2017 Second Quarter
Highlights
- Record net sales of $529.2 million, an
increase of 95.9% compared to the prior year period
- Net income of $1.3 million, compared to
a net loss of $3.0 million in the prior year period
- Adjusted EBITDA of $40.3 million,
Adjusted EBITDA margin of 7.6%1
- Completed four acquisitions in the
quarter
- Base business net sales of $235.9
million, an increase of 9.0% compared to the prior year period
- Completed the integration of
Winroc-SPI
Foundation Building Materials, Inc. (NYSE: FBM), the largest
specialty distributor of suspended ceiling systems in the United
States and Canada and the second largest specialty distributor of
wallboard in the United States and Canada, today reported second
quarter 2017 financial results.
"We recorded another quarter of strong operational and financial
performance, highlighted by year-over-year net sales growth of 96%,
net income of $1.3 million and adjusted EBITDA of $40.3 million,"
said Ruben Mendoza, President and CEO. "These positive results were
driven by the strength of our underlying markets, our continued
growth via acquisitions, increased cross-selling of products
throughout our organization, and our commitment to cost containment
and procurement synergies." Mr. Mendoza continued, "Base business
net sales increased 9.0% in the quarter, with a particularly strong
showing from our suspended ceiling systems product category, which
grew base business net sales in the category by 24.9%. We also
remained active on the acquisition front, closing four more
acquisitions in the quarter, and adding three more since the period
ended for a total of eight in 2017. In short, we continue to
execute on our long-term strategy of growing market share in key
product categories, thereby achieving larger economies of scale,
which benefits our customers and shareholders alike."
2017 Second Quarter
Results
Consolidated net sales for the three months ended June 30, 2017
were $529.2 million compared to $270.1 million for the three months
ended June 30, 2016, representing an increase of $259.1 million, or
95.9%. Acquired branches and existing branches that were
strategically combined with acquired branches contributed $239.5
million of this increase. Base business net sales increased $19.6
million, or 9.0%, for the three months ended June 30, 2017 compared
to the three months ended June 30, 2016. The increase in our base
business was primarily driven by the following factors:
- an increase in suspended ceiling
systems sales of approximately $6.3 million, or 24.9%, primarily
due to increased market share gains in California, Texas and
Colorado;
- an increase in wallboard sales of $5.3
million, or 5.6%, primarily due to a wallboard unit volume increase
of approximately 4.2% driven by an increase in the commercial and
residential end markets, and an increase in average selling price
of approximately 1.4%; and
- an increase in other product sales of
$5.6 million, or 9.6%, primarily due to continued complementary
product sales growth.
Consolidated gross profit for the three months ended June 30,
2017 was $149.5 million compared to $79.3 million for the three
months ended June 30, 2016, representing an increase of $70.2
million, or 88.5%. The increase in gross profit was primarily due
to the increase in sales volume and contribution from acquisitions.
Consolidated gross margin for the three months ended June 30, 2017
was 28.3% compared to 29.4% for the three months ended June 30,
2016. The decrease in gross margin was primarily due to a change in
product mix with a higher contribution from ceilings and mechanical
insulation on a percentage basis.
Selling, general and administrative, or SG&A, expenses
consist of warehouse, delivery and general and administrative
expenses. SG&A expenses for the three months ended June 30,
2017 were $113.6 million compared to $66.0 million for the three
months ended June 30, 2016, representing an increase of $47.6
million, or 72.1%. As a percentage of net sales, SG&A expenses
were 21.5% for the three months ended June 30, 2017 compared to
24.4% for the three months ended June 30, 2016. The decrease in
SG&A expenses as a percentage of net sales was primarily due to
lower transaction costs.
2017 Second Quarter Segment
Results
Specialty Building Products ("SBP"). SBP net sales for
the three months ended June 30, 2017 were $460.1 million compared
to $270.1 million for the three months ended June 30, 2016,
representing an increase of $189.9 million, or 70.3%. Acquired
branches and existing branches that were strategically combined
with acquired branches contributed $170.4 million of the increase,
primarily due to the acquisition of Winroc-SPI in August 2016. SBP
net sales attributable to our base business also increased due to
product expansion into new markets and the overall market growth in
both the commercial and residential construction markets.
SBP gross profit for the three months ended June 30, 2017 was
$130.7 million compared to $79.3 million for the three months ended
June 30, 2016, representing an increase of $51.4 million, or 64.8%.
SBP gross profit increased in line with higher sales volume and
contribution from acquisitions and base business growth. SBP gross
margin for the three months ended June 30, 2017 was 28.4% compared
to 29.4% for the three months ended June 30, 2016. The decrease in
SBP gross margin was primarily due to a change in product mix with
a higher contribution from ceilings on a percentage basis.
Mechanical Insulation ("MI"). MI net sales for the
three months ended June 30, 2017 were $69.1 million. We entered the
mechanical insulation market as a result of the Winroc-SPI
acquisition in August 2016, therefore, there were no sales in this
segment for the three months ended June 30, 2016.
MI gross profit for the three months ended June 30, 2017 was
$18.8 million. MI gross margin for the three months ended June 30,
2017 was 27.2%. We entered the mechanical insulation market as a
result of the Winroc-SPI acquisition in August 2016, therefore,
there was no gross profit in this segment for the three months
ended June 30, 2016.
2017 Year-to-Date
Highlights
- Record net sales of $1,008.7 million,
an increase of 96.0% compared to the prior year period
- Net income of $5.2 million, compared to
a net loss of $4.2 million in the prior year period
- Completed five acquisitions in the
period ended June 30, 2017
- Base business net sales of $458.1
million, an increase of 10.2% compared to the prior year
period
2017 Year-to-Date
Results
Consolidated net sales for the six months ended June 30, 2017
were $1,008.7 million compared to $514.8 million for the six months
ended June 30, 2016, representing an increase of $493.9 million, or
96.0%. Acquired branches and existing branches that were
strategically combined with acquired branches contributed $451.5
million of the increase. Base business net sales increased $42.5
million, or 10.2%, for the six months ended June 30, 2017 as
compared to the six months ended June 30, 2016. The increase in our
base business was primarily driven by the following factors:
- an increase in suspended ceiling
systems sales of approximately $10.4 million, or 21.9%, primarily
due to increased market share gains in California, Texas and
Colorado;
- an increase in wallboard sales of $13.4
million, or 7.3%, primarily due to a wallboard unit volume increase
of approximately 5.8% driven by an increase in the commercial and
residential end markets, and an increase in average selling price
of approximately 1.5%; and
- an increase in other product sales of
$10.5 million, or 9.4%, primarily due to continued complementary
product sales growth.
Consolidated gross profit for the six months ended June 30, 2017
was $289.4 million compared to $151.6 million for the six months
ended June 30, 2016, representing an increase of $137.9 million, or
91.0%. The increase in consolidated gross profit was primarily due
to the increase in sales volume and contribution from acquisitions.
Consolidated gross margin for the six months ended June 30, 2017
was 28.7% compared to 29.4% for the six months ended June 30, 2016.
The decrease in consolidated gross margin was primarily due to a
change in product mix with a higher contribution from ceilings and
mechanical insulation on a percentage basis.
Selling, general and administrative, or SG&A, expenses
consist of warehouse, delivery and general and administrative
expenses. SG&A expenses for the six months ended June 30, 2017
were $226.7 million compared to $122.8 million for the six months
ended June 30, 2016, representing an increase of $103.9 million, or
84.6%. As a percentage of net sales, SG&A expenses were 22.5%
for the six months ended June 30, 2017 compared to 23.9% for the
six months ended June 30, 2016. The decrease in SG&A expenses
as a percentage of net sales was primarily due to lower transaction
costs.
2017 Year-to-Date Segment
Results
SBP. SBP net sales for the six months ended June 30, 2017
were $878.5 million compared to $514.8 million for the six months
ended June 30, 2016, representing an increase of $363.8 million, or
70.7%. Acquired branches and existing branches that were
strategically combined with acquired branches contributed $321.3
million of the increase, primarily due to the acquisition of
Winroc-SPI in August 2016. Base business net sales also increased
by $42.5 million due to product expansion into new markets and the
overall market growth in both the commercial and residential
construction markets.
SBP gross profit for the six months ended June 30, 2017 was
$253.2 million compared to $151.6 million for the six months ended
June 30, 2016, representing an increase of $101.6 million, or
67.0%. SBP gross profit increased in line with higher sales volume
and contribution from acquisitions and base business growth. SBP
gross margin for the six months ended June 30, 2017 was 28.8%
compared to 29.4% for the six months ended June 30, 2016. The
decrease in SBP gross margin was primarily due to a change in
product mix with a higher contribution from ceilings on a
percentage basis.
MI. MI net sales for the six months ended June 30,
2017 were $130.1 million. We entered the mechanical insulation
market as a result of the Winroc-SPI acquisition in August 2016,
therefore, there were no sales in this segment for the six months
ended June 30, 2016.
MI gross profit for the six months ended June 30, 2017 was $36.3
million. MI gross margin for the six months ended June 30, 2017 was
27.9%. We entered the mechanical insulation market as a result of
the Winroc-SPI acquisition in August 2016, therefore, there was no
gross profit in this segment for the six months ended June 30,
2016.
Acquisitions
We have completed the following eight acquisitions in 2017:
# of Branches Acquisitions
Effective Date Branch Locations
Acquired American Wal-Board, Inc. August 1, 2017 TN, MS 2
Ceiling and Wall Supply, Inc. July 1, 2017 MO, IL, KY 5 Virginia
Builders Supply, Inc. July 1, 2017 VA 1 Wallboard, Inc. May 1, 2017
MN 2 Gypsum Wallboard Supply, Inc. May 1, 2017 WA 1 Performance
Contracting, Inc (Trident) April 28, 2017 GA 1 Irwin Builders
Supply Corporation April 3, 2017 PA 1 Dominion Interior Supply
Corporation January 3, 2017 VA 4 Total 17
The five acquisitions completed prior to June 30, 2017
contributed approximately $15.4 million of net sales to our results
for the three months ended June 30, 2017 and $18.6 million for the
six months ended June 30, 2017. We expect the eight acquisitions
completed between January 1, 2017 and the date of this earnings
release to contribute net sales of approximately $57.0 million to
$61.0 million for the period from July 1, 2017 through December 31,
2017. As of August 1, 2017, all acquisitions made through June 30,
2017 were integrated from an accounting and information technology
perspective.
Conference Call
Information
In conjunction with this release, Foundation Building Materials,
Inc. will host a conference call today, Thursday, August 3, 2017,
at 10:00 am Eastern Time. Ruben Mendoza, President and Chief
Executive Officer and John Gorey, Chief Financial Officer will host
the call. Investors may dial into the call at (877) 407-9039 (U.S.)
or (201) 689-8470 (international) five to ten minutes prior to the
start time to allow for registration. Investors may also listen to
the live audio webcast via the Investor Relations page of the
Foundation Building Materials, Inc. website at http://investors.fbmsales.com. Please allow 15
minutes prior to the call to download and install any necessary
audio software.
An audio replay of the event will be archived on the Investor
Relations page of the company's website at
http://investors.fbmsales.com. The audio replay will also be
available via telephone from Thursday, August 3, 2017, at
approximately 12:00 p.m. Eastern Time through Thursday, August 10,
2017, at 11:59 p.m. Eastern Time. Dial (844) 512-2921 and enter
the passcode 13666696. International callers should
dial (412) 317-6671 and enter the same passcode number to access
the audio replay.
About Foundation Building
Materials
Foundation Building Materials is a specialty distributor of
wallboard, suspended ceiling systems, and mechanical insulation
throughout the U.S. and Canada. Based in Tustin, California, the
Company employs more than 3,500 people and operates more than 220
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 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 Report on Form 10-K and
our 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 is a non-GAAP measure. See the supplementary
schedules at the end of this press release for a discussion of how
we define and calculate this measure, why we believe it is
important and a reconciliation thereof to the most directly
comparable GAAP measure. Adjusted EBITDA margin represents Adjusted
EBITDA divided by net sales
FOUNDATION BUILDING MATERIALS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) FOR THE
THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016 (in
thousands, except share and per share data)
Three Months Ended June 30, Six Months Ended June
30, 2017 2016
2017 2016 Net
sales $ 529,230 $ 270,147 $ 1,008,687 $ 514,752 Cost of
goods sold (exclusive of depreciation and amortization)
379,698 190,812 719,244
363,172 Gross profit 149,532 79,335 289,443 151,580
Operating expenses: Selling, general and administrative 113,602
66,025 226,664 122,796 Depreciation and amortization 19,027
10,281 37,423 19,894
Total operating expenses 132,629 76,306
264,087 142,690 Income from
operations 16,903 3,029 25,356 8,890 Interest expense (14,876 )
(8,478 ) (30,125 ) (16,514 ) Other income, net 95
4 13,384 14 Income (loss)
before income taxes 2,122 (5,445 ) 8,615 (7,610 ) Income tax
expense (benefit) 862 (2,485 ) 3,426
(3,389 ) Net income (loss) $ 1,260 $ (2,960 )
$ 5,189 $ (4,221 ) Earnings (loss) per share data:
Basic $ 0.03 $ (0.10 ) $ 0.13 $ (0.14 ) Diluted $ 0.03 $ (0.10 ) $
0.13 $ (0.14 ) Weighted average shares outstanding: Basic
42,865,407 29,974,239 40,084,730 29,974,239 Diluted 42,879,319
29,974,239 40,084,940 29,974,239
FOUNDATION BUILDING
MATERIALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) JUNE 30, 2017 AND DECEMBER 31, 2016 (in
thousands, except share data) June 30,
2017 December 31, 2016 Assets Current
assets: Cash and cash equivalents $ 19,946 $ 28,552 Accounts
receivable—net of allowance for doubtful accounts of $5,266 and
$5,685, respectively 306,104 261,686 Other receivables 43,486
52,845 Inventories 167,425 157,991 Prepaid expenses and other
current assets 12,227 12,516 Total
current assets 549,188 513,590 Property and equipment, net 153,282
144,387
Intangible assets, net
205,496 215,381 Goodwill 452,205 437,935 Other assets 6,420
9,692
Total assets $ 1,366,591 $
1,320,985
Liabilities and stockholders' equity
Current liabilities: Accounts payable $ 143,483 $ 119,788 Accrued
payroll and employee benefits 22,624 26,956 Accrued taxes 7,690
9,151 Other current liabilities 43,602 49,613
Total current liabilities 217,399 205,508 Asset-based
revolving credit facility 74,247 208,469 Long-term portion of notes
payable, net 529,822 525,487 Tax receivable agreement 203,837 —
Deferred income taxes, net 29,347 26,867 Other liabilities
12,099 26,138
Total liabilities
1,066,751 992,469 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; 42,865,407 and 29,974,239
shares issued, respectively 13 — Additional paid-in capital 329,679
364,815 Accumulated deficit (31,107 ) (36,296 ) Accumulated other
comprehensive income (loss) 1,255 (3 ) Total
stockholders' equity 299,840 328,516
Total liabilities and stockholders' equity $ 1,366,591
$ 1,320,985
FOUNDATION BUILDING MATERIALS,
INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND
2016 (in thousands) Six Months Ended
June 30, 2017 2016
Cash flows from operating activities: Net income (loss) $
5,189 $ (4,221 ) Adjustments to reconcile net income (loss) to net
cash provided by operating activities: Depreciation 14,723 5,430
Amortization of intangible assets 22,700 14,464 Amortization of
debt issuance costs and debt discount 4,844 1,707 Inventory fair
value adjustment 664 1,635 Provision for doubtful accounts 766
1,132 Stock-based compensation 1,765 — Unrealized gain on
derivative instruments, net (13,155 ) — Loss on disposal of
property and equipment 242 110 Deferred income taxes 3,356 (1,875 )
Change in assets and liabilities, net of effects of acquisitions:
Accounts receivable (32,706 ) (15,248 ) Other receivables 10,638
3,982 Inventories (2,807 ) (12,378 ) Prepaid expenses and other
current assets 561 403 Other assets 393 197 Accounts payable 17,875
26,959 Accrued payroll and employee benefits (4,433 ) (1,468 )
Accrued taxes (1,474 ) 1,031 Other liabilities (7,258 )
(3,087 ) Net cash provided by operating activities 21,883
18,773 Cash flows from investing activities: Purchases of property
and equipment (17,525 ) (7,763 ) Payment of net working capital
adjustments (405 ) — Proceeds from net working capital adjustments
8,554 — Proceeds from the disposal of fixed assets 429 —
Acquisitions, net of cash acquired (52,951 ) (57,942
) Net cash used in investing activities (61,898 ) (65,705 ) Cash
flows from financing activities: Proceeds from asset-based
revolving credit facility 280,995 15,000 Repayments of asset-based
revolving credit facility (415,497 ) (30,000 ) Principal borrowings
on long-term debt — 67,200 Principal payments on long-term debt —
(1,400 ) Debt issuance costs — (1,281 ) Principal repayment of
capital lease obligations (1,395 ) — Issuance of common stock
163,952 — Capital contributions 2,997 — Capital distributions
— (17 ) Net cash provided by financing
activities 31,052 49,502 Effect of exchange rate changes on cash
357 — Net (decrease) increase in cash
(8,606 ) 2,570 Cash and cash equivalents at beginning of period
28,552 10,662 Cash and cash equivalents
at end of period $ 19,946 $ 13,232
Supplemental disclosures of cash flow information: Cash paid during
the period for income taxes $ 143 $ 1,610 Cash paid during the
period for interest $ 25,699 $ 14,582 Supplemental disclosures of
non-cash investing and financing activities: Change in fair value
of derivatives, net of tax $ 1,400 $ — Assets acquired under
capital lease $ 658 $ — Goodwill adjustment for purchase price
allocation $ 1,724 $ — Tax receivable agreement $ 203,837 $ —
Property and equipment included in accounts payable $ 198 $ —
FOUNDATION BUILDING MATERIALS, INC. NET SALES BY
PRODUCTS BY SEGMENT AND GROSS PROFIT AND GROSS MARGIN BY
SEGMENT FOR THE THREE MONTHS ENDED JUNE 30, 2017 AND
2016 (in thousands) Three Months Ended
June 30, Change 2017 2016
$ % SBP Segment
Wallboard $ 181,062 39.4 % $ 117,507 43.5 % $ 63,555 54.1%
Suspended ceiling systems 83,271 18.1 % 29,679 11.0 % 53,592 180.6%
Metal framing 72,404 15.7 % 48,485 17.9 % 23,919 49.3% Other
123,349 26.8 % 74,476 27.6 %
48,873 65.6% Total SBP net sales $ 460,086
100.0 % $ 270,147 100.0 % $ 189,939
70.3% MI Segment Commercial and industrial insulation $
49,730 71.9 % $ — — $ 49,730 —% Non-insulation products
19,414 28.1 % — —
19,414 —% Total MI net sales $ 69,144 100.0 %
$ — — $ 69,144 —% Total net sales $
529,230 $ 270,147 Gross profit - SBP $ 130,729
$ 79,335 $ 51,394 64.8% Gross profit - MI 18,803
— 18,803 —% Total gross profit $
149,532 $ 79,335 $ 70,197 88.5% Gross
margin - SBP 28.4 % 29.4 % (1.0 )% Gross margin - MI 27.2 % — % — %
Total gross margin 28.3 % 29.4 % (1.1 )%
FOUNDATION
BUILDING MATERIALS, INC. NET SALES BY PRODUCTS BY SEGMENT
AND GROSS PROFIT AND GROSS MARGIN BY SEGMENT FOR THE SIX
MONTHS ENDED JUNE 30, 2017 AND 2016 (in thousands)
Six Months Ended June 30, Change
2017 2016 $
%
SBP Segment Wallboard $ 349,576 39.8 % $ 226,441 44.0
% $ 123,135 54.4 % Suspended ceiling systems 155,984 17.8 % 55,835
10.8 % 100,149 179.4 % Metal framing 141,065 16.1 % 91,465 17.8 %
49,600 54.2 % Other 231,924 26.3 %
141,011 27.4 % 90,913 64.5 % Total SBP
net sales $ 878,549 100.0 % $ 514,752
100.0 % $ 363,797 70.7 % MI Segment Commercial and
industrial insulation $ 95,041 73.0 % $ — — $ 95,041 — %
Non-insulation products 35,097 27.0 % —
— 35,097 — % Total MI net sales
$ 130,138 100.0 % $ — — $
130,138 — % Total net sales $ 1,008,687 $ 514,752
Gross profit - SBP $ 253,155 $ 151,580 $ 101,575 67.0
% Gross profit - MI 36,288 —
36,288 — % Total gross profit $ 289,443 $ 151,580
$ 137,863 91.0 % Gross margin - SBP 28.8 %
29.4 % (0.6 )% Gross margin - MI 27.9 % — % — % Total gross margin
28.7 % 29.4 % (0.7 )%
FOUNDATION BUILDING MATERIALS,
INC. BASE BUSINESS AND ACQUIRED AND COMBINED NET SALES
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016
(in thousands) Three Months Ended June
30, Change 2017 2016
$ % Base Business (1) $ 235,927 $ 216,369 $
19,558 9.0% Acquired and combined (2) 293,303 53,778
239,525 445.4%
Net sales
$ 529,230 $ 270,147 $ 259,083 95.9% (1)Represents net sales
from branches that were owned by us since January 1, 2016 and
branches that were opened by us during such period. (2)Represents
branches acquired and combined after January 1, 2016, primarily as
a result of our strategic combination of branches.
Six Months Ended June 30, Change 2017
2016 $ % Base Business (1) $ 458,086 $ 415,603
$ 42,483 10.2% Acquired and combined (2) 550,601
99,149 451,452 455.3%
Net sales
$ 1,008,687 $ 514,752 $ 493,935 96.0% (1)Represents net
sales from branches that were owned by us since January 1, 2016 and
branches that were opened by us during such period. (2)Represents
branches acquired and combined after January 1, 2016, primarily as
a result of our strategic combination of branches.
FOUNDATION BUILDING MATERIALS, INC. BASE BUSINESS AND
ACQUIRED AND COMBINED NET SALES BY SEGMENT AND PRODUCT FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016 (in
thousands)
Acquired Base Acquired Base
and Three Months Business and Three
Months Business Combined Total Net
Ended June 30, Net Sales Combined Ended
June 30, Net Sales Net Sales Sales %
2016 Growth Net Sales 2017 %
Growth % Growth Growth Wallboard $
117,507 $ 5,250 $ 58,305 $ 181,062 5.6 % 49.6 % 54.1 % Metal
framing 48,485 2,394 21,525 72,404 6.3 % 44.4 % 49.3 % Suspended
ceiling systems 29,679 6,270 47,322 83,271 24.9 % 159.4 % 180.6 %
Other products 74,476 5,644 43,229
123,349 9.6 % 58.0 % 65.6 %
SBP net sales
270,147 19,558 170,381 460,086 9.0 % 63.1 % 70.3 %
MI net sales
— — 69,144 69,144 — % — % — %
Total net sales
$ 270,147 $ 19,558 $ 239,525 $ 529,230 9.0 % 88.7 % 95.9 %
Acquired Base Acquired Base
and Six Months Business and Six
Months Business Combined Total Net
Ended June 30, Net Sales Combined Ended
June 30, Net Sales Net Sales Sales %
2016 Growth Net Sales 2017 %
Growth % Growth Growth Wallboard $
226,440 $ 13,392 $ 109,744 $ 349,576 7.3 % 48.5 % 54.4 % Metal
framing 91,465 8,173 41,427 141,065 11.2 % 45.3 % 54.2 % Suspended
ceiling systems 55,835 10,369 89,780 155,984 21.9 % 160.8 % 179.4 %
Other products 141,012 10,549 80,363
231,924 9.4 % 57.0 % 64.5 %
SBP net sales
514,752 42,483 321,314 878,549 10.2 % 62.4 % 70.7 %
MI net sales
— — 130,138 130,138 — % — % — %
Total net sales
$ 514,752 $ 42,483 $ 451,452 $ 1,008,687 10.2 % 87.7 % 96.0 %
Non-GAAP (Generally Accepted Accounting
Principles) Financial Measures
In addition to results under GAAP, this press release contains
certain non-GAAP financial measures, including Adjusted EBITDA,
which is provided as a supplemental measure of financial
performance. This measure is not required by, or presented in
accordance with, GAAP. We calculate Adjusted EBITDA as net income
(loss) before interest expense, income tax benefit (expense),
depreciation and amortization and before non-recurring adjustments
such as purchase accounting adjustments, IPO expenses, stock-based
compensation, non-cash (gains) losses on the sale of property and
equipment and derivative financial instruments.
Adjusted EBITDA is presented because it is an important metric
used by management as one of the means by which it assesses
financial performance. Adjusted EBITDA is also frequently used by
analysts, investors and other interested parties to evaluate
companies in our industry. This measure, when used in conjunction
with related GAAP financial measures, provides investors with an
additional financial analytical framework that may be useful in
assessing our company and its results of operations.
Adjusted EBITDA has certain limitations. Adjusted EBITDA should
not be considered as an alternative to net income, or as any other
measure of financial performance derived in accordance with GAAP.
Adjusted EBITDA also should not be construed as an inference that
our future results will be unaffected by unusual or nonrecurring
items for which it makes adjustments. Additionally, Adjusted EBITDA
is not intended to be a liquidity measure. Other companies,
including other companies in our industry, may not use this measure
or may calculate this measure differently than we do, limiting its
usefulness as a comparative measure.
The following is a reconciliation of Adjusted EBITDA to the
nearest GAAP measure, net income:
Three Months Ended June 30, 2017 (in
thousands) Net income $ 1,260 Interest expense, net 14,876 Income
tax expense 862 Depreciation and amortization 19,027 Unrealized
non-cash loss on derivative financial instrument 63 Public company
readiness expenses 1,434 Stock-based compensation 212 Non-cash
purchase accounting effects(a) 593 Loss on disposal of property and
equipment 20 Transaction costs(b) 1,979 Adjusted
EBITDA $ 40,326 Adjusted EBITDA margin(c) 7.6 % (a)
Adjusts for the 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 acquisitions. (b) Represents one-time costs related
to our acquisitions paid to third party advisors, including fees to
financial advisors, accountants, attorneys and other professionals.
(c) Adjusted EBITDA margin represents Adjusted EBITDA divided by
net sales.
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