2018 First Quarter
Highlights
- Net sales of $536.3 million, an
increase of 11.9% compared to the prior year period
- Base business net sales of $485.2
million, an increase of 4.9% compared to the prior year period
- Net loss of $1.1 million compared to
net income of $3.9 million in the prior year period
- Adjusted EBITDA(1) of $35.0
million
- Completed two acquisitions in the
quarter
Foundation Building Materials, Inc. (NYSE:FBM), one of the
largest specialty building product distributors of wallboard,
suspended ceiling systems and mechanical insulation in North
America, today reported first quarter 2018 financial results.
“We recorded a solid quarter of operational and financial
performance, highlighted by year-over-year net sales growth of 12%,
and base business growth of 5%, with good performance from both our
Specialty Building Products and Mechanical Insulation business
segments,” said Ruben Mendoza, President and CEO. “Despite adverse
weather early in the year, we finished the quarter strong, and we
look forward to building on this positive momentum in the business
as we continue to deliver long-term value to our customers and
stockholders.”
2018 First Quarter
Results
Consolidated net sales for the three months ended March 31, 2018
were $536.3 million compared to $479.5 million for the three months
ended March 31, 2017, representing an increase of $56.8 million, or
11.9%. Base business net sales increased $22.5 million, or 4.9%, to
$485.2 million for the three months ended March 31, 2018, compared
to the three months ended March 31, 2017.
Consolidated gross profit for the three months ended March 31,
2018 was $154.4 million compared to $139.9 million for the three
months ended March 31, 2017, representing an increase of $14.5
million, or 10.4%. Consolidated gross margin for the three months
ended March 31, 2018 was 28.8% compared to 29.2% for the three
months ended March 31, 2017. The decrease in gross margin was
primarily due to a change in product mix with a higher contribution
from suspended ceilings systems and mechanical insulation on a
percentage of net sales basis.
Selling, general and administrative, or SG&A, expenses for
the three months ended March 31, 2018 were $121.4 million compared
to $113.1 million for the three months ended March 31, 2017,
representing an increase of $8.4 million, or 7.4.%. As a percentage
of net sales, SG&A expenses were 22.6% for the three months
ended March 31, 2018 compared to 23.6% for the three months ended
March 31, 2017. Excluding non-recurring expenses, SG&A expenses
as a percentage of net sales for the three months ended March 31,
2018 were 22.3% compared to 22.4% for the three months ended March
31, 2017. The decrease in SG&A expenses as a percentage of net
sales was due to our continued focus on operating efficiencies and
cost reduction initiatives.
Net loss for the three months ended March 31, 2018 was $1.1
million, or $0.02 loss per share, a decrease of $5.0 million
compared to net income of $3.9 million, or $0.11 earnings per
share, for the three months ended March 31, 2017. The decrease in
net income was primarily due to a decrease in gains from
derivatives of $13.1 million, partially offset by higher income
from operations of $4.7 million and lower income taxes of $3.4
million. Adjusted net income(1) for the three months ended March
31, 2018 was $0.4 million, or $0.01 adjusted earnings per share(1),
an increase of $1.2 million compared to an adjusted net loss(1) of
$0.8 million, or $0.02 adjusted loss per share(1), for the three
months ended March 31, 2017.
Adjusted EBITDA(1) was $35.0 million and Adjusted EBITDA
margin(1) was 6.5% for the three months ended March 31, 2018.
2018 First Quarter Segment
Results
Specialty Building Products (“SBP”). SBP net sales for
the three months ended March 31, 2018 were $463.7 million compared
to $418.5 million for the three months ended March 31, 2017,
representing an increase of $45.2 million, or 10.8%. Net sales from
acquired branches and existing branches that were strategically
combined with acquired branches contributed $32.0 million of the
increase.
SBP gross profit for the three months ended March 31, 2018 was
$134.4 million compared to $122.4 million for the three months
ended March 31, 2017, representing an increase of $12.0 million, or
9.8%. SBP gross margin for the three months ended March 31, 2018
was 29.0% compared to 29.3% for the three months ended March 31,
2017. The decrease in gross margin was primarily due to a change in
product mix with a higher contribution from lower gross margin
products such as suspended ceilings systems, on a percentage of net
sales basis.
Mechanical Insulation (“MI”). MI net sales for the three
months ended March 31, 2018 were $72.6 million compared to $61.0
million for the three months ended March 31, 2017, representing an
increase of $11.6 million, or 19.1%. Base business net sales
contributed $9.3 million of the increase, primarily due to higher
net sales to industrial end markets.
MI gross profit for the three months ended March 31, 2018 was
$20.0 million compared to $17.5 million for the three months ended
March 31, 2017, representing an increase of $2.5 million, or 14.4%.
MI gross margin for the three months ended March 31, 2018 was 27.5%
compared to 28.7% for the three months ended March 31, 2017. This
decrease was primarily due to a higher contribution from large
industrial projects for the three months ended March 31, 2018,
which generally have lower margins relative to the overall MI
segment.
Acquisitions
During the first quarter the Company completed two acquisitions
totaling seven branches. For 2018, these two acquisitions are
expected to contribute $27.0 million to $29.0 million to net sales.
Foundation Building Materials will continue to supplement organic
growth with strategic acquisitions.
Expected Debt
Refinancing
The Company is actively exploring the refinancing of its $575.0
million 8.25% senior secured notes due 2021, or Notes. In the third
quarter of 2018, the prepayment premium of the Notes will decrease,
and the Company believes it will have opportunities to refinance
the Notes, which could provide estimated annual cash interest
savings of $12.0 million to $15.0 million. As Foundation Building
Materials continues to optimize its capital structure and operating
efficiencies, the Company expects its generation of cash flow to
improve, which will allow the Company to further reduce its
leverage over the next couple of years.
First Quarter Earnings Release and
Conference Call
In conjunction with this release, Foundation Building Materials,
Inc. will host a conference call today, Wednesday, May 9, 2018, at
9:00 AM Eastern Time. Ruben Mendoza, President and Chief Executive
Officer, John Gorey, Chief Financial Officer, and John Moten, Vice
President Investor Relations, will host the call.
The call can be accessed three ways:
- At the FBM website: www.fbmsales.com in the Investors section of the
Company’s website;
- By telephone: For both listen only
participants and those who wish to take part in the question and
answer portion of the call, the telephone dial-in number in the
U.S. is (877) 407-9039. For participation outside the U.S., the
dial-in number is (201) 689-8470; and
- Audio Replay: A replay of the call will
be available beginning at 12:00 PM Eastern Time on Wednesday, May
9, 2018, and ending 11:59 PM Eastern Time May 16, 2018. Dial-in
numbers for U.S. based participants are (844) 512-2921.
Participants outside the U.S. should use the replay dial-in number
of (412) 317-6671. All callers will be required to provide the
Conference ID of 13679454.
About Foundation Building
Materials
Foundation Building Materials is a specialty building products
distributor of wallboard, suspended ceiling systems, and mechanical
insulation throughout North America. Based in Tustin, California,
the Company employs more than 3,700 people and operates more than
220 branches across the U.S. and Canada.
Forward-Looking
Statements
This press release contains “forward-looking statements” as that
term is defined in the Private Securities Litigation Reform Act of
1995. Forward-looking statements include, without limitation, any
statement that may predict, forecast, indicate or imply future
results, performance or achievements, and may contain words such as
“believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,”
“plan,” or words or phrases with similar meaning. Forward-looking
statements should not be read as a guarantee of future performance
or results, and will not necessarily be accurate indications of the
times at, or by, which such performance or results will be
achieved. Forward-looking statements are based on current
expectations, forecasts and assumptions that involve risks and
uncertainties, including, but not limited to, economic,
competitive, governmental and technological factors outside of our
control, that may cause our business, strategy or actual results to
differ materially from the forward-looking statements. We do not
intend, and undertake no obligation, to update any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required by applicable law.
Investors are referred to our filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K and
our Quarterly Reports on Form 10-Q for additional information
regarding the risks and uncertainties that may cause actual results
to differ materially from those expressed in any forward-looking
statement.
(1) Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted net income (loss) and Adjusted earnings (loss) per
share are non-GAAP measures. See the supplementary schedules at the
end of this press release for a discussion of how we define and
calculate these measures, why we believe they are important and a
reconciliation thereof to the most directly comparable GAAP
measures. Adjusted EBITDA margin represents Adjusted EBITDA divided
by net sales.
- Financial Tables Follow -
FOUNDATION BUILDING MATERIALS,
INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and per
share data)
Three Months Ended
March 31,
2018 2017 Net sales $ 536,297 $ 479,457
Cost of goods sold 381,857 339,546 Gross profit
154,440 139,911 Operating expenses: Selling, general and
administrative 121,427 113,062 Depreciation and amortization 19,886
18,396 Total operating expenses 141,313
131,458 Income from operations 13,127 8,453 Interest expense
(15,132 ) (15,249 ) Other income, net 67 13,289
(Loss) income before income taxes (1,938 ) 6,493 Income tax
(benefit) expense (885 ) 2,564 Net (loss) income $ (1,053 )
$ 3,929 (Loss) earnings per share data: Basic $ (0.02
) $ 0.11 Diluted $ (0.02 ) $ 0.11 Weighted average shares
outstanding: Basic 42,879,874 37,273,156 Diluted 42,879,874
37,273,156
FOUNDATION BUILDING MATERIALS,
INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share
data)
March 31, 2018 December 31,
2017 Assets Current assets: Cash and cash equivalents $
8,645 $ 12,101
Accounts receivable—net of allowance for
doubtful accounts of$4,870 and $4,651, respectively
312,787 280,023 Other receivables 53,191 59,462 Inventories 192,934
184,436 Prepaid expenses and other current assets 11,327 12,636
Total current assets 578,884 548,658 Property and equipment, net
152,306 151,408 Intangible assets, net 181,856 189,770 Goodwill
466,614 458,737 Other assets 5,352 5,604
Total assets $
1,385,012 $ 1,354,177
Liabilities and stockholders' equity
Current liabilities: Accounts payable $ 158,475 $ 156,345 Accrued
payroll and employee benefits 20,902 21,158 Accrued taxes 11,081
7,790 Tax receivable agreement 15,892 15,892 Other current
liabilities 27,405 41,093 Total current liabilities 233,755 242,278
Asset-based revolving credit facility 89,878 47,486 Long-term
portion of notes payable, net 536,748 534,379 Tax receivable
agreement 119,912 119,912 Deferred income taxes, net 16,646 17,819
Other liabilities 11,264 13,639
Total liabilities 1,008,203
975,513 Commitments and contingencies Stockholders' equity:
Preferred stock, $0.001 par value, authorized 10,000,000 shares; 0
shares issued — —
Common stock, $0.001 par value, authorized
190,000,000 shares;42,891,252 and 42,865,407 shares issued,
respectively
13 13 Additional paid-in capital 330,339 330,113 Retained earnings
45,311 46,184 Accumulated other comprehensive income 1,146 2,354
Total stockholders' equity 376,809 378,664
Total liabilities and
stockholders' equity $ 1,385,012 $ 1,354,177
FOUNDATION BUILDING MATERIALS,
INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Three Months Ended March 31, 2018
2017 Cash flows from operating activities: Net (loss)
income $ (1,053 ) $ 3,929 Adjustments to reconcile net (loss)
income to net cash (used in) provided by operating activities:
Depreciation 7,970 7,131 Amortization of intangible assets 11,916
11,265 Amortization of debt issuance costs and debt discount 2,624
2,399 Inventory fair value purchase accounting adjustment 407 71
Provision for doubtful accounts 551 135 Stock-based compensation
271 1,553 Unrealized gain on derivative instruments, net (74 )
(13,219 ) Loss on disposal of property and equipment 13 152
Deferred income taxes (1,614 ) 2,543 Change in assets and
liabilities, net of effects of acquisitions: Accounts receivable
(31,221 ) (11,273 ) Other receivables 6,278 12,595 Inventories
(6,129 ) (2,137 ) Prepaid expenses and other current assets 1,423
787 Other assets 36 158 Accounts payable 2,423 8,249 Accrued
payroll and employee benefits (202 ) (7,793 ) Accrued taxes 3,301
(238 ) Other liabilities (13,461 ) (15,424 ) Net cash (used in)
provided by operating activities (16,541 ) 883 Cash flows from
investing activities: Purchases of property and equipment (7,594 )
(7,572 ) Payment of net working capital adjustments (15 ) —
Proceeds from net working capital adjustments 178 — Proceeds from
the disposal of fixed assets 200 98 Acquisitions, net of cash
acquired (21,233 ) (13,195 ) Net cash used in investing activities
(28,464 ) (20,669 ) Cash flows from financing activities: Proceeds
from asset-based revolving credit facility 131,224 114,500
Repayments of asset-based revolving credit facility (88,724 )
(281,032 ) Tax withholding payment related to net settlement of
equity awards (45 ) — Principal repayment of capital lease
obligations (745 ) (691 ) Issuance of common stock — 164,189
Capital contributions — 2,997 Net cash provided by
(used in) financing activities 41,710 (37 ) Effect of exchange rate
changes on cash (161 ) 64 Net decrease in cash (3,456 )
(19,759 ) Cash and cash equivalents at beginning of period 12,101
28,552 Cash and cash equivalents at end of period $ 8,645 $
8,793 Supplemental disclosures of cash flow
information: Cash paid during the period for income taxes $ — $ 39
Cash paid during the period for interest $ 24,201 $ 25,308
Supplemental disclosures of non-cash investing and financing
activities: Change in fair value of derivatives, net of tax $ 1,163
$ 461 Assets acquired under capital lease $ — $ 378 Goodwill
adjustment for purchase price allocation $ 202 $ 723 Tax receivable
agreement $ — $ 203,837
FOUNDATION BUILDING MATERIALS,
INC.
NET SALES BY SEGMENT AND PRODUCT LINE
AND SEGMENT GROSS PROFIT AND GROSS MARGIN
(UNAUDITED)
Three Months Ended March 31,
Change (dollars in thousands)
2018 2017
$ % SBP Segment Wallboard(1) $
180,653 39.0 % $ 168,239 40.2 % $ 12,414 7.4 % Suspended ceiling
systems 86,179 18.6 % 72,716 17.4 % 13,463 18.5 % Metal framing
73,967 16.0 % 68,662 16.4 % 5,305 7.7 % Complementary and other
products 122,862 26.4 % 108,846 26.0 % 14,016
12.9 % Total SBP net sales $ 463,661 100.0 % $ 418,463
100.0 % $ 45,198 10.8 % MI Segment Total MI
net sales(2) $ 72,636 100.0 % $ 60,994 100.0 % $
11,642 19.1 % Total net sales $ 536,297 $ 479,457
$ 56,840 11.9 % Gross profit - SBP $ 134,437 $
122,426 $ 12,011 9.8 % Gross profit - MI 20,003 17,485
2,518 14.4 % Total gross profit $ 154,440 $
139,911 $ 14,529 10.4 % Gross margin - SBP
29.0 % 29.3 % (0.3 )% Gross margin - MI 27.5 % 28.7 % (1.2 )% Total
gross margin 28.8 % 29.2 % (0.4 )% (1) For the three months ended
March 31, 2017, wallboard accessories have been reclassified from
“Wallboard” to “Complementary and other products” to conform to the
current year presentation. (2) MI contains sales from Commercial
and industrial insulation and Non-insulation products.
FOUNDATION BUILDING MATERIALS,
INC.
BASE BUSINESS AND ACQUIRED AND COMBINED
NET SALES (UNAUDITED)
Three Months Ended
March 31,
Change (dollars in thousands)
2018 2017
$ % Base business(1) $ 485,241 $ 462,743 $
22,498 4.9 % Acquired and combined(2) 51,056 16,714
34,342 205.5 % Net sales $ 536,297 $ 479,457 $
56,840 11.9 % (1) Represents net sales from branches that
were owned by us since January 1, 2017 and branches that were
opened by us during such period. (2) Represents branches acquired
and existing branches combined with acquired branches after January
1, 2017.
FOUNDATION BUILDING MATERIALS,
INC.
BASE BUSINESS AND ACQUIRED AND COMBINED
NET SALES BY SEGMENT AND PRODUCT
(UNAUDITED)
Three
Months
Ended
March 31,
2017
Base
Business
Net Sales
(Decrease)
Increase
Acquired
and
Combined
Net Sales
Increase
Three
Months
Ended
March 31,
2018
Total Net
Sales %
Increase
Base
Business Net
Sales %
(Decrease)
Increase(1)
Acquired
and
Combined
Net Sales %
Increase(2)
(dollars in thousands) Wallboard $ 168,239 $ (1,641 ) $ 14,055 $
180,653 7.4 % (1.0 )% 203.2 % Suspended ceiling systems 72,716
6,719 6,744 86,179 18.5 % 9.7 % 186.3 % Metal framing 68,662 776
4,529 73,967 7.7 % 1.2 % 210.0 % Complementary and other products
108,846 7,373 6,643 122,862 12.9 % 7.0
% 236.1 % SBP net sales 418,463 13,227 31,971 463,661 10.8 % 3.3 %
206.2 % MI net sales 60,994 9,271 2,371 72,636
19.1 % 15.5 % 196.4 %
Total net sales $ 479,457
$ 22,498 $ 34,342 $ 536,297 11.9 % 4.9
% 205.5 % Average daily sales $ 7,492 $ 352 $ 537 $ 8,380 11.9 %
4.9 % 205.5 %
(1) Represents base business net sales (decrease) increase as a
percentage of base business net sales for the three months ended
March 31, 2017. (2) Represents acquired and combined net sales
increase as a percentage of acquired and combined net sales for the
three months ended March 31, 2017.
Non-GAAP (Generally Accepted Accounting
Principles) Financial Measures
In addition to results under GAAP, this press release contains
certain non-GAAP financial measures, including EBITDA, Adjusted
EBITDA, Adjusted EBITDA margin, Adjusted net income (loss) and
Adjusted earnings per share ("EPS"), which are provided as
supplemental measures of financial performance. These measures are
not required by, or presented in accordance with, GAAP. We
calculate EBITDA as net (loss) income before interest expense net,
income tax (benefit) expense, and depreciation and amortization. We
calculate Adjusted EBITDA as EBITDA before unrealized gains on
derivative financial instruments, IPO and public company readiness
expenses, stock-based compensation, and other non-recurring
adjustments such as non-cash purchase accounting effects, losses on
the disposal of property and equipment, transaction costs and
management fees. We calculate Adjusted EBITDA margin as Adjusted
EBITDA divided by net sales. We calculate Adjusted net income
(loss) as net (loss) income before unrealized gains on derivative
financial instruments, IPO and public company readiness expenses,
stock-based compensation, and other non-recurring adjustments such
as non-cash purchase accounting adjustments, losses on the disposal
of property and equipment, transaction costs, and management fees.
We calculate Adjusted EPS as Adjusted net income (loss) on a per
weighted average share outstanding basis.
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net
income (loss) and Adjusted EPS are presented because they are
important metrics used by management as a means by which it
assesses financial performance. EBITDA, Adjusted EBITDA, Adjusted
EBITDA margin, Adjusted net income (loss) and Adjusted EPS are also
frequently used by analysts, investors and other interested parties
to evaluate companies in our industry. These measures, when used in
conjunction with related GAAP financial measures, provides
investors with an additional financial analytical framework that
may be useful in assessing our company and its results of
operations.
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net
income (loss) and Adjusted EPS have certain limitations. These
measures should not be considered as alternatives to net income and
earnings per share, or as any other measure of financial
performance derived in accordance with GAAP. EBITDA, Adjusted
EBITDA, Adjusted EBITDA margin, Adjusted net income (loss) and
Adjusted EPS also should not be construed as an inference that our
future results will be unaffected by unusual or non-recurring
items. Additionally, EBITDA, Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted net income (loss) and Adjusted EPS are not
intended to be liquidity measures. Other companies, including other
companies in our industry, may not use these measures or may
calculate these measures differently than we do, limiting their
usefulness as comparative measures.
The following is a reconciliation of EBITDA and Adjusted EBITDA
to the nearest GAAP measure, net (loss) income (unaudited):
Three Months Ended March 31,
2018 2017 (in thousands) Net (loss) income $
(1,053 ) $ 3,929 Interest expense, net 15,111 15,214 Income tax
(benefit) expense (885 ) 2,564 Depreciation and amortization 19,886
18,396
EBITDA 33,059 40,103
Unrealized gain on derivative financial instruments (74 )
(13,219 ) IPO and public company readiness expenses 89 2,975
Stock-based compensation 271 1,553 Non-cash purchase accounting
effects(a) 407 71 Loss on disposal of property and equipment 13 152
Transaction costs(b) 1,218 592 Management fees(c) — 353
Adjusted EBITDA $ 34,983
$ 32,580 Adjusted EBITDA
margin(d) 6.5 % 6.8 % (a)
Adjusts for the effect of the purchase accounting step-up in
the value of inventory to fair value recognized in cost of goods
sold as a result of acquisitions. (b) Represents one-time costs
related to our acquisitions, including fees to financial advisors,
accountants, attorneys, other professionals and certain internal
corporate development costs. Certain amounts have been reclassified
for the three months ended March 31, 2017 to conform our
presentation of Adjusted EBITDA to the current year presentation.
(c) Represents fees paid to our former private equity sponsor for
services provided pursuant to past management agreements. These
fees are no longer being incurred. (d) Adjusted EBITDA margin
represents Adjusted EBITDA divided by net sales.
The following is a reconciliation of Adjusted
net income (loss) to the nearest GAAP measure, net (loss) income
(unaudited):
Three Months Ended March 31,
2018 2017 (in thousands, except share
and per share data) Net (loss) income $ (1,053 ) $ 3,929 Unrealized
gain on derivative financial instruments (74 ) (13,219 ) IPO and
public company readiness expenses 89 2,975 Stock-based compensation
271 1,553 Non-cash purchase accounting effects(a) 407 71 Loss on
disposal of property and equipment 13 152 Transaction costs(b)
1,218 592 Management fees(c) — 353 Tax effect of adjustments(d)
(492 ) 2,746 Adjusted net income (loss) $ 379 $ (848 )
(Loss) earnings per share data as reported: Basic $ (0.02 )
$ 0.11 Diluted $ (0.02 ) $ 0.11 Earnings (loss) per share data as
adjusted: Basic $ 0.01 $ (0.02 ) Diluted $ 0.01 $ (0.02 )
Weighted average shares outstanding: Basic 42,879,874 37,273,156
Diluted 42,879,874 37,273,156 (a) Adjusts for the effect of
the purchase accounting step-up in the value of inventory to fair
value recognized in cost of goods sold as a result of acquisitions.
(b) Represents one-time costs related to our acquisitions,
including fees to financial advisors, accountants, attorneys, other
professionals and certain internal corporate development costs. (c)
Represents fees paid to former private equity sponsors for services
provided pursuant to past management agreements. These fees are no
longer being incurred. (d) Represents the tax effect of the
adjustments to reflect corporate income taxes. The statutory tax
rates for the three months ended March 31, 2018 and 2017 are 25.6%
and 36.5%, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180509005578/en/
Investor Relations:Foundation Building Materials, Inc.John
Moten, 657-900-3200Investors@fbmsales.comorMedia Relations:Joele
Frank, Wilkinson Brimmer KatcherJed Repko / Ed Trissel,
212-355-4449
Foundation Building Mate... (NYSE:FBM)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024
Foundation Building Mate... (NYSE:FBM)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024