IRVING, Texas, May 15, 2017 (GLOBE NEWSWIRE) --
Forterra, Inc. ("Forterra" or "the Company") (NASDAQ:FRTA), a
leading manufacturer of water and drainage infrastructure pipe and
products in the United States and Eastern Canada, today announced
results for the quarter ended March 31, 2017.
First Quarter 2017
Results
First quarter 2017 net sales increased to $338.3
million, compared to $187.0 million in the prior year quarter. This
sales growth is attributable to the impact of acquisitions that
increased net sales by $163.0 million. Drainage Pipe & Products
("Drainage") net sales improved to $160.4 million, compared to
$144.3 million in the prior year quarter, due to $20.1 million of
net sales from acquisitions. The decline in net sales excluding
acquisitions was due to a more typical winter in Q1 2017 and the
impact of heavy rain and flooding in California compared to
unseasonably warm weather in the northern regions in Q1 2016. Water
Pipe & Products ("Water") net sales more than tripled to $177.8
million, compared to $40.5 million in the prior year quarter, due
to net sales from our acquisition of U.S. Pipe of $142.9 million.
Net sales excluding acquisitions was impacted by lower average
sales prices as well as customer and weather related project delays
in the concrete and steel pressure pipe portion of the Water
business.
Drainage gross profit was $17.4 million compared
to $30.5 million in the prior year quarter. Water gross
profit increased to $22.2 million from $6.0 million. The key
factors affecting gross profit for the two segments during the
quarter are included in the discussion of EBITDA1 and Adjusted
EBITDA1.
First quarter 2017 had a consolidated net loss of
$22.5 million, or $(0.35) loss per share, compared to a net loss of
$3.9 million in the prior year quarter, due to the impact of lower
gross profit as a percentage of sales and higher SG&A costs as
a percentage of sales. Adjusted net loss1 was $19.7
million compared to Adjusted net income1 of $1.0 million in
the prior year quarter.
EBITDA2 and Adjusted EBITDA1 for the
fourth quarter were $7.4 million and $11.9 million, respectively,
compared to $15.9 million and $20.9 million, respectively, in the
prior year quarter. The decline in Adjusted EBITDA1 was
attributable to lower adjusted EBITDA from the Drainage segment,
partially offset by higher acquisition-driven Adjusted
EBITDA1 from the Water segment, and higher SG&A as a
percentage of sales. The increase in SG&A was due primarily to
higher professional fees associated with the integration of
acquisitions and the cost savings initiatives announced by the
Company on its fourth quarter 2016 results call.
Drainage Pipe & Products EBITDA2 and
Adjusted EBITDA1 were $11.4 million and $12.8 million,
respectively, compared to $27.9 million and $29.1 million in the
prior year quarter, respectively.
The average sales prices of products in the
Drainage segment declined due primarily to increased competition in
the Houston, Texas market. Net sales and gross margin declined due
to heavy rainfall in California combined with colder weather in the
Northern and Midwest regions as compared to an unusually warm first
quarter of 2016. Cost of goods sold increased due to higher labor,
freight and raw materials costs and due to the start-up of a new
precast plant that had lower cost absorption during the ramp in
operations of the plant. The first quarter 2016 results do not
include rent expense of approximately $3.8 million per quarter
associated with the sale-leaseback transaction that closed in April
2016.
Water Pipe & Products EBITDA2 and
Adjusted EBITDA1 increased to $17.1 million and $17.8 million,
respectively, compared to $4.2 million for both metrics in the
prior year quarter. The first quarter 2017 Water segment results
included the benefit of the transformative April 2016 acquisition
of U.S. Pipe. The ductile iron pipe portion of the Water segment
was impacted by higher scrap prices that reduced gross margin for
the quarter. The concrete and steel pressure pipe portion of the
Water segment was also impacted by project delays that caused a
decline in net sales and lower average selling prices.
Balance Sheet and
Liquidity
At March 31, 2017, the Company had cash of $27.5 million
and borrowings under its credit agreements of $1.26 billion.
Availability under the Company's asset based revolving credit
facility as of March 31, 2017 was $68.1 million.
On May 1, 2017, the Company entered into an
Amendment to its $1.05 billion Senior Lien Term Loan Credit
Agreement that resulted in a repricing of the facility from LIBOR +
350 basis points to LIBOR + 300 basis points and the incurrence of
an incremental $200 million term loan with terms matching the
existing credit agreement. The majority of the net proceeds
from the term loan upsize of approximately $197 million were used
to pay down the revolving credit facility.
Long-term Margin Enhancement
Plan Reaffirmed
The Company continued work on its previously announced initiatives
that are expected to drive a four hundred basis point increase in
income from operations as a percentage of sales by 2019 as compared
to full year 2016 results. The Company invested in the
retention of strategic consultants to assist with the development
and implementation of an efficient plan to achieve margin expansion
and cost reduction initiatives, including a national procurement
plan, freight optimization and SG&A cost reductions. These
collective initiatives are expected to contribute towards
Forterra's ability to achieve its full year 2019 target of a 400
basis point expansion in income from operations as a percentage of
sales as compared to full year 2016. These initiatives are
expected to require significant investment, including professional
fees, most of which the Company believes are being incurred in the
first half of 2017. The Company expects some of the benefits
to begin to contribute to improved performance starting in the
second half of 2017.
Second Quarter 2017
Financial Outlook
While the Company does not anticipate providing an annual or
quarterly guidance going forward, given the significant change to
its expectations for the first half of 2017, additional perspective
is being furnished at this time. The Company expects that net
income for the second quarter of 2017 will range from $3.0 million
to $10.0 million and adjusted EBITDA will range from $50.0 million
to $60.0 million. The range reflects market factors that impacted
the business in first quarter 2017 that are expected to continue to
weigh on second quarter 2017. These include project delays in the
concrete and steel pressure pipe product group and ongoing
competitive pressures in Houston. The Company also expects to
incur higher costs of raw materials, freight and labor that will
not be offset by recently implemented price increases until the
second half of 2017. Finally, the Company expects costs associated
with its growth and margin enhancing initiatives, ongoing
integration activities and Sarbanes-Oxley Act compliance to result
in lower year over year results in the first half of 2017. The
Company does not expect these factors to materially impact results
in the second half of 2017 as the Company benefits from announced
price increases.
CEO
Commentary
Forterra CEO Jeff Bradley commented, "Our financial performance is
disappointing this quarter, but we do not believe it is
representative of the long-term strength of our business and our
competitive position in the industry. Our earnings results
for the quarter were impacted by a number of factors that
unfortunately will persist through the second quarter of 2017. I
continue to believe that the second half of the year will be in
line with our previous expectations reflecting the benefit of
announced price increases and sales that shifted from the first
half of the year."
Mr. Bradley continued, "Following a year of
significant acquisitions in 2016 and early 2017 that helped us to
build the foundation of our business, we are focused on integration
and execution of our initiatives that we expect will drive
efficiency and transform the business. While this will require
additional investment and time, we expect that the effort should
result in sustained top-line growth, margin expansion and cost
savings. We are fully committed to these initiatives."
Conference Call and Webcast
Information
Forterra will host a conference call to review first quarter 2017
results on May 15, 2017 at 10:00 a.m. Eastern Time (9:00 a.m.
Central). The dial-in number for the call is 574-990-1396 or toll
free 844-498-0572. The participant passcode is 13431861. Please
dial in at least five minutes prior to the call to register. The
call may also be accessed via a webcast available on the Investors
section of the Company's website at http://forterrabp.com. A
replay of the conference call and archive of the webcast will be
available after the call for 30 days under the Investor section of
the Company's website.
About
Forterra
Forterra is a leading manufacturer of water and drainage pipe and
products in the U.S. and Eastern Canada for a variety of
water-related infrastructure applications, including water
transmission, distribution, and drainage. Based in Irving, Texas,
Forterra's product breadth and significant scale help make it a
one- stop shop for water related pipe and products, and a preferred
supplier to a wide variety of customers, including contractors,
distributors and municipalities. For more information on Forterra,
visit http://forterrabp.com.
Forward-Looking
Statements
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements may be identified by the use of words
such as "anticipate", "believe", "expect", "estimate", "plan",
"outlook", and "project" and other similar expressions that predict
or indicate future events or trends or that are not statements of
historical matters. Forward-looking statements should not be read
as a guarantee of future performance or results, and will not
necessarily be accurate indications of the times at, or by, which
such performance or results will be achieved. Forward- looking
statements are based on historical information available at the
time the statements are made and are based on management's
reasonable belief or expectations with respect to future events,
and are subject to risks and uncertainties, many of which are
beyond the Company's control, that could cause actual performance
or results to differ materially from the belief or expectations
expressed in or suggested by the forward-looking statements.
Forward-looking statements speak only as of the date on which they
are made and the Company undertakes no obligation to update any
forward-looking statement to reflect future events, developments or
otherwise, except as may be required by applicable law. Investors
are referred to the Company's filings with the Securities and
Exchange Commission, including its Annual Report on Form 10-K, 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 net income, adjusted EBITDA and
adjusted EBITDA margin are non-GAAP measures. See the financial
schedules at the end of this press release for how we define these
measures, a discussion of why we believe they are useful and
reconciliation thereof to the most directly comparable GAAP
financial measures.
2 For purposes of evaluating segment profit, the Company's
chief operating decision maker reviews EBITDA as a basis for making
the decisions to allocate resources and assess performance.
Condensed Consolidated Statements of
Operations
(in thousands, except share data and per share
data) |
|
|
|
Three months ended |
|
March 31, |
|
2017 |
|
2016 |
|
unaudited |
|
unaudited |
Net
sales |
$ |
338,302 |
|
|
$ |
186,996 |
|
Cost of
goods sold |
299,335 |
|
|
151,305 |
|
Gross
profit |
38,967 |
|
|
35,691 |
|
Selling, general &
administrative expenses |
(65,301 |
) |
|
(33,661 |
) |
Impairment and exit
charges |
(435 |
) |
|
- |
|
Earnings from equity method
investee |
3,171 |
|
|
1,303 |
|
Gain (loss) on sale of
PP&E |
(774 |
) |
|
2 |
|
Other operating income |
2,007 |
|
|
1,226 |
|
|
(61,332 |
) |
|
(31,130 |
) |
Income
(loss) from operations |
(22,365 |
) |
|
4,561 |
|
|
|
|
|
Other
income (expenses) |
|
|
|
Interest expense |
(13,542 |
) |
|
(17,290 |
) |
Loss
before income taxes |
(35,907 |
) |
|
(12,729 |
) |
Income tax benefit |
13,364 |
|
|
10,567 |
|
Loss
from continuing operations |
(22,543 |
) |
|
(2,162 |
) |
|
|
|
|
Discontinued operations, net of tax |
$ |
- |
|
|
$ |
(1,774 |
) |
|
|
|
|
Net
loss |
$ |
(22,543 |
) |
|
$ |
(3,936 |
) |
Condensed Consolidated Balance Sheets
(in thousands, except share data) |
|
|
|
|
|
March 31,
2017 |
|
December 31,
2016 |
ASSETS |
|
|
|
Current
assets |
|
|
|
Cash and cash equivalents |
$ |
27,540 |
|
|
$ |
40,024 |
|
Receivables, net |
242,478 |
|
|
201,481 |
|
Inventories |
321,709 |
|
|
279,502 |
|
Prepaid expenses |
7,924 |
|
|
6,417 |
|
Other current assets |
11,215 |
|
|
5,179 |
|
Total current assets |
610,866 |
|
|
532,603 |
|
Non-current assets |
|
|
|
Property, plant and equipment,
net |
461,932 |
|
|
452,914 |
|
Goodwill |
507,036 |
|
|
491,447 |
|
Intangible assets, net |
272,109 |
|
|
281,598 |
|
Investment in equity method
investee |
56,157 |
|
|
55,236 |
|
Other long-term assets |
12,909 |
|
|
10,988 |
|
Total assets |
$ |
1,921,009 |
|
|
$ |
1,824,786 |
|
LIABILITIES AND EQUITY |
|
|
|
Current
liabilities |
|
|
|
Trade payables |
$ |
152,761 |
|
|
$ |
134,059 |
|
Accrued liabilities |
62,369 |
|
|
82,165 |
|
Deferred revenue |
21,610 |
|
|
20,797 |
|
Current portion of long-term
debt |
10,500 |
|
|
10,500 |
|
Total current liabilities |
247,240 |
|
|
247,521 |
|
Non-current liabilities |
|
|
|
Senior Term Loan |
989,631 |
|
|
990,483 |
|
Revolving credit facility |
215,268 |
|
|
95,064 |
|
Deferred tax liabilities |
95,731 |
|
|
100,550 |
|
Deferred gain on
sale-leaseback |
77,559 |
|
|
78,215 |
|
Other long-term
liabilities |
27,486 |
|
|
23,253 |
|
Long-term TRA Payable |
156,783 |
|
|
156,783 |
|
Total liabilities |
1,809,698 |
|
|
1,691,869 |
|
Commitments and Contingencies
(Note 15) |
|
|
|
Equity |
|
|
|
Common stock, $0.001 par
value, 64,174,233 and 63,924,124 shares issued and outstanding and
190,000,000 shares authorized |
18 |
|
|
18 |
|
Additional
paid-in-capital |
228,719 |
|
|
228,316 |
|
Accumulated other
comprehensive loss |
(4,491 |
) |
|
(5,025 |
) |
Retained deficit |
(112,935 |
) |
|
(90,392 |
) |
Total shareholders'
equity |
111,311 |
|
|
132,917 |
|
Total liabilities and
shareholders' equity |
$ |
1,921,009 |
|
|
$ |
1,824,786 |
|
Condensed Consolidated Statements of Cash
Flows
(in thousands) |
|
|
|
|
|
Three months ended |
|
|
March 31, |
|
|
2017 |
|
2016 |
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
|
Net loss |
|
$ |
(22,543 |
) |
|
$ |
(3,936 |
) |
Adjustments
to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation &
amortization expense |
|
29,804 |
|
|
13,759 |
|
Loss (gain) on disposal of
property, plant and equipment |
|
774 |
|
|
(2 |
) |
Amortization of debt discount
and issuance costs |
|
1,976 |
|
|
1,835 |
|
Earnings from equity method
investee |
|
(3,171 |
) |
|
(1,303 |
) |
Distributions from equity
method investee |
|
2,250 |
|
|
1,500 |
|
Unrealized foreign currency
gains, net |
|
(2,008 |
) |
|
(2,782 |
) |
Provision (recoveries) for
doubtful accounts |
|
1,677 |
|
|
83 |
|
Deferred taxes |
|
(4,514 |
) |
|
(11,189 |
) |
Deferred rent |
|
589 |
|
|
(28 |
) |
Other non-cash items |
|
458 |
|
|
- |
|
Change in
assets and liabilities: |
|
|
|
|
Receivables, net |
|
(42,066 |
) |
|
(19,102 |
) |
Inventories |
|
(38,305 |
) |
|
(5,756 |
) |
Related party receivables |
|
(5,972 |
) |
|
- |
|
Other assets |
|
(1,354 |
) |
|
(3,020 |
) |
Accounts payable and accrued
liabilities |
|
2,408 |
|
|
(4,432 |
) |
Other assets &
liabilities |
|
2,214 |
|
|
(1,461 |
) |
NET CASH USED IN OPERATING
ACTIVITIES |
|
(77,783 |
) |
|
(35,834 |
) |
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES |
|
|
|
|
Purchase of property, plant
and equipment |
|
(17,077 |
) |
|
(6,750 |
) |
Assets and liabilities
acquired, business combinations, net |
|
(35,346 |
) |
|
(66,751 |
) |
NET CASH USED IN INVESTING
ACTIVITIES |
|
(52,423 |
) |
|
(73,501 |
) |
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
|
Payments on Senior and Junior
Term Loans |
|
(2,625 |
) |
|
(2,191 |
) |
Proceeds from Revolver |
|
134,000 |
|
|
80,000 |
|
Payments on Revolver |
|
(14,000 |
) |
|
(6,566 |
) |
Proceeds from settlement of
derivatives |
|
- |
|
|
6,566 |
|
Other financing
activities |
|
(7 |
) |
|
- |
|
NET CASH PROVIDED BY FINANCING
ACTIVITIES |
|
117,368 |
|
|
77,809 |
|
Effect of exchange rate
changes on cash |
|
354 |
|
|
(261 |
) |
Net change in cash and cash
equivalents |
|
(12,484 |
) |
|
(31,787 |
) |
Cash and cash equivalents,
beginning of period |
|
40,024 |
|
|
43,590 |
|
Cash and cash equivalents, end
of period |
|
$ |
27,540 |
|
|
$ |
11,803 |
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES: |
Cash interest paid |
|
12,738 |
|
|
8,231 |
|
Income taxes paid |
|
925 |
|
|
- |
|
SUPPLEMENTAL NON-CASH
INVESTING AND FINANCING DISCLOSURES: |
|
|
|
|
|
|
|
|
Fair value changes of
derivatives recorded in OCI, net of tax |
|
(496 |
) |
|
(1,209 |
) |
Additional Statistics
(unaudited)
Reconciliation of Non-GAAP Measures
In addition to our results
calculated under generally accepted accounting principles in the
United States ("GAAP"), in this earnings release we also present
adjusted net income, adjusted EBITDA and adjusted EBITDA margin.
Adjusted net income, adjusted EBITDA and adjusted EBITDA margin are
non-GAAP measures and have been presented in this earnings release
as supplemental measures of financial performance that are not
required by, or presented in accordance with GAAP. We calculate
adjusted net income as net income (loss) after adjusting for
impairment and restructuring charges, (gains)/losses on the sale of
property, plant and equipment and certain other income and
expenses, such as transaction costs, carve-out costs related to our
separation from HeidelbergCement and costs associated with disposed
sites and including normalized income tax expense for the
adjustments to net income (loss). We calculate adjusted
EBITDA as net income (loss) before interest expense, income tax
benefit (expense), depreciation and amortization and before
impairment and restructuring charges, (gains)/losses on the sale of
property, plant and equipment and certain other income and
expenses, such as transaction costs, carve-out costs related to our
separation from HeidelbergCement and costs associated with disposed
sites. Adjusted EBITDA margin represents adjusted EBITDA as a
percentage of net sales.
Adjusted net income, adjusted
EBITDA and adjusted EBITDA margin are presented in this earnings
release because they are important metrics used by management as
one of the means by which it assesses our financial performance.
Adjusted net income, adjusted EBITDA and adjusted EBITDA margin are
also frequently used by analysts, investors and other interested
parties to evaluate companies in our industry. We use
adjusted net income, adjusted EBITDA and adjusted
EBITDA margin as supplements to GAAP measures of performance to
evaluate the effectiveness of our business strategies, to make
budgeting decisions, to allocate resources and to compare our
performance relative to our peers. Adjusted net income, adjusted
EBITDA and adjusted EBITDA margin are also important measures for
assessing our operating results and evaluating each operating
segment's performance on a consistent basis, by excluding the
impacts of depreciation, amortization, income tax expense, interest
expense and other items not indicative of ongoing operating
performance. Additionally, these measures, when used in conjunction
with related GAAP financial measures, provide investors with
additional financial analytical framework which management uses, in
addition to historical operating results, as the basis for
financial, operational and planning decisions and present
measurements that third parties have indicated are useful in
assessing the Company and its results of operations.
Adjusted net income, adjusted
EBITDA and adjusted EBITDA margin have certain limitations.
Adjusted net income and adjusted EBITDA should not be considered as
alternatives to consolidated net income, and in the case of our
segment results, adjusted EBITDA should not be considered an
alternative to EBITDA, which the CODM reviews for purposes of
evaluating segment profit, or in the case of any of the non-GAAP
measures, as a substitute for any other measure of financial
performance calculated in accordance with GAAP. Similarly, adjusted
EBITDA margin should not be considered as an alternative to gross
margin or any other margin calculated in accordance with GAAP.
These measures also should not be construed as an inference that
our future results will be unaffected by unusual or nonrecurring
items for which these non-GAAP measures make adjustments.
Additionally, adjusted net income, adjusted EBITDA and adjusted
EBITDA margin are not intended to be liquidity measures because of
certain limitations such as: (i) they do not reflect our cash
outlays for capital expenditures or future contractual commitments;
(ii) they do not reflect changes in, or cash requirements for,
working capital; (iii) they do not reflect interest expense, or the
cash requirements necessary to service interest, or principal
payments, on indebtedness; (iv) they do not reflect income tax
expense or the tax necessary to pay income taxes; and (v) although
depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in
the future, and these non-GAAP measures do not reflect cash
requirements for such replacements.
Other companies, including other
companies in our industry, may not use such measures or may
calculate one or more of the measures differently than as presented
in this earnings release, limiting their usefulness as a
comparative measure. In evaluating adjusted net income, adjusted
EBITDA and adjusted EBITDA margin, you should be aware that
in the future we will incur expenses that are the same as or
similar to some of the adjustments made in the calculations below
and the presentation of adjusted net income, adjusted EBITDA and
adjusted EBITDA margin should not be construed to mean that our
future results will be unaffected by such adjustments. Management
compensates for these limitations by using adjusted net income,
adjusted EBITDA and adjusted EBITDA margin as supplemental
financial metrics and in conjunction with results prepared in
accordance with GAAP.
Reconciliation of net income (loss) to adjusted net income
(loss)
(in thousands) |
|
|
|
Three months ended March 31, |
|
2017 |
|
2016 |
|
unaudited |
|
unaudited |
Net loss |
$ |
(22,543 |
) |
|
$ |
(3,936 |
) |
Loss from discontinued
operations, net |
- |
|
|
1,774 |
|
(Gain) loss on sale of
property, plant & equipment, net1 |
774 |
|
|
(2 |
) |
Impairment and
restructuring2 |
435 |
|
|
- |
|
Transaction costs3 |
2,059 |
|
|
3,937 |
|
Inventory step-up impacting
margin4 |
1,419 |
|
|
1,050 |
|
Costs associated with disposed
sites5 |
- |
|
|
89 |
|
Other (gains) expenses6 |
(538 |
) |
|
- |
|
Non-cash compensation7 |
357 |
|
|
- |
|
Tax impact of net income
adjustments8 |
(1,667 |
) |
|
(1,877 |
) |
Adjusted net income
(loss) |
$ |
(19,704 |
) |
|
$ |
1,035 |
|
|
|
|
|
|
|
|
|
1 (Gain) loss on sale of property,
plant and equipment, primarily related to the disposition of
manufacturing facilities.
2 Impairment of intangible assets and the following
charges related to plant closures: (i) impairment charges in
respect of abandoned fixed assets that had remaining book value and
(ii) restructuring charges in respect of severance and lease and
other contract termination costs.
3 Legal, valuation, accounting, advisory and other costs
related to business combinations and other transactions.
4 Effect of the purchase accounting step-up in the value of
inventory to fair value recognized in cost of goods sold as a
result of business combinations.
5 Results of operations of our disposed roof tile business
and other disposed sites for the periods presented, net of specific
items for which adjustments are separately made elsewhere in the
calculation of adjusted net income (loss) presented
herein.
6 Other (gains) losses, such as gain on insurance proceeds
related to the destruction of property.
7 Non-cash equity based compensation expense.
8 Assumes a normalized tax rate of 37% applied to the
adjustments to net income.
Reconciliation of net income (loss) to adjusted
EBITDA
(in thousands) |
|
|
|
Three months ended March 31, |
|
2017 |
|
2016 |
|
unaudited |
|
unaudited |
Net loss |
$ |
(22,543 |
) |
|
$ |
(3,936 |
) |
Loss from discontinued
operations, net |
- |
|
|
1,774 |
|
Interest expense |
13,542 |
|
|
17,290 |
|
Depreciation and
amortization |
29,804 |
|
|
11,292 |
|
Income tax benefit |
(13,364 |
) |
|
(10,567 |
) |
EBITDA |
7,439 |
|
|
15,853 |
|
(Gain) loss on sale of
property, plant & equipment, net1 |
774 |
|
|
(2 |
) |
Impairment and
restructuring2 |
435 |
|
|
- |
|
Transaction costs3 |
2,059 |
|
|
3,937 |
|
Inventory step-up impacting
margin4 |
1,419 |
|
|
1,050 |
|
Costs associated with disposed
sites5 |
- |
|
|
89 |
|
Non-cash compensation6 |
357 |
|
|
- |
|
Other (gains) expenses7 |
(538 |
) |
|
- |
|
Adjusted EBITDA |
$ |
11,945 |
|
|
$ |
20,927 |
|
Adjusted EBITDA margin |
3.5 |
% |
|
11.2 |
% |
Gross profit |
38,967 |
|
|
35,691 |
|
Gross profit margin |
11.5 |
% |
|
19.1 |
% |
|
|
|
|
|
|
1 (Gain) loss on sale of property,
plant and equipment, primarily related to the disposition of
manufacturing facilities.
2 Impairment of intangible assets and the following
charges related to plant closures: (i) impairment charges in
respect of abandoned fixed assets that had remaining book value and
(ii) restructuring charges in respect of severance and lease and
other contract termination costs.
3 Legal, valuation, accounting, advisory and other costs
related to business combinations and other transactions.
4 Effect of the purchase accounting step-up in the value
of inventory to fair value recognized in cost of goods sold as a
result of business combinations.
5 Results of operations of our disposed roof tile
business and other disposed sites for the periods presented, net of
specific items for which adjustments are separately made elsewhere
in the calculation of adjusted EBITDA presented herein.
6 Non-cash equity compensation expense.
7 Other (gains) losses, such as gain on insurance
proceeds related to the destruction of property.
Reconciliation of segment EBITDA to segment adjusted
EBITDA
(in thousands) |
|
|
|
|
|
|
|
|
Three
months ended March 31, 2017 |
Drainage Pipe & Products |
|
Water Pipe & Products |
|
Corporate and Other |
|
Total |
EBITDA |
$ |
11,411 |
|
|
$ |
17,112 |
|
|
$ |
(21,084 |
) |
|
$ |
7,439 |
|
|
|
|
|
|
|
|
|
(Gain) loss on sale of
property, plant & equipment, net1 |
(6 |
) |
|
780 |
|
|
- |
|
|
774 |
|
Impairment and
restructuring2 |
- |
|
|
435 |
|
|
- |
|
|
435 |
|
Transaction costs3 |
- |
|
|
- |
|
|
2,059 |
|
|
2,059 |
|
Inventory step-up impacting
margin4 |
1,419 |
|
|
- |
|
|
- |
|
|
1,419 |
|
Costs associated with disposed
sites5 |
- |
|
|
- |
|
|
- |
|
|
- |
|
Other (gains) expenses6 |
- |
|
|
(538 |
) |
|
- |
|
|
(538 |
) |
Non-cash compensation7 |
21 |
|
|
19 |
|
|
317 |
|
|
357 |
|
Adjusted EBITDA |
$ |
12,845 |
|
|
$ |
17,808 |
|
|
$ |
(18,708 |
) |
|
$ |
11,945 |
|
Three
months ended March 31, 2016 |
Drainage Pipe & Products |
|
Water Pipe & Products |
|
Corporate and Other |
|
Total |
EBITDA |
$ |
27,949 |
|
|
$ |
4,153 |
|
|
$ |
(16,249 |
) |
|
$ |
15,853 |
|
|
|
|
|
|
|
|
|
(Gain) loss on sale of
property, plant & equipment, net1 |
(2 |
) |
|
- |
|
|
- |
|
|
(2 |
) |
Impairment and
restructuring2 |
- |
|
|
- |
|
|
- |
|
|
- |
|
Transaction costs3 |
- |
|
|
- |
|
|
3,937 |
|
|
3,937 |
|
Inventory step-up impacting
margin4 |
1,050 |
|
|
- |
|
|
- |
|
|
1,050 |
|
Costs associated with disposed
sites5 |
89 |
|
|
- |
|
|
- |
|
|
89 |
|
Other (gains) expenses6 |
- |
|
|
- |
|
|
- |
|
|
- |
|
Adjusted EBITDA |
$ |
29,086 |
|
|
$ |
4,153 |
|
|
$ |
(12,312 |
) |
|
$ |
20,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 (Gain) loss on sale of property,
plant and equipment, primarily related to the disposition of
manufacturing facilities.
2 Impairment of intangible assets and the following
charges related to plant closures: (i) impairment charges in
respect of abandoned fixed assets that had remaining book value and
(ii) restructuring charges in respect of severance and lease and
other contract termination costs.
3 Legal, valuation, accounting, advisory and other costs
related to business combinations.
4 Effect of the purchase accounting step-up in the value
of inventory to fair value recognized in cost of goods sold as a
result of business combinations.
5 Results of operations of our disposed roof tile
business and other disposed sites for the periods presented, net of
specific items for which adjustments are separately made elsewhere
in the calculation of adjusted EBITDA presented herein.
6 Other (gains) losses, such as gain on insurance proceeds
related to the destruction of property.
7 Non-cash equity compensation expense.
Reconciliation of Net Income to Adjusted EBITDA Guidance
for Q2 2017
(in millions) |
|
|
|
|
|
Q2
2017 EBITDA Guidance |
|
|
Low |
|
High |
Net income |
|
$ |
3 |
|
|
$ |
10 |
|
Interest expense |
|
15 |
|
|
15 |
|
Income tax expense |
|
6 |
|
|
9 |
|
Depreciation and
amortization |
|
26 |
|
|
26 |
|
Adjusted EBITDA |
|
$ |
50 |
|
|
$ |
60 |
|