Press Release

Foundation Building Materials, Inc. Announces Second Quarter 2019 Results

Company Release - 8/5/2019 4:25 PM ET

2019 Second Quarter Highlights

  • Net sales of $559.9 million, an increase of 7.2% compared to the prior year period
  • Base business net sales of $499.0 million, an increase of 3.4% compared to the prior year period; average daily base business net sales increased 3.4%
  • Net income from continuing operations of $14.7 million for the three months ended June 30, 2019, an increase of $13.2 million, compared to net income from continuing operations of $1.5 million in the prior year period
  • Adjusted net income(1) of $15.8 million for the three months ended June 30, 2019, an increase of $12.4 million, compared to an adjusted net income of $3.4 million in the prior year period
  • Earnings per share from continuing operations of $0.34 compared to earnings per share of $0.03 in the prior year period; adjusted earnings per share(1) of $0.37 compared to adjusted earnings per share of $0.08 in the prior year period
  • Adjusted EBITDA(1) of $50.3 million, an increase of 29.8% compared to the prior year period; adjusted EBITDA margin(1) of 9.0% compared to 7.4% in the prior year period

TUSTIN, Calif.--(BUSINESS WIRE)-- 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 second quarter 2019 financial results and updated its 2019 guidance.

"Our strong underlying profitability highlighted our second quarter results," said Ruben Mendoza, President and CEO. "Despite 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 exceed our financial objectives for the year."

2019 Second Quarter Results

Net sales for the three months ended June 30, 2019, were $559.9 million compared to $522.2 million for the three months ended June 30, 2018, representing an increase of $37.7 million, or 7.2%. Average daily base business net sales grew 3.4% driven by strong commercial activity and product expansion into new geographic markets.

Gross profit for the three months ended June 30, 2019, was $171.5 million compared to $146.3 million for the three months ended June 30, 2018, representing an increase of $25.2 million, or 17.3%. The increase in gross profit was primarily due to an expansion of our gross margin and an increase in sales from acquisitions and base business growth. Gross margin for the three months ended June 30, 2019, was 30.6% compared to 28.0% for the three months ended June 30, 2018. The increase in gross margin was primarily due to improved profitability across our product lines driven by our ongoing pricing and purchasing initiatives.

Selling, general and administrative ("SG&A") expenses for the three months ended June 30, 2019, were $122.7 million compared to $110.2 million for the three months ended June 30, 2018, representing an increase of $12.6 million. As a percentage of net sales, SG&A expenses were 21.9% for the three months ended June 30, 2019, compared to 21.1% for the three months ended June 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 and higher operating costs as a result of adverse weather conditions.

Net income from continuing operations for the three months ended June 30, 2019, was $14.7 million, or $0.34 per share, compared to net income from continuing operations of $1.5 million, or $0.03 per share for the three months ended June 30, 2018. Adjusted net income(1) for the three months ended June 30, 2019, was $15.8 million, or $0.37 per share, an increase of $12.4 million compared to adjusted net income(1) of $3.4 million, or $0.08 per share, for the three months ended June 30, 2018.

Adjusted EBITDA(1) was $50.3 million and adjusted EBITDA margin(1) was 9.0% for the three months ended June 30, 2019, compared to adjusted EBITDA(1) of $38.8 million and adjusted EBITDA margin(1) of 7.4% for the three months ended June 30, 2018.

2019 Year-To-Date Results

Net sales for the six months ended June 30, 2019, were $1,074.8 million compared to $985.9 million for the six months ended June 30, 2018, representing an increase of $88.9 million, or 9.0%. Average daily net sales increased 9.9% over the prior year period. Average daily base business net sales grew 5.8%, driven by strong commercial activity and product expansion into new geographic markets.

Gross profit for the six months ended June 30, 2019, was $324.5 million compared to $280.7 million for the six months ended June 30, 2018, representing an increase of $43.8 million, or 15.6%. The increase in gross profit was driven by higher sales volume and contributions from acquisitions and base business growth. Gross margin for the six months ended June 30, 2019, was 30.2% compared to 28.5% for the six months ended June 30, 2018. The increase in gross margin was primarily due to improved profitability across our product lines driven by ongoing pricing and purchasing initiatives and continued stabilization of the Company's product costs.

SG&A expenses for the six months ended June 30, 2019, were $240.0 million compared to $214.8 million for the six months ended June 30, 2018, representing an increase of $25.2 million. As a percentage of net sales, SG&A expenses were 22.3% for the six months ended June 30, 2019, compared to 21.8% for the six months ended June 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 and higher operating costs as a result of adverse weather conditions.

Net income from continuing operations for the six months ended June 30, 2019, was $19.5 million, or $0.45 per share, compared to a net loss from continuing operations of $0.8 million, or $0.02 per share, for the six months ended June 30, 2018. Adjusted net income(1) for the six months ended June 30, 2019, was $21.9 million, or $0.51 per share, an increase of $19.5 million compared to an adjusted net income(1) of $2.3 million, or $0.05 per share, for the six months ended June 30, 2018.

Adjusted EBITDA(1) was $87.8 million and adjusted EBITDA margin(1) was 8.2% for the six months ended June 30, 2019, compared to adjusted EBITDA(1) of $70.2 million and adjusted EBITDA margin(1) of 7.1% for the six months ended June 30, 2018.

Acquisitions

On May 1, 2019, the Company acquired all of the shares of Select Acoustic Supply Inc. ("Select"). Select was an independent distributor of drywall, steel framing, insulation, basement blanket and spray foam. Select operated one branch in the Greater Toronto Area in Ontario, Canada. For 2019, Select is expected to contribute between $10.0 million -- $12.0 million to net sales. From January 1 through June 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

 

Previously
Provided 2019
Guidance(a)

 

Updated 2019
Guidance(a)

 

 

 

 

Net sales (in billions)

$2.10 to $2.25

 

$2.10 to $2.25

Gross margin

29.1% to 29.3%

 

29.7% to 30.2%

Adjusted EBITDA(b) (in millions)

$160.0 to $180.0

 

$165.0 to $185.0

Adjusted EBITDA margin(b)

7.6% to 8.0%

 

7.8% to 8.2%

Adjusted EPS(b)

$0.70 to $0.90

 

$0.80 to $1.00

Net debt leverage(b)(c)

3.2x to 3.5x

 

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 are non-GAAP financial measures. Adjusted EBITDA margin represents adjusted EBITDA divided by net sales.

 (c) For a calculation of net debt leverage as of June 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 June 30, 2019.

Second Quarter Earnings Release and Conference Call

In conjunction with this release, Foundation Building Materials, Inc. will host a conference call tomorrow, Tuesday, August 6, 2019, at 8:30 AM Eastern Time. Ruben Mendoza, President and Chief Executive Officer, John Gorey, Chief Financial Officer, Pete Welly, Chief Operating 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 "Event Calendar" 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
  • Audio Replay: A replay of the call will be available beginning at 12:00 PM Eastern Time on Tuesday, August 6, 2019, and ending 11:59 PM Eastern Time on Tuesday, August 13, 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 13692295.

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 Tustin, 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, as well as statements regarding the Company's progress towards achieving its strategic objectives, including the successful integration and 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 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 June 30,

 

Six Months Ended June 30,

 

2019

 

2018

 

2019

 

2018

Net sales

$

559,911

 

 

$

522,219

 

 

$

1,074,783

 

 

$

985,880

 

Cost of goods sold

388,374

 

 

375,952

 

 

750,286

 

 

705,176

 

Gross profit

171,537

 

 

146,267

 

 

324,497

 

 

280,704

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative expenses

122,735

 

 

110,153

 

 

239,965

 

 

214,810

 

Depreciation and amortization

20,351

 

 

18,751

 

 

40,693

 

 

37,148

 

Total operating expenses

143,086

 

 

128,904

 

 

280,658

 

 

251,958

 

Income from operations

28,451

 

 

17,363

 

 

43,839

 

 

28,746

 

Interest expense

(8,341

)

 

(15,333

)

 

(16,897

)

 

(30,452

)

Other income, net

44

 

 

61

 

 

85

 

 

135

 

Income (loss) before income taxes

20,154

 

 

2,091

 

 

27,027

 

 

(1,571

)

Income tax expense (benefit)

5,433

 

 

618

 

 

7,478

 

 

(780

)

Income (loss) from continuing operations

14,721

 

 

1,473

 

 

19,549

 

 

(791

)

Income from discontinued operations, net of tax

 

 

3,927

 

 

 

 

5,138

 

Loss on sale of discontinued operations, net of tax

(44

)

 

 

 

(1,390

)

 

 

Net income

$

14,677

 

 

$

5,400

 

 

$

18,159

 

 

$

4,347

 

 

 

 

 

 

 

 

 

Earnings (loss) per share data:

 

 

 

 

 

 

 

Earnings (loss) from continuing operations per share - basic

$

0.34

 

 

$

0.03

 

 

$

0.45

 

 

$

(0.02

)

Earnings (loss) from continuing operations per share - diluted

$

0.34

 

 

$

0.03

 

 

$

0.45

 

 

$

(0.02

)

 

 

 

 

 

 

 

 

Earnings (loss) from discontinued operations per share - basic

$

 

 

$

0.10

 

 

$

(0.03

)

 

$

0.12

 

Earnings (loss) from discontinued operations per share - diluted

$

 

 

$

0.10

 

 

$

(0.03

)

 

$

0.12

 

 

 

 

 

 

 

 

 

Earnings per share - basic

$

0.34

 

 

$

0.13

 

 

$

0.42

 

 

$

0.10

 

Earnings per share - diluted

$

0.34

 

 

$

0.13

 

 

$

0.42

 

 

$

0.10

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

42,987,915

 

 

42,893,498

 

 

42,960,124

 

 

42,886,867

 

Diluted

43,245,353

 

 

42,910,017

 

 

43,064,496

 

 

42,903,788

 

 

FOUNDATION BUILDING MATERIALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share data)

 

June 30, 2019

 

December 31, 2018

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

6,454

 

 

$

15,299

 

Accounts receivable—net of allowance for doubtful accounts of $3,631 and $3,239, respectively

325,579

 

 

276,043

 

Other receivables

46,415

 

 

57,472

 

Inventories

170,398

 

 

165,989

 

Prepaid expenses and other current assets

12,281

 

 

9,053

 

Total current assets

561,127

 

 

523,856

 

Property and equipment, net

148,054

 

 

151,641

 

Right-of-use assets, net

114,653

 

 

 

Intangible assets, net

129,565

 

 

145,876

 

Goodwill

490,607

 

 

484,941

 

Other assets

5,760

 

 

10,393

 

Total assets

$

1,449,766

 

 

$

1,316,707

 

Liabilities and stockholders' equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

165,314

 

 

$

137,773

 

Accrued payroll and employee benefits

25,867

 

 

28,830

 

Accrued taxes

9,508

 

 

11,867

 

Tax receivable agreement

27,676

 

 

16,667

 

Current portion of term loan, net

4,500

 

 

4,500

 

Current portion of lease liabilities

28,407

 

 

 

Other current liabilities

22,227

 

 

19,979

 

Total current liabilities

283,499

 

 

219,616

 

Asset-based revolving credit facility

136,462

 

 

146,000

 

Long-term portion of term loan, net

436,316

 

 

437,999

 

Tax receivable agreement

90,272

 

 

117,948

 

Deferred income taxes, net

18,701

 

 

20,678

 

Long-term portion of lease liabilities

93,627

 

 

 

Other liabilities

8,231

 

 

8,117

 

Total liabilities

1,067,108

 

 

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; 42,988,110 and 42,907,326 shares issued, respectively

13

 

 

13

 

Additional paid-in capital

334,131

 

 

332,330

 

Retained earnings

52,174

 

 

34,187

 

Accumulated other comprehensive loss

(3,660

)

 

(181

)

Total stockholders' equity

382,658

 

 

366,349

 

Total liabilities and stockholders' equity

$

1,449,766

 

 

$

1,316,707

 

 

FOUNDATION BUILDING MATERIALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

Six Months Ended June 30,

 

2019

 

2018

Cash flows from operating activities:

 

 

 

Net income

$

18,159

 

 

$

4,347

 

Less: loss on sale of discontinued operations

(1,390

)

 

 

Less: net income from discontinued operations

 

 

5,138

 

Net income (loss) from continuing operations

19,549

 

 

(791

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities from continuing operations:

 

 

 

Depreciation

17,558

 

 

15,627

 

Amortization of intangible assets

23,135

 

 

21,521

 

Amortization of debt issuance costs and debt discount

992

 

 

5,338

 

Inventory fair value purchase accounting adjustment

234

 

 

407

 

Provision for doubtful accounts

1,525

 

 

1,278

 

Stock-based compensation

1,939

 

 

878

 

Unrealized gain on derivative instruments, net

 

 

(134

)

(Gain) loss on disposal of property and equipment

(67

)

 

275

 

Right-of-use assets non-cash expense

13,601

 

 

 

Deferred income taxes

271

 

 

(421

)

Change in assets and liabilities, net of effects of acquisitions:

 

 

 

Accounts receivable

(43,441

)

 

(53,444

)

Other receivables

13,581

 

 

10,052

 

Inventories

(1,291

)

 

(22,209

)

Prepaid expenses and other current assets

(3,123

)

 

(1,019

)

Other assets

(121

)

 

977

 

Accounts payable

23,429

 

 

15,061

 

Accrued payroll and employee benefits

(3,057

)

 

5,136

 

Accrued taxes

(2,291

)

 

3,216

 

Other liabilities

(9,219

)

 

(1,049

)

Net cash provided by operating activities from continuing operations

53,204

 

 

699

 

Cash flows from investing activities from continuing operations:

 

 

 

Purchases of property and equipment

(15,052

)

 

(19,762

)

Proceeds from termination of net investment hedge

3,313

 

 

 

Proceeds from net working capital adjustments related to acquisitions

470

 

 

296

 

Proceeds from the disposal of fixed assets

2,376

 

 

577

 

Acquisitions, net of cash acquired

(21,923

)

 

(21,220

)

Net cash used in investing activities from continuing operations

(30,816

)

 

(40,109

)

Cash flows from financing activities from continuing operations:

 

 

 

Proceeds from asset-based revolving credit facility

281,620

 

 

266,198

 

Repayments of asset-based revolving credit facility

(291,371

)

 

(219,350

)

Principal payments for term loan

(2,250

)

 

 

Payment related to tax receivable agreement

(16,667

)

 

 

Tax withholding payment related to net settlement of equity awards

(138

)

 

(45

)

Principal repayment of finance lease obligations

(1,319

)

 

(1,358

)

Net cash (used in) provided by financing activities from continuing operations

(30,125

)

 

45,445

 

Net cash used in operating activities from discontinued operations

 

 

(10,038

)

Net cash used in investing activities from discontinued operations

(1,390

)

 

(701

)

Net cash used in financing activities of discontinued operations

 

 

(131

)

Net cash used in discontinued operations

(1,390

)

 

(10,870

)

Effect of exchange rate changes on cash

282

 

 

(183

)

Net decrease in cash

(8,845

)

 

(5,018

)

Cash and cash equivalents at beginning of period

15,299

 

 

12,101

 

Cash and cash equivalents at end of period

$

6,454

 

 

$

7,083

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

Cash paid for income taxes

$

5,091

 

 

$

1,423

 

Cash paid for interest

$

16,477

 

 

$

25,201

 

Supplemental disclosures of non-cash investing and financing activities:

 

 

 

Change in fair value of derivatives, net of tax

$

6,012

 

 

$

2,259

 

Goodwill adjustment for purchase price allocation

$

57

 

 

$

138

 

 

FOUNDATION BUILDING MATERIALS, INC.

NET SALES BY MAJOR PRODUCT LINE, GROSS PROFIT AND GROSS MARGIN

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (UNAUDITED)

(in thousands)

 

Three Months Ended June 30,

 

Change

 

2019

 

2018

 

$

 

%

Wallboard

$

214,059

 

38.2

%

 

$

198,598

 

38.0

%

 

$

15,461

 

 

7.8

%

Suspended ceiling systems

106,176

 

19.0

%

 

97,755

 

18.7

%

 

8,421

 

 

8.6

%

Metal framing

102,425

 

18.3

%

 

91,476

 

17.5

%

 

10,949

 

 

12.0

%

Complementary and other products

137,251

 

24.5

%

 

134,390

 

25.8

%

 

2,861

 

 

2.1

%

Total net sales

$

559,911

 

100.0

%

 

$

522,219

 

100.0

%

 

$

37,692

 

 

7.2

%

Total gross profit

$

171,537

 

 

 

$

146,267

 

 

 

$

25,270

 

 

17.3

%

Total gross margin

30.6

%

 

 

28.0

%

 

 

2.6

%

 

 

 

Six Months Ended June 30,

 

Change

 

2019

 

2018

 

$

 

%

Wallboard

$

416,973

 

38.8

%

 

$

379,252

 

38.5

%

 

$

37,721

 

 

9.9

%

Suspended ceiling systems

195,172

 

18.2

%

 

183,933

 

18.7

%

 

11,239

 

 

6.1

%

Metal framing

201,676

 

18.8

%

 

165,443

 

16.8

%

 

36,233

 

 

21.9

%

Complementary and other products

260,962

 

24.2

%

 

257,252

 

26.0

%

 

3,710

 

 

1.4

%

Total net sales

$

1,074,783

 

100.0

%

 

$

985,880

 

100.0

%

 

$

88,903

 

 

9.0

%

Total gross profit

$

324,497

 

 

 

$

280,704

 

 

 

$

43,793

 

 

15.6

%

Total gross margin

30.2

%

 

 

28.5

%

 

 

1.7

%

 

 

 

FOUNDATION BUILDING MATERIALS, INC.

BASE BUSINESS AND ACQUIRED AND COMBINED NET SALES

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (UNAUDITED)

(in thousands)

 

Three Months Ended June 30,

 

Change

 

2019

 

2018

 

$

 

%

Base business (1)

$

499,006

 

 

$

482,655

 

 

$

16,351

 

 

3.4

%

Acquired and combined (2)

60,905

 

 

39,564

 

 

21,341

 

 

53.9

%

Net sales

$

559,911

 

 

$

522,219

 

 

$

37,692

 

 

7.2

%

(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.

 

Six Months Ended June 30,

 

Change

 

2019

 

2018

 

$

 

%

Base business (1)

$

959,907

 

 

$

914,019

 

 

$

45,888

 

 

5.0

%

Acquired and combined (2)

114,876

 

 

71,861

 

 

43,015

 

 

59.9

%

Net sales

$

1,074,783

 

 

$

985,880

 

 

$

88,903

 

 

9.0

%

(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 SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (UNAUDITED)

(in thousands)

 

Three Months
Ended June
30, 2018

 

Base
Business
Net Sales
Change

 

Acquired
and
Combined
Net Sales
Change

 

Three Months
Ended June
30, 2019

 

Total Net
Sales %
Change

Base
Business
Net Sales
%
Change(1)

 

Acquired
and
Combined
Net Sales % Change(2)

Wallboard

$

198,598

 

 

$

3,593

 

 

$

11,868

 

 

$

214,059

 

 

7.8

%

1.9

%

 

134.5

%

Suspended ceiling
systems

97,755

 

 

2,637

 

 

5,784

 

 

106,176

 

 

8.6

%

3.1

%

 

47.8

%

Metal framing

91,476

 

 

4,683

 

 

6,266

 

 

102,425

 

 

12.0

%

5.3

%

 

212.5

%

Complementary and
other products

134,390

 

 

5,438

 

 

(2,577

)

 

137,251

 

 

2.1

%

4.6

%

 

(16.4

)%

Net sales

$

522,219

 

 

$

16,351

 

 

$

21,341

 

 

$

559,911

 

 

7.2

%

3.4

%

 

53.9

%

Average daily net
sales(3)

$

8,160

 

 

$

256

 

 

$

333

 

 

$

8,749

 

 

7.2

%

3.4

%

 

53.9

%

(1) Represents base business net sales change as a percentage of base business net sales for the three months ended June 30, 2018.

(2) Represents acquired and combined net sales change as a percentage of acquired and combined net sales for the three months ended June 30, 2018.

(3) The number of business days for the three months ended June 30, 2019 and 2018 were 64 and 64, respectively.

 

 

Six Months
Ended June
30, 2018

 

Base Business
Net Sales
Change

 

Acquired
and

Combined
Net Sales
Change

 

Six Months
Ended June
30, 2019

 

Total Net
Sales %
Change

Base
Business
Net Sales
%
Change(1)

 

Acquired
and
Combined
Net Sales
%
Change(2)

Wallboard

$

379,252

 

 

$

13,129

 

 

$

24,592

 

 

$

416,973

 

 

9.9

%

3.6

%

 

156.1

%

Suspended ceiling
systems

183,933

 

 

2,459

 

 

8,780

 

 

195,172

 

 

6.1

%

1.5

%

 

39.6

%

Metal framing

165,443

 

 

22,622

 

 

13,611

 

 

201,676

 

 

21.9

%

14.1

%

 

285.5

%

Complementary and
other products

257,252

 

 

7,678

 

 

(3,968

)

 

260,962

 

 

1.4

%

3.4

%

 

(13.6

)%

Net sales

$

985,880

 

 

$

45,888

 

 

$

43,015

 

 

$

1,074,783

 

 

9.0

%

5.0

%

 

59.9

%

Average daily net
sales(3)

$

7,702

 

 

$

418

 

 

$

343

 

 

$

8,463

 

 

9.9

%

5.8

%

 

61.1

%

(1) Represents base business net sales change as a percentage of base business net sales for the six months ended June 30, 2018.

(2) Represents acquired and combined net sales change as a percentage of acquired and combined net sales for the six months ended June 30, 2018.

(3) The number of business days for the six months ended June 30, 2019 and 2018 were 127 and 128, 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 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 interest expense, net, income tax expense (benefit), depreciation and amortization, unrealized gain 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, (gain) loss 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 unrealized gain 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, (gain) loss 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, 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 June 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
June 30,

 

Six Months Ended
June 30,

 

2019

 

2018

 

2019

 

2018

(dollars in thousands)

 

 

 

 

 

 

 

Net income (loss) from continuing operations

$

14,721

 

 

$

1,473

 

 

$

19,549

 

 

$

(791

)

Interest expense, net

8,402

 

 

15,315

 

 

16,987

 

 

30,413

 

Income tax expense (benefit)

5,433

 

 

618

 

 

7,478

 

 

(780

)

Depreciation and amortization

20,351

 

 

18,751

 

 

40,693

 

 

37,148

 

Unrealized gain on derivative financial instruments

 

 

(60

)

 

 

 

(134

)

IPO and public company readiness expenses

 

 

 

 

 

 

89

 

Stock-based compensation

1,110

 

 

636

 

 

1,939

 

 

878

 

Non-cash purchase accounting effects(a)

 

 

 

 

 

 

407

 

(Gain) loss on disposal of property and equipment

(258

)

 

263

 

 

(67

)

 

275

 

Transaction costs(b)

582

 

 

1,786

 

 

1,227

 

 

2,703

 

Adjusted EBITDA

$

50,341

 

 

$

38,782

 

 

$

87,806

 

 

$

70,208

 

Adjusted EBITDA margin(c)

9.0

%

 

7.4

%

 

8.2

%

 

7.1

%

(a) Adjusts for the effect of the purchase accounting step-up in the value of inventory to fair value recognized as a result of acquisitions.

(b) Represents costs related to our transactions, including fees to financial advisors, accountants, attorneys, other professionals as well as certain internal corporate development costs.

(c) 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):

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share and per share data)

 

 

 

 

 

 

 

Net income (loss) from continuing operations

$

14,721

 

 

$

1,473

 

 

$

19,549

 

 

$

(791

)

Unrealized gain on derivative financial instruments

 

 

(60

)

 

 

 

(134

)

IPO and public company readiness expenses

 

 

 

 

 

 

89

 

Stock-based compensation

1,110

 

 

636

 

 

1,939

 

 

878

 

Non-cash purchase accounting effects(a)

 

 

 

 

 

 

407

 

(Gain) loss on disposal of property and equipment

(258

)

 

263

 

 

(67

)

 

275

 

Transaction costs(b)

582

 

 

1,786

 

 

1,227

 

 

2,703

 

Tax effects(c)

(366

)

 

(671

)

 

(792

)

 

(1,078

)

Adjusted net income

$

15,789

 

 

$

3,427

 

 

$

21,856

 

 

$

2,349

 

 

 

 

 

 

 

 

 

Earnings (loss) per share data as reported:

 

 

 

 

 

 

 

Basic

$

0.34

 

 

$

0.03

 

 

$

0.45

 

 

$

(0.02

)

Diluted

$

0.34

 

 

$

0.03

 

 

$

0.45

 

 

$

(0.02

)

Earnings (loss) per share data as adjusted:

 

 

 

 

 

 

 

Basic

$

0.37

 

 

$

0.08

 

 

$

0.51

 

 

$

0.05

 

Diluted

$

0.37

 

 

$

0.08

 

 

$

0.51

 

 

$

0.05

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

42,987,915

 

 

42,893,498

 

 

42,960,124

 

 

42,886,867

 

Diluted

43,245,353

 

 

42,910,017

 

 

43,064,496

 

 

42,903,788

 

(a) Adjusts for the effect of the purchase accounting step-up in the value of inventory to fair value recognized as a result of acquisitions.

 

(b) 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.

 

(c) Represents the impact of corporate income taxes.

 

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

Source: Foundation Building Materials, Inc.