Cary vinyl-siding company seeks $300 million IPO

A Cary company that sells vinyl siding, windows, fencing and other building products plans to raise as much as $300 million through an IPO, in a bet that Wall Street investors believe the housing market is recovering.

Ply Gem Holdings filed details of its proposed initial public offering of stock in a filing with the Securities and Exchange Commission.

The company was formed in 2004 when CI Capital Partners, a New York private equity firm, paid $560 million for the vinyl products division of Nortek, a building-materials supplier based in Rhode Island.

The company moved its corporate headquarters to Cary from Missouri two years ago after state and local officials promised incentives worth up to $200,000 if the company created 100 jobs.

The company employs about 60 people in Cary and continues to hire locally, chief financial officer Shawn Poe said in a telephone interview this morning. The N.C. Department of Commerce has paid Ply Gem $50,000, half of its promised grant, he added.

Ply Gem employs about 4,200 companywide, mostly across the United States.

Since starting the company, Ply Gem's owners have bought five more building-materials businesses and slashed costs by combining operations, closing facilities and eliminating about half its workforce.

"As a leading manufacturer of exterior building products, we intend to capitalize on the recovery in new construction and home repair and remodeling," Ply Gem wrote in its SEC filing.

"The 2009 level of 441,000 single family housing starts was approximately 60 percent below the 50-year average, representing a significant opportunity for growth as activity returns to historical levels," the company wrote. "Furthermore, we believe that the underinvestment in homes during the recent recession and the overall age of the U.S. housing stock will drive significant future spending for home repair and remodeling."

The company already is seeing some signs of recovery.

For the three months ended April 3, Ply Gem reported net sales of $204.2 million, up about 12 percent from the same period a year earlier. During the latest quarter, Ply Gem had net income of $54.1 million, reversing a net loss of $55.5 million a year earlier.

"Obviously, our performance has improved over the past several quarters," Poe said.

CEO Gary E. Robinette, 61, joined Ply Gem in October 2006. He previously was the chief operating officer at Stock Building Supply, a Raleigh-based company that sells housing materials to builders and developers.

Ply Gem isn't a stranger to Wall Street. As of April 3, the company had $926.8 million in publicly traded debt.

Much of the money raised in its IPO will be used to repay that debt, which could raise red flags among potential stock investors, said John Fitzgibbon, publisher of IPOScoop.com in Edison, N.J. Typically, investors want to see that a company will use new capital to expand its business.

Poe dismissed that concern, saying it's a "typical IPO process" for a company owned by a private equity firm.

Ply Gem will have some powerful help in selling its story to investors. Its IPO will be underwritten by powerful investment banks J.P. Morgan, Goldman Sachs, Credit Suisse, UBS and Deutsche Bank.

The company expects to list its shares on the New York Stock Exchange under the ticker symbol "PGEM." Before the deal can happen, Ply Gem will need to file more details with the SEC, including how many shares it wants to sell and at what price range.

An IPO likely won't happen for at least several months, as the SEC reviews the offering and Ply Gem officials wait to see if the stock market remains inviting to such deals.

If successful, Ply Gem's IPO would be the largest for a Triangle company since Talecris Biotherapeutics' IPO last fall.

In addition to its headquarters in Cary, Ply Gem has a manufacturing facility in Fair Bluff and a warehouse in Fayetteville.