the terms specified in the indenture governing the 2021 Senior Notes. The indenture governing the 2021 Senior Notes does not require us to make any mandatory redemptions or sinking fund payments. However, upon the occurrence of a change of control, as defined in the indenture, the Company is required to offer to repurchase the notes at 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. We also may make optional redemptions at various premiums including a make-whole call at the then current treasury rate plus 50 basis points prior to October 1, 2024, then 102.188% on or after August 1, 2024, 101.094% on or after August 2025, then at 100.000% on or after August 1, 2026.

The indenture for the 2021 Senior Notes includes certain covenants limiting the ability of the Company and any guarantors to, (i) incur additional indebtedness; (ii) pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments; (iii) enter into agreements that restrict distributions from restricted subsidiaries; (iv) sell or otherwise dispose of assets; (v) enter into transactions with affiliates; (vi) create or incur liens; merge, consolidate or sell all or substantially all of the Company’s assets; (vii) place restrictions on the ability of subsidiaries to pay dividends or make other payments to the Company; and (viii) designate the Company’s subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications.

2016 Credit Agreement due 2024

See Note 18, Subsequent Events, for a discussion of events relating to the 2016 Credit Agreement that occurred after October 1, 2022.

On February 16, 2016, we entered into the 2016 Credit Agreement due 2024, among us, the lending institutions identified in the 2016 Credit Agreement due 2024, and Truist Financial Corporation (formerly known as SunTrust Bank), as Administrative Agent and Collateral Agent. The 2016 Credit Agreement due 2024 establishes senior secured credit facilities in an aggregate amount of $310.0 million, consisting of a $270.0 million Term B term loan facility originally maturing in February 2022 that amortizes on a basis of 1% annually during its six-year term, and a $40.0 million revolving credit facility originally maturing in February 2021 that included a swing line facility and a letter of credit facility. Our obligations under the 2016 Credit Agreement due 2024 are, subject to exceptions, guaranteed by substantially all of our wholly-owned direct and indirect subsidiaries that are restricted subsidiaries and secured by substantially all of our assets as well as our direct and indirect restricted subsidiaries’ assets.

On March 16, 2018, we entered into an amendment of our 2016 Credit Agreement due 2024 (the “Second Amendment”). The Second Amendment, among other things, decreased the applicable interest rate margins for the Initial Term Loans (as defined in the 2016 Credit Agreement due 2024) from (i) 3.75% to 2.50%, in the case of the Base Rate Loans (as defined in the 2016 Credit Agreement due 2024), and (ii) 4.75% to 3.50%, in the case of the Eurodollar Loans (as defined in the 2016 Credit Agreement due 2024). On February 17, 2017, we entered into the first amendment to our 2016 Credit Agreement due 2024, which also resulted in decreases in the applicable margins, but which, unlike the Second Amendment, did not include any changes in lender positions.

On October 31, 2019, we entered into an amendment of our 2016 Credit Agreement due 2024 (“Third Amendment”). The Third Amendment provided for, among other things, (i) a three-year Term A loan in the then aggregate principal amount of $64.0 million (the “Initial Term A Loan”), maturing in October 2022, which refinanced in full our existing Term B term loan facility under the 2016 Credit Agreement, and had no regularly scheduled amortization, and (ii) a new five-year revolving credit facility in an aggregate principal amount of up to $80.0 million (the “Revolving Facility”), maturing in October 2024, which replaced our then existing $40.0 million revolving credit facility under the 2016 Credit Agreement, and includes a swing-line facility and letter of credit facility. Our obligations under the 2016 Credit Agreement continue to be secured by substantially all of our assets, as well as our direct and indirect subsidiaries’ assets, and is senior in position to the 2021 Senior Notes.

On October 25, 2021, we entered into an amendment of our 2016 Credit Agreement ("Fourth Amendment"). The Fourth Amendment provided for, among other things, a three-year Term A loan in the aggregate maximum available amount of $60.0 million (the "Incremental Term A Loan"), proceeds from which were used to fund the Anlin Acquisition. The Fourth Amendment does not change any terms relating to the Revolving Facility, under which we paid quarterly fees on the unused portion of the revolving credit facility equal to a percentage spread (ranging from 0.25% to 0.35%) based on our first lien net leverage ratio. As of October 1, 2022, there were $5.7 million in letters of credit outstanding and $74.3 million available under the Revolving Facility.

The weighted average all-in interest rate for borrowings under the term-loan portion of the 2016 Credit Agreement due 2024 was 5.12% as of October 1, 2022, and was 2.10% at January 1, 2022.

Deferred Financing Costs

The activity relating to deferred financing costs, composed of third-party fees and costs, and lender fees, for the nine months ended October 1, 2022, are as follows. All deferred financing costs are classified as a reduction of the carrying value of long-term debt:

(in thousands)	Total
At beginning of year	$	9,345
Less: Amortization expense		(921	)
At end of period	$	8,424

Estimated amortization expense relating to deferred financing costs for the years indicated as of October 1, 2022, is as follows:

(in thousands)	Total
Remainder of 2022	$	312
2023		1,282
2024		1,282
2025		1,083
2026		1,114
Thereafter		3,351
Total	$	8,424

We have no scheduled payments of outstanding debt until the contractual maturity of the 2016 Credit Agreement in October 2024. Our contractual future maturities of long-term debt are as follows (at face value):

(in thousands)
Remainder of 2022	$	—
2023		—
2024		60,000
2025		—
2026		—
Thereafter		575,000
Total	$	635,000

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Leases

9 Months Ended

Oct. 01, 2022

Leases [Abstract]

Leases

NOTE 10. LEASES

We lease certain of our manufacturing facilities under operating leases. We also lease production equipment, vehicles, computer equipment, storage units and office equipment under operating leases. Our leases have remaining lease terms of 1 year to 10 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year. All of our leases are operating leases. We did not recognize right-of-use assets or lease liabilities for certain short-term leases that are month-to-month leases. The lease expense relating to these leases is not significant.

The components of lease expense for the three and nine months ended October 1, 2022 and October 2, 2021, are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2022		2021		2022		2021
Operating lease cost	$	5,101	$	4,213	$	14,941	$	10,990
Short-term lease cost		2,668		2,280		7,488		6,696
Total lease cost	$	7,769	$	6,493	$	22,429	$	17,686

Other information relating to leases for the three and nine months ended October 1, 2022 and October 2, 2021, are as follows (in thousands, except years and percentages):

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
Supplemental cash flows information
Cash paid for amounts included in the   measurement of lease liabilities:
Operating cash flows relating to   operating leases	$	(4,913	)	$	(3,435	)	$	(14,230	)	$	(9,503	)
Right-of-use assets obtained in exchange   for lease obligations:
Operating leases	$	1,363		$	933		$	13,625		$	47,838
Weighted average remaining lease term in years
Operating leases		6.39			6.39			6.39			6.39
Weighted average discount rate
Operating leases		5.4	%		5.5	%		5.4	%		5.5	%

Future maturities under operating leases were as follows at October 1, 2022 and January 1, 2022 (in thousands):

	October 1,			January 1,
	2022			2022
Remainder of 2022	$	5,005		$	17,929
2023		19,735			17,577
2024		19,140			16,990
2025		17,998			15,987
2026		16,799			15,025
2027		15,847			14,358
Thereafter		22,978			17,891
Total future minimum lease payments		117,502			115,757
Less: Imputed interest		(17,361	)		(18,674	)
Operating lease liability - total	$	100,141		$	97,083
Reported as of October 1, 2022 and January 2, 2021:
Current portion of operating lease liability	$	15,247		$	13,180
Operating lease liability, less current portion		84,894			83,903
Operating lease liability - total	$	100,141		$	97,083

As of October 1, 2022, we had no additional operating or finance leases that have not yet commenced. Our operating leases expire at various times through 2032. Lease expense was $7.8 million for the three months ended October 1, 2022 and was $6.5 million for the three months ended October 2, 2021. Of the $7.8 million for the three months ended October 1, 2022, $4.0 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses. Of the $6.5 million for the three months ended October 2, 2021, $0.5 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses. Lease expense was $22.4 million for the nine months ended October 1, 2022 and was $17.7 million for the nine months ended October 2, 2021. Of the $22.4 million for the nine months ended October 1, 2022, $11.4 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses. Of the $17.7 million for the nine months ended October 2, 2021, $6.9 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses.

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Commitments and Contingencies

9 Months Ended

Oct. 01, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 11. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Our Company is a party to various legal proceedings in the ordinary course of business. Although the ultimate disposition of those proceedings cannot be predicted with certainty, management believes the outcome of any claim that is pending or threatened, either individually or in the aggregate, will not have a material adverse effect on our operations, financial position or cash flows.

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Income Taxes

9 Months Ended

Oct. 01, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 12. INCOME TAXES

We had income tax expense of $10.1 million for the three months ended October 1, 2022, compared with income tax benefit of $2.4 million for the three months ended October 2, 2021. Our effective tax rate for the three months ended October 1, 2022, was 24.9%, compared with 31.9% for the three months ended October 2, 2021. Our income tax expense for the three months ended October 1, 2022, and income tax benefit for the three months ended October 2, 2021, includes income tax expenses of $291 thousand and $449 thousand, respectively, relating to our 75% share of the pre-tax earnings of Eco. We had an income tax expense of $29.9 million for the nine months ended October 1, 2022, compared with income tax expense of $4.3 million for the nine months ended October 2, 2021. Our effective tax rate for the nine months ended October 1, 2022, was 24.8%, compared with 18.8% for the nine months ended October 2, 2021. Our income tax expense for the nine months ended October 1, 2022, and October 2, 2021, includes $1.0 million and $1.2 million, respectively, relating to our 75% share of the pre-tax earnings of Eco.

Income tax expense in the three months ended October 1, 2022 includes discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $60 thousand, and from research and development tax credits true-up adjustments, which totaled $472 thousand. The income tax benefit in the three months ended October 2, 2021 included discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards totaling $14 thousand, and other true-up adjustments totaling less than $0.1 million. Income tax expense in the nine months ended October 1, 2022 includes discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $156 thousand, from research and development tax credits true-up adjustments, which totaled $472 thousand, and a refund from the state of Florida, received by the Company in the second quarter of 2022, relating to excess taxes received by the state in 2021, which was $584 thousand, benefiting tax expense by $462 thousand, net of its Federal tax effect. Income tax expense in the nine months ended October 2, 2021 include discrete items of income tax benefit relating to excess tax benefits from the lapses of restrictions on stock awards, which totaled $714 thousand. Excluding discrete items of income tax, the effective tax rates for the three months ended October 1, 2022 and October 2, 2021, would have been an income tax expense rate of 26.2% and an income tax benefit rate of 30.8%, respectively. Excluding discrete items of income tax, the effective tax rates for the nine months ended October 1, 2022 and October 2, 2021, would have been income tax expense rates of 25.7% and 21.9%, respectively.

In September 2021, the state of Florida announced that the corporate income tax rate for the 2021 tax year was being lowered from its then current level of 4.458% to 3.535%. However, for 2022, Florida's corporate income tax rate returned to its statutory level before the passage of the Tax Cuts and Jobs Act, which is 5.5%. As such, we adjusted our annual effective tax rate for 2022 to include this increase in rate in Florida, where a substantial portion of our business is apportioned, to an estimated combined statutory federal and state rate of 25.7%, from our estimate in 2021 of 24.2%. During the first nine months of 2022, we made payments of estimated taxes totaling $21.7 million, which included $20.8 million in Federal estimated income taxes with the remainder to various states, primarily Florida. During the first nine months of 2021, we made payments of estimated taxes totaling $12.4 million, which included $8.3 million in Federal estimated income taxes with the remainder to various states, primarily Florida. As a result of Hurricane Ian, a large and destructive Category 4 Atlantic hurricane, which made landfall on the southwest Florida coastline at Cayo Costa on September 28, 2022, the U.S. Internal Revenue Service and the state of Florida have both extended their deadlines for payment of the fourth quarter 2022 estimated tax payment, originally due December 15, 2022, to February 15, 2023.

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Fair Value

9 Months Ended

Oct. 01, 2022

Fair Value Disclosures [Abstract]

Fair Value

NOTE 13. FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A three-tier fair value hierarchy is used to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The three levels of the fair value hierarchy are as follows:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The accounting guidance concerning fair value allows us to elect to measure financial instruments at fair value and report the changes in fair value through earnings. This election can only be made at certain specified dates and is irrevocable once made. We do not have a policy regarding specific assets or liabilities to elect to measure at fair value, but rather we make the election on an instrument-by-instrument basis as they are acquired or incurred.

During the three or nine months ended October 1, 2022 or October 2, 2021, we did not make any transfers between Level 2 and Level 3 financial assets. We conduct reviews on a quarterly basis to verify pricing, assess liquidity, and determine if significant inputs have changed that would impact the fair value hierarchy disclosure.

Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, accounts and notes receivable, and accounts payable and accrued liabilities, whose carrying amounts approximate their fair values due to their short-term nature. Our financial instruments also include borrowings under the 2016 Credit Agreement, as well as the 2021 Senior Notes, all classified as long-term debt. The fair value of borrowings under the 2016 Credit Agreement due 2024 approximated its carrying value due to its variable-rate nature, and was approximately $60.0 million as of October 1, 2022, and January 1, 2022, compared to a principal outstanding value of $60.0 million at those dates, respectively. The fair value of the 2021 Senior Notes is based on debt with similar terms and characteristics and was approximately $475.8 million as of October 1, 2022, compared to a principal outstanding value of $575.0 million, and the fair value was approximately $578.2 million as of January 1, 2022, compared to a principal outstanding value of $575.0 million.

Items Measured at Fair Value

The following are measured in the condensed consolidated financial statements at fair value on a recurring basis and are categorized in the table below based upon the lowest level of significant input to the valuation (in thousands):

	Fair Value Measurements
	Assets (Liabilities)
				Quoted		Significant
				Prices in		Other			Significant
				Active		Observable			Unobservable
				Markets		Inputs			Inputs
October 1, 2022	Total			(Level 1)		(Level 2)			(Level 3)
Description
Aluminum contracts	$	(4,001	)	$	—	$	(4,001	)	$	—
MTP contracts		598			—		598			—
	$	(3,403	)	$	—	$	(3,403	)	$	—

	Fair Value Measurements
	Assets (Liabilities)
			Quoted		Significant
			Prices in		Other		Significant
			Active		Observable		Unobservable
			Markets		Inputs		Inputs
January 1, 2022	Total		(Level 1)		(Level 2)		(Level 3)
Description
Aluminum contracts	$	4,829	$	—	$	4,829	$	—
MTP contracts		4,599		—		4,599		—
	$	9,428	$	—	$	9,428	$	—

See Note 14 for a description of the methods and assumptions used in the determination of the fair values of our aluminum forward and Midwest Transaction Premium (“MTP”) contracts, as well as the basis for classifying these assets and liabilities as Level 2.

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Derivatives

9 Months Ended

Oct. 01, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

NOTE 14. DERIVATIVES

Aluminum Contracts and Midwest Transaction Premium

We enter into aluminum forward contracts to hedge the fluctuations in the purchase price of aluminum extrusion we use in production, and to hedge the fluctuations in the price of the delivery component of our aluminum extrusion purchases, known as the Midwest Transaction Premium, or MTP. Our contracts are designated as cash flow hedges since they are highly effective in offsetting changes in the cash flows attributable to forecasted purchases of aluminum and the related MTP.

We record our aluminum hedge contracts at fair value, based on trading values for aluminum forward contracts. Aluminum forward contracts identical to those held by us trade on the London Metal Exchange (“LME”). The LME provides a transparent forum and is the world’s largest center for the trading of futures contracts for non-ferrous metals. The prices are used by the metals industry worldwide as the basis for contracts for the movement of physical material throughout the production cycle. Based on this high degree of volume and liquidity in the LME, we believe the valuation price at any measurement date for contracts with identical terms as to prompt date, trade date and trade price as those we hold at any time represents a contract’s exit price to be used for purposes of determining fair value.

We record our MTP hedge contracts at fair value, based on the Platts MW US Transaction price per pound assessment, which has been a benchmark for decades in the North American aluminum industry. Platts surveys the North American market daily to capture trades, bids and offers on a delivered Midwest basis. Data is normalized to reflect the typical price per pound between the largest number of market participants, for delivery within 7 to 30 days from date of publication, net-30-day payment terms, for typical order quantities, chemistries and freight allowances. The survey is extensive and encompasses both domestic and offshore producers, traders and brokers that are varied in scope. Based on the extensive nature of this pricing mechanism, we believe the Platts MW US Transaction price at any time represents a contract’s exit price to be used for purposes of determining fair value.

Guidance under the Financial Instruments Topic 825 of the Codification requires us to record our hedge contracts at fair value and consider our credit risk for contracts in a liability position, and our counter-party’s credit risk for contracts in an asset position, in determining fair value. We assess our counter-party’s risk of non-performance when measuring the fair value of financial instruments in an asset position by evaluating their financial position, including cash on hand, as well as their credit ratings. We assess our risk of non-performance when measuring the fair value of our financial instruments in a liability position by evaluating our credit ratings, our current liquidity including cash on hand and availability under our revolving credit facility as compared to the maturities of the financial liabilities. We do not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting arrangement.

At October 1, 2022, the fair value of our aluminum forward contracts was in a liability position of $4.0 million. We had 8 outstanding forward contracts for the purchase of 11.5 million pounds of aluminum through December 2022, at an average price of $1.33 per pound, which excludes the Midwest premium, with maturity dates of between one and three months. At October 1, 2022, the fair value of our MTP contracts was in an asset position of $0.6 million. We had 2 outstanding MTP contracts to hedge the Platt US MW Transaction price per pound for the delivery of 5.3 million pounds of aluminum through December 2022, at an average price of $0.11 per pound, with maturity dates of between one and three months. We assessed the risk of non-performance of the Company and our counterparty to these contracts, as applicable, and determined it was immaterial and, therefore, did not record any adjustment to their fair values as of October 1, 2022.

We assess the effectiveness of our aluminum forward and MTP contracts by comparing the change in the fair value of the forward contract to the change in the expected cash to be paid for the hedged item. The effective portion of the gain or loss on our aluminum forward contracts is reported as a component of accumulated other comprehensive income (loss) and is reclassified into earnings in the same line item in the income statement as the hedged item in the same period or periods during which the transaction affects earnings. We expect the amount of accumulated other comprehensive loss of approximately $3.4 million in the accompanying condensed consolidated balance sheet as of October 1, 2022, to be reclassified to earnings within the next twelve months.

The fair values of our aluminum hedges and MTP contracts are classified in the accompanying condensed consolidated balance sheets at October 1, 2022 and January 1, 2022, as follows (in thousands):

	Derivative Assets			Derivative Liabilities
	October 1, 2022			October 1, 2022
Derivatives designated as hedging
instruments under Subtopic 815-20:	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivative instruments:
Aluminum contracts	Other current assets	$	—	Accrued liabilities	$	(4,001	)
MTP contracts	Other current assets		598	Accrued liabilities		—
Aluminum contracts	Other assets		—	Other liabilities		—
MTP contracts	Other assets		—	Other liabilities		—
Total derivative instruments	Total derivative assets	$	598	Total derivative liabilities	$	(4,001	)
	Derivative Assets			Derivative Liabilities
	January 1, 2022			January 1, 2022
Derivatives designated as hedging
instruments under Subtopic 815-20:	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivative instruments:
Aluminum contracts	Other current assets	$	4,829	Accrued liabilities	$	—
MTP contracts	Other current assets		4,599	Accrued liabilities		—
Aluminum contracts	Other assets		—	Other liabilities		—
MTP contracts	Other assets		—	Other liabilities		—
Total derivative instruments	Total derivative assets	$	9,428	Total derivative liabilities	$	—

The ending accumulated balance for the aluminum forward and MTP contracts included in accumulated other comprehensive income (losses), net of tax, was an accumulated other comprehensive loss of $2.5 million as of October 1, 2022, and was an accumulated other comprehensive income of $7.0 million at January 1, 2022. The income tax effects of accumulated comprehensive income (losses) are released as amounts are reclassified out of accumulated comprehensive income (losses) at the income tax rate used at the time those income tax effects were provided, which generally represents our blended statutory income tax rate.

The following represents the gains (losses) on derivative financial instruments, and their classifications within the accompanying condensed consolidated financial statements, for the three and nine months ended October 1, 2022 and October 2, 2021 (in thousands):

	Derivatives in Cash Flow Hedging Relationships
	Amount of Gain or (Loss) Recognized in OCI(L) on Derivatives					Location of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income
	Three Months Ended						Three Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
Aluminum contracts	$	(2,012	)	$	4,194	Cost of sales	$	(3,185	)	$	4,271
MTP contracts	$	(621	)	$	2,355	Cost of sales	$	769		$	2,425
	Derivatives in Cash Flow Hedging Relationships
	Amount of Gain or (Loss) Recognized in OCI(L) on Derivatives					Location of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income
	Nine Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
Aluminum contracts	$	(9,427	)	$	13,385	Cost of sales	$	(597	)	$	8,423
MTP contracts	$	(60	)	$	10,525	Cost of sales	$	3,941		$	4,181

We classify cash flows related to derivative instruments as operating activities in the condensed consolidated statements of cash flows.

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Oct. 01, 2022

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

NOTE 15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table shows the components of accumulated other comprehensive income (loss) for the three and nine months ended October 1, 2022 and October 2, 2021 (in thousands):

Three months ended October 1, 2022	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at July 2, 2022	$	(3,846	)	$	1,478		$	(2,368	)
Increase (decrease) in fair value of derivatives		(2,012	)		(621	)		(2,633	)
Amounts reclassified from accumulated other comprehensive income (loss)		3,185			(769	)		2,416
Tax effect		(279	)		335			56
Net current-period other comprehensive loss		894			(1,055	)		(161	)
Balance at October 1, 2022	$	(2,952	)	$	423		$	(2,529	)
Nine months ended October 1, 2022	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at January 1, 2022	$	3,610		$	3,396		$	7,006
Increase (decrease) in fair value of derivatives		(9,427	)		(60	)		(9,487	)
Amounts reclassified from accumulated other comprehensive income		597			(3,941	)		(3,344	)
Tax effect		2,268			1,028			3,296
Net current-period other comprehensive loss		(6,562	)		(2,973	)		(9,535	)
Balance at October 1, 2022	$	(2,952	)	$	423		$	(2,529	)

Three months ended October 2, 2021	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at July 3, 2021	$	6,191		$	5,139		$	11,330
Increase in fair value of derivatives		4,194			2,355			6,549
Amounts reclassified from accumulated other comprehensive income		(4,271	)		(2,425	)		(6,696	)
Tax effect		20			17			37
Net current-period other comprehensive loss		(57	)		(53	)		(110	)
Balance at October 2, 2021	$	6,134		$	5,086		$	11,220
Nine months ended October 2, 2021	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at January 2, 2021	$	2,403		$	317		$	2,720
Increase in fair value of derivatives		13,385			10,525			23,910
Amounts reclassified from accumulated other comprehensive income		(8,423	)		(4,181	)		(12,604	)
Tax effect		(1,231	)		(1,575	)		(2,806	)
Net current-period other comprehensive income		3,731			4,769			8,500
Balance at October 2, 2021	$	6,134		$	5,086		$	11,220

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Segments

9 Months Ended

Oct. 01, 2022

Segment Reporting [Abstract]

Segments

NOTE 16. SEGMENTS

We have two reportable segments: the Southeast segment, and the Western segment.

The Southeast reporting segment, which is also an operating segment, is composed of sales from our facilities in Florida. The Western reporting segment, also an operating segment, is composed of sales from our facilities in Arizona and California.

Centralized financial and operational oversight, including resource allocation and assessment of performance on an income from operations basis, is performed by our CEO, whom we have determined to be our chief operating decision maker (“CODM”), with oversight by the Board of Directors.

The following table represents summary financial data attributable to our operating segments for the three and nine months ended October 1, 2022, and October 2, 2021. Results of the Southeast segment for the three and nine months ended October 1, 2022 includes the results of Eco for the entire three- and nine-month periods, whereas for the three and nine months ended October 2, 2021, the three months ended October 2, 2021 includes the results of Eco for the entire three-month period, but the nine months ended October 2, 2021 includes only its post-acquisition period from February 1, 2021. Results of the Western segment for the three and nine months ended October 1, 2022 includes the results of CRi, acquired May 1, 2021, and Anlin, acquired October 25, 2021. Results of the Western segment for the three and nine months ended October 2, 2021, includes CRi's results for the post acquisition period from May 1, 2021, and no results from Anlin. Corporate overhead has been allocated to each segment using an allocation method we believe is reasonable (in thousands):

	Three Months Ended					Nine Months Ended
	October 1,		October 2,			October 1,		October 2,
	2022		2021			2022		2021
Net sales:
Southeast segment	$	288,246	$	255,170		$	867,505	$	731,257
Western segment		97,591		45,261			283,515		125,766
Total net sales	$	385,837	$	300,431		$	1,151,020	$	857,023
Income from operations:
Southeast segment	$	30,037	$	20,713		$	96,607	$	54,977
Western segment		17,366		4,895			45,132		16,091
Total income from operations		47,403		25,608			141,739		71,068
Interest expense, net		6,889		7,686			21,124		22,968
Debt extinguishment costs		—		25,472			—		25,472
Total income (loss) before income taxes	$	40,514	$	(7,550	)	$	120,615	$	22,628

Depreciation expense for the three months ended October 1, 2022 and October 2, 2021, was $6.7 million and $7.0 million for our Southeast segment, respectively, and $1.6 million and $0.9 million for our Western segment, respectively. Depreciation expense for the nine-months ended October 1, 2022 and October 2, 2021, was $20.6 million and $19.7 million for our Southeast segment, respectively, and $4.7 million and $2.6 million for our Western segment, respectively. Amortization expense for the three months ended October 1, 2022 and October 2, 2021, was $2.7 million, and $2.7 million for our Southeast segment, respectively, and $3.1 million and $2.6 million for our Western segment, respectively. Amortization expense for the nine months ended October 1, 2022 and October 2, 2021, was $8.1 million, and $7.9 million for our Southeast segment, respectively, and $11.6 million and $7.3 million for our Western segment, respectively.

Total assets of our Southeast segment as of October 1, 2022 and January 1, 2022 were $995.3 million and $911.3 million, respectively. Total assets of our Western segment as of October 1, 2022 and January 1, 2022 were $607.3 million and $549.3 million, respectively.

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Reedemable Non-Controlling Interest

9 Months Ended

Oct. 01, 2022

Noncontrolling Interest [Abstract]

Reedemable Non-Controlling Interest

NOTE 17. REEDEMABLE NON-CONTROLLING INTEREST

On February 1, 2021, we completed an acquisition of a 75% ownership stake in Eco. The seller of Eco obtained the remaining equity interest in the newly formed company, Eco Enterprises. The seller’s redeemable non-controlling interest ("RNCI") was initially established at fair value.

The agreement between PGT Innovations, Inc. and the seller provides the Company with a call right for seller’s equity interest in the third year following the acquisition date. If the Company does not exercise its right to call by the third anniversary, the agreement provides the seller with a put right which can be exercised during the 15-day period following the third anniversary. Upon exercise of the put or call right, the purchase price is calculated based on a future agreed performance metric. The put option makes the non-controlling interest redeemable and, therefore, the redeemable non-controlling interest is classified as temporary equity outside of shareholders’ equity.

The Company calculates the estimated future redemption value of the non-controlling interest on a quarterly basis. The redeemable non-controlling interest is accreted to the future redemption value using the effective interest method up to the date on which the put-right becomes effective. Any accretion adjustment in the current reporting period of the redeemable non-controlling interest is offset against retained earnings and impacts earnings used in the calculation of earnings per share attributable to common shareholders in the reporting period. Based on the formula in the operating agreement governing this transaction, the future redemption value of the redeemable non-controlling interest was estimated to be $47.5 million, which we accreted to $39.7 million as of October 1, 2022.

The following table presents the changes in the Company’s redeemable non-controlling interest for the period presented:

	Nine Months Ended
	October 1,		October 2,
(in thousands)	2022		2021
Balance at beginning of period	$	36,863	$	—
RNCI in Eco at initially estimated fair value		—		28,464
Net income attributable to redeemable non-controlling interest		1,334		1,656
Change in value of redeemable non-controlling interest		1,514		4,528
Balance at end of period	$	39,711	$	34,648

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Subsequent Events

9 Months Ended

Oct. 01, 2022

Subsequent Events [Abstract]

Subsequent Events

NOTE 18. SUBSEQUENT EVENTS

Acquisition and Refinancing

On October 14, 2022, pursuant to a Share Purchase Agreement ("SPA"), WWS Acquisition LLC (“Buyer”), a Missouri limited liability company and indirect wholly owned subsidiary of the Company, completed the acquisition ("Martin Acquisition") of all of the issued and outstanding shares of capital of Martin Door Holdings Inc., a Utah corporation (“Seller” or "Martin") headquartered in Salt Lake City, and manufacturer of premium overhead garage doors and hardware serving the Western U.S. residential and commercial markets.

The total fair value of consideration transferred at closing for the Martin Acquisition, was approximately $187.8 million, subject to certain adjustments as set forth in the SPA, which included an enterprise value of $185.0 million, and a payment of approximately $2.8 million for estimated net working capital in excess of target net working capital. The purchase price is subject to a post-closing true-up mechanism as set forth in the SPA, which is expected to be determined within ninety days from the date of the closing of the Martin Acquisition. Martin's assets include those typical to the operation of the business including accounts receivable, inventories, property and equipment, as well as intangibles assets which we expect will include one or more Martin trade names, customer relationships, developed technology, and possibly other yet to be identified intangible assets. We expect to engage a third-party valuation firm to assist with the valuation of such assets.

On October 13, 2022, the Company entered into an amendment of the 2016 Credit Agreement (the “Fifth Amendment”). The Fifth Amendment provides for, among other things, a new five-year revolving credit facility in an aggregate principal amount of $250.0 million (the “New Revolving Credit Facility”). The New Revolving Credit Facility refinances and replaces the previously existing $80.0 million revolving credit facility under the 2016 Credit Agreement. The Company’s obligations under the 2016 Credit Agreement continue to be secured by substantially all of its and its direct and indirect subsidiaries’ assets.

Interest on borrowings under the New Revolving Credit Facility is payable either quarterly or at the expiration of any Secured Overnight Financing Rate ("SOFR") interest period applicable thereto. Borrowings under the New Revolving Credit Facility accrue interest at a rate equal to, at our option, a base rate (with a floor of 100 basis points) plus a percentage spread (ranging from 0.75% to 1.75%) based on our first lien net leverage ratio or SOFR (with a floor of 0 basis points) plus a percentage spread (ranging from 1.75% to 2.75%) based on our first lien net leverage ratio. After giving effect to the Fifth Amendment, we will pay quarterly fees on the unused portion of the New Revolving Credit Facility equal to a percentage spread (ranging from 0.25% to 0.35%) based on our first lien net leverage ratio. The Fifth Amendment also modifies the financial covenant under the 2016 Credit Agreement such that it will be tested on a quarterly basis, commencing with the fiscal quarter ending December 31, 2022.

The Martin Acquisition was financed with the $250.0 million available under the New Revolving Credit Facility provided by the Fifth Amendment of our 2016 Credit Agreement, under which we drew $160.0 million on October 14, 2022, the proceeds of which were used to pay $98.4 million of the $187.8 million total fair value of consideration transferred, and to pay $61.6 million to prepay our $60.0 million Term A Loan under the Fourth Amendment of our 2016 Credit Agreement, plus $1.6 million in fees, costs and accrued interest. The remainder of the total fair value of consideration transferred totaling $89.4 million was funded with cash and cash equivalents on hand previously generated through operations. We also paid buyer fees and costs relating to the Martin Acquisition, which we are analyzing for proper accounting treatment. We accrued an estimated $1.25 million of acquisition-related expenses in the three months ended October 1, 2022 for services received prior to the closing of the Martin Acquisition, classified as selling, general and administrative expenses in the accompanying condensed consolidated statements of operations for the three and nine months ended October 1, 2022.

Cyberattack

On November 5, 2022, the Company detected a ransomware infection that impacted portions of its network and caused disruption to daily business operations. Immediately, upon discovery, the Company engaged outside cybersecurity experts familiar with these types of incidents to conduct a forensic investigation and assess the extent and scope of the incident. As of the date of the filing of this Quarterly Report on Form 10-Q, the investigation is in its early stages and ongoing. To date, there is no evidence of personal information being accessed or acquired.

Security is a top priority for the Company, and the Company continues to work to take a series of measures to safeguard the integrity of its information technology systems. Upon detecting the security event, the Company took immediate steps designed to contain the incident and implement its business continuity plans to restore and support continued operations. The Company has notified appropriate law enforcement authorities.

The Company is also working closely with cybersecurity experts and legal counsel. The Company is in the early stages of its investigation and assessment of the security event and cannot determine, at this time, the extent of the impact from such event on its business, results of operations or financial condition or whether such impact will have a material adverse effect. The Company carries insurance, including cyber insurance, commensurate with the size and the nature of its operations. Further, while the Company is communicating with its customers regarding this disruption, it cannot guarantee that its customer relationships will not be harmed as a result of this event. In addition to these risks and other information set forth in this report, one should carefully consider the discussion on the other risks and uncertainties that cybersecurity incidents may have on us, contained in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K/A for the year ended January 1, 2022.

 

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Description of Business and Basis of Presentation (Policies)

9 Months Ended

Oct. 01, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnotes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. Our condensed consolidated financial statements are unaudited; however, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for the remainder of the current year or for any future periods. The Company’s fiscal three and nine months ended October 1, 2022, and October 2, 2021 consisted of 13 and 39 weeks, respectively.

The condensed consolidated balance sheet as of January 1, 2022, is derived from the audited consolidated financial statements, but does not include all disclosures required by GAAP. The condensed consolidated balance sheet as of January 1, 2022, and the unaudited condensed consolidated financial statements as of and for the periods ended October 1, 2022 and October 2, 2021, should be read in conjunction with the more detailed audited consolidated financial statements for the year ended January 1, 2022, included in the Company’s most recent Annual Report on Form 10-K/A. The accounting policies used in the preparation of these unaudited condensed consolidated financial statements are consistent with the accounting policies described in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K/A.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

We have two reportable segments: the Southeast segment and the Western segment. The Southeast reporting segment, which is also an operating segment, is composed of sales from our facilities in Florida. The Western reporting segment, also an operating segment, is composed of sales from our facilities in Arizona and California. See Note 16 for segment disclosures.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Business Combinations - Contracts Assets and Liabilities

On October 28, 2021, the FASB issued ASU 2021-08, which amends ASC 805-20 to “require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.” Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. This standard was effective beginning January 1, 2022. Early adoption was permitted and was adopted by the Company in the period beginning January 3, 2021. The adoption of this standard did not have any impact on our consolidated financial statements.

Revenue Recognition Accounting Policy

Revenue Recognition Accounting Policy

The Company primarily manufactures fully customized windows and doors based on design specifications, measurements, colors, finishes, framing materials, glass-types, and other options selected by the customer at the point in time an order is received. The Company has an enforceable right to payment at the time an order is received and accepted at the agreed-upon sales prices contained in our agreements with our customers for all manufacturing efforts expended on behalf of its customers. Due to the customized build-to-order nature of these products, the Company’s assessment is that the substantial portion of its finished goods and certain unused glass components have no alternative use, and that control of these products and components passes to the customer over time during the manufacturing of the products in an order, or upon our receipt of certain pre-cut glass components from our supplier attributed to specific customer orders.

Based on these factors, the Company recognizes a substantial portion of revenue over time during the manufacturing process once customization begins, and for certain unused glass components on hand, at the end of a reporting period. Revenue on work-in-process at the end of a reporting period is recognized in proportion to costs incurred to total estimated cost of the product being manufactured. Except for the Western segment’s volume products, discussed in the section titled Disaggregation of Revenue from Contracts with Customers below, revenue recognized at a point in time is immaterial.

Shipping and Handling Cost and Commissions on Contract Assets

Policies Regarding Shipping and Handling Costs and Commissions on Contract Assets

The Company has made a policy election to continue to recognize shipping and handling costs as a fulfillment activity. Treating shipping and handling as a fulfillment activity requires estimated shipping and handling costs for undelivered products and certain glass components on which we have recognized revenue and created a contract asset, to be accrued to match this cost with the recognized revenue. Sales taxes collected from customers are recorded on a net basis.

The Company utilizes the practical expedient which permits the current expensing of costs to obtain a contract when the expected amortization period is one year or less, which typically results in expensing commissions paid to employees. We expense sales commissions paid to employees as sales are recognized, including sales from the creation of contract assets, as the expected amortization period is less than one year.

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Revenue Recognition and Contracts with Customers (Tables)

9 Months Ended

Oct. 01, 2022

Revenue from Contract with Customer [Abstract]

Net Sales by Reporting Segment, Product Category and Market

The following table provides information about our net sales by reporting segment, product category and market for the three and nine months ended October 1, 2022 and October 2, 2021:

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
Disaggregation of revenue (in millions):	2022		2021		2022		2021
Reporting segment:
Southeast	$	288.2	$	255.1	$	867.5	$	731.2
Western		97.6		45.3		283.5		125.8
Total net sales	$	385.8	$	300.4	$	1,151.0	$	857.0
Product category:
Impact-resistant window and door products	$	227.7	$	207.8	$	688.5	$	596.7
Non-impact window and door products		158.1		92.6		462.5		260.3
Total net sales	$	385.8	$	300.4	$	1,151.0	$	857.0
Market:
New construction	$	160.9	$	120.5	$	484.3	$	365.0
Repair and remodel		224.9		179.9		666.7		492.0
Total net sales	$	385.8	$	300.4	$	1,151.0	$	857.0

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Warranty (Tables)

9 Months Ended

Oct. 01, 2022

Guarantees and Product Warranties [Abstract]

Summary of Current Period Charges, Adjustments to Previous Estimates, Settlements representing Actual Costs Incurred with regard to Accrued Warranty

The following table summarizes current period charges, adjustments to previous estimates, as well as settlements, which represent actual costs incurred during the period for the three and nine months ended October 1, 2022 and October 2, 2021.

	Beginning		Acquisition-			Charged								End of
Accrued Warranty	of Period		Related			to Expense		Adjustments			Settlements			Period
(in thousands)
Three months ended October 1, 2022	$	16,151	$	(2,537	)	$	6,880	$	750		$	(5,763	)	$	15,481
Three months ended October 2, 2021	$	9,459	$	347		$	5,706	$	(531	)	$	(5,505	)	$	9,476
Nine months ended October 1, 2022	$	13,504	$	(2,537	)	$	22,872	$	1,263		$	(19,621	)	$	15,481
Nine months ended October 2, 2021	$	8,001	$	536		$	18,015	$	(890	)	$	(16,186	)	$	9,476

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Inventories (Tables)

9 Months Ended

Oct. 01, 2022

Inventory Disclosure [Abstract]

Summary of Inventories

Inventories consisted of the following:

	October 1,		January 1,
	2022		2022
	(in thousands)
Raw materials	$	107,005	$	87,164
Work-in-progress		2,729		3,248
Finished goods		2,523		1,028
Inventories	$	112,257	$	91,440

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Acquisitions (Tables)

9 Months Ended

Oct. 01, 2022

Anlin Windows and Doors [Member]

Business Acquisition [Line Items]

Schedule for Valuation of Identifiable Intangible Assets Acquired and Estimate of Useful Lives

The valuation of the identifiable intangible assets acquired in the Anlin Acquisition and our estimate of their respective useful lives are as follows:

								Initial
	Initial		Adjustment to			Preliminary		Useful Life
	Valuation		Valuation			Valuation		(in years)
(in thousands)
Trade name	$	35,400	$	(3,700	)	$	31,700	indefinite
Customer relationships		42,100		(4,300	)		37,800	15
Customer-related backlog		—		2,200			2,200	<1
Developed technology		300		—			300	9
Intangible assets, net	$	77,800	$	(5,800	)	$	72,000

Schedule of Fair Value of Assets and Liabilities Assumed

The estimated fair value of assets acquired, and liabilities assumed as of the closing date of the Anlin Acquisition, are as follows:

	Initial Allocation			Adjustments to Allocation			Final Allocation
Accounts receivable	$	10,803		$	—		$	10,803
Inventories		7,633			(327	)		7,306
Contract assets, net		7,027			—			7,027
Prepaid expenses and other assets		1,626			(954	)		672
Property and equipment		22,800			1,509			24,309
Operating lease right-of-use asset		3,450			14			3,464
Intangible assets		77,800			(5,800	)		72,000
Total assets acquired		131,139			(5,558	)		125,581
Accounts payable		(5,175	)		593			(4,582	)
Accrued and other liabilities		(7,993	)		2,537			(5,456	)
Operating lease liability		(3,450	)		(14	)		(3,464	)
Total liabilities assumed		(16,618	)		3,116			(13,502	)
Net assets acquired		114,521			(2,442	)		112,079
Goodwill		5,596			4,017			9,613
Fair value of consideration transferred	$	120,117		$	1,575		$	121,692
Consideration:
Cash	$	114,196		$	786		$	114,982
Contingent consideration		5,921			789			6,710
Fair value of consideration transferred	$	120,117		$	1,575		$	121,692

Summary of Unaudited Proforma Results

The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future market conditions which could alter the following unaudited pro forma results.

	Three Months Ended			Nine Months Ended
Pro Forma Results (unaudited)	October 2, 2021			October 2, 2021
(in thousands, except per share amounts)	(unaudited)
Net sales	$	329,613		$	939,395
Net income (loss) attributable to common shareholders	$	(3,326	)	$	18,410
Net income (loss) per common share attributable to common shareholders:
Basic	$	(0.06	)	$	0.31
Diluted	$	(0.06	)	$	0.31

ECO [Member]

Business Acquisition [Line Items]

Schedule for Valuation of Identifiable Intangible Assets Acquired and Estimate of Useful Lives

The valuation of the identifiable intangible assets acquired in the Eco Acquisition and our estimate of their respective useful lives are as follows:

								Initial
	Initial		Adjustment to			Final		Useful Life
	Valuation		Valuation			Valuation		(in years)
(in thousands)
Trade names	$	36,000	$	(1,100	)	$	34,900	indefinite
Customer relationships		36,700		2,700			39,400	5 - 15
Intangible assets, net	$	72,700	$	1,600		$	74,300

Schedule of Fair Value of Assets and Liabilities Assumed

The estimated fair value of assets acquired, and liabilities assumed as of the closing date of the Eco Acquisition, are as follows:

	Initial Allocation			Adjustments to Allocation			Final Allocation
Accounts receivable	$	5,031		$	(241	)	$	4,790
Inventories		7,728			(684	)		7,044
Contract assets, net		4,312			(123	)		4,189
Prepaid expenses and other assets		1,706			(759	)		947
Property and equipment		24,009			(191	)		23,818
Operating lease right-of-use asset		27,864			(1,049	)		26,815
Intangible assets		72,700			1,600			74,300
Total assets acquired		143,350			(1,447	)		141,903
Accounts payable		(6,809	)		(116	)		(6,925	)
Accrued and other liabilities, including customer deposits		(4,215	)		(604	)		(4,819	)
Operating lease liability		(27,864	)		1,049			(26,815	)
Total liabilities assumed		(38,888	)		329			(38,559	)
Net assets acquired		104,462			(1,118	)		103,344
Redeemable non-controlling interest		(34,084	)		5,620			(28,464	)
Net assets acquired, net of redeemable non-controlling interest		70,378			4,502			74,880
Goodwill		30,051			(2,967	)		27,084
Fair value of consideration transferred	$	100,429		$	1,535		$	101,964
Consideration:
Cash	$	94,321		$	35		$	94,356
PGTI common stock		6,108			—			6,108
Contingent consideration		—			1,500			1,500
Fair value of consideration transferred	$	100,429		$	1,535		$	101,964

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Net Income Per Common Share (Tables)

9 Months Ended

Oct. 01, 2022

Earnings Per Share [Abstract]

Calculation of EPS and Reconciliation of Weighted Average Common Shares Used in Calculation of Basic and Diluted EPS

The table below presents the calculation of EPS and a reconciliation of weighted average common shares used in the calculation of basic and diluted EPS:

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
	(in thousands, except per share amounts)
Net income (loss)	$	30,414		$	(5,140	)	$	90,705		$	18,368
Less: Net income attributable to RNCI		(373	)		(677	)		(1,334	)		(1,656	)
Net income (loss) attributable to the Company		30,041			(5,817	)		89,371			16,712
Decrease (increase) in redemption value of RNCI		271			(965	)		(1,514	)		(4,528	)
Net income (loss) attributable to common shareholders	$	30,312		$	(6,782	)	$	87,857		$	12,184
Weighted-average number of common shares outstanding - Basic		59,964			59,590			59,908			59,475
Add: Dilutive shares from equity plans		438			—			293			560
Weighted-average number of common shares outstanding - Diluted		60,402			59,590			60,201			60,035
Net income (loss) per common share attributable to common shareholders:
Basic	$	0.51		$	(0.11	)	$	1.47		$	0.20
Diluted	$	0.50		$	(0.11	)	$	1.46		$	0.20

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Oct. 01, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill and Intangible Assets Net

Goodwill and intangible assets are as follows:

							Initial
	October 1,			January 1,			Useful Life
	2022			2022			(in years)
	(in thousands)
Goodwill	$	370,115		$	364,598		indefinite
Other intangible assets:
Trade names (indefinite-lived)	$	208,441		$	212,141		indefinite
Customer relationships and customer-related assets		286,947			289,047		<1-15
Trade name (amortizable)		22,200			22,200		15
Developed technology		5,900			5,900		6-10
Non-compete agreement		3,338			3,338		2-5
Software license		590			590		2
Less: Accumulated amortization		(158,416	)		(138,691	)
Subtotal		160,559			182,384
Other intangible assets, net	$	369,000		$	394,525
Goodwill at January 1, 2022	$	364,598
Increase in Anlin Acquisition contingent consideration		789
Decrease in Anlin Acquisition trade name		3,700
Decrease in Anlin Acquisition customer relationships		4,300
Increase in Anlin Acquisition customer-related backlog asset		(2,200	)
Final net working capital payment in Anlin Acquisition		786
Estimated contingent consideration in Eco Acquisition		1,500
Decrease in estimated warranty reserve in Anlin Acquisition		(2,537	)
Net other measurement period changes in Anlin Acquisition		(821	)
Goodwill at October 1, 2022	$	370,115
Trade names (indefinite-lived) at January 1, 2022	$	212,141
Decrease in Anlin Acquisition trade name		(3,700	)
Trade names (indefinite-lived) at October 1, 2022	$	208,441

Estimated Amortization for Future Fiscal Year

Estimated amortization of our amortizable intangible assets for future years is as follows:

(in thousands)	Total
Remainder of 2022	$	5,162
2023		20,520
2024		20,474
2025		20,299
2026		16,906
Thereafter		77,198
Total	$	160,559

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Long-Term Debt (Tables)

9 Months Ended

Oct. 01, 2022

Debt Disclosure [Abstract]

Schedule of Long-term Debt

	October 1,			January 1,
	2022			2022
	(in thousands)
2021 Senior Notes due 2029, maturing in October 2029	$	575,000		$	575,000
2016 Credit Agreement due 2024, maturing in October 2024		60,000			60,000
Long-term debt		635,000			635,000
Deferred financing costs		(8,424	)		(9,345	)
Long-term debt, net	$	626,576		$	625,655

Activity Relating to Deferred Financing Costs Composed of Third-Party Fees and Costs, and Lender Fees

The activity relating to deferred financing costs, composed of third-party fees and costs, and lender fees, for the nine months ended October 1, 2022, are as follows. All deferred financing costs are classified as a reduction of the carrying value of long-term debt:

(in thousands)	Total
At beginning of year	$	9,345
Less: Amortization expense		(921	)
At end of period	$	8,424

Estimated Amortization Expense Relating to Deferred Financing Costs

Estimated amortization expense relating to deferred financing costs for the years indicated as of October 1, 2022, is as follows:

(in thousands)	Total
Remainder of 2022	$	312
2023		1,282
2024		1,282
2025		1,083
2026		1,114
Thereafter		3,351
Total	$	8,424

Contractual Future Maturities of Long-Term Debt

Our contractual future maturities of long-term debt are as follows (at face value):

(in thousands)
Remainder of 2022	$	—
2023		—
2024		60,000
2025		—
2026		—
Thereafter		575,000
Total	$	635,000

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Leases (Tables)

9 Months Ended

Oct. 01, 2022

Leases [Abstract]

Components of Lease Expense

The components of lease expense for the three and nine months ended October 1, 2022 and October 2, 2021, are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2022		2021		2022		2021
Operating lease cost	$	5,101	$	4,213	$	14,941	$	10,990
Short-term lease cost		2,668		2,280		7,488		6,696
Total lease cost	$	7,769	$	6,493	$	22,429	$	17,686

Other Information Relating to Leases

Other information relating to leases for the three and nine months ended October 1, 2022 and October 2, 2021, are as follows (in thousands, except years and percentages):

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
Supplemental cash flows information
Cash paid for amounts included in the   measurement of lease liabilities:
Operating cash flows relating to   operating leases	$	(4,913	)	$	(3,435	)	$	(14,230	)	$	(9,503	)
Right-of-use assets obtained in exchange   for lease obligations:
Operating leases	$	1,363		$	933		$	13,625		$	47,838
Weighted average remaining lease term in years
Operating leases		6.39			6.39			6.39			6.39
Weighted average discount rate
Operating leases		5.4	%		5.5	%		5.4	%		5.5	%

Future Maturities under Operating Leases

Future maturities under operating leases were as follows at October 1, 2022 and January 1, 2022 (in thousands):

	October 1,			January 1,
	2022			2022
Remainder of 2022	$	5,005		$	17,929
2023		19,735			17,577
2024		19,140			16,990
2025		17,998			15,987
2026		16,799			15,025
2027		15,847			14,358
Thereafter		22,978			17,891
Total future minimum lease payments		117,502			115,757
Less: Imputed interest		(17,361	)		(18,674	)
Operating lease liability - total	$	100,141		$	97,083
Reported as of October 1, 2022 and January 2, 2021:
Current portion of operating lease liability	$	15,247		$	13,180
Operating lease liability, less current portion		84,894			83,903
Operating lease liability - total	$	100,141		$	97,083

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Fair Value (Tables)

9 Months Ended

Oct. 01, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value on Recurring Basis

The following are measured in the condensed consolidated financial statements at fair value on a recurring basis and are categorized in the table below based upon the lowest level of significant input to the valuation (in thousands):

	Fair Value Measurements
	Assets (Liabilities)
				Quoted		Significant
				Prices in		Other			Significant
				Active		Observable			Unobservable
				Markets		Inputs			Inputs
October 1, 2022	Total			(Level 1)		(Level 2)			(Level 3)
Description
Aluminum contracts	$	(4,001	)	$	—	$	(4,001	)	$	—
MTP contracts		598			—		598			—
	$	(3,403	)	$	—	$	(3,403	)	$	—

	Fair Value Measurements
	Assets (Liabilities)
			Quoted		Significant
			Prices in		Other		Significant
			Active		Observable		Unobservable
			Markets		Inputs		Inputs
January 1, 2022	Total		(Level 1)		(Level 2)		(Level 3)
Description
Aluminum contracts	$	4,829	$	—	$	4,829	$	—
MTP contracts		4,599		—		4,599		—
	$	9,428	$	—	$	9,428	$	—

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Derivatives (Tables)

9 Months Ended

Oct. 01, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Fair Value of Hedges

The fair values of our aluminum hedges and MTP contracts are classified in the accompanying condensed consolidated balance sheets at October 1, 2022 and January 1, 2022, as follows (in thousands):

	Derivative Assets			Derivative Liabilities
	October 1, 2022			October 1, 2022
Derivatives designated as hedging
instruments under Subtopic 815-20:	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivative instruments:
Aluminum contracts	Other current assets	$	—	Accrued liabilities	$	(4,001	)
MTP contracts	Other current assets		598	Accrued liabilities		—
Aluminum contracts	Other assets		—	Other liabilities		—
MTP contracts	Other assets		—	Other liabilities		—
Total derivative instruments	Total derivative assets	$	598	Total derivative liabilities	$	(4,001	)
	Derivative Assets			Derivative Liabilities
	January 1, 2022			January 1, 2022
Derivatives designated as hedging
instruments under Subtopic 815-20:	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivative instruments:
Aluminum contracts	Other current assets	$	4,829	Accrued liabilities	$	—
MTP contracts	Other current assets		4,599	Accrued liabilities		—
Aluminum contracts	Other assets		—	Other liabilities		—
MTP contracts	Other assets		—	Other liabilities		—
Total derivative instruments	Total derivative assets	$	9,428	Total derivative liabilities	$	—

Gains (Losses) on Derivative Financial Instruments

The following represents the gains (losses) on derivative financial instruments, and their classifications within the accompanying condensed consolidated financial statements, for the three and nine months ended October 1, 2022 and October 2, 2021 (in thousands):

	Derivatives in Cash Flow Hedging Relationships
	Amount of Gain or (Loss) Recognized in OCI(L) on Derivatives					Location of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income
	Three Months Ended						Three Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
Aluminum contracts	$	(2,012	)	$	4,194	Cost of sales	$	(3,185	)	$	4,271
MTP contracts	$	(621	)	$	2,355	Cost of sales	$	769		$	2,425
	Derivatives in Cash Flow Hedging Relationships
	Amount of Gain or (Loss) Recognized in OCI(L) on Derivatives					Location of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income
	Nine Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
Aluminum contracts	$	(9,427	)	$	13,385	Cost of sales	$	(597	)	$	8,423
MTP contracts	$	(60	)	$	10,525	Cost of sales	$	3,941		$	4,181

We classify cash flows related to derivative instruments as operating activities in the condensed consolidated statements of cash flows.

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Oct. 01, 2022

Equity [Abstract]

Components of Accumulated Other Comprehensive Income (Loss)

The following table shows the components of accumulated other comprehensive income (loss) for the three and nine months ended October 1, 2022 and October 2, 2021 (in thousands):

Three months ended October 1, 2022	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at July 2, 2022	$	(3,846	)	$	1,478		$	(2,368	)
Increase (decrease) in fair value of derivatives		(2,012	)		(621	)		(2,633	)
Amounts reclassified from accumulated other comprehensive income (loss)		3,185			(769	)		2,416
Tax effect		(279	)		335			56
Net current-period other comprehensive loss		894			(1,055	)		(161	)
Balance at October 1, 2022	$	(2,952	)	$	423		$	(2,529	)
Nine months ended October 1, 2022	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at January 1, 2022	$	3,610		$	3,396		$	7,006
Increase (decrease) in fair value of derivatives		(9,427	)		(60	)		(9,487	)
Amounts reclassified from accumulated other comprehensive income		597			(3,941	)		(3,344	)
Tax effect		2,268			1,028			3,296
Net current-period other comprehensive loss		(6,562	)		(2,973	)		(9,535	)
Balance at October 1, 2022	$	(2,952	)	$	423		$	(2,529	)

Three months ended October 2, 2021	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at July 3, 2021	$	6,191		$	5,139		$	11,330
Increase in fair value of derivatives		4,194			2,355			6,549
Amounts reclassified from accumulated other comprehensive income		(4,271	)		(2,425	)		(6,696	)
Tax effect		20			17			37
Net current-period other comprehensive loss		(57	)		(53	)		(110	)
Balance at October 2, 2021	$	6,134		$	5,086		$	11,220
Nine months ended October 2, 2021	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at January 2, 2021	$	2,403		$	317		$	2,720
Increase in fair value of derivatives		13,385			10,525			23,910
Amounts reclassified from accumulated other comprehensive income		(8,423	)		(4,181	)		(12,604	)
Tax effect		(1,231	)		(1,575	)		(2,806	)
Net current-period other comprehensive income		3,731			4,769			8,500
Balance at October 2, 2021	$	6,134		$	5,086		$	11,220

XML

Segments (Tables)

9 Months Ended

Oct. 01, 2022

Segment Reporting [Abstract]

Summary of Financial Data Attributable to Operating Segments

Corporate overhead has been allocated to each segment using an allocation method we believe is reasonable (in thousands):

	Three Months Ended					Nine Months Ended
	October 1,		October 2,			October 1,		October 2,
	2022		2021			2022		2021
Net sales:
Southeast segment	$	288,246	$	255,170		$	867,505	$	731,257
Western segment		97,591		45,261			283,515		125,766
Total net sales	$	385,837	$	300,431		$	1,151,020	$	857,023
Income from operations:
Southeast segment	$	30,037	$	20,713		$	96,607	$	54,977
Western segment		17,366		4,895			45,132		16,091
Total income from operations		47,403		25,608			141,739		71,068
Interest expense, net		6,889		7,686			21,124		22,968
Debt extinguishment costs		—		25,472			—		25,472
Total income (loss) before income taxes	$	40,514	$	(7,550	)	$	120,615	$	22,628

XML

Reedemable Non-Controlling Interest (Tables)

9 Months Ended

Oct. 01, 2022

Noncontrolling Interest [Abstract]

Summary of Changes in Redeemable Non-Controlling Interest

The following table presents the changes in the Company’s redeemable non-controlling interest for the period presented:

	Nine Months Ended
	October 1,		October 2,
(in thousands)	2022		2021
Balance at beginning of period	$	36,863	$	—
RNCI in Eco at initially estimated fair value		—		28,464
Net income attributable to redeemable non-controlling interest		1,334		1,656
Change in value of redeemable non-controlling interest		1,514		4,528
Balance at end of period	$	39,711	$	34,648

XML

Description of Business and Basis of Presentation - Additional Information (Detail)	9 Months Ended
	Oct. 01, 2022 Plant Segment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of reportable segments | Segment	2
Change in accounting principle accounting standards update adopted	true
Change in accounting principle, accounting standards update, adoption date	Dec. 29, 2019
Accounting Standards Update 2021-08 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Change in accounting principle accounting standards update adopted	true
Change in accounting principle, accounting standards update, adoption date	Jan. 01, 2022
Change in accounting principle, accounting standards update, early adoption	true
Change in accounting principle, accounting standards update, immaterial effect	true
Glass Tempering and Laminating Plant [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of plants	2
Glass Tempering and Laminating Plant [Member] | North Venice, Florida [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of plants	1
Glass Tempering and Laminating Plant [Member] | Medley, Florida [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of plants	1
Insulation Glass Plants [Member] | North Venice, Florida [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of plants	1

XML

Revenue Recognition and Contracts with Customers - Additional Information (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022 USD ($)	Oct. 02, 2021 USD ($)	Oct. 01, 2022 USD ($) Segment	Oct. 02, 2021 USD ($)	Jan. 01, 2022 USD ($)
Disaggregation Of Revenue [Line Items]
Number of reportable segments | Segment			2
Net sales	$ 385,837	$ 300,431	$ 1,151,020	$ 857,023
Contract liabilities	42,900		42,900		$ 45,200
Contract assets, net	$ 56,313		$ 56,313		55,239
Revenue recognition, practical expedient			true
Change in accounting principle accounting standards update adopted	true		true
Change in accounting principle, accounting standards update, adoption date	Dec. 29, 2019		Dec. 29, 2019
Accounting standards update extensible list			us-gaap:AccountingStandardsUpdate201613Member
Accounts receivable, gross	$ 177,200		$ 177,200		145,900
Allowance for credit losses	10,300		10,300		4,700
Additional reserves for credit losses	3,000
Provisions for credit losses			7,395	3,309
Accrued Liabilities [Member]
Disaggregation Of Revenue [Line Items]
Contract liabilities	34,400		34,400		37,000
Reduction to Contract Assets [Member]
Disaggregation Of Revenue [Line Items]
Contract liabilities	8,500		8,500		$ 8,200
Western Segment [Member]
Disaggregation Of Revenue [Line Items]
Net sales	97,591	45,261	283,515	125,766
Western Segment [Member] | Volume Products [Member] | Passes at Point in Time [Member]
Disaggregation Of Revenue [Line Items]
Net sales	$ 26,600	$ 21,900	$ 82,600	$ 62,500

XML

Revenue Recognition and Contracts with Customers - Net Sales by Reporting Segment, Product Category and Market (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Disaggregation Of Revenue [Line Items]
Net sales	$ 385,837	$ 300,431	$ 1,151,020	$ 857,023
Southeast Segment [Member]
Disaggregation Of Revenue [Line Items]
Net sales	288,246	255,170	867,505	731,257
Western Segment [Member]
Disaggregation Of Revenue [Line Items]
Net sales	97,591	45,261	283,515	125,766
Impact-Resistant Windows and Door Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales	227,700	207,800	688,500	596,700
Non-Impact Window and Door Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales	158,100	92,600	462,500	260,300
New Construction [Member]
Disaggregation Of Revenue [Line Items]
Net sales	160,900	120,500	484,300	365,000
Repair and Remodel [Member]
Disaggregation Of Revenue [Line Items]
Net sales	$ 224,900	$ 179,900	$ 666,700	$ 492,000

XML

Warranty - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021	Jan. 01, 2022
Product Warranty Liability [Line Items]
Warranty expense, average rate of sales	1.80%	1.90%	2.00%	2.10%
Warranty expense rate description			Our warranty expense rate in the three months ended October 1, 2022 is a result of a decrease in the use of higher-cost contract labor we had used in the first half of 2022 to respond to warranty claims due to a currently tight labor market.During the nine months ended October 1, 2022, we recorded warranty expense at a rate of approximately 2.0% of sales, which was slightly lower than the rate during the nine months ended October 2, 2021 of 2.1% of sales. Our warranty expense rate in the nine months ended October 1, 2022 was affected by the use of higher-cost contract labor during the first quarter of 2022 to respond to warranty claims in a currently tight labor market. The rate in the nine months ended October 2, 2021 includes the effect of wind-down of certain commercial business in the first quarter of 2021, which resulted in warranty costs higher than those we would incur in the normal course of business.
Accrued warranty reserve	$ 15.5		$ 15.5		$ 13.5
Accrued Expenses [Member]
Product Warranty Liability [Line Items]
Accrued warranty reserve, current	$ 12.5		$ 12.5		$ 11.8
Minimum [Member]
Product Warranty Liability [Line Items]
Warranty periods			1 year
Warranty period of the majority of products sold			1 year
Maximum [Member]
Product Warranty Liability [Line Items]
Warranty periods			10 years
Warranty period of the majority of products sold			3 years

XML

Warranty - Summary of Current Period Charges, Adjustments to Previous Estimates, Settlements representing Actual Costs Incurred with regard to Accrued Warranty (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Guarantees and Product Warranties [Abstract]
Accrued Warranty, Beginning of Period	$ 16,151	$ 9,459	$ 13,504	$ 8,001
Accrued Warranty, Acquisition-Related	(2,537)	347	(2,537)	536
Accrued Warranty, Charged to Expense	6,880	5,706	22,872	18,015
Accrued Warranty, Adjustments	750	(531)	1,263	(890)
Accrued Warranty, Settlements	(5,763)	(5,505)	(19,621)	(16,186)
Accrued Warranty, End of Period	$ 15,481	$ 9,476	$ 15,481	$ 9,476

XML

Inventories - Summary of Inventories (Detail) - USD ($) $ in Thousands	Oct. 01, 2022	Jan. 01, 2022
Inventory Disclosure [Abstract]
Raw materials	$ 107,005	$ 87,164
Work-in-progress	2,729	3,248
Finished goods	2,523	1,028
Inventories	$ 112,257	$ 91,440

XML

Stock Based-Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
	Feb. 14, 2022	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense for stock based awards		$ 2,700	$ 2,300	$ 7,638	$ 5,748
Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense for stock based awards		2,300	$ 1,900	6,600	$ 4,900
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation		$ 11,900		$ 11,900
Weighted-average period				1 year 8 months 12 days
Restricted Stock [Member] | 2022 Long Term Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance criteria defined in share awards				The percentages, ranging from less than 80% to greater than 120% of the target amount of that EBITDA metric, provide for the awarding of shares ranging from 0% to 200% of the target amount of shares with respect to 37.5% of half of the 234,259 shares, or 87,849 shares.
Restricted Stock [Member] | 2022 Long Term Incentive Plan [Member] | Executive and Non Executive Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards	468,518
Shares awarded subject to performance adjustment	234,259
Shares awarded subject to total shareholder return	234,259
Weighted average fair value of common stock	$ 19.84
Restricted Stock [Member] | 2022 Long Term Incentive Plan [Member] | Executive and Non Executive Employees [Member] | EBITDA Criteria of Performance and TSR component [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards	146,410
Percentage of shares issuable based on target performance	62.50%
Weighted average fair value of common stock	$ 20.79
Restricted Stock [Member] | 2022 Long Term Incentive Plan [Member] | Executive and Non Executive Employees [Member] | EBITDA Criteria [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards	87,849
Percentage of shares issuable based on target performance	37.50%
Restricted Stock [Member] | 2022 Long Term Incentive Plan [Member] | Executive and Non Executive Employees [Member] | TSR Falls at 75th Percentile or Higher [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of additional performance shares to be received by grantee	25.00%
Restricted Stock [Member] | 2022 Long Term Incentive Plan [Member] | Executive and Non Executive Employees [Member] | TSR Falls at 25th Percentile or Lower [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of performance shares to be forfeiture by grantee	25.00%
Restricted Stock [Member] | 2022 Long Term Incentive Plan [Member] | Executive and Non Executive Employees [Member] | Company Performance Criteria [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards	234,259
Weighted average fair value of common stock	$ 18.27
Restricted Stock [Member] | 2022 Long Term Incentive Plan [Member] | Executive and Non Executive Employees [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares issuable based on target performance	200.00%
Performance percentage	120.00%
Restricted Stock [Member] | 2022 Long Term Incentive Plan [Member] | Executive and Non Executive Employees [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares issuable based on target performance	0.00%
Performance percentage	80.00%

XML

Acquisitions - Additional Information (Detail)					3 Months Ended					9 Months Ended
	Oct. 25, 2021 USD ($)	May 02, 2021 USD ($)	Feb. 01, 2021 USD ($) Location $ / shares shares	Feb. 01, 2021 USD ($) $ / shares	Oct. 01, 2022 USD ($)	Jul. 02, 2022 USD ($)	Oct. 02, 2021 USD ($)	Apr. 03, 2021 USD ($)	Jan. 02, 2021 USD ($)	Oct. 01, 2022 USD ($)	Oct. 02, 2021 USD ($)	Apr. 02, 2022 USD ($)	Jan. 01, 2022 USD ($)
Business Acquisition [Line Items]
Goodwill					$ 370,115,000					$ 370,115,000			$ 364,598,000
Aggregate principal amount issuance					635,000,000					635,000,000			635,000,000
Net sales					385,837,000		$ 300,431,000			1,151,020,000	$ 857,023,000
Net income attributable to common shareholders					30,041,000		(5,817,000)			89,371,000	16,712,000
Selling, general and administrative expenses					102,399,000		78,595,000			307,786,000	224,106,000
Net income including portion attributable to non-controlling interest					30,414,000		(5,140,000)			90,705,000	18,368,000
Net income portion attributable to redeemable non-controlling interest					373,000		677,000			1,334,000	1,656,000
Southeast Segment [Member]
Business Acquisition [Line Items]
Goodwill					228,300,000					228,300,000			226,800,000
Net sales					288,246,000		$ 255,170,000			867,505,000	$ 731,257,000
2016 Credit Agreement Due 2024 [Member]
Business Acquisition [Line Items]
Aggregate principal amount issuance					60,000,000					60,000,000			$ 60,000,000
Anlin Windows & Doors [Member]
Business Acquisition [Line Items]
Fair value of consideration	$ 121,692,000
Cash payment to acquire business	114,982,000					$ 800,000
Decrease in acquired accounts receivable	10,803,000
Contingent consideration payment						2,700,000
Goodwill estimated to tax deductible, difference										5,300,000
Estimated fair value of assets acquired	125,581,000
Liabilities assumed	13,502,000
Intangible assets	72,000,000
Goodwill	$ 9,613,000				9,600,000					9,600,000
Business combination, effective date of acquisition	Oct. 25, 2021
Business combination, purchase price	$ 113,500,000
Working capital adjustments	1,500,000
Additional payment on working capital adjustments					800,000
Earn-out contingency liability adjustment												$ 800,000
Fair value of contingent consideration	6,700,000				9,100,000					9,100,000
Earn-out contingency payment due in one year	3,200,000
Earn-out contingency payment due in two year	9,500,000
Earn-out contingency liability	5,900,000											6,700,000
Contingent consideration	6,710,000
Initial estimated fair value of contingent consideration remaining payment					4,300,000					4,300,000
Business combination, acquisition related costs										4,800,000
Decrease in accrued and other liabilities					2,500,000
Decrease in goodwill					2,500,000					789,000
Net sales					35,000,000.0					106,200,000
Net income attributable to common shareholders					4,400,000					14,600,000
Contingent consideration	5,900,000											6,700,000
Anlin Windows & Doors [Member] | Selling, General and Administrative Expenses [Member]
Business Acquisition [Line Items]
Estimated fair value exceeded amount										300,000
Business combination, acquisition related costs	1,800,000
Anlin Windows & Doors [Member] | 2021 Anlin EBITDA [Member]
Business Acquisition [Line Items]
Contingent consideration										2,400,000
Anlin Windows & Doors [Member] | 2022 Anlin EBITDA [Member]
Business Acquisition [Line Items]
Contingent consideration										4,300,000
Anlin Windows & Doors [Member] | 2016 Credit Agreement [Member]
Business Acquisition [Line Items]
Cash payment to acquire business	115,000,000.0
Anlin Windows & Doors [Member] | 2016 Credit Agreement Due 2024 [Member]
Business Acquisition [Line Items]
Cash payment to acquire business	115,000,000.0
Proceeds from term loan	60,000,000.0
Debt instrument, fees	59,400,000
Anlin Windows & Doors [Member] | 4.375% Senior Notes Due in 2029 [Member]
Business Acquisition [Line Items]
Aggregate principal amount	$ 575,000,000.0
Accrued Interest rate	4.375%
Anlin Windows & Doors [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Intangible assets					$ 2,200,000					2,200,000
Decrease in goodwill										4,300,000
Anlin Windows & Doors [Member] | Customer-related backlog [Member]
Business Acquisition [Line Items]
Intangible assets												2,200,000
Decrease in goodwill										$ (2,200,000)
Anlin Windows & Doors [Member] | Anlins Backlog [Member]
Business Acquisition [Line Items]
Intangible assets												$ 2,200,000
Anlin Windows & Doors [Member] | Cash On Hand [Member] | 2016 Credit Agreement Due 2024 [Member]
Business Acquisition [Line Items]
Cash payment to acquire business	$ 55,600,000
CRi [Member]
Business Acquisition [Line Items]
Fair value of consideration		$ 12,500,000
Cash payment to acquire business		12,100,000
Decrease in acquired accounts receivable		400
Estimated fair value of assets acquired		17,600,000
Liabilities assumed		5,100,000
Operating lease right of use assets and operating lease liabilities		2,600,000
Current assets		4,100,000
Intangible assets		7,000,000.0
Goodwill		3,700,000
Trade accounts payable and customer deposits		$ 2,500,000
ECO [Member]
Business Acquisition [Line Items]
Fair value of consideration			$ 101,964,000
Cash payment to acquire business			94,356,000
Decrease in acquired accounts receivable			4,790,000	$ 4,790,000
Estimated contingent consideration						$ 1,500,000
Estimated fair value of assets acquired			141,903,000	141,903,000
Liabilities assumed			38,559,000	38,559,000
Intangible assets			74,300,000	74,300,000
Goodwill			$ 27,084,000	$ 27,084,000
Business combination, effective date of acquisition			Feb. 01, 2021
Business combination, percentage of ownership stake acquired			75.00%	75.00%	75.00%	75.00%				75.00%
Earn-out contingency liability					$ 1,900,000					$ 1,900,000
Contingent consideration			$ 1,500,000
Working capital adjustment and customer deposits			5,600,000
Issue of common stock value to acquire business			$ 6,108,000
Sale of stock, price per share | $ / shares			$ 21.34	$ 21.34
Business combination, value of shares issuance			$ 7,600,000	$ 7,600,000
Percentage of holder of redeemable non-controlling interest restricted from selling shares from date of acquisition				25.00%
Period of holder of redeemable non-controlling interest restricted from selling shares from date of acquisition			3 years
Percentage of discount in sale of stock price per share for lack of marketability			20.00%
Estimated fair value of redeemable non-controlling interest			$ 28,464,000	$ 28,464,000
Fair value of acquisition including non-controlling interest			$ 130,400,000	130,400,000
Percentage of estimated fair value of entity at acquisition date to calculate fair value of redeemable on controlling interest			25.00%
Percentage of estimated discount for lack of sellers voting control in new entity			5.00%
Percentage of estimated discount for lack of sellers of marketability of minority stake			10.00%
Number of manufacturing location | Location			3
Contingent consideration					1,900,000					1,900,000
Selling, general and administrative expenses					$ 427,000					$ 427,000
ECO [Member] | Southeast Segment [Member]
Business Acquisition [Line Items]
Estimated amount of goodwill deductible for tax purposes			$ 27,100,000	27,100,000
ECO [Member] | Selling, General and Administrative Expenses [Member]
Business Acquisition [Line Items]
Business combination, acquisition related costs			1,700,000					$ 700,000	$ 1,000,000.0
ECO [Member] | Common Stock [Member]
Business Acquisition [Line Items]
Issue of common stock value to acquire business			$ 6,100,000
Business combination, number of shares issuance | shares			357,797
ECO [Member] | 2018 Senior Notes due 2026 [Member]
Business Acquisition [Line Items]
Aggregate principal amount issuance			$ 60,000,000.0	$ 60,000,000.0
Accrued Interest rate			6.75%
Percentage of principal amount issued			105.50%	105.50%
Debt instrument premium			$ 3,300,000	$ 3,300,000
ECO [Member] | Cash On Hand [Member] | 2018 Senior Notes due 2026 [Member]
Business Acquisition [Line Items]
Cash payment to acquire business			$ 31,100,000

XML

Acquisitions - Schedule of Fair Value of Assets and Liabilities Assumed (Detail) - USD ($) $ in Thousands			3 Months Ended
	Oct. 25, 2021	Feb. 01, 2021	Jul. 02, 2022	Oct. 01, 2022	Jan. 01, 2022
Business Acquisition [Line Items]
Goodwill				$ 370,115	$ 364,598
ECO [Member]
Business Acquisition [Line Items]
Accounts receivable		$ 4,790
Inventories		7,044
Contract assets, net		4,189
Prepaid expenses and other assets		947
Property and equipment		23,818
Operating lease right-of-use asset		26,815
Intangible assets		74,300
Total assets acquired		141,903
Accounts payable		(6,925)
Accrued and other liabilities, including customer deposits		(4,819)
Operating lease liability		(26,815)
Total liabilities assumed		(38,559)
Net assets acquired		103,344
Redeemable non-controlling interest		(28,464)
Net assets acquired, net of redeemable non-controlling interest		74,880
Goodwill		27,084
Fair value of consideration transferred		101,964
Cash		94,356
PGTI common stock		6,108
Contingent consideration		1,500
Fair value of consideration transferred		101,964
ECO [Member] | Previously Reported [Member]
Business Acquisition [Line Items]
Accounts receivable		5,031
Inventories		7,728
Contract assets, net		4,312
Prepaid expenses and other assets		1,706
Property and equipment		24,009
Operating lease right-of-use asset		27,864
Intangible assets		72,700
Total assets acquired		143,350
Accounts payable		(6,809)
Accrued and other liabilities, including customer deposits		(4,215)
Operating lease liability		(27,864)
Total liabilities assumed		(38,888)
Net assets acquired		104,462
Redeemable non-controlling interest		(34,084)
Net assets acquired, net of redeemable non-controlling interest		70,378
Goodwill		30,051
Fair value of consideration transferred		100,429
Cash		94,321
PGTI common stock		6,108
Fair value of consideration transferred		100,429
ECO [Member] | Adjustments to Allocation [Member]
Business Acquisition [Line Items]
Accounts receivable		(241)
Inventories		(684)
Contract assets, net		(123)
Prepaid expenses and other assets		(759)
Property and equipment		(191)
Operating lease right-of-use asset		(1,049)
Intangible assets		1,600
Total assets acquired		(1,447)
Accounts payable		(116)
Accrued and other liabilities, including customer deposits		(604)
Operating lease liability		1,049
Total liabilities assumed		329
Net assets acquired		(1,118)
Redeemable non-controlling interest		5,620
Net assets acquired, net of redeemable non-controlling interest		4,502
Goodwill		(2,967)
Fair value of consideration transferred		1,535
Cash		35
Contingent consideration		1,500
Fair value of consideration transferred		$ 1,535
Anlin Windows & Doors [Member]
Business Acquisition [Line Items]
Accounts receivable	$ 10,803
Inventories	7,306
Contract assets, net	7,027
Prepaid expenses and other assets	672
Property and equipment	24,309
Operating lease right-of-use asset	3,464
Intangible assets	72,000
Total assets acquired	125,581
Accounts payable	(4,582)
Accrued and other liabilities	(5,456)
Operating lease liability	(3,464)
Total liabilities assumed	(13,502)
Net assets acquired	112,079
Goodwill	9,613			$ 9,600
Fair value of consideration transferred	121,692
Cash	114,982		$ 800
Contingent consideration	6,710
Fair value of consideration transferred	121,692
Anlin Windows & Doors [Member] | Previously Reported [Member]
Business Acquisition [Line Items]
Accounts receivable	10,803
Inventories	7,633
Contract assets, net	7,027
Prepaid expenses and other assets	1,626
Property and equipment	22,800
Operating lease right-of-use asset	3,450
Intangible assets	77,800
Total assets acquired	131,139
Accounts payable	(5,175)
Accrued and other liabilities	(7,993)
Operating lease liability	(3,450)
Total liabilities assumed	(16,618)
Net assets acquired	114,521
Goodwill	5,596
Fair value of consideration transferred	120,117
Cash	114,196
Contingent consideration	5,921
Fair value of consideration transferred	120,117
Anlin Windows & Doors [Member] | Adjustments to Allocation [Member]
Business Acquisition [Line Items]
Inventories	(327)
Prepaid expenses and other assets	(954)
Property and equipment	1,509
Operating lease right-of-use asset	14
Intangible assets	(5,800)
Total assets acquired	(5,558)
Accounts payable	593
Accrued and other liabilities	2,537
Operating lease liability	(14)
Total liabilities assumed	3,116
Net assets acquired	(2,442)
Goodwill	4,017
Fair value of consideration transferred	1,575
Cash	786
Contingent consideration	789
Fair value of consideration transferred	$ 1,575

XML

Acquisitions - Schedule for Valuation of Identifiable Intangible Assets Acquired and Estimate of Useful Lives (Detail) - USD ($) $ in Thousands	Oct. 25, 2021	Feb. 01, 2021
Anlin Windows & Doors [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	$ 72,000
Anlin Windows & Doors [Member] | Previously Reported [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	77,800
Anlin Windows & Doors [Member] | Adjustments to Allocation [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	(5,800)
Anlin Windows & Doors [Member] | Trade Name [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	31,700
Anlin Windows & Doors [Member] | Trade Name [Member] | Previously Reported [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	35,400
Anlin Windows & Doors [Member] | Trade Name [Member] | Adjustments to Allocation [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	(3,700)
Anlin Windows & Doors [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	$ 37,800
Useful Life (in years)	15 years
Anlin Windows & Doors [Member] | Customer Relationships [Member] | Previously Reported [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	$ 42,100
Anlin Windows & Doors [Member] | Customer Relationships [Member] | Adjustments to Allocation [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	(4,300)
Anlin Windows & Doors [Member] | Customer-related backlog [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	$ 2,200
Anlin Windows & Doors [Member] | Customer-related backlog [Member] | Maximum [Member]
Business Acquisition [Line Items]
Useful Life (in years)	1 year
Anlin Windows & Doors [Member] | Customer-related backlog [Member] | Adjustments to Allocation [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	$ 2,200
Anlin Windows & Doors [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	$ 300
Useful Life (in years)	9 years
Anlin Windows & Doors [Member] | Developed Technology [Member] | Previously Reported [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount	$ 300
ECO [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount		$ 74,300
ECO [Member] | Previously Reported [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount		72,700
ECO [Member] | Adjustments to Allocation [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount		1,600
ECO [Member] | Trade Name [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount		34,900
ECO [Member] | Trade Name [Member] | Previously Reported [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount		36,000
ECO [Member] | Trade Name [Member] | Adjustments to Allocation [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount		(1,100)
ECO [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount		$ 39,400
ECO [Member] | Customer Relationships [Member] | Minimum [Member]
Business Acquisition [Line Items]
Useful Life (in years)		5 years
ECO [Member] | Customer Relationships [Member] | Maximum [Member]
Business Acquisition [Line Items]
Useful Life (in years)		15 years
ECO [Member] | Customer Relationships [Member] | Previously Reported [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount		$ 36,700
ECO [Member] | Customer Relationships [Member] | Adjustments to Allocation [Member]
Business Acquisition [Line Items]
Preliminary/Final Valuation Amount		$ 2,700

XML

Acquisitions - Summary of Unaudited Proforma Results (Detail) - Anlin Windows and Doors [Member] - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Oct. 02, 2021	Oct. 02, 2021
Business Acquisition [Line Items]
Net sales	$ 329,613	$ 939,395
Net income (loss) attributable to common shareholders	$ (3,326)	$ 18,410
Net income (loss) per common share attributable to common shareholders:
Basic	$ (0.06)	$ 0.31
Diluted	$ (0.06)	$ 0.31

XML

Net Income Per Common Share - Additional Information (Detail) - shares	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Earnings Per Share [Abstract]
Dilutive securities excluded from the calculation of weighted average shares outstanding	0	0	0	0
Dilutive shares		510,000

XML

Net Income Per Common Share - Calculation of EPS and Reconciliation of Weighted Average Common Shares Used in Calculation of Basic and Diluted EPS (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Earnings Per Share [Abstract]
Net income (loss)	$ 30,414	$ (5,140)	$ 90,705	$ 18,368
Less: Net income attributable to RNCI	(373)	(677)	(1,334)	(1,656)
Net income (loss) attributable to the Company	30,041	(5,817)	89,371	16,712
Decrease (increase) in redemption value of RNCI	271	(965)	(1,514)	(4,528)
Net income (loss) attributable to common shareholders	$ 30,312	$ (6,782)	$ 87,857	$ 12,184
Weighted-average number of common shares outstanding - Basic	59,964	59,590	59,908	59,475
Add: Dilutive shares from equity plans	438	0	293	560
Weighted-average number of common shares outstanding - Diluted	60,402	59,590	60,201	60,035
Net income (loss) per common share attributable to common shareholders:
Basic	$ 0.51	$ (0.11)	$ 1.47	$ 0.20
Diluted	$ 0.50	$ (0.11)	$ 1.46	$ 0.20

XML

Goodwill and Other Intangible Assets - Schedule of Goodwill and Intangible Assets Net (Detail) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended
	Oct. 25, 2021	Oct. 01, 2022	Oct. 01, 2022	Jan. 01, 2022
Indefinite-lived Intangible Assets [Line Items]
Less: Accumulated amortization		$ (158,416)	$ (158,416)	$ (138,691)
Subtotal		160,559	160,559	182,384
Other intangible assets, net		369,000	369,000	394,525
Goodwill at January 1, 2022			364,598
Goodwill at October 1, 2022		370,115	370,115
Anlin [Member]
Indefinite-lived Intangible Assets [Line Items]
Increase (decrease) in goodwill		2,500	789
Final net working capital payment			786
Estimated contingent consideration	$ 6,710
Net decrease in other allocation changes			(821)
Goodwill at October 1, 2022	$ 9,613	9,600	9,600
Eco Enterprises, LLC [Member]
Indefinite-lived Intangible Assets [Line Items]
Estimated contingent consideration			1,500
Trade Name [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets		208,441	208,441	212,141
Trade Name [Member] | Anlin [Member]
Indefinite-lived Intangible Assets [Line Items]
Decrease in trade names			(3,700)
Customer Relationships and Customer-related Assets [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets		286,947	286,947	289,047
Customer Relationships and Customer-related Assets [Member] | Anlin [Member]
Indefinite-lived Intangible Assets [Line Items]
Increase (decrease) in goodwill			$ 4,300
Customer Relationships and Customer-related Assets [Member] | Minimum [Member]
Indefinite-lived Intangible Assets [Line Items]
Initial Useful Life (in years)			1 year
Customer Relationships and Customer-related Assets [Member] | Maximum [Member]
Indefinite-lived Intangible Assets [Line Items]
Initial Useful Life (in years)			15 years
Customer-related backlog asset [Member] | Anlin [Member]
Indefinite-lived Intangible Assets [Line Items]
Increase (decrease) in goodwill			$ (2,200)
Trade Name [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets		22,200	$ 22,200	22,200
Initial Useful Life (in years)			15 years
Trade Name [Member] | Anlin [Member]
Indefinite-lived Intangible Assets [Line Items]
Increase (decrease) in goodwill			$ 3,700
Warranty Reserve [Member] | Anlin [Member]
Indefinite-lived Intangible Assets [Line Items]
Increase (decrease) in goodwill			(2,537)
Developed Technology [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets		5,900	$ 5,900	5,900
Developed Technology [Member] | Minimum [Member]
Indefinite-lived Intangible Assets [Line Items]
Initial Useful Life (in years)			6 years
Developed Technology [Member] | Maximum [Member]
Indefinite-lived Intangible Assets [Line Items]
Initial Useful Life (in years)			10 years
Noncompete Agreements [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets		3,338	$ 3,338	3,338
Noncompete Agreements [Member] | Minimum [Member]
Indefinite-lived Intangible Assets [Line Items]
Initial Useful Life (in years)			2 years
Noncompete Agreements [Member] | Maximum [Member]
Indefinite-lived Intangible Assets [Line Items]
Initial Useful Life (in years)			5 years
Software License [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets		$ 590	$ 590	$ 590
Initial Useful Life (in years)			2 years

XML

Goodwill and Other Intangible Assets - Estimated Amortization for Future Fiscal Year (Detail) - USD ($) $ in Thousands	Oct. 01, 2022	Jan. 01, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2022	$ 5,162
2023	16,906
2024	20,520
2025	20,474
2026	20,299
Thereafter	77,198
Subtotal	$ 160,559	$ 182,384

XML

Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021	Jan. 01, 2022
Indefinite-lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 5,800	$ 5,300	$ 19,700	$ 15,200
Goodwill	370,115		370,115		$ 364,598
Customer-related Backlog [Member]
Indefinite-lived Intangible Assets [Line Items]
Amortization of intangible assets			2,200
Southeast Segment [Member]
Indefinite-lived Intangible Assets [Line Items]
Goodwill	228,300		228,300		226,800
Western Segment [Member]
Indefinite-lived Intangible Assets [Line Items]
Goodwill	$ 141,800		$ 141,800		$ 137,800

XML

Long Term Debt - Schedule of Long-term Debt (Detail) - USD ($) $ in Thousands	Oct. 01, 2022	Jan. 01, 2022
Debt Instrument [Line Items]
Long-term debt	$ 635,000	$ 635,000
Deferred financing costs	(8,424)	(9,345)
Long-term debt, net	626,576	625,655
2016 Credit Agreement Due 2024, Maturing in October 2024 [Member]
Debt Instrument [Line Items]
Long-term debt	60,000	60,000
2021 Senior Notes due 2029, Maturing in October 2029 [Member]
Debt Instrument [Line Items]
Long-term debt	$ 575,000	$ 575,000

XML

Long-Term Debt - Additional Information (Detail) - USD ($)						9 Months Ended
	Oct. 25, 2021	Sep. 24, 2021	Oct. 31, 2019	Mar. 16, 2018	Feb. 16, 2016	Oct. 01, 2022	Jan. 01, 2022
Line of Credit Facility [Line Items]
Face value of debt outstanding						$ 635,000,000	$ 635,000,000
Letters of credit outstanding						5,700,000
2016 Credit Agreement Due 2024 [Member]
Line of Credit Facility [Line Items]
Face value of debt outstanding						60,000,000	$ 60,000,000
Credit agreement date					Feb. 16, 2016
Prepayment of term loan						$ 54,000,000.0
Senior Secured Credit Facilities [Member]
Line of Credit Facility [Line Items]
Amount available under credit facility					$ 310,000,000.0
Term Loan Facility [Member]
Line of Credit Facility [Line Items]
Amount available under credit facility					$ 270,000,000.0
Maturity term of credit agreement					6 years
Credit facility amortization percentage					1.00%
Weighted average interest rate						5.12%	2.10%
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Amount available under credit facility					$ 40,000,000.0
Credit available under the credit facility						$ 74,300,000
Revolving Credit Facility [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Credit facility amortization percentage	0.35%
Revolving Credit Facility [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Credit facility amortization percentage	0.25%
Second Amendment [Member]
Line of Credit Facility [Line Items]
Interest rate terms						The Second Amendment, among other things, decreased the applicable interest rate margins for the Initial Term Loans (as defined in the 2016 Credit Agreement due 2024) from (i) 3.75% to 2.50%, in the case of the Base Rate Loans (as defined in the 2016 Credit Agreement due 2024), and (ii) 4.75% to 3.50%, in the case of the Eurodollar Loans (as defined in the 2016 Credit Agreement due 2024).
Second Amendment [Member] | Base Rate [Member]
Line of Credit Facility [Line Items]
Basis spread on LIBOR				2.50%		3.75%
Second Amendment [Member] | Euro Dollar [Member]
Line of Credit Facility [Line Items]
Basis spread on LIBOR				3.50%		4.75%
Third Amendment [Member]
Line of Credit Facility [Line Items]
Face value of debt outstanding			$ 64,000,000.0
Term of credit facility			3 years
Revolving Credit Facility due 2024 [Member]
Line of Credit Facility [Line Items]
Face value of debt outstanding						$ 40,000,000.0
Term of credit facility			5 years
Revolving Credit Facility due 2024 [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Face value of debt outstanding			$ 80,000,000.0
Fourth Amendment [Member]
Line of Credit Facility [Line Items]
Term of credit facility	3 years
Maximum borrowing available during period	$ 60,000,000.0
2018 Senior Notes due 2026 [Member]
Line of Credit Facility [Line Items]
Debt instrument, face amount						425,000,000.0
Repayments of debt						$ 425,000,000.0
Repurchase notes percentage of aggregate principal amount						5.063%
Prepayment of term loan						$ 21,500,000
2021 Senior Notes Due 2029 [Member]
Line of Credit Facility [Line Items]
Long-term debt		$ 575,000,000.0
Accrued Interest rate		4.375%
Percentage of principal amount issued		100.00%
Debt instrument, maturity date		Oct. 01, 2029
Financing Costs		$ 8,700,000
Percentage of lender spread on principal amount		1.25%
Financing costs lender spread		$ 7,200,000
Financing costs other		$ 1,500,000
Face value of debt outstanding						575,000,000.0
Accrued interest						$ 12,600,000
Repurchase notes percentage of aggregate principal amount						101.00%
2021 Senior Notes Due 2029 [Member] | Prior to October 1, 2024 [Member]
Line of Credit Facility [Line Items]
Basis points, floor						50.00%
2021 Senior Notes Due 2029 [Member] | On or After August 1, 2024 [Member]
Line of Credit Facility [Line Items]
Debt instrument, redemption percentage						102.188%
2021 Senior Notes Due 2029 [Member] | On or After August 2025 [Member]
Line of Credit Facility [Line Items]
Debt instrument, redemption percentage						101.094%
2021 Senior Notes Due 2029 [Member] | On or After August 1, 2026 [Member]
Line of Credit Facility [Line Items]
Debt instrument, redemption percentage						100.00%

XML

Long-Term Debt - Activity Relating to Deferred Financing Costs Composed of Third-Party Fees and Costs, and Lender Fees (Detail) $ in Thousands	9 Months Ended
	Oct. 01, 2022 USD ($)
Debt Instrument [Line Items]
At beginning of year	$ 9,345
Less: Amortization expense	(921)
At end of period	$ 8,424

XML

Long-Term Debt - Estimated Amortization Expense Relating to Deferred Financing Costs (Detail) - USD ($) $ in Thousands	Oct. 01, 2022	Jan. 01, 2022
Debt Disclosure [Abstract]
Remainder of 2022	$ 312
2023	1,282
2024	1,282
2025	1,083
2026	1,114
Thereafter	3,351
Total	$ 8,424	$ 9,345

XML

Long-Term Debt - Contractual Future Maturities of Long-Term Debt (Detail) - USD ($) $ in Thousands	Oct. 01, 2022	Jan. 01, 2022
Debt Disclosure [Abstract]
Remainder of 2022	$ 0
2023	0
2024	60,000
2025	0
2026	0
Thereafter	575,000
Total	$ 635,000	$ 635,000

XML

Leases - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Lessee Lease Description [Line Items]
Operating lease existence of option to extend			true
Operating lease extension period			5 years
Operating lease existence of option to terminate			true
Operating lease not yet commenced description			no additional operating or finance leases that have not yet commenced
Finance lease not yet commenced description			no additional operating or finance leases that have not yet commenced
Lease expenses	$ 7.8	$ 6.5	$ 22.4	$ 17.7
Operating lease expire description			Our operating leases expire at various times through 2032.
Cost of Sales [Member]
Lessee Lease Description [Line Items]
Lease expenses	$ 4.0	$ 0.5	$ 11.4	$ 6.9
Minimum [Member]
Lessee Lease Description [Line Items]
Operating lease term	1 year		1 year
Maximum [Member]
Lessee Lease Description [Line Items]
Operating lease term	10 years		10 years
Operating lease termination period			1 year

XML

Leases - Components of Lease Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Leases [Abstract]
Operating lease cost	$ 5,101	$ 4,213	$ 14,941	$ 10,990
Short-term lease cost	2,668	2,280	7,488	6,696
Total lease cost	$ 7,769	$ 6,493	$ 22,429	$ 17,686

XML

Leases - Other Information Relating to Leases (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows relating to operating leases	$ (4,913)	$ (3,435)	$ (14,230)	$ (9,503)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$ 1,363	$ 933	$ 13,625	$ 47,838
Weighted average remaining lease term in years
Operating leases	6 years 4 months 20 days	6 years 4 months 20 days	6 years 4 months 20 days	6 years 4 months 20 days
Weighted average discount rate
Operating leases	5.40%	5.50%	5.40%	5.50%

XML

Leases - Future Maturities under Operating Leases (Detail) - USD ($) $ in Thousands	Oct. 01, 2022	Jan. 01, 2022
Leases [Abstract]
Remainder of 2022	$ 5,005	$ 17,929
2023	19,735	17,577
2024	19,140	16,990
2025	17,998	15,987
2026	16,799	15,025
2027	15,847	14,358
Thereafter	22,978	17,891
Total future minimum lease payments	117,502	115,757
Less: Imputed interest	(17,361)	(18,674)
Operating lease liability - total	100,141	97,083
Current portion of operating lease liability	15,247	13,180
Operating lease liability, less current portion	$ 84,894	$ 83,903

XML

Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended			9 Months Ended
	Sep. 30, 2021	Oct. 01, 2022	Oct. 02, 2021	Apr. 03, 2021	Oct. 01, 2022	Oct. 02, 2021	Jul. 02, 2022	Feb. 01, 2021
Income Taxes [Line Items]
Income tax expense (benefit)		$ 10,100	$ (2,410)		$ 29,910	$ 4,260
Effective tax rates		24.90%	31.90%		24.80%	18.80%
Pre-tax earnings		$ 40,514	$ (7,550)		$ 120,615	$ 22,628
Income tax benefit net of federal tax effect		462
Income tax expense benefit excess tax received by state		584
Excess tax benefits relating to exercises of stock options and lapses of restrictions on stock awards		$ (60)	(14)		$ (156)	$ 714
Tax credits true-up adjustments			$ 100
Effective tax rates, excluding discrete item		26.20%	(30.80%)		25.70%	21.90%
Effective tax rates, statutory federal and state rate					25.70%	24.20%
Payment of estimated income taxes					$ 21,700	$ 12,400
Corporate income tax rate	4.458%			3.535%	5.50%
Research and Development [Member]
Income Taxes [Line Items]
Tax credits true-up adjustments		$ 472			$ 472
Federal [Member]
Income Taxes [Line Items]
Payment of estimated income taxes					$ 20,800	8,300
ECO [Member]
Income Taxes [Line Items]
Percentage of ownership stake		75.00%			75.00%		75.00%	75.00%
Pre-tax earnings		$ 291	$ 449		$ 1,000	$ 1,200

XML

Fair Value - Additional Information (Detail) - USD ($)	3 Months Ended	9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Jan. 01, 2022
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value of assets, level 2 to level 3 transfers	$ 0	$ 0
Long-term debt	635,000,000		$ 635,000,000
2016 Credit Agreement Due 2024 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value of current long-term debt	60,000,000.0
Long-term debt	60,000,000		60,000,000
2021 Senior Notes [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value of current long-term debt	475,800,000		578,200,000
Long-term debt	$ 575,000,000.0		$ 575,000,000.0

XML

Fair Value - Schedule of Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Oct. 01, 2022	Jan. 01, 2022
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets (Liabilities)	$ (3,403)	$ 9,428
Aluminum Contracts [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets (Liabilities)	(4,001)	4,829
MTP Contracts [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets (Liabilities)	598	4,599
Significant Other Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets (Liabilities)	(3,403)	9,428
Significant Other Observable Inputs (Level 2) [Member] | Aluminum Contracts [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets (Liabilities)	(4,001)	4,829
Significant Other Observable Inputs (Level 2) [Member] | MTP Contracts [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets (Liabilities)	$ 598	$ 4,599

XML

Derivatives - Additional Information (Detail) $ in Thousands, lb in Millions	9 Months Ended
	Oct. 01, 2022 USD ($) Forwardcontract lb $ / lb	Jan. 01, 2022 USD ($)
Derivative [Line Items]
Derivative liability	$ 4,001
Derivative assets	598	$ 9,428
Fair Value of Derivative	$ 3,400
MTP Contracts [Member]
Derivative [Line Items]
Typical order quantities payment terms net	30 days
Derivative assets	$ 600
Number of outstanding forward contracts | Forwardcontract	2
Derivative, amount of hedged item | lb	5.3
Derivative average price | $ / lb	0.11
Maturity period of contract, minimum	1 month
Maturity period of contract, maximum	3 months
Aluminum Forward Contracts [Member]
Derivative [Line Items]
Derivative liability	$ 4,000
Number of outstanding forward contracts | Forwardcontract	8
Derivative, amount of hedged item | lb	11.5
Derivative average price | $ / lb	1.33
Maturity period of contract, minimum	1 month
Maturity period of contract, maximum	3 months
Aluminum Contracts and MTP Contracts [Member]
Derivative [Line Items]
Accumulated other comprehensive (loss) income	$ (2,500)	$ 7,000

XML

Derivatives - Summary of Fair Value of Hedges (Detail) - USD ($) $ in Thousands	Oct. 01, 2022	Jan. 01, 2022
Derivative Instruments And Hedging Activities [Line Items]
Total derivative instruments Assets	$ 598	$ 9,428
Total derivative instruments Liabilities	(4,001)
Aluminum Contracts [Member]
Derivative Instruments And Hedging Activities [Line Items]
Total derivative instruments Assets		$ 4,829
Derivative Asset, Statement of Financial Position [Extensible Enumeration]		Other Assets, Current
Total derivative instruments Liabilities	$ (4,001)
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Accounts Payable and Accrued Liabilities, Current
MTP Contracts [Member]
Derivative Instruments And Hedging Activities [Line Items]
Total derivative instruments Assets	$ 598	$ 4,599
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Other Assets, Current	Other Assets, Current

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Derivatives - Gains (Losses) on Derivative Financial Instruments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in OCI(L) on Derivatives	$ (2,633)	$ 6,549	$ (9,487)	$ 23,910
Aluminum Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income	$ (3,185)	$ 4,271	$ (597)	$ 8,423
Derivative Instrument, Gain (Loss) Reclassified from AOCI into Income, Effective Portion, Statement of Income or Comprehensive Income [Extensible Enumeration]	Cost of Goods and Services Sold	Cost of Goods and Services Sold	Cost of Goods and Services Sold	Cost of Goods and Services Sold
Aluminum Contracts [Member] | Inventory Classified as Cost of Sales [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in OCI(L) on Derivatives	$ (2,012)	$ 4,194	$ (9,427)	$ 13,385
MTP Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income	$ 769	$ 2,425	$ 3,941	$ 4,181
Derivative Instrument, Gain (Loss) Reclassified from AOCI into Income, Effective Portion, Statement of Income or Comprehensive Income [Extensible Enumeration]	Cost of Goods and Services Sold	Cost of Goods and Services Sold	Cost of Goods and Services Sold	Cost of Goods and Services Sold
MTP Contracts [Member] | Inventory Classified as Cost of Sales [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in OCI(L) on Derivatives	$ (621)	$ 2,355	$ (60)	$ 10,525

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Accumulated Other Comprehensive Income (loss) - Components of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021	Jul. 02, 2022	Jan. 01, 2022	Jul. 03, 2021	Jan. 02, 2021
Components of Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ 613,460		$ 613,460			$ 529,097
Increase (decrease) in fair value of derivatives	(2,633)	$ 6,549	(9,487)	$ 23,910
Amounts reclassified from accumulated other comprehensive income (loss)	2,416	(6,696)	(3,344)	(12,604)
Tax effect	56	37	3,296	(2,806)
Other comprehensive income (loss), net of tax	(161)	(110)	(9,535)	8,500
Ending Balance	613,460		613,460			529,097
Accumulated Other Comprehensive Income [Member]
Components of Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(2,529)	11,220	(2,529)	11,220	$ (2,368)	7,006	$ 11,330	$ 2,720
Other comprehensive income (loss), net of tax	(161)	(110)	(9,535)	8,500
Ending Balance	(2,529)	11,220	(2,529)	11,220	(2,368)	7,006	11,330	2,720
Aluminum Contracts [Member]
Components of Accumulated Other Comprehensive Income (Loss) [Line Items]
Increase (decrease) in fair value of derivatives	(2,012)	4,194	(9,427)	13,385
Amounts reclassified from accumulated other comprehensive income (loss)	3,185	(4,271)	597	(8,423)
Tax effect	(279)	20	2,268	(1,231)
Other comprehensive income (loss), net of tax	894	(57)	(6,562)	3,731
Aluminum Contracts [Member] | Accumulated Other Comprehensive Income [Member]
Components of Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(2,952)	6,134	(2,952)	6,134	(3,846)	3,610	6,191	2,403
Ending Balance	(2,952)	6,134	(2,952)	6,134	(3,846)	3,610	6,191	2,403
MTP Contracts [Member]
Components of Accumulated Other Comprehensive Income (Loss) [Line Items]
Increase (decrease) in fair value of derivatives	(621)	2,355	(60)	10,525
Amounts reclassified from accumulated other comprehensive income (loss)	(769)	(2,425)	(3,941)	(4,181)
Tax effect	335	17	1,028	(1,575)
Other comprehensive income (loss), net of tax	(1,055)	(53)	(2,973)	4,769
MTP Contracts [Member] | Accumulated Other Comprehensive Income [Member]
Components of Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	423	5,086	423	5,086	1,478	3,396	5,139	317
Ending Balance	$ 423	$ 5,086	$ 423	$ 5,086	$ 1,478	$ 3,396	$ 5,139	$ 317

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Segments - Additional Information (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022 USD ($)	Oct. 02, 2021 USD ($)	Oct. 01, 2022 USD ($) Segment	Oct. 02, 2021 USD ($)	Jan. 02, 2022 USD ($)	Jan. 01, 2022 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | Segment			2
Depreciation expense			$ 25,359	$ 22,290
Amortization expense			19,725	15,174
Assets	$ 1,602,604		1,602,604			$ 1,460,610
Southeast Segment [Member]
Segment Reporting Information [Line Items]
Depreciation expense	6,700	$ 7,000	20,600	19,700
Amortization expense	2,700	2,700	8,100	7,900
Assets	995,300		995,300		$ 911,300
Western Segment [Member]
Segment Reporting Information [Line Items]
Depreciation expense	1,600	900	4,700	2,600
Amortization expense	3,100	$ 2,600	11,600	$ 7,300
Assets	$ 607,300		$ 607,300		$ 549,300

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Segments - Summary of Financial Data Attributable to Operating Segments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Net sales:
Total net sales	$ 385,837	$ 300,431	$ 1,151,020	$ 857,023
Income from operations:
Total income from operations	47,403	25,608	141,739	71,068
Interest expense, net	6,889	7,686	21,124	22,968
Debt extinguishment costs		25,472		25,472
Income (loss) before income taxes	40,514	(7,550)	120,615	22,628
Southeast Segment [Member]
Net sales:
Total net sales	288,246	255,170	867,505	731,257
Income from operations:
Total income from operations	30,037	20,713	96,607	54,977
Western Segment [Member]
Net sales:
Total net sales	97,591	45,261	283,515	125,766
Income from operations:
Total income from operations	$ 17,366	$ 4,895	$ 45,132	$ 16,091

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Reedemable Non-Controlling Interest - Additional Information (Detail) - USD ($) $ in Thousands	Feb. 01, 2021	Oct. 01, 2022	Jan. 01, 2022	Oct. 02, 2021
Redeemable Noncontrolling Interest [Line Items]
Redeemable noncontrolling interest value		$ 47,500
Accretion value of redeemable non-controlling interest		$ 39,711	$ 36,863	$ 34,648
Eco Enterprises, LLC [Member]
Redeemable Noncontrolling Interest [Line Items]
Noncontrolling interest, ownership percentage by parent	75.00%
Sellers equity interest put or call right exercise purchase price description	Upon exercise of the put or call right, the purchase price is calculated based on a future agreed performance metric
ECO [Member]
Redeemable Noncontrolling Interest [Line Items]
Sellers equity interest put right exercise period following call right exercise period	15 days

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Reedemable Non-Controlling Interest - Summary of Changes in Redeemable Non-Controlling Interest (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2022	Oct. 02, 2021	Oct. 01, 2022	Oct. 02, 2021
Noncontrolling Interest [Abstract]
Balance at beginning of period			$ 36,863
RNCI in Eco at initially estimated fair value				$ 28,464
Net income portion attributable to redeemable non-controlling interest	$ 373	$ 677	1,334	1,656
Change in value of redeemable non-controlling interest	(271)	965	1,514	4,528
Balance at end of period	$ 39,711	$ 34,648	$ 39,711	$ 34,648

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Subsequent Events - Additional Information (Details) - USD ($) $ in Thousands				3 Months Ended
	Oct. 14, 2022	Oct. 13, 2022	Oct. 31, 2019	Oct. 01, 2022	Jan. 01, 2022
Subsequent Event [Line Items]
Aggregate principal amount issuance				$ 635,000	$ 635,000
Revolving Credit Facility due 2024 [Member]
Subsequent Event [Line Items]
Term of credit facility			5 years
Aggregate principal amount issuance				40,000
Revolving Credit Facility due 2024 [Member] | Maximum [Member]
Subsequent Event [Line Items]
Aggregate principal amount issuance			$ 80,000
Martin Acquisition [Member]
Subsequent Event [Line Items]
Acquisition related expenses				$ 1,250
Subsequent Event [Member] | Term A Loan [Member]
Subsequent Event [Line Items]
Fees and costs relating to prepayment of term loan	$ 1,600
Payments of term loan	61,600
Prepayments of term loan	60,000
Subsequent Event [Member] | New Revolving Credit Facility [Member]
Subsequent Event [Line Items]
Term of credit facility		5 years
Aggregate principal amount issuance		$ 250,000
Subsequent Event [Member] | New Revolving Credit Facility [Member] | Minimum [Member]
Subsequent Event [Line Items]
Credit facility amortization percentage		0.25%
Subsequent Event [Member] | New Revolving Credit Facility [Member] | Maximum [Member]
Subsequent Event [Line Items]
Credit facility amortization percentage		0.35%
Subsequent Event [Member] | New Revolving Credit Facility [Member] | SOFR [Member]
Subsequent Event [Line Items]
Basis points, floor		0.00%
Subsequent Event [Member] | New Revolving Credit Facility [Member] | SOFR [Member] | Minimum [Member]
Subsequent Event [Line Items]
Basis spread on variable rate		1.75%
Subsequent Event [Member] | New Revolving Credit Facility [Member] | SOFR [Member] | Maximum [Member]
Subsequent Event [Line Items]
Basis spread on variable rate		2.75%
Subsequent Event [Member] | New Revolving Credit Facility [Member] | Base Rate [Member]
Subsequent Event [Line Items]
Basis points, floor		100.00%
Subsequent Event [Member] | New Revolving Credit Facility [Member] | Base Rate [Member] | Minimum [Member]
Subsequent Event [Line Items]
Basis spread on variable rate		0.75%
Subsequent Event [Member] | New Revolving Credit Facility [Member] | Base Rate [Member] | Maximum [Member]
Subsequent Event [Line Items]
Basis spread on variable rate		1.75%
Subsequent Event [Member] | Martin Acquisition [Member]
Subsequent Event [Line Items]
Fair value of consideration transferred	89,400
Subsequent Event [Member] | Martin Acquisition [Member] | New Revolving Credit Facility [Member]
Subsequent Event [Line Items]
Aggregate principal amount issuance	250,000
Proceeds from lines of credit	160,000
Cash payment to acquire business	98,400
Subsequent Event [Member] | Martin Acquisition [Member] | SPA [Member]
Subsequent Event [Line Items]
Fair value of consideration transferred	187,800
Enterprise value	185,000
Payment for estimated net working capital	$ 2,800