Continental Building Products, Inc. (NYSE:CBPX) (the Company), a
leading manufacturer of gypsum wallboard and complementary
finishing products, announced today results for the second quarter
ended June 30, 2017.
Highlights of Second Quarter 2017 as Compared to Second
Quarter 2016
- Net sales increased 3.0% to
$120.6 million
- Net income was $12.4 million
compared to $12.7 million
- Earnings per share increased 3.2% to
$0.32
- EBITDA1 was $34.1 million compared
to $35.1 million
- Deployed $22.6 million to
repurchase 932,000 shares of common stock
"We produced another quarter of strong cash flows, repurchased
more than 2% of our outstanding shares and delivered improvement in
earnings per share," stated Jay Bachmann, Continental’s President
and Chief Executive Officer. "We grew sales during the quarter with
a focus on delivering exceptional customer service and maximized
our profit opportunity through strict operating discipline amidst
the backdrop of a higher inflationary environment. We are excited
by the progress of our high-return capital investments and our
constant focus on continuous operational improvement, internally
called the Bison Way. We expect these actions to help blunt the
impact of higher raw material costs and generate value creation as
we also deploy capital into share repurchases."
Second Quarter 2017 Results vs. Second Quarter 2016
Wallboard volumes increased to 647 million square feet
(MMSF) for the second quarter 2017, compared to 643 MMSF in the
prior year quarter. Net sales were up 3.0% to $120.6 million,
compared to $117.1 million in the prior year quarter,
primarily due to a higher average mill net price2 of $150.32,
compared to $144.86 in the prior year quarter.
Operating income was $21.6 million, compared to
$23.2 million in the prior year quarter. This decrease was
primarily driven by higher input costs, partially offset by higher
average mill net price, resulting in a gross margin of 25.5% in the
second quarter 2017, compared to 28.5% in the second quarter 2016.
SG&A expense was $9.2 million compared to
$10.2 million in the prior year quarter, or 7.6% as a
percentage of net sales compared to 8.7% in the prior year
quarter.
Interest expense decreased 16.1% to $3.1 million, compared
to $3.6 million in the prior year quarter, reflecting lower
average outstanding borrowings during second quarter 2017 compared
to second quarter 2016 and the lower interest rate following the
debt refinancing in August 2016 and debt repricing in February
2017.
Net income for the second quarter 2017 declined by
$0.3 million to $12.4 million compared to $12.7 million
in the prior year quarter. EPS was $0.32 per share compared to
$0.31 per share in the second quarter 2016. EBITDA1 was
$34.1 million for the second quarter 2017, compared to
$35.1 million in the prior year quarter.
Balance Sheet and Cash Flow
As of June 30, 2017, the Company had cash of
$55.8 million and total outstanding borrowing under the credit
agreement of $272.3 million. During the second quarter 2017,
the Company generated cash flows from operations of
$24.0 million and incurred $2.8 million of capital
expenditures and software development costs.
During the second quarter 2017, the Company repurchased 932,000
shares of its common stock under its repurchase program at an
aggregate purchase price of $22.6 million, representing 2.3%
of its outstanding shares as of December 31, 2016. Since the
inception of this program in November 2015, the Company has
repurchased $76.6 million of its common stock through
June 30, 2017.
Forward-Looking Guidance
For the full year 2017, guidance on certain measures is as
follows:
- SG&A is expected to be in the range
of $38 - $40 million.
- Cost of goods sold inflation is
expected to be at 6% to 7%.
- Total capital expenditures is expected
to be in the range of $24 - $31 million.
- Maintenance capital spending is
expected to be in the range of $12 - $14 million.
- High-return plant network capital
spending is expected to be in the range of $12 - $17 million.
- Depreciation and amortization is
expected to be in the range of $43 - $45 million.
- Effective interest rate on our term
loan is expected to be 4.1%, up from our prior guidance of 4%,
while the cash interest rate is expected to be 3.6%.
- Effective tax rate is expected to be in
the range of 33% - 35%.
Investor Conference Webcast and Conference Call
The Company will host a webcast and conference call on Thursday,
August 3, 2017 at 5:00 p.m. Eastern time to review second
quarter 2017 financial results and discuss recent events and
conduct a question-and-answer period. The live webcast will be
available on the Investor Relations section of the Company’s
website at www.continental-bp.com. To participate in the call,
please dial 877-451-6152 (domestic) or 201-389-0879
(international). A replay of the conference call will be available
through September 3, 2017, by dialing 844-512-2921 (domestic) or
412-317-6671 (international) and entering the passcode
13666128.
About Continental Building Products
Continental Building Products is a leading North American
manufacturer of gypsum wallboard and complementary finishing
products. The Company is headquartered in Herndon, Virginia with
operations serving the residential, commercial and repair and
remodel construction markets primarily in the eastern United States
and eastern Canada. For additional information, visit
www.continental-bp.com.
Forward-Looking Statements
This press release contains forward-looking statements.
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 and
its 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 See the financial schedules at the end of this press release
for a reconciliation of EBITDA, which is a non-GAAP financial
measure, to relevant GAAP financial measures.
2 Mill net price represents average selling price per thousand
square feet (MSF), net of freight and delivery costs.
Continental Building Products,
Inc.Consolidated Statements of Operations(unaudited)
For the Three Months Ended For
the Six Months Ended June 30, 2017 June 30, 2016 June 30,
2017 June 30, 2016 (in thousands, except share data and per
share amounts) Net sales $ 120,630 $ 117,115 $ 241,245 $ 228,600
Costs, expenses and other income: Cost of goods sold 89,817 83,744
179,441 163,699 Selling and administrative 9,193 10,163
18,497 19,123 Total costs and operating
expenses 99,010 93,907 197,938 182,822
Operating income 21,620 23,208 43,307 45,778 Other
(expense)/income, net (135 ) 6 (779 ) 160 Interest expense, net
(3,062 ) (3,648 ) (5,978 ) (7,346 )
Income before income/(losses) from equity
methodinvestment and provision for income tax
18,423 19,566 36,550 38,592 Income/(losses) from equity method
investment 345 (240 ) 175 (435 ) Income before
provision for income taxes 18,768 19,326 36,725 38,157 Provision
for income taxes (6,370 ) (6,604 ) (12,100 ) (12,934 ) Net income $
12,398 $ 12,722 $ 24,625 $ 25,223
Net income per share: Basic $ 0.32 $ 0.31 $ 0.63 $ 0.61
Diluted $ 0.32 $ 0.31 $ 0.62 $ 0.61 Weighted average shares
outstanding: Basic 39,125,571 40,670,650 39,349,674 41,097,472
Diluted 39,210,219 40,717,162 39,454,928 41,128,466
Continental Building Products,
Inc.Consolidated Balance Sheets
June 30, 2017 December 31, 2016
(unaudited) (in thousands) Assets: Cash and cash equivalents $
55,847 $ 51,536 Receivables, net 37,411 32,473 Inventories, net
27,111 25,239 Prepaid and other current assets 5,862 7,485
Total current assets 126,231 116,733 Property, plant and
equipment, net 297,931 307,838 Customer relationships and other
intangibles, net 75,522 81,555 Goodwill 119,945 119,945 Equity
method investment 8,628 8,020 Debt issuance costs 568 658
Total Assets $ 628,825 $ 634,749 Liabilities
and Shareholders' Equity: Liabilities: Accounts payable $ 26,262 $
27,411 Accrued and other liabilities 10,328 12,321 Notes payable,
current portion 1,720 1,742 Total current liabilities
38,310 41,474 Deferred taxes and other long-term liabilities 19,251
19,643 Notes payable, non-current portion 263,776 264,620
Total Liabilities 321,337 325,737 Equity:
Undesignated preferred stock, par value
$0.001 per share; 10,000,000 shares authorized, noshares issued and
outstanding at June 30, 2017 and December 31, 2016
— —
Common stock, $0.001 par value per share;
190,000,000 shares authorized;44,304,664 and 44,191,370 shares
issued at June 30, 2017 and December 31, 2016, respectively;
38,655,886and 39,691,715 shares outstanding at June 30, 2017 and
December 31, 2016, respectively
44 44 Additional paid-in capital 324,086 322,384 Less: Treasury
stock (116,592 ) (88,756 ) Accumulated other comprehensive loss
(3,423 ) (3,409 ) Accumulated earnings 103,373 78,749
Total Equity 307,488 309,012 Total Liabilities and
Equity $ 628,825 $ 634,749
Continental Building Products,
Inc.Consolidated Statements of Cash Flows(unaudited)
For the Six Months Ended June 30, 2017
June 30, 2016 (in thousands) Cash flows from operating activities:
Net income $ 24,625 $ 25,223 Adjustments to reconcile net income to
net cash provided by operating activities: Depreciation and
amortization 23,760 23,788 Bad debt expense 22 28 Amortization of
debt issuance costs and debt discount 586 1,207 Loss on disposal of
property, plant and equipment 18 41 (Income)/losses from equity
method investment (175 ) 435 Loss on debt extinguishment 686 —
Stock-based compensation 1,479 1,152 Deferred taxes 92 268 Change
in assets and liabilities: Receivables (4,964 ) (1,973 )
Inventories (1,811 ) 1,053 Prepaid expenses and other current
assets 966 (534 ) Accounts payable (564 ) (620 ) Accrued and other
current liabilities (2,038 ) (152 ) Other long term liabilities
(188 ) (413 ) Net cash provided by operating activities 42,494
49,503 Cash flows from investing activities: Capital expenditures
(8,070 ) (1,765 ) Software purchased or developed (133 ) (356 )
Capital contributions to equity method investment (647 ) (226 )
Distributions from equity method investment 214 356
Net cash used in investing activities (8,636 ) (1,991 ) Cash flows
from financing activities: Proceeds from exercise of stock options
230 20 Tax withholdings on share-based compensation (240 ) —
Proceeds from debt refinancing 273,625 — Disbursements for debt
refinancing (273,625 ) — Payments of financing costs (649 ) —
Principal payments for debt (1,368 ) (25,000 ) Payments to
repurchase common stock (27,836 ) (22,010 ) Net cash used in
financing activities (29,863 ) (46,990 ) Effect of foreign exchange
rates on cash and cash equivalents 316 475 Net change
in cash and cash equivalents 4,311 997 Cash,
beginning of period 51,536 14,729 Cash, end of period
$ 55,847 $ 15,726
Reconciliation of Non-GAAP
Measures
EBITDA, EBITDA Margin, Adjusted Net Income, and Adjusted
Earnings Per Share have been presented in this press release as
supplemental measures of financial performance that are not
required by, or presented in accordance with, Generally Accepted
Accounting Principles (GAAP). This release presents EBITDA, EBITDA
Margin, Adjusted Net Income, and Adjusted Earnings Per Share, as
supplemental performance measures because management believes that
they facilitate a comparative assessment of the Company’s operating
performance relative to its performance based on results under GAAP
while isolating the effects of some items that vary from period to
period without any correlation to core operating performance and
eliminate certain charges that management believes do not reflect
the Company’s operations and underlying operational performance.
Furthermore, the Company's Board of Director compensation committee
uses EBITDA to evaluate management's compensation. Management also
believes that EBITDA, EBITDA Margin, Adjusted Net Income, and
Adjusted Earnings Per Share are useful to investors because they
allow investors to view the business through the eyes of management
and the Board of Directors, facilitating comparison of results
across historical periods.
EBITDA, EBITDA Margin, Adjusted Net Income, and Adjusted
Earnings Per Share may not be comparable to similarly titled
measures of other companies because other companies may not
calculate EBITDA, EBITDA Margin, Adjusted Net Income, and Adjusted
Earnings Per Share in the same manner. EBITDA, EBITDA Margin,
Adjusted Net Income, and Adjusted Earnings Per Share are not
measurements of the Company’s financial performance under GAAP and
should not be considered in isolation or as alternatives to net
income or earnings per share determined in accordance with GAAP or
any other financial statement data presented as indicators of
financial performance or liquidity, each as calculated and
presented in accordance with GAAP.
Reconciliation of Net Income to EBITDA
For the Three Months Ended For the Six Months Ended
June 30, 2017 June 30, 2016 June 30, 2017 June 30,
2016 (in thousands) Net income $ 12,398 $ 12,722 $ 24,625 $ 25,223
Adjustments:
Other expense/(income), net 135 (6 ) 779 (160 ) Interest expense,
net 3,062 3,648 5,978 7,346 (Income)/losses from equity method
investment (345 ) 240 (175 ) 435 Provision for income taxes 6,370
6,604 12,100 12,934 Depreciation and amortization 12,474
11,842 23,760 23,788 EBITDA—Non-GAAP Measure $
34,094 $ 35,050 $ 67,067 $ 69,566
EBITDA Margin - EBITDA as a percentage of
netsales - Non-GAAP Measure
28.3 % 29.9 % 27.8 % 30.4 %
Reconciliation of Net Income and
Earnings Per Share (EPS) to Adjusted Net Income and Adjusted
EPS
For the Three Months Ended For the Six Months Ended June 30, 2017
June 30, 2016 June 30, 2017 June 30, 2016 (dollars in thousands,
except per share amounts) Net income - GAAP Measure $ 12,398 $
12,722 $ 24,625 $ 25,223
Expense of original issue discount and
deferredfinancing fees for debt refinancing, after tax (a)
— — 454 — Adjusted net income - non-GAAP
measure $ 12,398 $ 12,722 $ 25,079 $ 25,223
Earnings per share - GAAP measure $ 0.32 $ 0.31 $ 0.63 $
0.61
Expense of original issue discount and
deferredfinancing fees for debt refinancing, after tax (a)
— — 0.01 — Adjusted earnings per share -
non-GAAP measure $ 0.32 $ 0.31 $ 0.64 $ 0.61
(a) Expense for debt repricing and expense for debt pricing per
share is shown net of income tax benefit of $0.2 million.
Other Financial and Operating Data
For the Three Months Ended For the Six Months Ended
June 30, 2017 June 30, 2016 June 30, 2017 June
30, 2016 (dollars in thousands, except mill net) Capital
expenditures and software purchased or developed $ 2,843 $ 1,854 $
8,203 $ 2,121 Wallboard sales volume (million square feet) 647 643
1,297 1,260 Mill net sales price (a) $ 150.32 $ 144.86 $ 149.11 $
144.74
(a) Mill net sales price represents average selling price per
thousand square feet net of freight and delivery costs.
Interim Volumes and Mill Net Prices
For the Three Months Ended June 30,2016
September 30,2016 December 31,2016 March 31,2017
June 30,2017 Volumes (million square feet) 643 634 666 650
647 Mill net sales price $ 144.86 $ 144.34 $ 141.61 $ 147.92 $
150.32
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Continental Building Products, Inc.Investor
Relations:703-480-3980Investorrelations@continental-bp.com
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