Atrium Companies, Inc. Announces Financial Results for the Third Quarter Ended September 30, 2004

Business Wire, Nov 8, 2004

DALLAS -- Atrium Companies, Inc. ("Atrium" or the "Company"), one of the largest manufacturers and suppliers of residential windows in North America, today announced its unaudited financial results for the third quarter and year-to-date period ended September 30, 2004. Selected financial results are set forth in this press release and the Company's definitive results will be included in its Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission (the "SEC") no later than Monday, November 15, 2004.

The following is a summary of Atrium's financial highlights for the third quarters and year-to-date periods ended September 30, 2004 and 2003. Reported results include the results of MD Casting, Inc., Danvid Window Company, Aluminum Screen Manufacturers, Inc., Superior Engineered Products Corporation, Atrium Shutters, Inc., West Coast Custom Finish, Inc. and Kinco, Ltd. (collectively, the "Acquisitions") since their respective dates of acquisition. Pro forma results give effect to the Acquisitions, the sale of the Company in December 2003 and the related debt refinancing as if they occurred on January 1, 2003.

Reported:

--Net sales increased $30.5 million, or 18.3%, to $197.4 million during the third quarter of 2004 compared to $166.9 million during the third quarter of 2003. For the year-to-date period, net sales increased $93.7 million, or 21.2%, to $535.9 million compared to $442.2 million during 2003.

--Gross profit totaled $59.8 million (30.3% of net sales) during the third quarter of 2004 compared to $55.0 million (32.9% of net sales) during the third quarter of 2003. For the year-to-date period, gross profit totaled $161.8 million (30.2% of net sales) compared to $142.5 million (32.2% of net sales) during 2003.

--Net income was $8.3 million during the third quarter of 2004 compared to $10.9 million during the third quarter of 2003, while net income for the year-to-date period was $11.1 million compared to $17.8 million during 2003.

--EBITDA totaled $25.6 million (13.0% of net sales) during the third quarter of 2004 compared to $24.8 million (14.9% of net sales) during the third quarter of 2003. For the year-to-date period, EBITDA totaled $62.0 million (11.6% of net sales) compared to $57.9 million (13.1% of net sales) during 2003.

"While we are disappointed with the third quarter financial results, the less than expected performance can be partially attributed to our recently completed acquisitions of two businesses that operate primarily in the state of Florida. The catastrophic weather conditions that plagued that area of the country throughout the third quarter hampered both operations and was a significant factor contributing to our performance. With the hurricane season behind us, both businesses are beginning to return to normal. On a positive note, we expect to benefit from the increased awareness of our product offerings, specifically our hurricane protection systems," stated Chief Executive Officer Jeff L. Hull.

Mr. Hull added, "In addition to dealing with weather issues, the business continued to be negatively affected by raw material inflation and rising workers' compensation and health insurance costs. While we have completed a number of initiatives to mitigate the impact of each of these items, including increasing selling prices and restructuring insurance programs, the full effect of these changes has yet to be felt."

Pro Forma:

--Pro forma net sales were flat at $209.5 million during the third quarter of 2004 compared to $209.6 million during the third quarter of 2003. For the year-to-date period, pro forma net sales increased $21.8 million, or 3.8%, to $590.1 million compared to $568.3 million during 2003.

--Pro forma gross profit totaled $62.2 million (29.7% of pro forma net sales) during the third quarter of 2004 compared to $68.7 million (32.8% of pro forma net sales) during the third quarter of 2003. For the year-to-date period, pro forma gross profit totaled $175.5 million (29.7% of pro forma net sales) compared to $180.5 million (31.8% of pro forma net sales) during 2003.

--Pro forma net income was $8.4 million during the third quarter of 2004 compared to $14.2 million during the third quarter of 2003, while pro forma net income for the year-to-date period was $12.3 million compared to $23.8 million during 2003.

--Pro forma EBITDA totaled $26.2 million (12.5% of pro forma net sales) during the third quarter of 2004 compared to $31.1 million (14.8% of pro forma net sales) during the third quarter of 2003. For the year-to-date period, pro forma EBITDA totaled $66.3 million (11.2% of pro forma net sales) compared to $72.8 million (12.8% of pro forma net sales) during 2003.

The results for the third quarter and year-to-date period ended September 30, 2004 are preliminary and subject to completion of the annual audit by Atrium's independent public accounting firm. We can provide no assurance that these results will not be subject to adjustment or reclassification upon completion of the audit.