2019 Fourth Quarter
Highlights
- Earnings per share ("EPS") from continuing operations of $0.22
compared to $0.04 in the prior year period; adjusted EPS(1) of
$0.26 compared to $0.16 in the prior year period
- Net income from continuing operations of $9.6 million, an
increase of $7.6 million, compared to the prior year period
- Adjusted net income(1) of $11.3 million, an increase of $4.3
million, compared to the prior year period
- Completed three acquisitions and opened San Antonio greenfield
branch
2019 Full Year
Highlights
- EPS from continuing operations of $0.97 compared to a loss per
share of $0.85 in the prior year period; adjusted EPS(1) of $1.11
compared to $0.41 in the prior year period
- Net sales of $2.2 billion, an increase of $110.2 million
compared to the prior year period
- Base business net sales of $1.9 billion, an increase of 2.5%
compared to the prior year period
- Net income from continuing operations of $41.8 million, an
increase of $78.2 million compared to the prior year period
- Reduced net debt leverage ratio(1) to 2.91x at December 31,
2019 from 3.63x at December 31, 2018
- Adjusted net income(1) of $47.6 million, an increase of $30.0
million, compared to the prior year period
- Adjusted EBITDA(1) of $176.8 million, an increase of 14.0%
compared to the prior year period; adjusted EBITDA margin(1) of
8.2% compared to 7.6% in the prior year period
Foundation Building Materials, Inc. (NYSE: FBM), one of the
largest specialty building products distributors of wallboard,
suspended ceiling systems and metal framing in North America, today
reported fourth quarter and full year 2019 financial results and
provided its 2020 guidance.
“We are pleased to deliver strong fourth quarter and full-year
results. As our results demonstrate, 2019 was a year of focus and
execution, and we achieved our financial goals with solid sales
growth and profit margin expansion, which contributed to our
reduction of debt,” said Ruben Mendoza, President and CEO. "For
2020, our strategic priorities are to drive organic growth, further
reduce our debt, and continue to drive profit margin expansion that
will deliver long-term value to our shareholders.”
2019 Fourth Quarter
Results
Net sales for the three months ended December 31, 2019 were
$514.8 million compared to $516.2 million for the three months
ended December 31, 2018, representing a decrease of $1.3 million,
or 0.3%. Net sales from base business branches decreased $4.1
million compared to the prior year period, primarily due to ongoing
softness in Canadian markets and lower residential construction
volumes.
Gross profit for the three months ended December 31, 2019 was
$160.3 million compared to $155.6 million for the three months
ended December 31, 2018, representing an increase of $4.7 million,
or 3.0%. 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 December 31,
2019 was 31.1% compared to 30.1% for the three months ended
December 31, 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.
Selling, general and administrative ("SG&A") expenses for
the three months ended December 31, 2019 were $124.0 million
compared to $116.4 million for the three months ended December 31,
2018, representing an increase of $7.6 million. As a percentage of
net sales, SG&A expenses were 24.1% for the three months ended
December 31, 2019, compared to 22.6% for the three months ended
December 31, 2018. The increase in SG&A expenses as a
percentage of net sales was primarily due to lower net sales,
higher labor and related costs and the Company's continued
investment in various company-wide initiatives.
Net income from continuing operations for the three months ended
December 31, 2019 was $9.6 million, or $0.22 per share, an increase
of $7.6 million compared to a net income from continuing operations
of $1.9 million, or $0.04 per share, for the three months ended
December 31, 2018. Adjusted net income(1) for the three months
ended December 31, 2019 was $11.3 million, or $0.26 per share, an
increase of $4.3 million compared to adjusted net income(1) of $7.0
million, or $0.16 per share, for the three months ended December
31, 2018.
Adjusted EBITDA(1) was $39.0 million and adjusted EBITDA
margin(1) was 7.6% for the three months ended December 31, 2019,
compared to adjusted EBITDA(1) of $41.2 million and adjusted EBITDA
margin(1) of 8.0% for the three months ended December 31, 2018.
2019 Full Year Results
Net sales for the year ended December 31, 2019 were $2,154.5
million compared to $2,044.3 million for the year ended December
31, 2018, representing an increase of $110.2 million, or 5.4%.
There was one less business day in the current period as compared
to the prior period. Average daily net sales increased 5.8%
compared to the prior period. Net sales from base business branches
contributed $47.0 million of the net sales increase, and average
daily base business net sales increased by 2.9% over the prior
period. Net sales from acquired branches and existing branches that
were strategically combined contributed $63.3 million of the net
sales increase. The base business net sales increase was primarily
due to strong commercial activity and product expansion into new
geographic markets.
Gross profit for the year ended December 31, 2019 was $656.6
million compared to $590.4 million for the year ended December 31,
2018, representing an increase of $66.3 million, or 11.2%. Gross
profit increased due to an expansion of the Company’s gross margin,
an increase in sales from acquisitions and base business growth.
Gross margin for the year ended December 31, 2019 was 30.5%
compared to 28.9% for the year ended December 31, 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 year ended December 31, 2019 were
$487.9 million compared to $444.5 million for the year ended
December 31, 2018, representing an increase of $43.3 million, or
9.7%. As a percentage of net sales, SG&A expenses were 22.6%
for the year ended December 31, 2019, compared to 21.7% for the
year ended December 31, 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
labor and related costs.
Net income from continuing operations for the year ended
December 31, 2019 was $41.8 million, or $0.97 per share, an
increase of $78.2 million compared to a net loss from continuing
operations of $36.4 million, or $0.85 per share, for the year ended
December 31, 2018. Adjusted net income(1) for the year ended
December 31, 2019 was $47.6 million, or $1.11 per share, an
increase of $30.0 million compared to an adjusted net income(1) of
$17.5 million, or $0.41 per share, for the year ended December 31,
2018.
Adjusted EBITDA(1) was $176.8 million and adjusted EBITDA
margin(1) was 8.2% for the year ended December 31, 2019, compared
to adjusted EBITDA(1) of $155.2 million and adjusted EBITDA
margin(1) of 7.6% for the year ended December 31, 2018.
Acquisitions and Greenfield
Branches
In 2019, the Company completed five acquisitions with combined
annualized net sales in excess of $52.0 million. During 2019, the
Company opened four greenfield branches and expects to open four to
six more branches by the end of 2020, which includes our most
recent greenfield branch in Charleston, South Carolina. 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 the Company’s national scale, increase the
Company’s market share, generate economies of scale and support the
Company’s organic growth.
2020
Guidance(a)
Net sales (in billions)
$2.2 to $2.3
Gross margin
30.0% to 31.0%
Adjusted EBITDA(b) (in millions)
$180.0 to $200.0
Adjusted EBITDA margin(b)
8.2% to 8.6%
Adjusted EPS(b)
$1.15 to $1.45
Net debt leverage ratio(b)(c)
2.5x to 2.8x
(a) Guidance for 2020 includes anticipated
contributions from greenfield branches and excludes
acquisitions.
(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.
(c) For a calculation of our net debt
leverage ratio as of December 31, 2019, see Item 7, Management's
Discussion and Analysis of Financial Condition and Results of
Operations in our Annual Report on Form 10-K for the year ended
December 31, 2019.
Fourth Quarter and Full Year Earnings
Release and Conference Call
In conjunction with this release, Foundation Building Materials,
Inc. will host a conference call tomorrow, Tuesday, February 25,
2020, 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 "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, February 25, 2020,
and ending 11:59 PM Eastern Time on Tuesday, March 3, 2020. 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 13698136.
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 3,500 people and operates more than
175 branches across the U.S. 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
“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 EBITDA margin, adjusted net
income, adjusted EPS and net debt leverage ratio 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. For a calculation of our net debt leverage ratio as
of December 31, 2019, see Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations in our
Annual Report on Form 10-K for the year ended December 31,
2019.
- Financial Tables Follow -
FOUNDATION BUILDING MATERIALS,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except share
and per share data)
Three Months Ended December
31, (Unaudited)
Year Ended December
31,
2019
2018
2019
2018
Net sales
$
514,841
$
516,159
$
2,154,530
$
2,044,312
Cost of goods sold
354,524
360,541
1,497,921
1,453,953
Gross profit
160,317
155,618
656,609
590,359
Operating expenses:
Selling, general and administrative
expenses
123,993
116,438
487,865
444,527
Depreciation and amortization
19,533
20,500
80,444
77,419
Total operating expenses
143,526
136,938
568,309
521,946
Income from operations
16,791
18,680
88,300
68,413
Loss on extinguishment of debt
—
—
—
(58,475
)
Interest expense
(7,773
)
(10,255
)
(33,788
)
(53,283
)
Other income, net
447
1,171
443
1,298
Income (loss) before income taxes
9,465
9,596
54,955
(42,047
)
Income tax (benefit) expense
(105
)
7,671
13,127
(5,628
)
Income (loss) from continuing
operations
9,570
1,925
41,828
(36,419
)
Income from discontinued operations, net
of tax
—
2,612
—
10,523
(Loss) gain on sale of discontinued
operations, net of tax
(188
)
13,713
(1,589
)
13,713
Net income (loss)
$
9,382
$
18,250
$
40,239
$
(12,183
)
Earnings (loss) per share data:
Earnings (loss) from continuing operations
per share - basic
$
0.22
$
0.04
$
0.97
$
(0.85
)
Earnings (loss) from continuing operations
per share - diluted
$
0.22
$
0.04
$
0.97
$
(0.85
)
Earnings (loss) from discontinued
operations per share - basic
$
—
$
0.39
$
(0.03
)
$
0.57
Earnings (loss) from discontinued
operations per share - diluted
$
(0.01
)
$
0.39
$
(0.04
)
$
0.57
Earnings (loss) per share - basic
$
0.22
$
0.43
$
0.94
$
(0.28
)
Earnings (loss) per share - diluted
$
0.21
$
0.43
$
0.93
$
(0.28
)
Weighted average shares outstanding:
Basic
42,990,542
42,903,161
42,975,026
42,892,879
Diluted
43,668,064
42,912,707
43,307,528
42,915,028
FOUNDATION BUILDING MATERIALS,
INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
data)
December 31, 2019
December 31, 2018
Current assets:
Cash and cash equivalents
$
17,766
$
15,299
Accounts receivable—net of allowance for
doubtful accounts of $3,169 and $3,239, respectively
262,757
276,043
Other receivables
59,104
57,472
Inventories
178,624
165,989
Prepaid expenses and other current
assets
7,965
9,053
Total current assets
526,216
523,856
Property and equipment, net
150,188
151,641
Right-of-use assets, net
120,562
—
Intangible assets, net
113,861
145,876
Goodwill
495,724
484,941
Other assets
5,206
10,393
Total assets
$
1,411,757
$
1,316,707
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
145,226
$
137,773
Accrued payroll and employee benefits
31,410
28,830
Accrued taxes
8,780
11,867
Current portion of tax receivable
agreement
27,850
16,667
Current portion of term loan
4,500
4,500
Current portion of lease liabilities
30,307
—
Other current liabilities
18,557
19,979
Total current liabilities
266,630
219,616
Asset-based revolving credit facility
89,000
146,000
Long-term portion of term loan, net
434,633
437,999
Tax receivable agreement
89,533
117,948
Deferred income taxes, net
18,972
20,678
Long-term portion of lease liabilities
97,145
—
Other liabilities
7,679
8,117
Total liabilities
1,003,592
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; 42,991,016 and 42,907,326 shares issued,
respectively
13
13
Additional paid-in capital
336,362
332,330
Retained earnings
74,254
34,187
Accumulated other comprehensive loss
(2,464
)
(181
)
Total stockholders' equity
408,165
366,349
Total liabilities and stockholders'
equity
$
1,411,757
$
1,316,707
FOUNDATION BUILDING MATERIALS,
INC.
STATEMENTS OF CASH
FLOWS
(in thousands)
Year Ended December
31,
2019
2018
Cash flows from operating activities:
Net income (loss)
$
40,239
$
(12,183
)
Less: (loss) gain on sale of discontinued
operations
(1,589
)
13,713
Less: net income from discontinued
operations
—
10,523
Net income (loss) from continuing
operations
41,828
(36,419
)
Adjustments to reconcile net income (loss)
from continuing operations to net cash provided by operating
activities of continuing operations:
Depreciation
33,708
33,437
Amortization of intangible assets
46,736
43,982
Amortization of debt issuance costs and
debt discount
2,156
7,370
Inventory fair value purchase accounting
adjustment
285
1,057
Loss on extinguishment of debt
—
58,475
Provision for doubtful accounts
2,390
1,810
Stock-based compensation
4,187
2,175
Reduction in tax receivable agreement
(242
)
(1,189
)
Unrealized gain on derivative instruments,
net
—
(265
)
Loss on disposal of property and
equipment
584
552
Right-of-use assets non-cash expense
27,801
—
Deferred income taxes
(1,038
)
221
Change in assets and liabilities, net of
effects of acquisitions:
Accounts receivable
20,272
(23,326
)
Other receivables
1,151
(1,721
)
Inventories
(8,226
)
(8,834
)
Prepaid expenses and other current
assets
1,168
2,708
Other assets
(167
)
(1,320
)
Accounts payable
2,477
(1,951
)
Accrued payroll and employee benefits
2,449
11,105
Accrued taxes
(3,164
)
4,893
Operating lease liability
(26,940
)
—
Other liabilities
(1,697
)
(16,911
)
Net cash provided by operating activities
from continuing operations
145,718
75,849
Cash flows from investing activities from
continuing operations:
Purchases of property and equipment
(34,402
)
(34,892
)
Proceeds from termination of net
investment hedge
3,313
—
Payment of net working capital adjustments
related to acquisitions
—
(40
)
Proceeds from net working capital
adjustments related to acquisitions
464
154
Proceeds from the disposal of fixed
assets
3,441
2,315
Acquisitions, net of cash acquired
(33,751
)
(93,477
)
Net cash used in investing activities from
continuing operations
(60,935
)
(125,940
)
Cash flows from financing activities from
continuing operations:
Proceeds from asset-based revolving credit
facility
531,993
897,911
Repayments of asset-based revolving credit
facility
(588,993
)
(799,272
)
Principal payments for term loan
(4,500
)
—
Term loan proceeds
—
450,000
Principal payments on long-term debt
—
(575,000
)
Prepayment premium on bond
—
(23,872
)
Debt issuance costs and deferred finance
costs
—
(7,935
)
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
(2,674
)
(2,771
)
Net cash used in financing activities from
continuing operations
(80,996
)
(61,000
)
Net cash used in operating activities from
discontinued operations
—
(6,614
)
Net cash (used in) provided by investing
activities from discontinued operations
(1,589
)
121,568
Net cash used in financing activities from
discontinued operations
—
(162
)
Net cash (used in) provided by
discontinued operations
(1,589
)
114,792
Effect of exchange rate changes on
cash
269
(503
)
Net increase in cash
2,467
3,198
Cash and cash equivalents at beginning of
period
15,299
12,101
Cash and cash equivalents at end of
period
$
17,766
$
15,299
Supplemental disclosures of cash flow
information:
Cash paid for income taxes
$
13,190
$
2,507
Cash paid for interest
$
31,749
$
61,199
Supplemental disclosures of non-cash
investing and financing activities:
Change in fair value of derivatives, net
of tax
$
5,443
$
4,616
Goodwill adjustment for purchase price
allocation
$
466
$
202
FOUNDATION BUILDING MATERIALS,
INC.
NET SALES BY MAJOR PRODUCT
LINE, GROSS PROFIT AND GROSS MARGIN
FOR THE THREE MONTHS ENDED
DECEMBER 31, 2019 AND 2018 (Unaudited) AND
YEARS ENDED DECEMBER 31, 2019
AND 2018 (Unaudited)
(dollars in thousands)
Three Months Ended December
31,
Change
2019
2018
$
%
Wallboard
$
193,500
37.6
%
$
198,014
38.4
%
$
(4,514
)
(2.3
)%
Suspended ceiling systems
99,629
19.4
%
91,453
17.7
%
8,176
8.9
%
Metal framing
92,137
17.8
%
97,474
18.9
%
(5,337
)
(5.5
)%
Complementary and other products
129,575
25.2
%
129,218
25.0
%
357
0.3
%
Total net sales
$
514,841
100.0
%
$
516,159
100.0
%
$
(1,318
)
(0.3
)%
Total gross profit
$
160,317
$
155,618
$
4,699
3.0
%
Total gross margin
31.1
%
30.1
%
1.0
%
Year Ended December
31,
Change
2019
2018
$
%
Wallboard
$
817,799
38.0
%
$
781,257
38.2
%
$
36,542
4.7
%
Suspended ceiling systems
413,674
19.2
%
379,809
18.6
%
33,865
8.9
%
Metal framing
392,630
18.2
%
361,493
17.7
%
31,137
8.6
%
Complementary and other products
530,427
24.6
%
521,753
25.5
%
8,674
1.7
%
Total net sales
$
2,154,530
100.0
%
$
2,044,312
100.0
%
$
110,218
5.4
%
Total gross profit
$
656,609
$
590,359
$
66,250
11.2
%
Total gross margin
30.5
%
28.9
%
1.6
%
FOUNDATION BUILDING MATERIALS,
INC.
BASE BUSINESS AND ACQUIRED AND
COMBINED NET SALES
FOR THE THREE MONTHS ENDED
DECEMBER 31, 2019 AND 2018 (Unaudited) AND
YEARS ENDED DECEMBER 31, 2019
AND 2018 (Unaudited)
(dollars in thousands)
Three Months Ended
December 31,
Change
2019
2018
$
%
Base business (1)
$
455,567
$
459,713
$
(4,146
)
(0.9
)%
Acquired and combined (2)
59,274
56,446
2,828
5.0
%
Net sales
$
514,841
$
516,159
$
(1,318
)
(0.3
)%
(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.
Year Ended December
31,
Change
2019
2018
$
%
Base business (1)
$
1,916,308
$
1,869,345
$
46,963
2.5
%
Acquired and combined (2)
238,222
174,967
63,255
36.2
%
Net sales
$
2,154,530
$
2,044,312
$
110,218
5.4
%
(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 MONTHS ENDED
DECEMBER 31, 2019 AND 2018 (Unaudited) AND
YEARS ENDED DECEMBER 31, 2019
AND 2018 (Unaudited)
(dollars in thousands)
Three Months Ended December
31, 2018
Base Business Net Sales
Change
Acquired and Combined Net
Sales Change
Three Months Ended December
31, 2019
Total Net Sales %
Change
Base Business Net Sales %
Change(1)
Acquired and Combined Net
Sales % Change(2)
Wallboard
$
198,014
$
(5,149
)
$
635
$
193,500
(2.3
)%
(2.9
)%
3.3
%
Suspended ceiling systems
91,453
5,147
3,029
99,629
8.9
%
6.7
%
21.0
%
Metal framing
97,474
(4,963
)
(374
)
92,137
(5.5
)%
(5.6
)%
(4.2
)%
Complementary and other products
129,218
819
(462
)
129,575
0.3
%
0.7
%
(3.3
)%
Net sales
$
516,159
$
(4,146
)
$
2,828
$
514,841
(0.3
)%
(0.9
)%
5.0
%
Average daily net sales(3)
$
8,325
$
(67
)
$
46
$
8,304
(0.3
)%
(0.9
)%
5.0
%
(1) Represents base business net sales
change as a percentage of base business net sales for the three
months ended December 31, 2018.
(2) Represents acquired and combined net
sales change as a percentage of acquired and combined net sales for
the three months ended December 31, 2018.
(3) The number of business days for the
three months ended December 31, 2019 and 2018 were 62 and 62,
respectively.
Year Ended December 31,
2018
Base Business Net Sales
Change
Acquired and Combined Net
Sales Change
Year Ended December 31,
2019
Total Net Sales %
Change
Base Business Net Sales %
Change(1)
Acquired and Combined Net
Sales % Change(2)
Wallboard
$
781,257
$
4,107
$
32,435
$
817,799
4.7
%
0.6
%
68.5
%
Suspended ceiling systems
379,809
17,260
16,605
413,674
8.9
%
5.3
%
31.1
%
Metal framing
361,493
14,627
16,510
392,630
8.6
%
4.3
%
82.1
%
Complementary and other products
521,753
10,969
(2,295
)
530,427
1.7
%
2.3
%
(4.2
)%
Net sales
$
2,044,312
$
46,963
$
63,255
$
2,154,530
5.4
%
2.5
%
36.2
%
Average daily net sales(3)
$
8,080
$
216
$
254
$
8,550
5.8
%
2.9
%
36.7
%
(1) Represents base business net sales
change as a percentage of base business net sales for the year
ended December 31, 2018.
(2) Represents acquired and combined net
sales change as a percentage of acquired and combined net sales for
the year ended December 31, 2018.
(3) The number of business days for the
years ended December 31, 2019 and 2018, were 252 and 253,
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
interest expense, net, loss on extinguishment of debt, income tax
(benefit) expense, depreciation and amortization, unrealized gain
on derivative financial instruments, offering and public company
readiness expenses, stock-based compensation, and other
non-recurring adjustments such as loss (gain) on the disposal of
property and equipment, transaction costs and non-cash decrease in
tax receivable agreement, or TRA, liability. 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 gain on derivative financial instruments, offering and
public company readiness expenses, stock-based compensation, and
other non-recurring adjustments such as loss (gain) on the disposal
of property and equipment, transaction costs and non-cash decrease
in TRA liability. 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 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations in our Annual Report on Form
10-K for the year ended December 31, 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 December
31,
Year Ended December
31,
2019
2018
2019
2018
(dollars in thousands)
Net income (loss) from continuing
operations
$
9,570
$
1,925
$
41,828
$
(36,419
)
Interest expense, net
7,696
10,244
33,695
53,201
Loss on extinguishment of debt
—
—
—
58,475
Income tax (benefit) expense
(105
)
7,671
13,127
(5,628
)
Depreciation and amortization
19,533
20,500
80,444
77,419
Unrealized gain on derivative financial
instruments
—
(209
)
—
(265
)
Offering and public company readiness
expenses(a)
87
—
465
89
Stock-based compensation
1,131
788
4,187
2,299
Loss (gain) on disposal of property and
equipment
638
(61
)
584
552
Transaction costs(b)
704
1,553
2,750
6,636
Non-cash decrease in TRA liability
(242
)
(1,189
)
(242
)
(1,189
)
Adjusted EBITDA
$
39,012
$
41,222
$
176,838
$
155,170
Adjusted EBITDA margin(c)
7.6
%
8.0
%
8.2
%
7.6
%
(a)
Represents costs related to our initial public offering, secondary
offering, and public company readiness expenses.
(b)
Represents costs related to our transactions, including fees to
financial advisors, accountants, attorneys, and other
professionals, as well as certain internal corporate development
costs. The costs also include non-cash purchase accounting effects
to adjust for the effect of the purchase accounting step-up in the
value of inventory to fair value recognized as a result of
acquisitions.
(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):
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
(in thousands, except share and per share
data)
Net income (loss) from continuing
operations
$
9,570
$
1,925
$
41,828
$
(36,419
)
Loss on extinguishment of debt
—
—
—
58,475
Unrealized gain on derivative financial
instruments
—
(209
)
—
(265
)
Offering and public company readiness
expenses(a)
87
—
465
89
Stock-based compensation
1,131
788
4,187
2,299
Loss (gain) on disposal of property and
equipment
638
(61
)
584
552
Transaction costs(b)
704
1,553
2,750
6,636
Non-cash decrease in TRA liability
(242
)
(1,189
)
(242
)
(1,189
)
Tax effects(c)
(609
)
4,162
(1,995
)
(12,635
)
Adjusted net income
$
11,279
$
6,969
$
47,577
$
17,543
Earnings (loss) per share data as
reported:
Basic
$
0.22
$
0.04
$
0.97
$
(0.85
)
Diluted
$
0.22
$
0.04
$
0.97
$
(0.85
)
Earnings per share data as adjusted:
Basic
$
0.26
$
0.16
$
1.11
$
0.41
Diluted
$
0.26
$
0.16
$
1.10
$
0.41
Weighted average shares outstanding:
Basic
42,990,542
42,903,161
42,975,026
42,892,879
Diluted
43,668,064
42,912,707
43,307,528
42,915,028
(a)
Represents costs related to our initial public offering, secondary
offering, and public company readiness expenses.
(b)
Represents costs related to our transactions, including fees to
financial advisors, accountants, attorneys, and other
professionals, as well as certain internal corporate development
costs. The costs also include non-cash purchase accounting effects
to adjust 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 the impact of corporate income taxes.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200224005935/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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