Goodman Global, Inc. (NYSE:GGL) today announced record results for
the second quarter and first half of 2007. For the second quarter
of 2007, the Company reported net sales of $563.7 million � a 12
percent increase from the prior year�s comparable quarter � net
income of $39.0 million and diluted earnings per share of $0.55.
For the six months ended June 30, 2007, the Company reported net
sales of $944.0 million � a 7 percent increase from the prior
year�s first half � net income of $43.6 million and diluted
earnings per share of $0.62. �We made great progress in both sales
and earnings growth during the second quarter,� said Charles
Carroll, President and Chief Executive Officer. �Despite tough
market conditions, we delivered a record performance and
significantly expanded our position in the market. Our sales grew
12 percent compared to the prior year�s second quarter, with strong
results across all major product categories. In addition to
increasing sales, we expanded our operating profit margin, with the
benefits of a more profitable sales mix, improved operating
efficiencies and past price increases more than offsetting higher
commodity costs and increased selling, general and administrative
expense. At the same time, we generated strong cash flow, combining
our excellent earnings performance with effective working capital
management, further strengthening our business,� he noted. �For
these reasons, we are raising our 2007 forecast for earnings growth
and cash generation,� Mr. Carroll went on to say. Second Quarter
Summary (millions, except per share) 2Q�07 2Q�06 Change Sales, net
$ 563.7 $ 504.5 12 % EBITDA (1) 87.5 45.4 - Adjusted EBITDA (1)
87.5 68.1 28 % Net income 39.0 9.6 - Adjusted Net income (1) 39.0
26.4 47 % Earnings per share, diluted $ 0.55 $ 0.13 - Adjusted
Earnings per share, diluted (1) 0.55 0.36 - Pro-forma Adjusted
Earnings per share, diluted (1) 0.55 0.37 49 % � (1) See "Non-GAAP
Financial Measures," "Reconciliation of Net Income to EBITDA and
Adjusted EBITDA," and "Reconciliation of Net Income to Adjusted Net
Income" for explanations of these items and management's purposes
in presenting these financial measures. Second Quarter Results
Second quarter 2007 net sales increased 12 percent, to $563.7
million from $504.5 million for the second quarter of 2006. The
Company sold more units than in the second quarter of 2006, which
contributed to the sales increase. In addition, sales growth
included the benefits of a price increase in late 2006 and the
continued mix shift to higher-efficiency products. The Company�s
net income for the second quarter of 2007 was $39.0 million,
compared with $9.6 million for the second quarter of 2006. Net
income for the second quarter of 2006 included, net of tax, $12.5
million of IPO-related expenses and $4.3 million of unrealized
losses on commodity derivatives that did not qualify for hedge
accounting treatment. Adjusted for these items, second quarter 2007
net income rose 47 percent from an adjusted net income of $26.4
million for the prior year�s comparable period. The increase in net
income was primarily the result of higher sales volumes, the
continued shift to higher-efficiency products, improved
productivity and lower interest expense, offset somewhat by higher
selling, general and administrative costs. Earnings per share,
diluted for the second quarter of 2007 were $0.55, compared with
earnings per share, diluted available to common shareholders of
$0.13 for the second quarter of 2006. Earnings per share, diluted
available to common shareholders for the second quarter of 2006
included IPO-related expenses and the impact of unrealized losses
on commodity derivatives that did not qualify for hedge accounting
treatment and were further reduced by the dividend on the Company�s
Series A Preferred Stock. As a result of the Company�s IPO in April
2006, the Series A Preferred Stock was redeemed. Adjusted to
exclude these items and treat the IPO as though it had occurred at
the beginning of the year with the preferred stock redeemed at that
time, second quarter 2007 diluted earnings per share increased 49
percent from diluted pro-forma adjusted earnings per share of $0.37
for the second quarter of 2006. For the second quarter of 2007, the
Company reported EBITDA of $87.5 million, compared with EBITDA of
$45.4 million for the second quarter of 2006. EBITDA for the second
quarter of 2006 included $16.1 million of IPO-related expenses and
$6.6 million of unrealized losses on commodity derivatives that did
not qualify for hedge accounting treatment. Adjusted for these
items, EBITDA for the second quarter of 2007 increased 28 percent
from the 2006 second quarter adjusted EBITDA of $68.1 million. The
Company concluded the quarter with net debt of $796.5 million, a
$146.9 million reduction from June 30, 2006 net debt of $943.4
million. The decrease in net debt was primarily achieved through
strong earnings performance and working capital improvements. Six
Month Results Net sales for the first six months of 2007 increased
seven percent to $944.0 million from net sales of $885.1 million
for the first six months of 2006. The increase in net sales was
driven by the continued shift to higher efficiency products and the
prior year�s price increases which more than offset a modest
decline in sales volume. Net income for the first six months of
2007 was $43.6 million, compared with net income of $18.0 million
for the first six months of 2006. For the first six months of 2006,
net income included, net of tax, $12.9 million of IPO-related
expenses and monitoring fees and $4.3 million of unrealized losses
on commodity derivatives that did not qualify for hedge accounting
treatment. Adjusted for these items, net income for the first six
months of 2007 increased 24 percent from an adjusted net income of
$35.2 million for the first six months of 2006. Earnings per share,
diluted were $0.62 for the first six months of 2007 and earnings
per share, diluted available to common shareholders were $0.19 for
the comparable period of 2006. For the first six months of 2006,
diluted earnings per share available to common shareholders
included IPO-related expenses, the impact of unrealized losses on
commodity derivatives that did not qualify for hedge accounting
treatment and were further reduced by the dividend on the Company�s
Series A Preferred Stock. Adjusted to exclude these items and treat
the IPO as though it had occurred at the beginning of the year with
the preferred stock redeemed at that time, diluted earnings per
share for the first six months of 2007 increased 24 percent from
diluted pro-forma adjusted earnings per share of $0.50 for the
first six months of 2006. EBITDA for the first six months of 2007
was $119.7 million and EBITDA for the first six months of 2006 was
$86.0 million. For the first six months of 2006, EBITDA included
IPO-related expenses and monitoring fees and unrealized losses on
commodity derivatives that did not qualify for hedge accounting
treatment. Adjusted for these items, EBITDA for the first six
months of 2007 increased $10.5 million, or 10 percent, from the
2006 first six months adjusted EBITDA of $109.2 million. Outlook
�The Company is performing very well,� said Mr. Carroll. �We are
delivering quality products to our customers and supporting them
with excellent availability and the industry�s best warranty. Based
on the recent success of our sales efforts and manufacturing
performance, we are expecting further strong sales and earnings
growth this year. As a result, we are raising our 2007 forecast. We
now expect EBITDA of between $260 million and $270 million and
diluted earnings per share of between $1.35 and $1.45,� he said.
�With this strong earnings performance and continued improvement in
working capital management, we expect to generate sufficient cash
to reduce debt by at least $150 million this year,� Mr. Carroll
concluded. Conference Call The Company will host a conference call
on Thursday, July 26, 2007 at 11:00 a.m. Eastern to review the
recent quarter�s performance. The call may be accessed by telephone
or the Internet. To access the call by telephone, dial 866-713-8310
and use the pass code 68548212. International callers should dial
617-597-5308 and use the same pass code. An Internet link to the
call may be found on the Company�s Web site, www.goodmanglobal.com,
in the �Management Presentations� section. A replay of the call
will be available starting approximately one hour after the
conclusion of the call and continuing until August 9, 2007. The
replay may be accessed by dialing 888-286-8010 and using the pass
code 99352880. International callers should dial 617-801-6888 and
use the same pass code. An Internet link to a replay of the call
will also be posted on the Company�s Web site. Informational
exhibits related to the Company�s performance will be available on
the Company�s Web site in the �Management Presentations� section
and may be referred to during the conference call. Initial Public
Offering On April 11, 2006, the Company completed the initial
public offering of the Company�s common stock. The Company offered
20.9 million shares, and selling shareholders sold an additional
6.1 million shares, including the exercise of the underwriters�
over-allotment option. Goodman received proceeds of approximately
$354.5 million after underwriting discounts and before expenses.
The proceeds were used to redeem all of the outstanding Series A
Preferred Stock, including accrued dividends; to pay Apollo for
termination of the management agreement; and to redeem a portion of
the Company�s floating rate notes. The termination of the
management agreement also concluded the payment of a periodic
monitoring fee. Non-GAAP Financial Measures In addition to
reporting financial results that are determined in accordance with
GAAP, Goodman also reports EBITDA, adjusted EBITDA, adjusted net
income, adjusted earnings per share and pro-forma adjusted earnings
per share, all of which are non-GAAP measures. Management believes
that the presentation of these non-GAAP financial measures enables
investors to better understand the Company�s underlying operational
and financial performance and facilitates comparison of results
between periods by eliminating the effects of unusual and
non-recurring events that are not part of Goodman�s core
operations. These measures should be considered in addition to, not
as substitutes for, GAAP measures. They should not be considered as
an alternative to operating income, net income or earnings per
share, determined in accordance with GAAP; as an indicator of
Goodman�s operating performance; as an alternative to cash flows
from operating activities, determined in accordance with GAAP; or
as a measure of liquidity. EBITDA, or earnings before interest,
taxes, depreciation and amortization, is calculated as net income
plus interest, taxes, depreciation and amortization. Adjusted
EBITDA, adjusted net income and adjusted earnings per share are
calculated to exclude the income and expenses of one-time and
non-recurring events. These include, primarily, costs associated
with the December 2004 Apollo transaction, the April 2006 IPO and
unrealized losses on commodity derivatives that did not qualify for
hedge accounting treatment. Pro-forma adjusted earnings per share
is calculated as though the IPO had been completed by the beginning
of 2006 and a portion of the proceeds used at that time to redeem
all of the outstanding Series A Preferred Stock, including accrued
dividends. EBITDA is commonly used in the financial community, and
Goodman presents EBITDA to enhance the understanding of its
operating performance. Goodman uses EBITDA as one criterion for
evaluating its performance relative to that of its peers. The
Company�s credit agreement and bond indentures have certain
covenants that use ratios utilizing a measure called adjusted
EBITDA. In addition, EBITDA may be used to determine incentive
compensation for employees. Goodman believes that EBITDA is an
operating performance measure, not a liquidity measure, and that
EBITDA provides investors and analysts with a measure of operating
results unaffected by differences in capital structures, capital
investment cycles and ages of related assets among otherwise
comparable companies. However, EBITDA is not a measurement of
financial performance under accounting principles generally
accepted in the United States, and Goodman�s EBITDA may not be
comparable to similarly titled measures of other companies. The
supplementary adjustments to EBITDA, net income and earnings per
share to derive adjusted EBITDA, adjusted net income, adjusted
earnings per share and pro-forma adjusted earnings per share may
not be in accordance with current SEC practices or the rules and
regulations adopted by the SEC that apply to periodic reports filed
under the Securities Exchange Act of 1934. Accordingly, the SEC may
require that these measures be presented differently in filings
made with the SEC than as presented in this release, or not be
presented at all. Safe Harbor for Forward-Looking and Cautionary
Statements Certain statements in this press release are
�forward-looking statements� within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements involve a number of risks,
uncertainties and other factors that could cause actual results,
performance or achievements of Goodman to be materially different
from any future results, performance or achievements expressed or
implied by these forward-looking statements. The words �believe,�
�expect,� �anticipate,� �intend,� �estimate,� and other expressions
that are predictions of or indicate future events and trends and
that do not relate to historical matters identify forward-looking
statements. Forward-looking statements also include statements
about the following subjects: forecasts and projections of
operating and financial results; changes in weather patterns and
seasonal fluctuations; changes in customer demand due to the
federally-mandated minimum efficiency standard; the maturation of
Goodman�s new company-operated distribution centers; increased
competition and technological changes and advances; increases in
the cost of raw materials and components; Goodman�s relations with
its independent distributors; and damage or injury caused by
Goodman�s products. Goodman undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result
of new information, future events, changed circumstances or
otherwise. These forward-looking statements are subject to numerous
risks and uncertainties, including, but not limited to, the impact
of general economic conditions in the regions in which Goodman does
business; general industry conditions, including competition and
product, raw material and energy prices; the realization of
expected tax benefits; changes in exchange rates and currency
values; capital expenditure requirements; access to capital markets
and the risks and uncertainties described under �Risk Factors�
contained in Goodman�s Annual Report on Form 10-K filed with the
Securities and Exchange Commission. About Goodman Houston-based
Goodman Global, Inc. is the second-largest domestic unit
manufacturer of heating, ventilation and air conditioning products
for residential and light-commercial use. Goodman�s products are
predominantly marketed under the Goodman�, Amana� and Quietflex�
brand names, and are sold through company-operated and independent
distribution networks with approximately 800 distribution points
throughout North America. For more information about Goodman, visit
www.goodmanglobal.com. Amana� is a trademark of Maytag Corporation
and is used under license to Goodman Company, L.P. All rights
reserved. GOODMAN GLOBAL, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) � Three Months Ended June 30, 2007 2006 (in
thousands, except per share) Sales, net $ 563,722 $ 504,454 Costs
and expenses: Cost of good sold 421,578 388,038 Selling, general
and administrative expenses 55,152 64,682 Depreciation and
amortization expense � 8,412 � � 7,997 Operating profit 78,580
43,737 Interest expense, net 16,986 21,899 Other (income) expense,
net � (503 ) � 6,325 Earnings before taxes 62,097 15,513 Provision
for income taxes � 23,126 � � 5,885 Net income $ 38,971 � $ 9,628
Preferred stock dividends � -- � � 730 Net income available to
common shareholders $ 38,971 � $ 8,898 Net income per share
available to common shareholders, diluted $ 0.55 � $ 0.13 Average
outstanding common shares, diluted � 70,838 � � 70,796 Six Months
Ended June 30, 2007 2006 (in thousands, except per share) Sales,
net $ 943,996 $ 885,142 Costs and expenses: Cost of good sold
724,840 682,674 Selling, general and administrative expenses
101,078 110,341 Depreciation and amortization expense � 16,723 � �
15,450 Operating profit 101,355 76,677 Interest expense, net 33,893
41,640 Other (income) expense, net � (1,630 ) � 6,168 Earnings
before taxes 69,092 28,869 Provision for income taxes � 25,490 � �
10,827 Net income $ 43,602 � $ 18,042 Preferred stock dividends �
-- � � 6,622 Net income available to common shareholders $ 43,602 �
$ 11,420 Net income per share available to common shareholders,
diluted $ 0.62 � $ 0.19 Average outstanding common shares, diluted
� 70,774 � � 60,292 GOODMAN GLOBAL, INC. RECONCILIATION OF NET
INCOME TO EBITDA AND ADJUSTED EBITDA(1) (Unaudited) � Three Months
Ended June 30, 2007 2006 (in thousands) Net income $ 38,971 $ 9,628
Add: Provision for income taxes 23,126 5,885 Interest expense, net
16,986 21,899 Depreciation and amortization expense � 8,412 � 7,997
EBITDA $ 87,495 $ 45,409 Adjustments: IPO-related expenses --
16,099 Unrealized losses on commodity derivatives � -- � 6,617
Adjusted EBITDA $ 87,495 $ 68,125 Six Months Ended June 30, 2007
2006 (in thousands) Net income $ 43,602 $ 18,042 Add: Provision for
income taxes 25,490 10,827 Interest expense, net 33,893 41,640
Depreciation and amortization expense � 16,723 � 15,450 EBITDA $
119,708 $ 85,959 Adjustments: Monitoring fees -- 552 IPO-related
expenses -- 16,099 Unrealized losses on commodity derivatives � --
� 6,617 Adjusted EBITDA $ 119,708 $ 109,227 (1) EBITDA and Adjusted
EBITDA are non-GAAP financial measures. For more information
regarding EBITDA and other non-GAAP financial measures, see
"Non-GAAP Financial Measures." GOODMAN GLOBAL, INC. RECONCILIATION
OF NET INCOME TO ADJUSTED NET INCOME(2) (Unaudited) � Three Months
Ended June 30, 2007 2006 (in thousands, except per share) Net
income $ 38,971 $ 9,628 Adjustments, net of tax: IPO-related
expenses -- 12,507 Unrealized losses on commodity derivatives � --
� 4,314 Adjusted net income $ 38,971 $ 26,449 Preferred stock
dividends � -- � 730 Adjusted net income available to common
shareholders $ 38,971 $ 25,719 Adjusted net income per share
available to common shareholders, diluted $ 0.55 $ 0.36 Pro-forma
adjusted net income per share, diluted $ 0.55 $ 0.37 Average
outstanding common shares, diluted � 70,838 � 70,796 Six Months
Ended June 30, 2007 2006 (in thousands, except per share) Net
income $ 43,602 $ 18,042 Adjustments, net of tax: Monitoring fees
-- 348 IPO-related expenses -- 12,507 Unrealized losses on
commodity derivatives � -- � 4,314 Adjusted net income $ 43,602 $
35,211 Preferred stock dividends � -- � 6,622 Adjusted net income
available to common shareholders $ 43,602 $ 28,589 Adjusted net
income per share available to common shareholders, diluted $ 0.62 $
0.47 Pro-forma adjusted net income per share, diluted $ 0.62 $ 0.50
Average outstanding common shares, diluted � 70,774 � 60,292
Pro-forma average outstanding common shares, diluted � 70,774 �
70,751 (2) Adjusted net income is a non-GAAP financial measure. For
more information regarding adjusted net income and other non-GAAP
financial measures, see "Non-GAAP Financial Measures." GOODMAN
GLOBAL, INC. SELECTED BALANCE SHEET AMOUNTS (Unaudited) � Periods
Ended June 30, 2007 2006 (in thousands) Cash and cash equivalents $
39,824 $ 7,317 Accounts receivable, net 316,916 281,550 Inventories
337,894 377,255 Trade accounts payable 179,405 167,817 Accrued
liabilities 130,940 146,309 Total assets 1,762,420 1,741,180 Total
debt 836,300 950,725 GOODMAN GLOBAL, INC. SELECTED CASH FLOW
AMOUNTS (Unaudited) � Three Months Ended June 30, 2007 � 2006 � (in
thousands) Changes in operating working capital: Accounts
receivable, net $ (85,489 ) $ (62,929 ) Inventories 11,214 (7,961 )
Accounts payable and accrued liabilities � 62,345 � � 7,457 �
Changes in operating working capital $ (11,930 ) $ (63,432 ) Free
cash flow: � � Net cash provided by (used in) operating activities
$ 40,203 $ (42,771 ) Purchases of property, plant and equipment
(7,784 ) (9,682 ) Proceeds from sale of property, plant and
equipment and other � 93 � � -- � Free cash flow $ 32,512 � $
(52,453 )
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