2018 Second Quarter
Highlights
- Record net sales of $605.0 million, an
increase of 14.3% compared to the prior year period
- Base business net sales of $546.2
million, an increase of 9.5% compared to the prior year period
- Net income of $5.4 million, an increase
of $4.1 million compared to the prior year period; earnings per
share of $0.13
- Adjusted net income(1) of $7.6 million
and adjusted earnings per share(1) of $0.18
- Adjusted EBITDA(1) of $46.3 million, an
increase of 14.8% compared to the prior year period; adjusted
EBITDA margin(1) of 7.7%
- Opened four greenfield branches
Foundation Building Materials, Inc. (the "Company") (NYSE: FBM),
one of the largest specialty building product distributors of
wallboard, suspended ceiling systems and mechanical insulation in
North America, today reported second quarter 2018 financial
results.
"We delivered strong second quarter results with double-digit
top line and robust bottom line growth," said Ruben Mendoza,
President and CEO. "Both our Specialty Building Products and
Mechanical Insulation segments posted record results reflecting
solid demand in our business." Mendoza continued, "As we enter the
second half of 2018, our business remains strong, and we see solid
activity in each of our end markets."
2018 Second Quarter Consolidated
Results
Consolidated net sales for the three months ended June 30, 2018,
were $605.0 million compared to $529.2 million for the three months
ended June 30, 2017, representing an increase of $75.7 million, or
14.3%. Base business net sales increased $47.5 million, or 9.5%, to
$546.2 million for the three months ended June 30, 2018, compared
to the three months ended June 30, 2017. Net sales from acquired
branches and existing branches that were strategically combined
contributed $28.2 million to the increase in consolidated net
sales.
Consolidated gross profit for the three months ended June 30,
2018, was $169.1 million compared to $149.5 million for the three
months ended June 30, 2017, representing an increase of $19.6
million, or 13.1%. Consolidated gross margin for the three months
ended June 30, 2018, was 28.0% compared to 28.3% for the three
months ended June 30, 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
and mechanical insulation on a percentage of net sales basis.
Selling, general and administrative, or SG&A, expenses for
the three months ended June 30, 2018, were $125.8 million compared
to $113.6 million for the three months ended June 30, 2017,
representing an increase of $12.2 million, or 10.7%. As a
percentage of net sales, SG&A expenses were 20.8% for the three
months ended June 30, 2018, compared to 21.5% for the three months
ended June 30, 2017. Excluding non-recurring adjustments of $3.0
million and $3.6 million for the three months ended June 30, 2018
and 2017, respectively, SG&A expenses as a percentage of net
sales for the three months ended June 30, 2018 was 20.3% compared
to 20.8% for the three months ended June 30, 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, as well as our increase in net sales.
Net income for the three months ended June 30, 2018, was $5.4
million, or $0.13 per share, an increase of $4.1 million compared
to net income of $1.3 million, or $0.03 per share, for the three
months ended June 30, 2017. Adjusted net income(1) for the three
months ended June 30, 2018, was $7.6 million, or $0.18 per share,
an increase of $3.6 million compared to an adjusted net income(1)
of $4.0 million, or $0.09 per share, for the three months ended
June 30, 2017.
Adjusted EBITDA(1) was $46.3 million and Adjusted EBITDA
margin(1) was 7.7% for the three months ended June 30, 2018.
2018 Second Quarter Segment
Results
Specialty Building Products (“SBP”). SBP net sales for
the three months ended June 30, 2018, were $522.2 million compared
to $460.1 million for the three months ended June 30, 2017,
representing an increase of $62.1 million, or 13.5%. Net sales from
base business contributed $34.4 million of the net increase which
was driven by strong commercial activity, price increases and
product expansion into new geographic markets. Net sales from
acquired branches and existing branches that were strategically
combined with acquired branches contributed $27.7 million of the
increase.
SBP gross profit for the three months ended June 30, 2018, was
$146.3 million compared to $130.7 million for the three months
ended June 30, 2017, representing an increase of $15.5 million, or
11.9%. SBP gross margin for the three months ended June 30, 2018,
was 28.0% compared to 28.4% for the three months ended June 30,
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 ceiling systems and metal framing on a
percentage of net sales basis.
Mechanical Insulation (“MI”). MI net sales for the three
months ended June 30, 2018, were $82.8 million compared to $69.1
million for the three months ended June 30, 2017, representing an
increase of $13.6 million, or 19.7%. Net sales from base business
contributed $13.1 million of the increase, which was primarily due
to higher net sales from our industrial end markets.
MI gross profit for the three months ended June 30, 2018, was
$22.8 million compared to $18.8 million for the three months ended
June 30, 2017, representing an increase of $4.0 million, or 21.4%.
MI gross margin for the three months ended June 30, 2018, was 27.6%
compared to 27.2% for the three months ended June 30, 2017. The
increase in gross margin was primarily due to a change in product
mix with an increased contribution from higher gross margin
products on a percentage of net sales basis.
2018 Year-to-Date Consolidated
Results
Consolidated net sales for the six months ended June 30, 2018,
were $1,141.3 million compared to $1,008.7 million for the six
months ended June 30, 2017, representing an increase of $132.6
million, or 13.1%. Base business net sales increased $70.0 million,
or 7.3%, to $1,031.4 million, for the six months ended June 30,
2018, compared to the six months ended June 30, 2017. Net sales
from acquired branches and existing branches that were
strategically combined contributed $62.6 million to the increase in
consolidated net sales.
Consolidated gross profit for the six months ended June 30,
2018, was $323.5 million compared to $289.4 million for the six
months ended June 30, 2017, representing an increase of $34.1
million, or 11.8%. Consolidated gross margin for the six months
ended June 30, 2018, was 28.3% compared to 28.7% for the six months
ended June 30, 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 and
mechanical insulation on a percentage of net sales basis.
SG&A expenses for the six months ended June 30, 2018, were
$247.2 million compared to $226.7 million for the six months ended
June 30, 2017, representing an increase of $20.5 million, or 9.1%.
As a percentage of net sales, SG&A expenses were 21.7% for the
six months ended June 30, 2018, compared to 22.5% for the six
months ended June 30, 2017. Excluding non-recurring adjustments of
$4.6 million and $9.3 million for the three months ended June 30,
2018 and 2017, respectively, SG&A expenses as a percentage of
net sales for the six months ended June 30, 2018, was 21.3%
compared to 21.6% for the six months ended June 30, 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, as well as our increase in net sales.
Net income for the six months ended June 30, 2018, was $4.3
million, or $0.10 per share, a decrease of $0.8 million compared to
net income of $5.2 million, or $0.13 per share, for the six months
ended June 30, 2017. Adjusted net income(1) for the six months
ended June 30, 2018, was $8.0 million, or $0.19 per share, an
increase of $4.8 million compared to an adjusted net income of $3.1
million, or $0.08 per share, for the six months ended June 30,
2017.
Adjusted EBITDA(1) was $81.3 million and Adjusted EBITDA
margin(1) was 7.1% for the six months ended June 30, 2018.
2018 Year-to-Date Segment
Results
Specialty Building Products. SBP net sales for the six
months ended June 30, 2018, were $985.9 million compared to $878.5
million for the six months ended June 30, 2017, representing an
increase of $107.3 million, or 12.2%. Net sales from acquired
branches and existing branches that were strategically combined
with acquired branches contributed $59.7 million of the increase.
SBP base business net sales also increased by $47.6 million, which
was driven by strong commercial activity, price increases and
product expansion into new geographic markets.
SBP gross profit for the six months ended June 30, 2018, was
$280.7 million compared to $253.2 million for the six months ended
June 30, 2017, representing an increase of $27.5 million, or 10.9%.
SBP gross profit increased as a result of higher sales volume and
contributions from acquired and combined branches. SBP gross margin
for the six months ended June 30, 2018, was 28.5% compared to 28.8%
for the six months ended June 30, 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
ceiling systems and metal framing on a percentage of net sales
basis.
Mechanical Insulation. MI net sales for the six months
ended June 30, 2018, were $155.4 million compared to $130.1 million
for the six months ended June 30, 2017, representing an increase of
$25.3 million, or 19.4%. Net sales from base business contributed
$22.4 million of the increase, which was primarily due to higher
net sales from our industrial end markets. Net sales from acquired
branches and existing branches that were strategically combined
with acquired branches contributed $2.9 million of the
increase.
MI gross profit for the six months ended June 30, 2018, was
$42.8 million compared to $36.3 million for the six months ended
June 30, 2017, representing an increase of $6.5 million, or 18.0%.
MI gross profit increased due to higher net sales from our base
business. MI gross margin for the six months ended June 30, 2018,
was 27.6% compared to 27.9% for the six months ended June 30, 2017.
This decrease was primarily due to a higher contribution from large
industrial projects for the six months ended June 30, 2018, which
generally have lower margins relative to the overall MI
segment.
Acquisitions and Greenfield
Branches
On August 1, 2018, the Company completed the acquisition of
Ciesco, Inc. ("Ciesco"), adding six additional SBP branches to the
Company's Northeastern and Mid-Atlantic markets. For the remainder
of 2018, Ciesco is expected to contribute $24.0 million to $27.0
million to net sales. Through August 9, 2018, the Company has
completed three acquisitions totaling 13 branches with combined
annualized net sales in excess of $100.0 million. The Company will
continue to supplement organic growth with strategic
acquisitions.
As of June 30, 2018, the Company has opened five greenfield
branches and expects to open one to two more branches by the end of
2018, for a total of six to seven branches. These greenfield
branches are projected to yield high returns on invested capital
within the first few years of startup. They also serve to further
leverage our national scale, increase our market share, and support
our organic growth.
Expected Debt
Refinancing
On July 30, 2018, the Company submitted a conditional notice of
redemption to the trustee and the holders of its senior secured
notes, or Notes, seeking to redeem all of the outstanding Notes on
August 15, 2018, conditioned on the prior completion of a new
$450.0 million term loan (the "Term Loan") and ABL Credit Agreement
(the "2018 ABL," and, together with the Term Loan, the "2018 Credit
Agreements"). The Term Loan was priced on May 14, 2018, with a
spread of LIBOR plus 325 basis points and will be issued at an
original issue discount of 99.75. The 2018 ABL also includes an
increase in commitments to $400.0 million from $300.0 million.
Due to the redemption of the Notes, the Company expects to
expense approximately $35.8 million of non-cash amortization
related to deferred financing costs and a $23.7 million prepayment
premium during the three months ending September 30, 2018. Upon
completion of the refinancing, the Company expects to realize
annual cash interest savings of $12.0 million to $15.0 million. As
the Company 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.
Second Quarter Earnings Release and
Conference Call
In conjunction with this release, the Company will host a
conference call today, Thursday, August 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 Thursday, August
9, 2018, and ending 11:59 PM Eastern Time August 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 13681777.
About Foundation Building
Materials
Foundation Building Materials, Inc. 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 Reports 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 and Adjusted earnings 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 INCOME
(UNAUDITED)
(in thousands, except share and per
share data)
Three Months Ended June 30, Six Months Ended June
30, 2018 2017 2018
2017 Net sales $ 604,973 $ 529,230 $ 1,141,270 $
1,008,687 Cost of goods sold 435,876 379,698 817,733
719,244 Gross profit 169,097 149,532 323,537 289,443
Operating expenses: Selling, general and administrative 125,785
113,602 247,212 226,664 Depreciation and amortization 20,341
19,027 40,227 37,423 Total operating expenses
146,126 132,629 287,439 264,087 Income
from operations 22,971 16,903 36,098 25,356 Interest expense
(15,345 ) (14,876 ) (30,477 ) (30,125 ) Other income, net 57
95 124 13,384 Income before income taxes 7,683
2,122 5,745 8,615 Income tax expense 2,283 862 1,398
3,426 Net income $ 5,400 $ 1,260 $
4,347 $ 5,189 Earnings per share data: Basic $
0.13 $ 0.03 $ 0.10 $ 0.13 Diluted $ 0.13 $ 0.03 $ 0.10 $ 0.13
Weighted average shares outstanding: Basic 42,893,498 42,865,407
42,886,867 40,084,730 Diluted 42,910,017 42,879,319 42,903,788
40,084,940
FOUNDATION BUILDING MATERIALS,
INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share
data)
June 30, 2018 December 31, 2017 Assets
Current assets: Cash and cash equivalents $ 7,083 $ 12,101 Accounts
receivable—net of allowance for doubtful accounts of $4,092 and
$4,651, respectively 343,382 280,023 Other receivables 49,286
59,462 Inventories 211,997 184,436 Prepaid expenses and other
current assets 13,807 12,636 Total current assets 625,555
548,658 Property and equipment, net 156,000 151,408 Intangible
assets, net 169,738 189,770 Goodwill 465,762 458,737 Other assets
5,790 5,604
Total assets $ 1,422,845 $
1,354,177
Liabilities and stockholders' equity Current
liabilities: Accounts payable $ 166,910 $ 156,345 Accrued payroll
and employee benefits 24,717 21,158 Accrued taxes 11,627 7,790 Tax
receivable agreement 15,892 15,892 Other current liabilities 40,021
41,093 Total current liabilities 259,167 242,278 Asset-based
revolving credit facility 94,075 47,486 Long-term portion of notes
payable, net 539,168 534,379 Tax receivable agreement 119,912
119,912 Deferred income taxes, net 18,198 17,819 Other liabilities
10,195 13,639
Total liabilities 1,040,715 975,513
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; 42,893,982 and 42,865,407 shares issued,
respectively 13 13 Additional paid-in capital 330,995 330,113
Retained earnings 50,711 46,184 Accumulated other comprehensive
income 411 2,354 Total stockholders' equity 382,130
378,664
Total liabilities and stockholders' equity $
1,422,845 $ 1,354,177
FOUNDATION BUILDING MATERIALS,
INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Six Months Ended June 30, 2018
2017 Cash flows from operating activities: Net income $
4,347 $ 5,189 Adjustments to reconcile net income to net cash (used
in) provided by operating activities: Depreciation 16,329 14,723
Amortization of intangible assets 23,898 22,700 Amortization of
debt issuance costs and debt discount 5,298 4,844 Inventory fair
value purchase accounting adjustment 407 664 Provision for doubtful
accounts 1,050 766 Stock-based compensation 927 1,765 Unrealized
gain on derivative instruments, net (135 ) (13,155 ) Loss on
disposal of property and equipment 309 242 Deferred income taxes
(421 ) 3,356 Change in assets and liabilities, net of effects of
acquisitions: Accounts receivable (63,199 ) (32,706 ) Other
receivables 9,918 10,638 Inventories (25,680 ) (2,807 ) Prepaid
expenses and other current assets (1,155 ) 561 Other assets 382 393
Accounts payable 11,349 17,875 Accrued payroll and employee
benefits 3,674 (4,433 ) Accrued taxes 3,855 (1,474 ) Other
liabilities (491 ) (7,258 ) Net cash (used in) provided by
operating activities (9,338 ) 21,883 Cash flows from investing
activities: Purchases of property and equipment (20,463 ) (17,525 )
Payment of net working capital adjustments (40 ) (405 ) Proceeds
from net working capital adjustments 336 8,554 Proceeds from the
disposal of fixed assets 577 429 Acquisitions, net of cash acquired
(21,220 ) (52,951 ) Net cash used in investing activities (40,810 )
(61,898 ) Cash flows from financing activities: Proceeds from
asset-based revolving credit facility 266,198 280,995 Repayments of
asset-based revolving credit facility (219,350 ) (415,497 ) Tax
withholding payment related to net settlement of equity awards (45
) — Principal repayment of capital lease obligations (1,489 )
(1,395 ) Issuance of common stock — 163,952 Capital contributions —
2,997 Net cash provided by financing activities
45,314 31,052 Effect of exchange rate changes on cash (184 ) 357
Net decrease in cash (5,018 ) (8,606 ) Cash and cash
equivalents at beginning of period 12,101 28,552 Cash and cash
equivalents at end of period $ 7,083 $ 19,946
Supplemental disclosures of cash flow information: Cash paid during
the period for income taxes $ 1,423 $ 143 Cash paid during the
period for interest $
25,226
$ 25,699 Supplemental disclosures of non-cash investing and
financing activities: Change in fair value of derivative, net of
tax $ 2,259 $ 1,400 Assets acquired under capital lease $ — $ 658
Goodwill adjustment for purchase price allocation $ 202 $ 1,724 Tax
receivable agreement $ — $ 203,837 Property and equipment included
in accounts payable $ — $ 198
FOUNDATION BUILDING MATERIALS,
INC.
NET SALES BY SEGMENT AND PRODUCT LINE
AND SEGMENT GROSS PROFIT AND GROSS MARGIN
(UNAUDITED)
Three Months Ended June 30, Change (dollars in
thousands)
2018 2017
$ % SBP Segment
Wallboard(1) $ 198,598 38.0 % $ 180,955 39.3 %
$ 17,643 9.7 % Suspended ceiling systems 97,755 18.7 % 83,271 18.1
% 14,484 17.4 % Metal framing 91,476 17.5 % 72,404 15.7 % 19,072
26.3 % Complementary and other products 134,390
25.8 % 123,456 26.9 % 10,934 8.9
% Total SBP net sales $ 522,219 100.0 % $
460,086 100.0 % $ 62,133 13.5 %
MI Segment Total MI net sales(2) $ 82,754
100.0 % $ 69,144 100.0 % $ 13,610 19.7
% Total net sales $ 604,973 $ 529,230 $ 75,743
14.3 % Gross profit - SBP $ 146,267 $ 130,729 $ 15,538 11.9
% Gross profit - MI 22,830 18,803 4,027 21.4 %
Total gross profit $ 169,097 $ 149,532 $ 19,565
13.1 % Gross margin - SBP 28.0 % 28.4 % (0.4 )% Gross
margin - MI 27.6 % 27.2 % 0.4 % Total gross margin 28.0 % 28.3 %
(0.3 )% (1) For the three months ended June 30, 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.
NET SALES BY SEGMENT AND PRODUCT LINE
AND SEGMENT GROSS PROFIT AND GROSS MARGIN
(UNAUDITED)
Six Months Ended June 30, Change (dollars in
thousands)
2018 2017
$ % SBP Segment
Wallboard(1) $ 379,251 38.5 % $ 349,195 39.7 %
$ 30,056 8.6 % Suspended ceiling systems 183,933 18.7 % 155,988
17.8 % 27,945 17.9 % Metal framing 165,443 16.8 % 141,065 16.1 %
24,378 17.3 % Complementary and other products 257,252
26.0 % 232,301 26.4 % 24,951
10.7 % Total SBP net sales $ 985,879
100.0 % $ 878,549 100.0 % $ 107,330
12.2 % MI Segment Total MI net sales(2) $ 155,391
100.0 % $ 130,138 100.0 % $
25,253 19.4 % Total net sales $ 1,141,270 $ 1,008,687
$ 132,583 13.1 % Gross profit - SBP $ 280,704
$ 253,155 $ 27,549 10.9 % Gross profit - MI 42,833 36,288
6,545 18.0 % Total gross profit $ 323,537 $
289,443 $ 34,094 11.8 % Gross margin - SBP
28.5 % 28.8 % (0.3 )% Gross margin - MI 27.6 % 27.9 % (0.3 )% Total
gross margin 28.3 % 28.7 % (0.4 )% (1) For the six months ended
June 30, 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 June 30, Change (dollars in
thousands)
2018 2017 $
% Base business(1) $ 546,206 $ 498,704 $ 47,502 9.5%
Acquired and combined(2) 58,767 30,526 28,241
92.5% Net sales $ 604,973 $ 529,230 $ 75,743
14.3% (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.
Six Months Ended June 30,
Change (dollars in thousands)
2018
2017 $ % Base business(1) $
1,031,447 $ 961,447 $ 70,000 7.3% Acquired and combined(2) 109,823
47,240 62,583 132.5% Net sales $ 1,141,270
$ 1,008,687 $ 132,583 13.1% (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)
ThreeMonthsEnded June
30,2017
BaseBusinessNet
SalesIncrease
AcquiredandCombinedNet
SalesIncrease
ThreeMonthsEndedJune 30,2018
Total NetSales
%Increase
BaseBusiness NetSales
%Increase(1)
AcquiredandCombinedNet Sales
%Increase(2)
(dollars in thousands) Wallboard(3) $ 180,955 $ 6,710 $ 10,933 $
198,598 9.7 % 4.0 % 81.9 % Suspended ceiling systems 83,271 6,390
8,094 97,755 17.4 % 8.1 % 177.8 % Metal framing 72,404 16,035 3,037
91,476 26.3 % 23.6 % 67.3 % Complementary and other products
123,456 5,283 5,651 134,390 8.9 % 4.5 %
106.8 % SBP net sales 460,086 34,418 27,715 522,219 13.5 % 8.0 %
100.1 % MI net sales 69,144 13,084 526 82,754
19.7 % 19.7 % 18.6 %
Total net sales $ 529,230
$ 47,502 $ 28,241 $ 604,973 14.3 % 9.5 % 92.5
% Average daily sales $ 8,269 $ 742 $ 442 $ 9,453 14.3 % 9.5 % 92.5
% (1) Represents base business net sales increase as a
percentage of base business net sales for the three months ended
June 30, 2017. (2) Represents acquired and combined net sales
increase as a percentage of acquired and combined net sales for the
three months ended June 30, 2017. (3) For the three months ended
June 30, 2017, wallboard accessories have been reclassified from
“Wallboard” to “Complementary and other products” to conform to the
current year presentation.
Six MonthsEnded June30,
2017
BaseBusinessNet
SalesIncrease
AcquiredandCombinedNet
SalesIncrease
Six MonthsEndedJune
30,2018
Total NetSales
%Increase
BaseBusiness NetSales
%Increase(1)
AcquiredandCombinedNet Sales
%Increase(2)
(dollars in thousands) Wallboard(3) $ 349,195 $ 5,069 $ 24,987 $
379,251 8.6 % 1.5 % 123.3 % Suspended ceiling systems 155,988
13,108 14,837 183,933 17.9 % 8.9 % 181.6 % Metal framing 141,065
16,812 7,566 165,443 17.3 % 12.5 % 113.5 % Complementary and other
products 232,301 12,656 12,295 257,252
10.7 % 5.6 % 151.7 % SBP net sales 878,549 47,645 59,685 985,879
12.2 % 5.7 % 138.2 % MI net sales 130,138 22,355
2,898 155,391 19.4 % 17.7 % 71.7 %
Total net
sales $ 1,008,687 $ 70,000 $ 62,583 $
1,141,270 13.1 % 7.3 % 132.5 % Average daily sales $ 7,880 $
547 $ 489 $ 8,916 13.1 % 7.3 % 132.5 % (1) Represents base business
net sales increase as a percentage of base business net sales for
the six months ended June 30, 2017. (2) Represents acquired and
combined net sales increase as a percentage of acquired and
combined net sales for the six months ended June 30, 2017. (3) For
the six months ended June 30, 2017, wallboard accessories have been
reclassified from “Wallboard” to “Complementary and other products”
to conform to the current year presentation.
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 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 income before interest expense net, income tax expense, and
depreciation and amortization. We calculate Adjusted EBITDA as
EBITDA before unrealized (gains) losses 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 as net income before unrealized
(gains) losses 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 on a per weighted average share outstanding
basis.
These non-GAAP financial measures are presented because they are
important metrics used by management as a means by which it
assesses financial performance. These measures may also be 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, provide investors with an
additional financial analytical framework that may be useful in
assessing our financial condition and results of operations.
These non-GAAP financial measures have certain limitations.
These measures should not be considered as alternatives to measures
of financial performance derived in accordance with GAAP. In
addition, these measures should not be construed as an inference
that our future results will be unaffected by unusual or
non-recurring items. Furthermore, these measures 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 income (unaudited):
Three Months Ended June 30,
Six Months Ended June 30, 2018
2017 2018 2017
(in thousands) Net income $ 5,400 $ 1,260 $ 4,347 $ 5,189
Interest expense, net 15,327 14,876 30,438 30,090 Income tax
expense 2,283 862 1,398 3,426 Depreciation and amortization 20,341
19,027 40,227 37,423
EBITDA
43,351 36,025 76,410 76,128
Unrealized (gains) losses on derivative financial instruments (60 )
63 (134 ) (13,156 ) IPO and public company readiness expenses —
1,434 89 4,409 Stock-based compensation 667 212 938 1,765 Non-cash
purchase accounting effects(a) — 593 407 664 Loss on disposal of
property and equipment 296 20 309 172 Transaction costs(b) 2,057
1,979 3,275 2,571 Management fees(c) — — — 353
Adjusted EBITDA $ 46,311
$ 40,326 $ 81,294
$ 72,906 Adjusted EBITDA
margin(d) 7.7 % 7.6 %
7.1 % 7.2 % (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 six months ended June 30, 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 to the
nearest GAAP measure, net income (unaudited):
Three Months Ended June 30,
Six Months Ended June 30, 2018
2017 2018 2017 (in thousands,
except share and per share data) Net income $ 5,400 $ 1,260 $ 4,347
$ 5,189 Unrealized (gains) losses on derivative financial
instruments (60 ) 63 (134 ) (13,156 ) IPO and public company
readiness expenses — 1,434 89 4,409 Stock-based compensation 667
212 938 1,765 Non-cash purchase accounting effects(a) — 593 407 664
Loss on disposal of property and equipment 296 20 309 172
Transaction costs(b) 2,057 1,979 3,275 2,571 Management fees(c) — —
— 353 Tax effect of adjustments(d) (757 ) (1,570 ) (1,249 ) 1,176
Adjusted net income $ 7,603 $ 3,991 $ 7,982 $ 3,143
Earnings per share (as reported): Basic $ 0.13 $ 0.03 $ 0.10 $ 0.13
Diluted $ 0.13 $ 0.03 $ 0.10 $ 0.13 Adjusted earnings per share:
Basic $ 0.18 $ 0.09 $ 0.19 $ 0.08 Diluted $ 0.18 $ 0.09 $ 0.19 $
0.08 Weighted average shares outstanding: Basic 42,893,498
42,865,407 42,886,867 40,084,730 Diluted 42,910,017 42,879,319
42,903,788 40,084,940 (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
rate for the three and six months ended June 30, 2018, was 25.6%.
The statutory tax rate for the three and six months ended June 30,
2017, was 36.5%.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180809005209/en/
Investor Relations:Foundation Building Materials, Inc.John
Moten, 657-900-3200Investors@fbmsales.comorMedia Relations:Joele
Frank, Wilkinson Brimmer KatcherJed Repko or Ed Trissel,
212-355-4449
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