2017 Third Quarter
Highlights
- Record net sales of $535.4 million, an
increase of 28.8% compared to the prior year period
- Earnings per share of $0.03 and
Adjusted earnings per share(1) of $0.08
- Net income of $1.4 million, compared to
a net loss of $15.3 million in the prior year period
- Adjusted EBITDA(1) of $40.3 million and
Adjusted EBITDA margin(1) of 7.5%
- Completed three acquisitions in the
quarter
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 third
quarter 2017 financial results.
“We recorded a solid quarter of operational and financial
performance, highlighted by year-over-year net sales growth of
28.8%, net income of $1.4 million and adjusted EBITDA(1) of $40.3
million,” said Ruben Mendoza, President and CEO. “Despite the
challenges of adverse weather and fewer business days, our
underlying business remained resilient. While our total base
business net sales declined 1% in the quarter due to the impact of
two hurricanes and fewer business days, our average daily net sales
improved 2% compared to the prior year period. We also benefited
from higher average selling prices for wallboard and continued
strength in suspended ceilings sales.” Mr. Mendoza continued, “We
also remained active on the acquisition front, completing 10
acquisitions this year that enhance our scale and geographical
reach. While the third quarter presented unique challenges to our
business, we continue to execute on our long-term strategy of
profitably growing our market share, achieving economies of scale,
and delivering long-term value to our customers and
shareholders.”
2017 Third Quarter
Results
Consolidated net sales for the third quarter ended September 30,
2017 were $535.4 million compared to $415.6 million for the third
quarter ended September 30, 2016, representing an increase of
$119.9 million, or 28.8%. Net sales from acquired branches and
those that were strategically combined with existing branches
increased by $122.6 million period over period. Base business net
sales decreased $2.7 million, or 1.2%, for the third quarter of
2017 compared to the third quarter of 2016. During the third
quarter, the occurrence of back-to-back major hurricanes affected
the Company’s branch operations in Texas, Florida, Georgia, and
South Carolina. In addition, two fewer business days compared to
the prior year quarter led to lower net sales.
Consolidated gross profit of $154.8 million grew 37.0%, compared
to $113.0 million in the third quarter of 2016. This increase is
mainly attributable to increased sales volume and contributions
from acquisitions. Gross margin for the third quarter of 2017 was
28.9% compared to 27.2% in 2016. This increase in gross margins was
primarily due to an increase in margins from wallboard, suspended
ceilings, mechanical insulation and the impact of lower current
period purchase accounting adjustments.
Selling, general, and administrative, or SG&A, expenses for
the third quarter of 2017 were $117.4 million compared to $96.0
million for the third quarter of 2016, representing an increase of
$21.4 million. As a percentage of net sales, SG&A expenses were
21.9% for the third quarter of 2017 compared to 23.1% for the prior
year quarter. The decrease in SG&A expenses as a percentage of
net sales was primarily due to lower transaction costs.
Third quarter net income of $1.4 million, or $0.03 per diluted
share, increased by $16.7 million, compared to a net loss of $15.3
million, or $0.51 net loss per share, in the third quarter of
2016.
Adjusted EBITDA(1) was $40.3 million for the quarter ended
September 30, 2017 and Adjusted EBITDA margin(1) was 7.5%.
2017 Third Quarter Segment
Results
Specialty Building Products (“SBP”). SBP net sales for
the third quarter of 2017 were $467.9 million compared to $378.3
million for the third quarter of 2016, representing an increase of
$89.6 million, or 23.7%. Net sales from acquired branches that were
strategically combined with existing branches increased by $92.3
million period over period. The increase in SPB net sales is
primarily due to the acquisition of Winroc-SPI in August 2016.
SBP gross profit for the third quarter of 2017 was $135.9
million compared to $105.2 million in the prior year quarter,
representing an increase of $30.7 million, or 29.2%. SBP gross
profit increased with higher sales volume and contributions from
acquisitions. SBP gross margin for the third quarter of 2017 was
29.0% compared to 27.8% for the third quarter of 2016. The increase
in SBP gross margin was primarily due to an increase in margins
from wallboard and suspended ceilings sales and the impact of lower
current period purchase accounting adjustments.
Mechanical Insulation (“MI”). MI net sales for the third
quarter of 2017 were $67.6 million compared to $37.3 million for
the third quarter of 2016. Because we entered the mechanical
insulation market with the Winroc-SPI acquisition in August 2016,
there were less than three months of sales in this segment for the
three months ended September 30, 2016.
MI gross profit for the three months ended September 30, 2017
was $18.9 million compared to $7.8 million for the three months
ended September 30, 2016, representing an increase of $11.1
million, or 141.9%. MI gross profit increased for the three months
ended September 30, 2017 as compared to the three months ended
September 30, 2016 primarily due to the timing of the Winroc-SPI
acquisition in August 2016 and not realizing a full quarter of
results in the third quarter of 2016. MI gross margin for the three
months ended September 30, 2017 was 28.0% compared to 21.0% for the
three months ended September 30, 2016. MI gross profit for the
three months ended September 30, 2017 included a $0.1 million
charge for inventory fair value purchase accounting adjustments as
compared to $2.3 million in the three months ended September 30,
2016. Excluding the effect of these adjustments, MI gross margin
for the three months ended September 30, 2017 was 28.1% compared to
27.1% for the three months ended September 30, 2016. The increase
in MI gross margin was primarily due to operational
efficiencies.
2017 Year-to-Date
Highlights
- Record net sales of $1,544.1 million,
an increase of 66.0% compared to the prior year period
- Base business net sales increased $39.8
million, an increase of 6.2% compared to the prior year period
- Net income of $6.6 million, compared to
a net loss of $19.6 million in the prior year period
- Completed eight acquisitions adding 17
branches
2017 Year-to-Date
Results
Consolidated net sales for the nine months ended September 30,
2017 were $1,544.1 million compared to $930.3 million for the nine
months ended September 30, 2016, representing an increase of $613.8
million, or 66.0%. Net sales from acquired branches and those that
were strategically combined with existing branches contributed
$574.1 of the increase. Base business net sales increased $39.8
million, or 6.2%, for the nine months ended September 30, 2017
compared to the nine months ended September 30, 2016. The increase
in consolidated net sales for the period is attributable to higher
sales of suspended ceilings, wallboard and other products and
contributions from acquisitions.
Consolidated gross profit for the nine months ended September
30, 2017 was $444.2 million compared to $264.5 million for the
comparable period in the prior year, representing an increase of
$179.7 million, or 67.9%. The increase in gross profit was
primarily due to the increase in sales volume and contributions
from acquisitions. Consolidated gross margin for the period was
28.8% compared to 28.4% for the nine months ended September 30,
2016.
SG&A expenses for the nine months ended September 30, 2017
were $344.1 million compared to $218.8 million for the comparable
period in the prior year, representing an increase of $125.3
million. As a percentage of net sales, SG&A expenses were 22.3%
for the nine months ended September 30, 2017 compared to 23.5% for
the nine months ended September 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 nine months ended September
30, 2017 were $1,346.4 million compared to $893.0 million for the
nine months ended September 30, 2016, representing an increase of
$453.4 million, or 50.8%. Net sales from acquired branches that
were strategically combined with existing branches contributed
$413.7 million of the increase, primarily due to the acquisition of
Winroc-SPI in August 2016. SBP base business net sales increased by
$39.8 million, or 6.2%, 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 nine months ended September 30, 2017
was $389.0 million compared to $256.7 million for the nine months
ended September 30, 2016, representing an increase of $132.3
million, or 51.5%. Gross profit increased due to higher sales
volume combined with contributions from acquisitions and base
business growth. SBP gross margins for the nine months was 28.9%
compared to 28.7% for the nine months ended September 30, 2016.
MI. MI net sales for the nine months ended September 30,
2017 were $197.7 million compared to $37.3 million for the nine
months ended September 30, 2016. The increase in net sales is
primarily due to our acquisition of Winroc-SPI on August 9, 2016,
therefore, there was a shorter period of sales in this segment
during the prior year period.
MI gross profit for the nine months ended September 30, 2017 was
$55.2 million compared to $7.8 million for the nine months ended
September 30, 2016, representing an increase of $47.4 million. We
entered the mechanical insulation market as a result of our
Winroc-SPI acquisition in August 2016. MI gross margins for the
nine months ended September 30, 2017 was 27.9% compared to 21.0%
for the nine months ended September 30, 2016. MI gross profit for
the nine months ended September 30, 2017 included a $0.1 million
charge for inventory fair value purchase accounting adjustments as
compared to $2.3 million in the nine months ended September 30,
2016. Excluding the effect of these adjustments, MI gross margin
for the nine months ended September 30, 2017 was 28.0% as compared
to 27.1% for the nine months ended September 30, 2016. The
improvement in gross margin, excluding the effect of the inventory
fair value adjustments, was primarily due to operational
efficiencies.
Acquisitions
We supplement our organic growth strategy with selective
acquisitions. During the third quarter, we completed three
acquisitions. From January 1, 2017 through the date of this
release, we have completed 10 acquisitions totaling 19 branches,
and we expect the full year 2017 net sales contribution from all
acquisitions to be in the range of $70 million to $80 million.
Third Quarter Earnings Release and
Conference Call
In conjunction with this release, Foundation Building Materials,
Inc. will host a conference call today, Tuesday, November 7, 2017,
at 8:30 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 Tuesday, November 7, 2017, at
approximately 12:00 p.m. Eastern Time through Tuesday, November 14,
2017, at 11:59 p.m. Eastern Time. Dial (844) 512-2921 and enter the
passcode 13672256. 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 United States 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 and Adjusted net income are non-GAAP
measure. 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.
- Financial Tables Follow -
FOUNDATION BUILDING MATERIALS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (in
thousands, except share and per share data)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2017 2016 2017 2016 Net
sales $ 535,446 $ 415,563 $ 1,544,133 $ 930,315 Cost of
goods sold (exclusive of depreciation and amortization) 380,663
302,595 1,099,907 665,767 Gross profit
154,783 112,968 444,226 264,548 Operating expenses: Selling,
general and administrative 117,410 95,962 344,074 218,758
Depreciation and amortization 19,729 13,711 57,152
33,605 Total operating expenses 137,139
109,673 401,226 252,363 Income from operations
17,644 3,295 43,000 12,185 Interest expense (15,069 ) (20,688 )
(45,194 ) (37,202 ) Other income, net 35 79 13,419
93 Income (loss) before income taxes 2,610 (17,314 )
11,225 (24,924 ) Income tax expense (benefit) 1,211 (1,969 )
4,637 (5,358 ) Net income (loss) $ 1,399 $ (15,345 )
$ 6,588 $ (19,566 ) Earnings (loss) per share data:
Basic $ 0.03 $ (0.51 ) $ 0.16 $ (0.65 ) Diluted $ 0.03 $ (0.51 ) $
0.16 $ (0.65 ) Weighted average shares outstanding: Basic
42,865,407 29,974,239 41,021,808 29,974,239 Diluted 42,870,391
29,974,239 41,023,935 29,974,239
FOUNDATION
BUILDING MATERIALS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited) SEPTEMBER 30, 2017 AND DECEMBER 31,
2016 (in thousands, except share data)
September 30, 2017 December 31,
2016 Assets Current assets: Cash and cash equivalents $
6,312 $ 28,552
Accounts receivable—net of allowance for
doubtful accounts of$5,266 and $5,685, respectively
308,955 261,686 Other receivables 48,609 52,845 Inventories 167,601
157,991 Prepaid expenses and other current assets 13,847
12,516 Total current assets 545,324 513,590 Property and
equipment, net 157,536 144,387 Intangible assets, net 198,998
215,381 Goodwill 458,472 437,935 Other assets 5,952 9,692
Total assets $ 1,366,282 $ 1,320,985
Liabilities and stockholders' equity Current liabilities:
Accounts payable $ 147,407 $ 119,788 Accrued payroll and employee
benefits 22,381 26,956 Accrued taxes 8,660 9,151 Other current
liabilities 28,553 49,613 Total current liabilities
207,001 205,508 Asset-based revolving credit facility 79,500
208,469 Long-term portion of notes payable, net 532,076 525,487 Tax
receivable agreement 203,837 — Deferred income taxes, net 26,441
26,867 Other liabilities 14,585 26,138
Total
liabilities 1,063,440 992,469 Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value,
authorized 10,000,000 shares; 0 sharesissued
— —
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 329,892 364,815 Accumulated deficit
(29,708 ) (36,296 ) Accumulated other comprehensive income (loss)
2,645 (3 ) Total stockholders' equity 302,842 328,516
Total liabilities and stockholders' equity $
1,366,282 $ 1,320,985
FOUNDATION
BUILDING MATERIALS, INC. CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (Unaudited) FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2017 AND 2016 (in thousands)
Nine Months Ended September 30, 2017
2016 Cash flows from operating activities: Net income (loss)
$ 6,588 $ (19,566 ) Adjustments to reconcile net income (loss) to
net cash provided by operating activities: Depreciation 22,675
9,620 Amortization of intangible assets 34,477 23,985 Amortization
of debt issuance costs and debt discount 7,352 3,599 Inventory fair
value purchase accounting adjustment 942 6,372 Unrealized gain on
foreign currency, net (169 ) (17 ) Loss on extinguishment of debt —
5,355 Provision for doubtful accounts 2,182 1,923 Stock-based
compensation 1,978 — Unrealized gain on derivative instruments, net
(13,045 ) (148 ) Loss on disposal of property and equipment 202 243
Deferred income taxes 2,710 (5,160 ) Change in assets and
liabilities, net of effects of acquisitions: Accounts receivable
(29,837 ) (21,179 ) Other receivables 6,429 2,177 Inventories 20
(6,782 ) Prepaid expenses and other current assets (945 ) (696 )
Other assets (2,180 ) (110 ) Accounts payable 18,414 (2,949 )
Accrued payroll and employee benefits (4,797 ) 2,647 Accrued taxes
(521 ) 1,187 Other liabilities (19,920 ) 7,421 Net cash
provided by operating activities 32,555 7,922 Cash flows from
investing activities: Purchases of property and equipment (26,268 )
(22,780 ) Payment of net working capital adjustments (405 ) —
Proceeds from net working capital adjustments 8,590 — Proceeds from
the disposal of fixed assets 528 — Acquisitions, net of cash
acquired (73,348 ) (372,116 ) Net cash used in investing activities
(90,903 ) (394,896 ) Cash flows from financing activities: Proceeds
from asset-based revolving credit facility 395,688 215,000
Repayments of asset-based revolving credit facility (524,782 )
(95,000 ) Principal borrowings on long-term debt — 713,600
Principal payments on long-term debt — (463,606 ) Debt issuance
costs — (34,359 ) Principal repayment of capital lease obligations
(2,110 ) (2,000 ) Issuance of common stock 163,952 — Capital
contributions 2,997 66,205 Capital distributions — (67 ) Net
cash provided by financing activities 35,745 399,773 Effect of
exchange rate changes on cash 363 (68 ) Net (decrease)
increase in cash (22,240 ) 12,731 Cash and cash equivalents at
beginning of period 28,552 10,662 Cash and cash
equivalents at end of period $ 6,312 $ 23,393
Supplemental disclosures of cash flow information: Cash paid for
income taxes $ 3,236 $ 2,228 Cash paid for interest $ 49,937 $
18,717 Cash Paid during the period for early debt repayment penalty
$ — $ 1,600 Supplemental disclosures of non-cash investing and
financing activities: Change in fair value of derivatives, net of
tax $ 3,047 $ 722 Assets acquired under capital lease $ 667 $ 804
Goodwill adjustment for purchase price allocation $ 518 $ — Tax
receivable agreement $ 203,837 $ — Property and equipment included
in accounts payable $ — $ 133 Embedded derivative in issued notes $
— $ 6,200
FOUNDATION BUILDING MATERIALS, INC.
NET SALES BY SEGMENT AND PRODUCT LINE AND SEGMENT GROSS PROFIT
AND GROSS MARGIN FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2017 AND 2016 (in thousands)
Three Months Ended September 30, Change
2017 2016 $ % SBP Segment
Wallboard $ 179,362 38.3 % $ 145,193 38.4 % $ 34,169 23.5 %
Suspended ceiling systems 91,933 19.6 % 62,488 16.5 % 29,445 47.1 %
Metal framing 71,420 15.3 % 64,950 17.2 % 6,470 10.0 % Other
125,176 26.8 % 105,649 27.9 % 19,527 18.5 %
Total SBP net sales $ 467,891 100.0 % $ 378,280 100.0
% $ 89,611 23.7 % MI Segment Commercial and
industrial insulation $ 53,447 79.1 % $ 28,128 75.4 % $ 25,319 90.0
% Non-insulation products 14,108 20.9 % 9,155 24.6 %
4,953 54.1 % Total MI net sales $ 67,555 100.0 % $
37,283 100.0 % $ 30,272 81.2 % Total net sales $
535,446 $ 415,563 $ 119,883 28.8 %
Gross profit - SBP $ 135,883 $ 105,154 $ 30,729 29.2 % Gross profit
- MI 18,900 7,814 11,086 141.9 % Total gross
profit $ 154,783 $ 112,968 $ 41,815 37.0 %
Gross margin - SBP 29.0 % 27.8 % 1.2 % Gross margin - MI
28.0 % 21.0 % 7.0 % Total gross margin 28.9 % 27.2 % 1.7 %
FOUNDATION BUILDING MATERIALS, INC. NET SALES BY
SEGMENT AND PRODUCT LINE AND SEGMENT GROSS PROFIT AND GROSS
MARGIN FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND
2016 (in thousands) Nine Months
Ended September 30, Change 2017
2016 $ % SBP Segment Wallboard $
528,937 39.3 % $ 371,634 41.6 % $ 157,303 42.3 % Suspended ceiling
systems 247,921 18.4 % 118,323 13.2 % 129,598 109.5 % Metal framing
212,486 15.8 % 156,415 17.5 % 56,071 35.8 % Other 357,097
26.5 % 246,660 27.7 % 110,437 44.8 % Total SBP net
sales $ 1,346,441 100.0 % $ 893,032 100.0 % $ 453,409
50.8 % MI Segment Commercial and industrial
insulation $ 148,488 75.1 % $ 28,128 75.4 % $ 120,360 427.9 %
Non-insulation products 49,204 24.9 % 9,155 24.6 %
40,049 437.5 % Total MI net sales $ 197,692 100.0 % $
37,283 100.0 % $ 160,409 430.2 % Total net sales $
1,544,133 $ 930,315 $ 613,818 66.0 %
Gross profit - SBP $ 389,037 $ 256,734 $ 132,303 51.5 % Gross
profit - MI 55,189 7,814 47,375 606.3 % Total
gross profit $ 444,226 $ 264,548 $ 179,678
67.9 % Gross margin - SBP 28.9 % 28.7 % 0.2 % Gross margin -
MI 27.9 % 21.0 % 6.9 % Total gross margin 28.8 % 28.4 % 0.4 %
FOUNDATION BUILDING MATERIALS, INC. BASE
BUSINESS AND ACQUIRED AND COMBINED NET SALES FOR THE THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (in
thousands)
Three Months EndedSeptember
30,
Change 2017 2016 $
% Base business (1) $ 226,960 $ 229,693 $ (2,733 ) (1.2 )%
Acquired and combined (2) 308,486 185,870 122,616
66.0 % Net sales $ 535,446 $ 415,563 $ 119,883
28.8 %
(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.
Nine Months EndedSeptember
30,
Change 2017 2016 $
% Base business (1) $ 685,047 $ 645,296 $ 39,751 6.2 %
Acquired and combined (2) 859,086 285,019 574,067
201.4 % Net sales $ 1,544,133 $ 930,315 $
613,818 66.0 %
(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 NINE MONTHS ENDED SEPTEMBER 30,
2017 AND 2016 (in thousands)
ThreeMonthsEndedSeptember30,
2016
BaseBusinessNet
SalesIncrease(Decrease)
AcquiredandCombinedNet
SalesIncrease
ThreeMonthsEndedSeptember30,
2017
Total NetSales
%Increase
BaseBusiness NetSales
%Increase(Decrease)(1)
AcquiredandCombinedNet Sales
%Increase(2)
(in thousands) Wallboard 145,193 (838 ) 35,007
179,362 23.5% (0.9)% 68.3% Metal framing 64,950 (3,979 ) 10,449
71,420 10.0% (9.2)% 48.0% Suspended ceiling systems 62,488 1,487
27,958 91,933 47.1% 5.1% 84.5% Other products 105,649 597
18,930 125,176 18.5% 0.9% 44.6% SBP net
sales 378,280 (2,733 ) 92,344 467,891 23.7% (1.2)% 62.1% MI net
sales $ 37,283 $ — $ 30,272 $ 67,555
81.2% —% 81.2%
Total net sales $ 415,563 $
(2,733 ) $ 122,616 $ 535,446 28.8% (1.2)%
66.0% (1) Represents base business net sales increase (decrease) as
a percentage of base business net sales for the three months ended
September 30, 2016. (2) Represents as acquired and combined net
sales increase as a percentage of acquired and combined net sales
for the three months ended September 30, 2016.
NineMonthsEndedSeptember30,
2016
BaseBusinessNet
SalesIncrease
AcquiredandCombinedNet
SalesIncrease
NineMonthsEndedSeptember30,
2017
Total NetSales
%Increase
BaseBusiness NetSales
%Increase(1)
AcquiredandCombinedNet Sales
%Increase(2)
(in thousands) Wallboard 371,634 12,554 144,749
528,937 42.3% 4.5% 152.3% Metal framing 156,415 4,194 51,877
212,486 35.8% 3.6% 129.0% Suspended ceiling systems 118,323 11,860
117,738 247,921 109.5% 15.4% 283.3% Other products 246,660
11,143 99,294 357,097 44.8% 6.3% 139.9%
SBP net sales 893,032 39,751 413,658 1,346,441 50.8% 6.2% 167.0% MI
net sales $ 37,283 $ — $ 160,409 $ 197,692
430.2% —% 430.3%
Total net sales $ 930,315
$ 39,751 $ 574,067 $ 1,544,133 66.0%
6.2% 201.4% (1) Represents base business net sales increase
as a percentage of base business net sales for the nine months
ended September 30, 2016. (2) Represents acquired and combined net
sales increase as a percentage of acquired and combined net sales
for the nine months ended September 30, 2016.
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 ,
Adjusted net income and Adjusted EPS, which are provided as
supplemental measures of financial performance. These measures are
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, public company readiness expenses,
stock-based compensation, non-cash (gain) losses on the sale of
property and equipment, transaction costs, non-recurring hurricane
costs and unrealized (gains) losses on derivative financial
instruments. We calculate Adjusted net income as net income (loss),
adjusted for the following: purchase accounting adjustments, public
company readiness expenses, stock-based compensation, non-cash
(gains) losses on the sale of property and equipment, transaction
costs, non-recurring hurricane related costs, unrealized (gains)
losses on derivative financial instruments and the effect of income
taxes related to these adjustments. We calculate Adjusted EPS as
Adjusted net income on a per weighted average share outstanding
basis.
Adjusted EBITDA, Adjusted net income and Adjusted EPS are
presented because they are important metrics used by management as
two of the means by which it assesses financial performance.
Adjusted EBITDA, Adjusted net income and Adjusted EPS are also
frequently used by analysts, investors and other interested parties
to evaluate companies in our industry. These measures, 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, Adjusted net income and Adjusted EPS have
certain limitations. These measures should not be considered as
alternatives to net income and earnings per share, or as any other
measure of financial performance derived in accordance with GAAP.
Adjusted EBITDA, Adjusted net income and Adjusted EPS also should
not be construed as an inference that our future results will be
unaffected by unusual or nonrecurring items. Additionally, Adjusted
EBITDA, Adjusted net income and Adjusted EPS are not intended to be
liquidity measures. Other companies, including other companies in
our industry, may not use these measures or may calculate these
measures differently than we do, limiting their usefulness as
comparative measures.
The following is a reconciliation of Adjusted EBITDA to the
nearest GAAP measure, net income:
Three Months EndedSeptember 30,
2017
(in thousands) Net income $ 1,399 Interest expense, net 15,043
Income tax expense 1,211 Depreciation and amortization 19,729
Unrealized non-cash loss on derivative financial instrument 111
Public company readiness expenses 519 Stock-based compensation 213
Non-cash purchase accounting effects(a) 278 Loss on disposal of
property and equipment 30 Hurricane related costs(b) 430
Transaction costs(c) 1,316 Adjusted EBITDA $ 40,279
Adjusted EBITDA margin(d) 7.5 % (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 costs related to payroll and inventory
resulting from Hurricanes Harvey and Irma. (c) Represents one-time,
third-party advisor costs related to our acquisitions in the
period, including fees to financial advisors, accountants,
attorneys and other professionals. (d) Adjusted EBITDA margin
represents Adjusted EBITDA divided by net sales.
The following is a reconciliation of Adjusted net income to the
nearest GAAP measure, net income:
Three Months EndedSeptember 30,
2017
(in thousands, except share and per share data) Net income $ 1,399
Unrealized non-cash loss on derivative financial instrument 111
Public company readiness expenses 519 Stock-based compensation 213
Non-cash purchase accounting effects(a) 278 Loss on disposal of
property and equipment 30 Hurricane related costs(b) 430
Transaction costs(c) 1,316 Tax effect of adjustments(d) (1,057)
Adjusted net income $ 3,239 Earnings per share data as
reported: Basic $ 0.03 Diluted $ 0.03 Earnings per share data as
adjusted: Basic $ 0.08 Diluted $ 0.08 Weighted average
shares outstanding: Basic 42,865,407 Diluted 42,870,391 (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 costs related to
payroll and inventory resulting from Hurricanes Harvey and Irma.
(c) Represents one-time, third-party advisor costs related to our
acquisitions in the period, including fees to financial advisors,
accountants, attorneys and other professionals. (d) Represents the
tax effect of the adjustments to reflect corporate income taxes.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171107005806/en/
Investor Relations:Foundation Building Materials, Inc.John
Moten, 657-900-3200Investors@fbmsales.comorMedia Relations:Joele
Frank, Wilkinson Brimmer KatcherJoe Sala or Ed
Trissel212-355-4449
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