Increases full-year adjusted EPS
guidance
2019 Third Quarter
Highlights
- Net sales of $564.9 million, an increase of 4.2% compared to
the prior year period
- Base business net sales of $500.8 million, an increase of 1.1%
compared to the prior year period
- Net income from continuing operations of $12.7 million, an
increase of $50.3 million, compared to the prior year period
- Adjusted net income(1) of $14.4 million, an increase of $6.2
million, compared to the prior year period
- Earnings per share ("EPS") from continuing operations of $0.30
compared to a loss per share of $0.88 in the prior year period;
adjusted EPS(1) of $0.33 compared to adjusted EPS of $0.19 in the
prior year period
- Adjusted EBITDA(1) of $50.0 million, an increase of 14.4%
compared to the prior year period; adjusted EBITDA margin(1) of
8.9% compared to 8.1% in the prior year period
- Increasing full-year adjusted EPS guidance from $0.80 to $1.00
to $0.95 to $1.05
Foundation Building Materials, Inc. (NYSE: FBM), one of the
largest specialty building product distributors of wallboard,
suspended ceiling systems and metal framing in North America, today
reported third quarter 2019 financial results and increased its
adjusted EPS 2019 guidance.
“Our strong underlying profitability was the key driver of our
third quarter results,” said Ruben Mendoza, President and CEO.
“Despite continuing softness in Canadian markets and adverse
weather affecting our net sales, we continue to see solid demand in
our core non-residential construction markets, and we are on track
to meet our financial objectives for the year.”
2019 Third Quarter
Results
Net sales for the three months ended September 30, 2019 were
$564.9 million compared to $542.3 million for the three months
ended September 30, 2018, representing an increase of $22.6
million, or 4.2%. Net sales from base business branches contributed
$5.2 million of the increase for the quarter, primarily driven by
strong commercial activity and product expansion into new
geographic markets.
Gross profit for the three months ended September 30, 2019 was
$171.8 million compared to $154.0 million for the three months
ended September 30, 2018, representing an increase of $17.8
million, or 11.5%. The increase in gross profit was primarily due
to an expansion of our gross margin and an increase in sales from
acquisitions. Gross margin for the three months ended September 30,
2019 was 30.4% compared to 28.4% for the three months ended
September 30, 2018. The increase in gross margin was primarily due
to improved profitability across our product lines driven by the
Company's ongoing pricing and purchasing initiatives and continued
stabilization of product costs.
Selling, general and administrative ("SG&A") expenses for
the three months ended September 30, 2019 were $123.9 million
compared to $113.3 million for the three months ended September 30,
2018, representing an increase of $10.6 million. As a percentage of
net sales, SG&A expenses were 21.9% for the three months ended
September 30, 2019, compared to 20.9% for the three months ended
September 30, 2018. The increase in SG&A expenses as a
percentage of net sales was primarily due to our continued
investment in various company-wide initiatives.
Net income from continuing operations for the three months ended
September 30, 2019 was $12.7 million, or $0.30 per share, compared
to a net loss from continuing operations of $37.6 million, or $0.88
per share, for the three months ended September 30, 2018. Adjusted
net income(1) for the three months ended September 30, 2019 was
$14.4 million, or $0.33 per share, an increase of $6.2 million
compared to adjusted net income(1) of $8.2 million, or $0.19 per
share, for the three months ended September 30, 2018.
Adjusted EBITDA(1) was $50.0 million and adjusted EBITDA
margin(1) was 8.9% for the three months ended September 30, 2019,
compared to adjusted EBITDA(1) of $43.7 million and adjusted EBITDA
margin(1) of 8.1% for the three months ended September 30,
2018.
2019 Year-To-Date
Results
Net sales for the nine months ended September 30, 2019 were
$1,639.7 million compared to $1,528.2 million for the nine months
ended September 30, 2018, representing an increase of $111.5
million, or 7.3%. There was one less day in the current period as
compared to the prior period. Average daily net sales increased
7.9% over the prior period. Net sales from base business branches
contributed $51.1 million of the net sales increase, and average
daily base business net sales increased by 4.2% over the prior
period. The base business net sales increase was primarily due to
strong commercial activity and product expansion into new
geographic markets.
Gross profit for the nine months ended September 30, 2019 was
$496.3 million compared to $434.7 million for the nine months ended
September 30, 2018, representing an increase of $61.6 million, or
14.2%. Gross profit increased due to an expansion of our gross
margin, an increase in sales from acquisitions and base business
growth. Gross margin for the nine months ended September 30, 2019
was 30.3% compared to 28.4% for the nine months ended September 30,
2018. The increase in gross margin was primarily due to improved
profitability across our product lines driven by the Company's
ongoing pricing and purchasing initiatives and continued
stabilization of product costs.
SG&A expenses for the nine months ended September 30, 2019
were $363.9 million compared to $328.1 million for the nine months
ended September 30, 2018, representing an increase of $35.8
million, or 10.9%. As a percentage of net sales, SG&A expenses
were 22.2% for the nine months ended September 30, 2019, compared
to 21.5% for the nine months ended September 30, 2018. The increase
in SG&A expenses as a percentage of net sales was primarily due
to the Company's continued investment in various company-wide
initiatives and higher operating costs as a result of adverse
weather conditions.
Net income from continuing operations for the nine months ended
September 30, 2019 was $32.3 million, or $0.75 per share, compared
to a net loss from continuing operations of $38.3 million, or $0.89
per share, for the nine months ended September 30, 2018. Adjusted
net income(1) for the nine months ended September 30, 2019 was
$36.3 million, or $0.84 per share, an increase of $25.7 million
compared to an adjusted net income(1) of $10.6 million, or $0.25
per share, for the nine months ended September 30, 2018.
Adjusted EBITDA(1) was $137.8 million and adjusted EBITDA
margin(1) was 8.4% for the nine months ended September 30, 2019,
compared to adjusted EBITDA(1) of $114.0 million and adjusted
EBITDA margin(1) of 7.5% for the nine months ended September 30,
2018.
Acquisitions
On October 1, 2019, the Company acquired the operations and
substantially all of the assets of Joe's Wallboard Supply Co. of
Colorado Springs, Inc. (“Wallboard Supply”). Wallboard Supply was a
distributor of drywall and accessories, steel framing, insulation,
tools and fasteners. Wallboard Supply operated one branch in
Colorado Springs, Colorado. For the remainder of 2019, Wallboard
Supply is expected to contribute $2.0 million to $3.0 million to
net sales.
On October 1, 2019, the Company acquired the operations and
substantially all of the assets of The Supply Guy, Inc. (“TSG”).
TSG was a distributor of tools, fasteners, and other related
products. TSG operated one branch in Lakewood, Washington. For the
remainder of 2019, TSG is expected to contribute $0.8 million to
$1.2 million to net sales.
From January 1 through September 30, 2019, the Company completed
two acquisitions totaling four branches with combined annualized
net sales between $28.0 million and $34.0 million. The Company
expects to continue to supplement organic growth with strategic
acquisitions.
2019
Guidance(a)
Net sales (in billions)
$2.10 to $2.25
Gross margin
29.7% to 30.2%
Adjusted EBITDA(b) (in millions)
$165.0 to $185.0
Adjusted EBITDA margin(b)
7.8% to 8.2%
Adjusted EPS(b)(c)
$0.95 to $1.05
Net debt leverage ratio(b)(d)
2.9x to 3.2x
(a) Guidance for 2019 includes anticipated
contributions from acquisitions and planned greenfield
branches.
(b)Adjusted EBITDA, adjusted EBITDA
margin, adjusted EPS and net debt leverage ratio are non-GAAP
financial measures. Adjusted EBITDA margin represents adjusted
EBITDA divided by net sales. For a reconciliation of net income
(loss) to adjusted EBITDA, please see the supplementary schedules
at the end of this release.
(c)We are increasing adjusted EPS
guidance. Previously provided guidance was $0.80 to $1.00.
(d)For a calculation of our net debt
leverage ratio as of September 30, 2019, see Item 2, Management's
Discussion and Analysis of Financial Condition and Results of
Operations in our Quarterly Report on Form 10-Q for the three
months ended September 30, 2019.
Third Quarter Earnings Release and
Conference Call
In conjunction with this release, Foundation Building Materials,
Inc. will host a conference call tomorrow, Tuesday, November 5,
2019, at 8:30 AM Eastern Time. Ruben Mendoza, President and Chief
Executive Officer, John Gorey, Chief Financial Officer, Kirby
Thompson, Senior Vice President of Sales and Marketing and John
Moten, Vice President Investor Relations will host the call.
The call can be accessed in three ways:
- At the FBM website: www.fbmsales.com under the "Events and
Presentations" tab 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 dial-in telephone number in the U.S. is (877) 407-9039. For
participation outside the U.S., the dial-in number is (201)
689-8470; and
- Using audio replay: A replay of the call will be available
beginning at 11:30 AM Eastern Time on Tuesday, November 5, 2019,
and ending 11:59 PM Eastern Time on Tuesday, November 12, 2019. The
dial-in number for U.S.-based participants is (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 13695544.
About Foundation Building
Materials
Foundation Building Materials is a specialty building products
distributor of wallboard, suspended ceiling systems, and metal
framing throughout North America. Based in Santa Ana, California,
the Company employs more than 3,400 people and operates more than
175 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 contained in this press
release relate to, among other things, the Company's projected
financial performance and operating results, including projected
net sales, gross margin, adjusted EBITDA, adjusted EBITDA margin,
adjusted EPS and net debt leverage ratio, as well as statements
regarding the Company's progress towards achieving its strategic
objectives, including the successful integration and future
performance of acquisitions and performance of greenfield branches
and the Company's acquisition strategy. 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 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 net income
and adjusted EPS are non-GAAP financial 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.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share
and per share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net sales
$
564,906
$
542,273
$
1,639,689
$
1,528,153
Cost of goods sold
393,111
388,236
1,143,397
1,093,412
Gross profit
171,795
154,037
496,292
434,741
Operating expenses:
Selling, general and administrative
expenses
123,907
113,279
363,872
328,088
Depreciation and amortization
20,218
19,771
60,911
56,922
Total operating expenses
144,125
133,050
424,783
385,010
Income from operations
27,670
20,987
71,509
49,731
Loss on extinguishment of debt
—
(58,475
)
—
(58,475
)
Interest expense
(9,118
)
(12,576
)
(26,015
)
(43,028
)
Other (expense) income, net
(89
)
(8
)
(4
)
126
Income (loss) before income taxes
18,463
(50,072
)
45,490
(51,646
)
Income tax expense (benefit)
5,754
(12,519
)
13,232
(13,299
)
Income (loss) from continuing
operations
12,709
(37,553
)
32,258
(38,347
)
Income from discontinued operations, net
of tax
—
2,772
—
7,913
Loss on sale of discontinued operations,
net of tax
(11
)
—
(1,401
)
—
Net income (loss)
$
12,698
$
(34,781
)
$
30,857
$
(30,434
)
Earnings (loss) per share data:
Earnings (loss) from continuing operations
per share - basic
$
0.30
$
(0.88
)
$
0.75
$
(0.89
)
Earnings (loss) from continuing operations
per share - diluted
$
0.30
$
(0.88
)
$
0.75
$
(0.89
)
Earnings (loss) from discontinued
operations per share - basic
$
—
$
0.07
$
(0.03
)
$
0.18
Earnings (loss) from discontinued
operations per share - diluted
$
—
$
0.07
$
(0.03
)
$
0.18
Earnings (loss) per share - basic
$
0.30
$
(0.81
)
$
0.72
$
(0.71
)
Earnings (loss) per share - diluted
$
0.30
$
(0.81
)
$
0.72
$
(0.71
)
Weighted average shares outstanding:
Basic
42,988,829
42,894,474
42,969,797
42,889,430
Diluted
43,508,678
42,917,230
43,174,351
42,905,273
FOUNDATION BUILDING MATERIALS,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
(in thousands, except share
data)
September 30, 2019
December 31, 2018
Current assets:
Cash and cash equivalents
$
22,668
$
15,299
Accounts receivable—net of allowance for
doubtful accounts of $3,678 and $3,239, respectively
314,088
276,043
Other receivables
49,284
57,472
Inventories
163,280
165,989
Prepaid expenses and other current
assets
13,321
9,053
Total current assets
562,641
523,856
Property and equipment, net
153,294
151,641
Right-of-use assets, net
117,137
—
Intangible assets, net
117,894
145,876
Goodwill
490,315
484,941
Other assets
5,481
10,393
Total assets
$
1,446,762
$
1,316,707
Liabilities and stockholders'
equity:
Current liabilities:
Accounts payable
$
143,958
$
137,773
Accrued payroll and employee benefits
29,113
28,830
Accrued taxes
11,092
11,867
Current portion of tax receivable
agreement
27,676
16,667
Current portion of term loan, net
4,500
4,500
Current portion of lease liabilities
29,310
—
Other current liabilities
23,650
19,979
Total current liabilities
269,299
219,616
Asset-based revolving credit facility
134,306
146,000
Long-term portion of term loan, net
435,475
437,999
Tax receivable agreement
90,272
117,948
Deferred income taxes, net
18,586
20,678
Long-term portion of lease liabilities
95,045
—
Other liabilities
7,957
8,117
Total liabilities
1,050,940
950,358
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; 42,989,840 and 42,907,326 shares issued,
respectively
13
13
Additional paid-in capital
335,237
332,330
Retained earnings
64,872
34,187
Accumulated other comprehensive loss
(4,300
)
(181
)
Total stockholders' equity
395,822
366,349
Total liabilities and stockholders'
equity
$
1,446,762
$
1,316,707
FOUNDATION BUILDING MATERIALS,
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended September
30,
2019
2018
Cash flows from operating activities:
Net income (loss)
$
30,857
$
(30,434
)
Add: loss on sale of discontinued
operations
(1,401
)
—
Less: net income from discontinued
operations
—
7,913
Net income (loss) from continuing
operations
32,258
(38,347
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities from continuing
operations:
Depreciation
26,173
24,383
Amortization of intangible assets
34,738
32,539
Amortization of debt issuance costs and
debt discount
1,617
6,834
Loss on extinguishment of debt
—
58,475
Inventory fair value purchase accounting
adjustment
234
413
Provision for doubtful accounts
2,017
1,654
Stock-based compensation
3,056
1,512
Unrealized gain on derivative instruments,
net
—
(56
)
(Gain) loss on disposal of property and
equipment
(54
)
614
Right-of-use assets non-cash expense
20,586
—
Deferred income taxes
63
(13,038
)
Change in assets and liabilities, net of
effects of acquisitions:
Accounts receivable
(32,949
)
(65,361
)
Other receivables
10,520
5,361
Inventories
5,623
(3,244
)
Prepaid expenses and other current
assets
(4,198
)
(496
)
Other assets
(187
)
(1,928
)
Accounts payable
2,417
(8,940
)
Accrued payroll and employee benefits
214
7,929
Accrued taxes
(860
)
4,783
Operating lease liability
(20,034
)
—
Other liabilities
6,019
(13,960
)
Net cash provided by (used in) operating
activities from continuing operations
87,253
(873
)
Cash flows from investing activities from
continuing operations:
Purchases of property and equipment
(29,369
)
(28,157
)
Proceeds from termination of net
investment hedge
3,313
—
Proceeds from net working capital
adjustments related to acquisitions
461
115
Proceeds from the disposal of fixed
assets
2,719
1,605
Acquisitions, net of cash acquired
(21,882
)
(70,334
)
Net cash used in investing activities from
continuing operations
(44,758
)
(96,771
)
Cash flows from financing activities from
continuing operations:
Proceeds from asset-based revolving credit
facility
403,454
757,298
Repayments of asset-based revolving credit
facility
(415,178
)
(498,964
)
Principal payments for term loan
(3,375
)
—
Term loan proceeds
—
450,000
Term loan original issuance discount and
deferred finance costs
—
(7,935
)
Repayment of bond principal
—
(575,000
)
Prepayment premium on senior secured
notes
—
(23,872
)
Payment related to tax receivable
agreement
(16,667
)
—
Tax withholding payment related to net
settlement of equity awards
(155
)
(61
)
Principal repayment of finance lease
obligations
(2,002
)
(2,094
)
Net cash (used in) provided by financing
activities from continuing operations
(33,923
)
99,372
Net cash used in operating activities from
discontinued operations
—
(2,063
)
Net cash used in investing activities from
discontinued operations
(1,401
)
(928
)
Net cash used in financing activities of
discontinued operations
—
(140
)
Net cash used in discontinued
operations
(1,401
)
(3,131
)
Effect of exchange rate changes on
cash
198
(138
)
Net increase (decrease) in cash
7,369
(1,541
)
Cash and cash equivalents at beginning of
period
15,299
12,101
Cash and cash equivalents at end of
period
$
22,668
$
10,560
Supplemental disclosures of cash flow
information:
Cash paid for income taxes
$
10,401
$
1,504
Cash paid for interest
$
24,150
$
52,288
Supplemental disclosures of non-cash
investing and financing activities:
Change in fair value of derivatives, net
of tax
$
5,663
$
839
Goodwill adjustment for purchase price
allocation
$
57
$
202
FOUNDATION BUILDING MATERIALS,
INC.
NET SALES BY MAJOR PRODUCT
LINE, GROSS PROFIT AND GROSS MARGIN
FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)
(dollars in thousands)
Three Months Ended September
30,
Change
2019
2018
$
%
Wallboard
$
207,326
36.7
%
$
203,991
37.6
%
$
3,335
1.6
%
Suspended ceiling systems
118,873
21.0
%
104,422
19.3
%
14,451
13.8
%
Metal framing
98,817
17.5
%
98,576
18.2
%
241
0.2
%
Complementary and other products
139,890
24.8
%
135,284
24.9
%
4,606
3.4
%
Total net sales
$
564,906
100.0
%
$
542,273
100.0
%
$
22,633
4.2
%
Total gross profit
$
171,795
$
154,037
$
17,758
11.5
%
Total gross margin
30.4
%
28.4
%
2.0
%
Nine Months Ended September
30,
Change
2019
2018
$
%
Wallboard
$
624,299
38.1
%
$
583,242
38.2
%
$
41,057
7.0
%
Suspended ceiling systems
314,045
19.2
%
288,356
18.9
%
25,689
8.9
%
Metal framing
300,493
18.3
%
264,019
17.3
%
36,474
13.8
%
Complementary and other products
400,852
24.4
%
392,536
25.7
%
8,316
2.1
%
Total net sales
$
1,639,689
100.0
%
$
1,528,153
100.0
%
$
111,536
7.3
%
Total gross profit
$
496,292
$
434,741
$
61,551
14.2
%
Total gross margin
30.3
%
28.4
%
1.9
%
FOUNDATION BUILDING MATERIALS,
INC.
BASE BUSINESS AND ACQUIRED AND
COMBINED NET SALES
FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)
(dollars in thousands)
Three Months Ended September
30,
Change
2019
2018
$
%
Base business (1)
$
500,834
$
495,613
$
5,221
1.1
%
Acquired and combined (2)
64,072
46,660
17,412
37.3
%
Net sales
$
564,906
$
542,273
$
22,633
4.2
%
(1) Represents net sales from branches
that were owned by us since January 1, 2018 and branches that were
opened by us during such period.
(2) Represents branches acquired and
combined after January 1, 2018, primarily as a result of our
strategic combination of branches.
Nine Months Ended September
30,
Change
2019
2018
$
%
Base business (1)
$
1,460,741
$
1,409,632
$
51,109
3.6
%
Acquired and combined (2)
178,948
118,521
60,427
51.0
%
Net sales
$
1,639,689
$
1,528,153
$
111,536
7.3
%
(1) Represents net sales from branches
that were owned by us since January 1, 2018 and branches that were
opened by us during such period.
(2) Represents branches acquired and
combined after January 1, 2018, primarily as a result of our
strategic combination of branches.
FOUNDATION BUILDING MATERIALS,
INC.
BASE BUSINESS AND ACQUIRED AND
COMBINED NET SALES BY MAJOR PRODUCT LINE
FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)
(dollars in thousands)
Three Months Ended September
30, 2018
Base Business Net Sales
Change
Acquired and Combined Net
Sales Change
Three Months Ended September
30, 2019
Total Net Sales %
Change
Base Business Net Sales %
Change(1)
Acquired and Combined Net
Sales % Change(2)
Wallboard
$
203,991
$
(3,872
)
$
7,207
$
207,326
1.6
%
(2.0
)%
57.1
%
Suspended ceiling systems
104,422
9,654
4,797
118,873
13.8
%
11.0
%
28.6
%
Metal framing
98,576
(3,032
)
3,273
98,817
0.2
%
(3.3
)%
51.2
%
Complementary and other products
135,284
2,471
2,135
139,890
3.4
%
2.0
%
19.6
%
Net sales
$
542,273
$
5,221
$
17,412
$
564,906
4.2
%
1.1
%
37.3
%
Average daily net sales(3)
$
8,608
$
83
$
276
$
8,967
4.2
%
1.1
%
37.3
%
(1) Represents base business net sales
change as a percentage of base business net sales for the three
months ended September 30, 2018.
(2) Represents acquired and combined net
sales change as a percentage of acquired and combined net sales for
the three months ended September 30, 2018.
(3) The number of business days for the
three months ended September 30, 2019 and 2018 were 63 and 63,
respectively.
Nine Months Ended September
30, 2018
Base Business Net Sales
Change
Acquired and Combined Net
Sales Change
Nine Months Ended September
30, 2019
Total Net Sales %
Change
Base Business Net Sales %
Change(1)
Acquired and Combined Net
Sales % Change(2)
Wallboard
$
583,242
$
9,257
$
31,800
$
624,299
7.0
%
1.7
%
112.0
%
Suspended ceiling systems
288,356
12,113
13,576
314,045
8.9
%
4.9
%
34.9
%
Metal framing
264,019
19,590
16,884
300,493
13.8
%
7.7
%
151.3
%
Complementary and other products
392,536
10,149
(1,833
)
400,852
2.1
%
2.9
%
(4.6
)%
Net sales
$
1,528,153
$
51,109
$
60,427
$
1,639,689
7.3
%
3.6
%
51.0
%
Average daily net sales(3)
$
8,001
$
308
$
321
$
8,630
7.9
%
4.2
%
51.8
%
(1) Represents base business net sales
change as a percentage of base business net sales for the nine
months ended September 30, 2018.
(2) Represents acquired and combined net
sales change as a percentage of acquired and combined net sales for
the nine months ended September 30, 2018.
(3) The number of business days for the
nine months ended September 30, 2019 and 2018 were 190 and 191,
respectively.
Non-GAAP (Generally Accepted Accounting
Principles) Financial Measures
In addition to presenting financial results prepared in
accordance with GAAP, this press release contains certain non-GAAP
financial measures, including adjusted EBITDA, adjusted EBITDA
margin, adjusted net income, net debt leverage ratio and adjusted
earnings per share, which are provided as supplemental measures of
financial performance. These measures are not required by, or
presented in accordance with, GAAP. The Company calculates adjusted
EBITDA as net income (loss) from continuing operations before loss
on extinguishment of debt, interest expense, net, income tax
expense (benefit), depreciation and amortization, unrealized loss
(gain) on derivative financial instruments, offering and public
company readiness expenses, stock-based compensation, and other
non-recurring adjustments such as non-cash purchase accounting
effects, loss (gain) on the disposal of property and equipment and
transaction costs. The Company calculates adjusted EBITDA margin as
adjusted EBITDA divided by net sales. The Company calculates
adjusted net income as net income (loss) from continuing operations
before loss on extinguishment of debt, unrealized loss (gain) on
derivative financial instruments, offering and public company
readiness expenses, stock-based compensation, and other
non-recurring adjustments such as non-cash purchase accounting
effects, loss (gain) on the disposal of property and equipment and
transaction costs. The Company calculates adjusted earnings per
share as adjusted net income on a per weighted average share
outstanding basis. For a calculation of net debt leverage ratio,
see Item 2, Management's Discussion and Analysis of Financial
Condition and Results of Operations in our Quarterly Report on Form
10-Q for the three months ended September 30, 2019.
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 are also frequently
used by analysts, investors and other interested parties to
evaluate companies in the Company’s industry. These measures, when
used in conjunction with the most directly comparable GAAP
financial measures, provide investors with an additional financial
analytical framework that may be useful in assessing the Company’s
financial condition and results of operations.
These non-GAAP financial measures have certain limitations,
which are discussed in greater detail in the Company's filings with
the Securities and Exchange Commission. These measures should not
be considered as alternatives to measures of financial performance
prepared in accordance with GAAP. In addition, these measures
should not be construed as an inference that the Company’s future
results will be unaffected by unusual or non-recurring items.
Furthermore, these measures are not intended to be considered
liquidity measures. Other companies, including other companies in
the Company’s industry, may not use these measures or may calculate
one or more of these measures differently than the Company does,
limiting their usefulness as comparative measures.
The following is a reconciliation of adjusted EBITDA to the most
directly comparable GAAP measure, net income (loss) from continuing
operations (unaudited):
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(dollars in thousands)
Net income (loss) from continuing
operations
$
12,709
$
(37,553
)
$
32,258
$
(38,347
)
Loss on extinguishment of debt
—
58,475
—
58,475
Interest expense, net
9,012
12,544
25,999
42,957
Income tax expense (benefit)
5,754
(12,519
)
13,232
(13,299
)
Depreciation and amortization
20,218
19,771
60,911
56,922
Unrealized loss (gain) on derivative
financial instruments
—
78
—
(56
)
Offering and public company readiness
expenses(a)
378
—
378
89
Stock-based compensation
1,117
633
3,056
1,512
Non-cash purchase accounting
effects(b)
—
6
—
413
Loss (gain) on disposal of property and
equipment
13
339
(54
)
614
Transaction costs(c)
819
1,967
2,046
4,670
Adjusted EBITDA
$
50,020
$
43,741
$
137,826
$
113,950
Adjusted EBITDA margin(d)
8.9
%
8.1
%
8.4
%
7.5
%
(a)
Represents costs related to our initial
public offering, secondary offering, and public company readiness
expenses.
(b)
Adjusts for the effect of the purchase
accounting step-up in the value of inventory to fair value
recognized as a result of acquisitions.
(c)
Represents costs related to our
transactions, including fees to financial advisors, accountants,
attorneys and other professionals as well as certain internal
corporate development costs.
(d)
Adjusted EBITDA margin represents adjusted
EBITDA divided by net sales.
The following is a reconciliation of adjusted net income to the
most directly comparable GAAP measure, net income (loss) from
continuing operations (unaudited):
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(in thousands, except share and per share
data)
Net income (loss) from continuing
operations
$
12,709
$
(37,553
)
$
32,258
$
(38,347
)
Loss on extinguishment of debt
—
58,475
—
58,475
Unrealized loss (gain) on derivative
financial instruments
—
78
—
(56
)
Offering and public company readiness
expenses(a)
378
—
378
89
Stock-based compensation
1,117
633
3,056
1,512
Non-cash purchase accounting
effects(b)
—
6
—
413
Loss (gain) on disposal of property and
equipment
13
339
(54
)
614
Transaction costs(c)
819
1,967
2,046
4,670
Tax effects(d)
(594
)
(15,719
)
(1,386
)
(16,797
)
Adjusted net income
$
14,442
$
8,226
$
36,298
$
10,573
Earnings (loss) per share data as
reported:
Basic
$
0.30
$
(0.88
)
$
0.75
$
(0.89
)
Diluted
$
0.30
$
(0.88
)
$
0.75
$
(0.89
)
Earnings per share data as adjusted:
Basic
$
0.33
$
0.19
$
0.84
$
0.25
Diluted
$
0.33
$
0.19
$
0.84
$
0.25
Weighted average shares outstanding:
Basic
42,988,829
42,894,474
42,969,797
42,889,430
Diluted
43,508,678
42,917,230
43,174,351
42,905,273
(a)
Represents costs related to our initial
public offering, secondary offering, and public company readiness
expenses.
(b)
Adjusts for the effect of the purchase
accounting step-up in the value of inventory to fair value
recognized as a result of acquisitions.
(c)
Represents costs related to our
transactions, including fees paid to financial advisors,
accountants, attorneys and other professionals as well as certain
internal corporate development costs.
(d)
Represents the impact of corporate income
taxes.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191104006008/en/
Investor Relations: John Moten, IRC Foundation Building
Materials, Inc. 657-900-3200 Investors@fbmsales.com
Media Relations: Joele Frank, Wilkinson Brimmer Katcher Jed
Repko or Ed Trissel 212-355-4449
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