In response to the COVID-19 disruption, Foundation Building
Materials is:
- First and foremost, ensuring the health and safety of its
employees, customers and communities
- Continuing to provide products to its customers to build
essential infrastructure with expected first quarter net sales in
the range of $520-$525 million
- Maintaining business continuity with most of its branch network
operational as "essential businesses"
- Safeguarding its balance sheet and liquidity
- Withdrawing its full year 2020 financial guidance
Foundation Building Materials, Inc. (“FBM” or the “Company”)
(NYSE: FBM), one of the largest specialty building products
distributors of wallboard, suspended ceiling systems and metal
framing in North America, today announced an operational update on
its business and the Company’s response to the coronavirus
(COVID-19) disruption. In addition, the Company is providing a
preliminary range of net sales, cash on hand and availability on
the Company's revolving credit facility for the quarter ended March
31, 2020. The Company is also withdrawing its full year 2020
financial guidance issued on February 24, 2020.
“Our thoughts and prayers are with those affected by the virus
and we are especially thankful to all healthcare workers for their
critical efforts to support patients during this challenging time,”
said Ruben Mendoza, President and Chief Executive Officer. “While
our anticipated first quarter net sales reflect the resiliency of
our operations and the ability of our team to navigate well during
a volatile quarter, we have implemented a number of cost-saving
initiatives and have reduced non-essential discretionary spending
in response to the uncertainty caused by the COVID-19 disruption.
Given the strength of our financial position and the underlying
fundamentals of our business, we believe our company is
well-positioned to navigate the challenging macroeconomic
environment.”
Safeguarding Employees, Customers and
Communities
The health and safety of the Company’s employees and customers
is of paramount importance as the Company seeks to fulfill its
responsibility as part of an “Essential Critical Infrastructure
Sector.” The Company continues to operate the vast majority of its
branches throughout the United States and Canada utilizing safety
precautions based on recommendations from federal, state and local
authorities. However, due to certain COVID-19 related restrictions,
the Company has currently reduced branch operations, mainly in
Pennsylvania, Michigan, certain areas of Northern California and
the state of Washington.
The COVID-19 disruption is impacting the communities in which
the Company operates. In response, the Company is taking steps to
support its communities through donations of thousands of N95 masks
to local hospitals.
Preliminary First Quarter 2020 Net
Sales Range
The Company experienced solid end market activity levels through
most of the first quarter. The Company expects first quarter 2020
net sales to be in the range of $520 million to $525 million.
Withdrawing Full Year 2020
Guidance
Considering the rapidly evolving COVID-19 disruption and
uncertain macroeconomic environment, the Company is withdrawing its
full year 2020 guidance issued on February 24, 2020. The Company
anticipates its future financial performance will be adversely
impacted due to the effects of the COVID-19 disruption, but the
magnitude and timing of this impact is too dependent on external
factors to reliably provide guidance at this time. The Company
plans to provide an update on the business during its first quarter
2020 earnings call on May 12, 2020.
Liquidity and Capital
Resources
FBM entered the COVID-19 disruption with a solid balance sheet.
Since then, the Company has taken proactive steps to further
enhance its financial flexibility, liquidity and cash flow to put
the Company in a strong position to return to normal operations
when conditions allow, including:
- drawing down an additional $120 million of cash under its
revolving credit facility;
- delaying or reducing capital expenditures that are not
anticipated to impact near-term business;
- deferring or limiting non-essential operating expenses;
- reducing salaries for exempt employees, led by voluntary salary
reductions by certain members of its senior management team,
including a 50% salary reduction for its Chief Executive
Officer;
- reducing independent board member compensation, led by
voluntary annual cash retainer reductions of 50%;
- optimizing all areas of working capital;
- restricting hiring, deferring wage increases and reducing other
costs to protect existing jobs;
- furloughing team members associated with temporary branch
closures; and
- temporarily suspending acquisition-related activity.
As a result of the additional draw down under its revolving
credit facility, as of March 31, 2020, the Company had cash on hand
of approximately $141 million and approximately $140 million of
remaining borrowing capacity under its revolving credit facility.
In addition, the Company is in the process of assessing the various
options that may be available to obtain relief under applicable
federal assistance programs.
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 operates more than 175 branches across the United
States and Canada. Learn more at www.fbmsales.com or follow us on
LinkedIn, Twitter, Instagram, or Facebook.
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
“anticipate,” “believe,” “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 are
subject to numerous risks and uncertainties including, without
limitation:
- the preliminary nature of the financial information provided
for the quarter ended March 31, 2020, which is subject to change as
a result of various factors, including normal quarter-end
adjustments, that could cause actual results to differ materially
from the preliminary results;
- the impact of the COVID-19 disruption on the Company's
business, the markets in which the Company operates, and
macroeconomic conditions generally;
- the impact of cost-saving initiatives on the Company’s
financial and liquidity position;
- disruptions in the Company’s ability to draw down additional
amounts under its credit facility or to comply with existing
covenants and debt service obligations;
- federal, state and local government initiatives to mitigate the
impact of the COVID-19 disruption, including additional
restrictions on business activities, shelter-in-place orders and
other restrictions;
- the Company's ability to qualify as an essential business or
service under state, county or local orders;
- the timing, amount and availability of economic stimulus or
other initiatives by federal, state or provincial governments;
- the Company’s ability to accurately assess and predict the
impact of the COVID-19 disruption on its results of operations,
financial condition, liquidity position, acquisition and
disposition activities and growth opportunities; and
- the information under the heading “Risk Factors” included in
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2019 and in other filings the Company makes from time
to time with the Securities and Exchange Commission.
Forward-looking statements are based on current expectations,
forecasts and assumptions that involve risks and uncertainties,
including, but not limited to, economic, competitive, governmental,
public health and technological factors outside of the Company's
control, which may cause its business, strategy or actual results
to differ materially from the forward-looking statements.
Forward-looking statements made in this press release are based on
information currently available to the Company and speak only as of
the date on which they are made. The Company does not intend, and
undertakes 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 or the listing rules of
the New York Stock Exchange. Investors are referred to its filings
with the Securities and Exchange Commission, including its Annual
Report on Form 10-K, its Quarterly Reports on Form 10-Q and its
Current Reports on Form 8-K, for additional information regarding
the risks and uncertainties that may cause actual results to differ
materially from those expressed in or implied by any
forward-looking statement. In addition, readers are cautioned that
the Company may make future changes to its business and operations
in response to the challenges and impacts of COVID-19, or in
response to other business developments, which changes may be
inconsistent with the Company's prior forward-looking statements,
and which may not be disclosed in future public announcements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200408005425/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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