YASTEST
- Higher average selling
prices on a sequential quarter basis in both the Drainage and Water
segments
- Sold the U.S. concrete and
steel pressure pipe business for a loss of $31.6 million that
contributed to the net loss of $11.5 million for the
quarter
- Adjusted EBITDA of $60.9
million, above the mid-point of the guidance range despite the
impact of two major hurricanes
- Ended the quarter with no
outstanding balance on the Revolver
IRVING, Texas, Nov. 08, 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
September 30, 2017.1
Third Quarter 2017
Results
Third quarter 2017 net sales increased to $444.3 million, compared
to $441.1 million in the prior year quarter. Net loss for the
quarter was $11.5 million, or a loss of $0.18 per share, compared
to net income of $8.4 million, or $0.19 per share, in the prior
year quarter. Adjusted EBITDA for the third quarter was $60.9
million, compared to $80.4 million in the prior year quarter.
The estimated Adjusted EBITDA impact of Hurricanes Harvey and Irma
was approximately $3.7 million including a $3.0 million impact to
Drainage Pipe & Products ("Drainage") and $0.7 million impact
to Water Pipe & Products ("Water").
Drainage net sales increased to $248.2 million,
compared to $215.5 million in the prior year quarter, due primarily
to $28.4 million of net sales from acquisitions. Net sales
excluding the acquisitions grew year over year with organic growth
in shipments partially offset by the negative impact of Hurricanes
Irma and Harvey. Drainage gross profit was $51.8 million
compared to $52.7 million in the prior year quarter, primarily due
to higher labor, freight and raw materials costs, that were not
fully offset by an increase in selling prices. Third quarter
2017 Drainage EBITDA and Adjusted EBITDA were $47.3 million and
$48.1 million, respectively, compared to $51.5 million and $51.8
million, respectively, in the prior year quarter.
Water net sales decreased to $196.0 million,
compared to $225.6 million in the prior year quarter, despite
higher selling prices of ductile iron pipe products. The sale
of the U.S. concrete and steel pressure pipe business effective
July 31, 2017 reduced net sales by $8.9 million. The balance
of the net sales decline was due to lower net sales of concrete
pressure pipe products in Canada and the impact of lower net sales
of ductile iron pipe. The decline in net sales of Canada pressure
pipe products was due to the completion of a large project in 2016.
The decline in ductile iron pipe sales was due to the impact of
Hurricane Irma and lower demand for infrastructure
projects.
Water gross profit in the third quarter was $30.9
million compared to $49.4 million in the prior year quarter.
Third quarter 2017 Water EBITDA and Adjusted EBITDA decreased to
$(4.1) million and $28.4 million, respectively, compared to $43.6
million and $43.3 million, respectively, in the prior year
quarter. The declines in gross profit, EBITDA and Adjusted
EBITDA were due to the impact of lower profitability from both
ductile iron pipe sales and concrete and steel pressure pipe
sales.
The ductile iron pipe portion of the Water segment
was impacted by higher scrap costs that were not fully offset by an
increase in selling prices of products sold. In Canada, the decline
in Water EBITDA and Adjusted EBITDA was primarily due to lower net
sales of concrete pressure pipe products as a result of a large
project that was completed in 2016.
|
|
Summary
of Results for the Divested U.S. Concrete and Steel Pressure Pipe
Business |
|
|
($ in millions) |
Three Months Ended September 30, |
|
2017 |
|
2016 |
|
(unaudited) |
|
(unaudited) |
Net Sales |
$ |
10.8 |
|
|
$ |
19.7 |
|
EBITDA |
(33.9 |
) |
|
(6.1 |
) |
Adjusted EBITDA |
$ |
(2.4 |
) |
|
$ |
(3.1 |
) |
|
|
|
|
|
|
|
|
Consolidated SG&A costs were lower in the
third quarter of 2017 as compared to the prior year quarter due
primarily to lower consulting and professional fees during the
quarter.
CEO
Commentary
Forterra CEO Jeff Bradley commented, "Our results this quarter
demonstrate our ability to successfully execute on multiple
objectives on a sequential quarter basis, including higher selling
prices, lower costs, and improved earnings. Additionally, in
spite of the impact of two major hurricanes, Adjusted EBITDA was
above the mid-point of our guidance range. My expectation for
continued improvement in our earnings is supported by ongoing
initiatives, a solid backlog and favorable market conditions."
Balance Sheet and
Liquidity
At September 30, 2017, the Company had cash of $41.1 million
and outstanding debt on its senior term loan of $1.2 billion.
As of September 30, 2017, there was no outstanding balance on
the Company's $300 million Revolver following an $80 million net
pay down during the quarter. The Company expects to continue
to build its cash position through the end of 2017 reflecting the
anticipated benefit of positive cash flow from working capital
during the fourth quarter.
Financial
Outlook
The Company expects that the net loss for the fourth quarter of
2017 will range from $16 million to $13 million and Adjusted EBITDA
will range from $20 million to $25 million. The guidance
range anticipates delivering an improved year over year Adjusted
EBITDA margin variance in Q4 2017 as compared to the prior
quarter. The guidance range also assumes a year over year
decline in sales, including a $27 million decline in net sales
associated with the divestiture of the U.S. concrete and steel
pressure pipe business. The Company expects to see higher
sequential quarter SG&A reflecting the continued use of
professionals in support of its Sarbanes-Oxley implementation.
Conference Call and Webcast
Information
Forterra will host a conference call to review third quarter 2017
results on November 8, 2017 at 10:00 a.m. Eastern Time (9:00 a.m.
Central Time). The dial-in number for the call is 574-990-1396 or
toll free 844-498-0572. The participant passcode is 4668329. Please
dial in at least five minutes prior to the call to register. The
call may also be accessed via a webcast which, along with the
supplemental presentation that will be referenced during the call,
are 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 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, drainage and stormwater management.
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 A
reconciliation of non-GAAP financial measures to comparable GAAP
financial measures is provided in the Reconciliation of Non-GAAP
Measures section of this press release.
|
Condensed Consolidated Statements of
Operations
(in thousands, except per share data) |
|
|
Three months ended |
|
Nine months ended |
|
September 30, |
|
September 30, |
|
2017 |
2016 |
|
2017 |
2016 |
|
(unaudited) |
|
(unaudited) |
Net
sales |
$ |
444,257 |
|
$ |
441,132 |
|
|
$ |
1,219,244 |
|
$ |
1,009,851 |
|
Cost of
goods sold |
362,150 |
|
339,819 |
|
|
1,022,574 |
|
789,756 |
|
Gross
profit |
82,107 |
|
101,313 |
|
|
196,670 |
|
220,095 |
|
Selling, general &
administrative expenses |
(59,366 |
) |
(62,355 |
) |
|
(191,964 |
) |
(153,076 |
) |
Impairment and exit
charges |
(1,193 |
) |
(555 |
) |
|
(13,004 |
) |
(578 |
) |
Earnings from equity method
investee |
2,936 |
|
4,146 |
|
|
9,449 |
|
9,014 |
|
Other operating income,
net |
2,008 |
|
1,946 |
|
|
5,251 |
|
5,290 |
|
|
(55,615 |
) |
(56,818 |
) |
|
(190,268 |
) |
(139,350 |
) |
Income
from operations |
26,492 |
|
44,495 |
|
|
6,402 |
|
80,745 |
|
|
|
|
|
|
|
Other
income (expenses) |
|
|
|
|
|
Interest expense |
(15,582 |
) |
(31,756 |
) |
|
(46,202 |
) |
(73,885 |
) |
Other expense, net |
(30,866 |
) |
(217 |
) |
|
(30,866 |
) |
(1,394 |
) |
Income
(loss) from continuing operations before income taxes |
(19,956 |
) |
12,522 |
|
|
(70,666 |
) |
5,466 |
|
Income tax benefit
(expense) |
8,454 |
|
(8,154 |
) |
|
25,448 |
|
28,586 |
|
Income
(loss) from continuing operations |
(11,502 |
) |
4,368 |
|
|
(45,218 |
) |
34,052 |
|
|
|
|
|
|
|
Discontinued operations, net of tax |
- |
|
4,000 |
|
|
- |
|
7,069 |
|
Net
income (loss) |
$ |
(11,502 |
) |
$ |
8,368 |
|
|
$ |
(45,218 |
) |
$ |
41,121 |
|
|
|
|
|
|
|
Basic
and Diluted earnings (loss) per share: |
|
|
|
|
|
Continuing operations |
$ |
(0.18 |
) |
$ |
0.10 |
|
|
$ |
(0.71 |
) |
$ |
0.75 |
|
Discontinued operations |
$ |
- |
|
$ |
0.09 |
|
|
$ |
- |
|
$ |
0.16 |
|
Net income (loss) |
$ |
(0.18 |
) |
$ |
0.19 |
|
|
$ |
(0.71 |
) |
$ |
0.91 |
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
Basic and Diluted |
63,799 |
|
45,369 |
|
|
63,794 |
|
45,369 |
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheets
(in thousands, except share data) |
|
|
September 30,
2017 |
|
December 31,
2016 |
ASSETS |
(unaudited) |
|
|
Current
assets |
|
|
|
Cash and cash equivalents |
$ |
41,131 |
|
|
$ |
40,024 |
|
Receivables, net |
266,676 |
|
|
201,481 |
|
Inventories |
264,292 |
|
|
279,502 |
|
Prepaid expenses |
5,596 |
|
|
6,417 |
|
Other current assets |
22,430 |
|
|
5,179 |
|
Total current assets |
600,125 |
|
|
532,603 |
|
Non-current assets |
|
|
|
Property, plant and equipment,
net |
426,246 |
|
|
452,914 |
|
Goodwill |
504,964 |
|
|
491,447 |
|
Intangible assets, net |
243,603 |
|
|
281,598 |
|
Investment in equity method
investee |
55,685 |
|
|
55,236 |
|
Other long-term assets |
15,992 |
|
|
10,988 |
|
Total assets |
$ |
1,846,615 |
|
|
$ |
1,824,786 |
|
LIABILITIES AND EQUITY |
|
|
|
Current
liabilities |
|
|
|
Trade payables |
$ |
133,899 |
|
|
$ |
134,059 |
|
Accrued liabilities |
79,320 |
|
|
82,165 |
|
Deferred revenue |
8,892 |
|
|
20,797 |
|
Current portion of long-term
debt |
12,510 |
|
|
10,500 |
|
Total current liabilities |
234,621 |
|
|
247,521 |
|
Non-current liabilities |
|
|
|
Senior term loan |
1,182,545 |
|
|
990,483 |
|
Revolving credit facility |
- |
|
|
95,064 |
|
Deferred tax liabilities |
77,651 |
|
|
100,550 |
|
Deferred gain on
sale-leaseback |
76,469 |
|
|
78,215 |
|
Other long-term
liabilities |
27,991 |
|
|
23,253 |
|
Long-term TRA Payable |
159,003 |
|
|
156,783 |
|
Total liabilities |
1,758,280 |
|
|
1,691,869 |
|
Equity |
|
|
|
Common stock, $0.001 par
value, 64,294,793 and 63,924,124 shares issued and outstanding,
respectively, and 190,000,000 shares authorized |
18 |
|
|
18 |
|
Additional
paid-in-capital |
229,057 |
|
|
228,316 |
|
Accumulated other
comprehensive loss |
(5,130 |
) |
|
(5,025 |
) |
Retained deficit |
(135,610 |
) |
|
(90,392 |
) |
Total shareholders'
equity |
88,335 |
|
|
132,917 |
|
Total liabilities and
shareholders' equity |
$ |
1,846,615 |
|
|
$ |
1,824,786 |
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows (in thousands) |
|
|
|
|
|
Nine months ended |
|
|
September 30, |
|
|
2017 |
|
2016 |
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
(unaudited) |
|
(unaudited) |
Net Income (loss) |
|
$ |
(45,218 |
) |
|
$ |
41,121 |
|
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities: |
Depreciation &
amortization expense |
|
87,463 |
|
|
71,049 |
|
Loss on business
divestiture |
|
31,606 |
|
|
- |
|
Loss on disposal of property,
plant and equipment |
|
1,749 |
|
|
1,169 |
|
Amortization of debt discount
and issuance costs |
|
6,061 |
|
|
6,393 |
|
Impairment charges |
|
10,551 |
|
|
- |
|
Earnings from equity method
investee |
|
(9,449 |
) |
|
(9,014 |
) |
Distributions from equity
method investee |
|
9,000 |
|
|
7,800 |
|
Unrealized (gain) loss on
derivative instruments, net |
|
(2,035 |
) |
|
1,606 |
|
Provision (recoveries) for
doubtful accounts |
|
2,289 |
|
|
(1,235 |
) |
Deferred taxes |
|
(16,321 |
) |
|
(51,846 |
) |
Deferred rent |
|
1,941 |
|
|
- |
|
Other non-cash items |
|
1,690 |
|
|
45 |
|
Change in
assets and liabilities: |
|
|
|
|
Receivables, net |
|
(84,974 |
) |
|
(61,591 |
) |
Inventories |
|
(18,217 |
) |
|
18,370 |
|
Other assets |
|
(15,522 |
) |
|
(7,973 |
) |
Accounts payable and accrued
liabilities |
|
2,668 |
|
|
7,854 |
|
Other assets &
liabilities |
|
(2,415 |
) |
|
7,124 |
|
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES |
|
(39,133 |
) |
|
30,872 |
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES |
|
|
|
|
Purchase of property, plant
and equipment |
|
(38,729 |
) |
|
(27,043 |
) |
Proceeds from business
divestiture |
|
23,200 |
|
|
- |
|
Assets and liabilities
acquired, business combinations, net |
|
(35,380 |
) |
|
(872,471 |
) |
NET CASH USED IN INVESTING
ACTIVITIES |
|
(50,909 |
) |
|
(899,514 |
) |
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
|
Proceeds from
sale-leaseback |
|
- |
|
|
216,280 |
|
Deferred transaction costs on
failed sale-leaseback |
|
- |
|
|
(6,492 |
) |
Payment of debt issuance
costs |
|
(2,498 |
) |
|
(10,638 |
) |
Payment of equity issuance
costs |
|
- |
|
|
(6,669 |
) |
Payments on term loans |
|
(8,880 |
) |
|
(2,191 |
) |
Proceeds from term loans,
net |
|
200,000 |
|
|
548,400 |
|
Proceeds from revolver |
|
194,000 |
|
|
131,611 |
|
Payments on revolver |
|
(293,000 |
) |
|
(55,173 |
) |
Proceeds from settlement of
derivatives |
|
- |
|
|
6,546 |
|
Capital contribution from
parent |
|
- |
|
|
402,127 |
|
Payments for return of
contributed capital |
|
- |
|
|
(363,582 |
) |
Other financing
activities |
|
(232 |
) |
|
- |
|
NET CASH PROVIDED BY FINANCING
ACTIVITIES |
|
89,390 |
|
|
860,219 |
|
Effect of exchange rate
changes on cash |
|
1,759 |
|
|
1,050 |
|
Net change in cash and cash
equivalents |
|
1,107 |
|
|
(7,373 |
) |
Cash and cash equivalents,
beginning of period |
|
40,024 |
|
|
43,590 |
|
Cash and cash equivalents, end
of period |
|
$ |
41,131 |
|
|
$ |
36,217 |
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES: |
Cash interest paid |
|
40,968 |
|
|
51,476 |
|
Income taxes paid |
|
27,590 |
|
|
- |
|
SUPPLEMENTAL NON-CASH
INVESTING AND FINANCING DISCLOSURES: |
Fair value changes of
derivatives recorded in OCI, net of tax |
|
(4,103 |
) |
|
(1,253 |
) |
|
|
|
|
|
|
|
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 EBITDA and adjusted EBITDA margin. 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 EBITDA as net income
(loss) before (earnings)/loss from discontinued operations,
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 non-recurring income and expenses, such as
transaction costs, inventory step-up impacting margin, non-cash
compensation expense and costs associated with disposed
sites. Adjusted EBITDA margin represents adjusted EBITDA as a
percentage of net sales.
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 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 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 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 EBITDA and adjusted
EBITDA margin have certain limitations. Adjusted EBITDA should not
be considered as an alternative to consolidated net income, and in
the case of our segment results, adjusted EBITDA should not be
considered an alternative to EBITDA, which the chief operating
decision maker 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 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 cash 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 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
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
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
EBITDA
(in thousands) |
|
|
Three months ended September 30, |
|
2017 |
|
2016 |
|
(unaudited) |
|
(unaudited) |
Net income (loss) |
$ |
(11,502 |
) |
|
$ |
8,368 |
|
Loss from discontinued
operations, net |
- |
|
|
(4,000 |
) |
Interest expense |
15,582 |
|
|
31,756 |
|
Depreciation and
amortization |
29,158 |
|
|
28,490 |
|
Income tax (benefit)
expense |
(8,454 |
) |
|
8,154 |
|
EBITDA1 |
24,784 |
|
|
72,768 |
|
(Gain) loss on sale of
property, plant & equipment, net2 |
555 |
|
|
1,547 |
|
Impairment and exit
charges3 |
1,193 |
|
|
555 |
|
Transaction costs4 |
1,553 |
|
|
8,139 |
|
Inventory step-up impacting
margin5 |
394 |
|
|
- |
|
Costs associated with disposed
sites6 |
31,606 |
|
|
46 |
|
Non-cash
compensation7 |
1,444 |
|
|
- |
|
Other (gains)
expenses8 |
(679 |
) |
|
(2,676 |
) |
Adjusted EBITDA9 |
$ |
60,850 |
|
|
$ |
80,379 |
|
Adjusted EBITDA
margin9 |
13.7 |
% |
|
18.2 |
% |
Gross profit |
82,107 |
|
|
101,313 |
|
Gross profit margin |
18.5 |
% |
|
23.0 |
% |
|
Nine months ended September 30, |
|
2017 |
|
2016 |
|
(unaudited) |
|
(unaudited) |
Net income (loss) |
$ |
(45,218 |
) |
|
$ |
41,121 |
|
Loss from discontinued
operations, net |
- |
|
|
(7,069 |
) |
Interest expense |
46,202 |
|
|
73,885 |
|
Depreciation and
amortization |
87,463 |
|
|
64,918 |
|
Income tax benefit |
(25,448 |
) |
|
(28,586 |
) |
EBITDA1 |
62,999 |
|
|
144,269 |
|
(Gain) loss on sale of
property, plant & equipment, net2 |
1,749 |
|
|
1,177 |
|
Impairment and exit
charges3 |
13,004 |
|
|
578 |
|
Transaction costs4 |
6,291 |
|
|
19,228 |
|
Inventory step-up impacting
margin5 |
2,151 |
|
|
12,515 |
|
Costs associated with disposed
sites6 |
31,606 |
|
|
234 |
|
Non-cash
compensation7 |
2,688 |
|
|
- |
|
Other (gains)
expenses8 |
(1,217 |
) |
|
(2,676 |
) |
Adjusted EBITDA9 |
$ |
119,271 |
|
|
$ |
175,325 |
|
Adjusted EBITDA
margin9 |
9.8 |
% |
|
17.4 |
% |
Gross profit |
196,670 |
|
|
220,095 |
|
Gross profit margin |
16.1 |
% |
|
21.8 |
% |
|
|
|
|
|
|
1 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.
2 (Gain)
loss on sale of property, plant and equipment, primarily related to
the disposition of manufacturing facilities.
3 Impairment
of goodwill and long-lived assets and other exit charges.
4 Legal,
valuation, accounting, advisory and other costs related to business
combinations and other transactions.
5 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.
6 Loss on
divestiture of U.S. concrete and steel pressure pipe business, and
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.
7 Non-cash
equity compensation expense.
8 Other
(gains) losses, such as gain on insurance proceeds related to the
destruction of property and adjustments to the estimated value of
the TRA liability.
9 Adjusted
EBITDA and Adjusted EBITDA margin are non-GAAP measures. See
the discussion of why we believe they are useful and reconciliation
thereof to the most directly comparable GAAP financial measures in
the beginning of these schedules.
|
Reconciliation of segment EBITDA to segment Adjusted
EBITDA
(in thousands) |
|
Three
months ended September 30, 2017 |
Drainage
Pipe & Products |
|
Water Pipe &
Products |
|
Corporate
and Other |
|
Total |
EBITDA1 |
$ |
47,342 |
|
|
$ |
(4,144 |
) |
|
$ |
(18,414 |
) |
|
$ |
24,784 |
|
|
|
|
|
|
|
|
|
(Gain) loss on sale of
property, plant & equipment, net2 |
(75 |
) |
|
680 |
|
|
(50 |
) |
|
555 |
|
Impairment and exit
charges3 |
- |
|
|
354 |
|
|
839 |
|
|
1,193 |
|
Transaction costs4 |
- |
|
|
- |
|
|
1,553 |
|
|
1,553 |
|
Inventory step-up impacting
margin5 |
394 |
|
|
- |
|
|
- |
|
|
394 |
|
Costs associated with disposed
sites6 |
- |
|
|
31,606 |
|
|
- |
|
|
31,606 |
|
Non-cash
compensation7 |
405 |
|
|
308 |
|
|
731 |
|
|
1,444 |
|
Other (gains)
expenses8 |
- |
|
|
(404 |
) |
|
(275 |
) |
|
(679 |
) |
Adjusted EBITDA9 |
$ |
48,066 |
|
|
$ |
28,400 |
|
|
$ |
(15,616 |
) |
|
$ |
60,850 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
248,231 |
|
|
$ |
195,987 |
|
|
$ |
39 |
|
|
$ |
444,257 |
|
Gross Profit |
$ |
51,825 |
|
|
$ |
30,920 |
|
|
$ |
(638 |
) |
|
$ |
82,107 |
|
Three
months ended September 30, 2016 |
Drainage
Pipe & Products |
|
Water Pipe &
Products |
|
Corporate
and Other |
|
Total |
EBITDA1 |
$ |
51,502 |
|
|
$ |
43,634 |
|
|
$ |
(22,368 |
) |
|
$ |
72,768 |
|
|
|
|
|
|
|
|
|
(Gain) loss on sale of
property, plant & equipment, net2 |
6 |
|
|
1,541 |
|
|
- |
|
|
1,547 |
|
Impairment and exit
charges3 |
245 |
|
|
304 |
|
|
6 |
|
|
555 |
|
Transaction costs4 |
- |
|
|
466 |
|
|
7,673 |
|
|
8,139 |
|
Inventory step-up impacting
margin5 |
- |
|
|
- |
|
|
- |
|
|
- |
|
Costs associated with disposed
sites6 |
46 |
|
|
- |
|
|
- |
|
|
46 |
|
Other (gains)
expenses8 |
- |
|
|
(2,676 |
) |
|
- |
|
|
(2,676 |
) |
Adjusted EBITDA9 |
$ |
51,799 |
|
|
$ |
43,269 |
|
|
$ |
(14,689 |
) |
|
$ |
80,379 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
215,486 |
|
|
$ |
225,645 |
|
|
$ |
1 |
|
|
$ |
441,132 |
|
Gross Profit |
$ |
52,661 |
|
|
$ |
49,394 |
|
|
$ |
(742 |
) |
|
$ |
101,313 |
|
Nine
months ended September 30, 2017 |
Drainage
Pipe & Products |
|
Water Pipe &
Products |
|
Corporate
and Other |
|
Total |
EBITDA1 |
$ |
98,832 |
|
|
$ |
30,881 |
|
|
$ |
(66,714 |
) |
|
$ |
62,999 |
|
|
|
|
|
|
|
|
|
(Gain) loss on sale of
property, plant & equipment, net2 |
(4 |
) |
|
1,753 |
|
|
- |
|
|
1,749 |
|
Impairment and exit
charges3 |
(14 |
) |
|
12,179 |
|
|
839 |
|
|
13,004 |
|
Transaction costs4 |
|
|
- |
|
|
6,291 |
|
|
6,291 |
|
Inventory step-up impacting
margin5 |
2,151 |
|
|
- |
|
|
- |
|
|
2,151 |
|
Costs associated with disposed
sites6 |
- |
|
|
31,606 |
|
|
- |
|
|
31,606 |
|
Non-cash
compensation7 |
454 |
|
|
345 |
|
|
1,889 |
|
|
2,688 |
|
Other (gains)
expenses8 |
- |
|
|
(942 |
) |
|
(275 |
) |
|
(1,217 |
) |
Adjusted EBITDA9 |
$ |
101,419 |
|
|
$ |
75,822 |
|
|
$ |
(57,970 |
) |
|
$ |
119,271 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
630,200 |
|
|
$ |
588,999 |
|
|
$ |
45 |
|
|
$ |
1,219,244 |
|
Gross Profit |
$ |
112,323 |
|
|
$ |
86,327 |
|
|
$ |
(1,980 |
) |
|
$ |
196,670 |
|
Nine
months ended September 30, 2016 |
Drainage
Pipe & Products |
|
Water Pipe &
Products |
|
Corporate
and Other |
|
Total |
EBITDA1 |
$ |
126,536 |
|
|
$ |
80,251 |
|
|
$ |
(62,518 |
) |
|
$ |
144,269 |
|
|
|
|
|
|
|
|
|
(Gain) loss on sale of
property, plant & equipment, net2 |
247 |
|
|
83 |
|
|
847 |
|
|
1,177 |
|
Impairment and exit
charges3 |
245 |
|
|
327 |
|
|
6 |
|
|
578 |
|
Transaction costs4 |
- |
|
|
535 |
|
|
18,693 |
|
|
19,228 |
|
Inventory step-up impacting
margin5 |
1,878 |
|
|
10,637 |
|
|
- |
|
|
12,515 |
|
Costs associated with disposed
sites6 |
234 |
|
|
- |
|
|
- |
|
|
234 |
|
Other (gains)
expenses8 |
- |
|
|
(2,676 |
) |
|
- |
|
|
(2,676 |
) |
Adjusted EBITDA9 |
$ |
129,140 |
|
|
$ |
89,157 |
|
|
$ |
(42,972 |
) |
|
$ |
175,325 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
552,035 |
|
|
$ |
455,286 |
|
|
$ |
2,530 |
|
|
$ |
1,009,851 |
|
Gross Profit |
$ |
131,325 |
|
|
$ |
90,611 |
|
|
$ |
(1,841 |
) |
|
$ |
220,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 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.
2 (Gain)
loss on sale of property, plant and equipment, primarily related to
the disposition of manufacturing facilities.
3 Impairment
of goodwill and long-lived assets and other exit charges.
4 Legal,
valuation, accounting, advisory and other costs related to business
combinations and other transactions.
5 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.
6 Loss on
divestiture of U.S. concrete and steel pressure pipe business, and
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.
7 Non-cash
equity compensation expense.
8 Other
(gains) losses, such as gain on insurance proceeds related to the
destruction of property and adjustments to the estimated value of
the TRA liability.
9 Adjusted
EBITDA and Adjusted EBITDA margin are non-GAAP measures. See
the discussion of why we believe they are useful and reconciliation
thereof to the most directly comparable GAAP financial measures in
the beginning of these schedules.
|
Reconciliation of Net Income to Adjusted EBITDA Guidance
for Q4 2017
(in millions) |
|
|
|
Q4
2017 EBITDA Guidance |
|
|
Low |
|
High |
Net income |
|
$ |
(16 |
) |
|
$ |
(13 |
) |
Interest expense |
|
16 |
|
|
16 |
|
Income tax benefit |
|
(10 |
) |
|
(8 |
) |
Depreciation and
amortization |
|
30 |
|
|
30 |
|
Adjusted EBITDA |
|
$ |
20 |
|
|
$ |
25 |
|
|
|
|
|
|
|
|
|
|
Company Contact Information:
Charles R. Brown, II
Executive Vice President and Chief Financial Officer
469-299-9113
IR@forterrabp.com
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Forterra, Inc. via Globenewswire
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