Continental Building Products, Inc. (NYSE:CBPX) (the "Company"),
a leading manufacturer of gypsum wallboard and complementary
finishing products, announced today results for the first quarter
ended March 31, 2018.
Highlights of First Quarter 2018 as Compared to First Quarter
2017
- Net income increased 11.6% to
$13.6 million
- Earnings per share increased 16.1% to
$0.36
- Net sales decreased 3.2% to
$116.8 million on wallboard volumes down 5.4%
- Gross margin increased to 25.8%
compared to 25.7%
- EBITDA1 decreased to $31.3 million
down 4.9% compared to $33.0 million
- Deployed $6.4 million in capital
investments
- Deployed $14.6 million to
repurchase 530,600 shares of common stock
- Outlook for full year 2018
unchanged
"We delivered higher gross margins in the first quarter while
facing a challenging operating environment, including lower volumes
as expected given strong pre-buy activity in advance of our January
1, 2018 price increase and poor weather for our regions. Our
ability to improve gross margins while overcoming a tightening
freight and labor market reflects our sharp focus on operating
discipline and our low cost highly efficient assets" stated Jay
Bachmann, President and Chief Executive Officer.
Mr. Bachmann continued, "We delivered strong quarterly earnings
of $0.36 per share. In addition to the benefits of tax reform and
the accretive benefit of our stock repurchase plan, we believe this
is a direct result of our Bison Way continuous improvement efforts
and the payback we are already receiving from high-return capital
projects. As we look forward to the balance of the year, we are
encouraged by the pace of wallboard demand in our markets, which
supports our unchanged outlook for full year 2018. At the same
time, we remain focused on deploying our strong cash flow to
improve our cost position through further investments in
high-return capital projects while continuing to repurchase shares
as a key avenue to return value to shareholders."
First Quarter 2018 Results vs. First Quarter 2017
Wallboard sales volumes decreased to
615 million square feet (MMSF) for the first quarter
2018, compared to 650 MMSF in the prior year quarter. Net sales
were down 3.2% to $116.8 million, compared to
$120.6 million in the prior year quarter, primarily due to a
5.4% decrease in wallboard volumes attributable to strong customer
pre-buy activity during the fourth quarter 2017 in anticipation of
a previously announced January 1, 2018 price increase, partially
offset by an increase in average mill net price compared to the
prior year quarter.
Operating income was $20.8 million, compared to
$21.7 million in the prior year quarter. This decrease was
primarily attributable to lower wallboard volumes. SG&A expense
was $9.4 million compared to $9.3 million in the prior
year quarter, or 8.1% of net sales compared to 7.7% in the prior
year quarter.
Interest expense decreased 6.7% to $2.7 million, compared
to $2.9 million in the prior year quarter, reflecting higher
investment income and capitalized interest partially offset by the
rise in LIBOR.
Net income for the first quarter 2018 increased 11.6% to
$13.6 million, or $0.36 per share, compared to
$12.2 million, or $0.31 per share, in the prior year quarter.
The $1.4 million increase in net income is primarily a result
of the decrease in provision for income taxes under the new tax
rates effective for 2018.
Balance Sheet and Cash Flow
As of March 31, 2018, the Company had cash on hand of
$63.8 million and total outstanding borrowing under the term
loan agreement of $270.9 million. During the first quarter
2018, the Company generated cash flows from operations of
$13.7 million and deployed $6.4 million in capital
investments.
In February 2018, the Company's Board of Directors authorized an
expansion of its stock repurchase program from up to
$200 million to up to $300 million. The program's
expiration date was also extended from the end of 2018 to the end
of 2019. During the first quarter 2018, the Company repurchased
530,600 shares of its common stock under its repurchase program at
an aggregate purchase price of $14.6 million, representing
1.4% of its outstanding shares as of December 31, 2017. As of
March 31, 2018, against the expanded program, the Company has
repurchased $117.9 million of our common stock at an average
price of $21.84 per share and had a remaining capacity of
$182.1 million for future repurchases.
Forward-Looking Outlook For the Full Year 2018
- SG&A is expected to be in the range
of $39 - $40 million
- Cost of goods sold inflation per unit
is expected to be at 3% to 5% partly offset by approximately $5
million of savings from high return capital projects
- Total capital expenditures are expected
to be in the range of $30 - $35 million
- Maintenance capital spending is
expected to be approximately $15 million
- High-return capital spending is
expected to be in the range of $15 - $20 million
- Depreciation and amortization is
expected to be in the range of $43 - $46 million
- Effective tax rate is expected to be in
the range of 22% - 24%
Investor Conference Webcast and Conference Call
The Company will host a webcast and conference call on Thursday,
May 3, 2018 at 5:00 p.m. Eastern Time to review first quarter
2018 financial results, 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) 407-0789 (domestic) or (201) 689-8562 (international). A
replay of the conference call will be available through June 3,
2018, by dialing (844) 512-2921 (domestic) or (412) 317-6671
(international) and entering the pass code number 13678456.
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, adjusted net income and adjusted
earnings per share, which are a non-GAAP financial measure, to
relevant GAAP financial measures, and a discussion of why they are
useful to investors.
Continental Building Products, Inc. Consolidated
Statements of Operations
(unaudited)
For the Three Months Ended March 31, 2018 March 31,
2017 (in thousands, except share data and per share amounts) Net
sales $ 116,802 $ 120,615 Costs, expenses and other income: Cost of
goods sold 86,616 89,624 Selling and administrative 9,424
9,304 Total costs and operating expenses 96,040
98,928 Operating income 20,762 21,687 Other expense, net
(140 ) (644 ) Interest expense, net (2,720 ) (2,916 ) Income before
losses from equity method investment and provision for income taxes
17,902 18,127 Losses from equity method investment (364 ) (170 )
Income before provision for income taxes 17,538 17,957 Provision
for income taxes (3,892 ) (5,730 ) Net income $ 13,646 $
12,227 Net income per share: Basic $ 0.36 $ 0.31
Diluted $ 0.36 $ 0.31 Weighted average shares outstanding: Basic
37,432,782 39,576,268 Diluted 37,604,953 39,702,126
Continental Building Products, Inc. Consolidated
Balance Sheets March 31, 2018
December 31, 2017
(unaudited) (in thousands) Assets: Cash and cash equivalents
$ 63,848 $ 72,521 Receivables, net 46,246 38,769 Inventories, net
27,725 24,882 Prepaid and other current assets 11,014 11,267
Total current assets 148,833 147,439 Property, plant and
equipment, net 293,902 294,003 Customer relationships and other
intangibles, net 68,433 70,807 Goodwill 119,945 119,945 Equity
method investment 9,071 9,263 Debt issuance costs 432 477
Total Assets $ 640,616 $ 641,934 Liabilities
and Shareholders' Equity: Liabilities: Accounts payable $ 31,215 $
30,809 Accrued and other liabilities 10,682 11,940 Notes payable,
current portion 1,680 1,702 Total current liabilities
43,577 44,451 Deferred taxes and other long-term liabilities 15,888
15,847 Notes payable, non-current portion 263,242 263,610
Total Liabilities 322,707 323,908
Shareholders' Equity: Undesignated preferred stock, par value
$0.001 per share; 10,000,000 shares authorized, no shares issued
and outstanding — —
Common stock, $0.001 par value per share;
190,000,000 shares authorized; 44,408,395 and 44,321,776 shares
issued
and 37,088,978 and 37,532,959 shares
outstanding as of March 31, 2018 and December 31, 2017,
respectively
44 44 Additional paid-in capital 325,615 325,391 Less: Treasury
stock (157,907 ) (143,357 ) Accumulated other comprehensive loss
(2,085 ) (2,649 ) Accumulated earnings 152,242 138,597
Total Shareholders' Equity 317,909 318,026
Total Liabilities and Shareholders' Equity $ 640,616 $
641,934
Continental Building
Products, Inc. Consolidated Statements of Cash Flows
(unaudited)
For the Three Months Ended March 31, 2018 March 31,
2017 (in thousands) Cash flows from operating activities: Net
income $ 13,646 $ 12,227 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 10,581 11,286 Amortization of debt issuance costs and
debt discount 334 291 Losses from equity method investment 364 170
Debt related expenses — 686 Share-based compensation 600 724
Deferred taxes — 92 Change in assets and liabilities: Receivables
(7,562 ) (9,323 ) Inventories (2,913 ) (1,279 ) Prepaid expenses
and other current assets 1,144 1,994 Accounts payable (1,353 )
1,714 Accrued and other current liabilities (1,042 ) 100 Other
long-term liabilities (56 ) (146 ) Net cash provided by operating
activities 13,743 18,536 Cash flows from investing activities:
Capital expenditures (5,955 ) (5,359 ) Software purchased or
developed (482 ) (1 ) Capital contributions to equity method
investment (251 ) (524 ) Distributions from equity method
investment 78 214 Net cash used in investing
activities (6,610 ) (5,670 ) Cash flows from financing activities:
Proceeds from exercise of stock options 11 168 Tax withholdings on
share-based compensation (421 ) (209 ) Proceeds from debt
refinancing — 273,625 Disbursements for debt refinancing — (273,625
) Payments of financing costs — (649 ) Principal payments for debt
(679 ) (684 ) Payments to repurchase common stock (14,550 ) (5,237
) Net cash used in financing activities (15,639 ) (6,611 ) Effect
of foreign exchange rates on cash and cash equivalents (167 ) 117
Net change in cash and cash equivalents (8,673 ) 6,372
Cash, beginning of period 72,521 51,536 Cash,
end of period $ 63,848 $ 57,908
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 in the United States ("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 Directors' 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 March 31, 2018 March 31, 2017 (unaudited,
in thousands) Net income $ 13,646 $ 12,227
Adjustments:
Other expense, net 140 644 Interest expense, net 2,720 2,916 Losses
from equity method investment 364 170 Provision for income taxes
3,892 5,730 Depreciation and amortization 10,581 11,286
EBITDA - Non-GAAP measure $ 31,343 $ 32,973
EBITDA Margin - EBITDA as a percentage of net sales - Non-GAAP
measure 26.8 % 27.3 %
Reconciliation of Net Income
and Earnings Per Share to Adjusted Net Income and Adjusted Earnings
Per Share For the Three Months Ended March 31, 2018 March 31,
2017 (unaudited, in thousands, except share data and per share
amounts) Net income - GAAP measure $ 13,646 $ 12,227 Debt related
expenses, net of tax (1) — 454 Adjusted net income -
Non-GAAP measure $ 13,646 $ 12,681 Earnings
per share - GAAP measure $ 0.36 $ 0.31 Debt related expenses, net
of tax (1) — 0.01 Adjusted earnings per share -
Non-GAAP measure $ 0.36 $ 0.32 (1)
Expenses related to debt repricing activities are shown net of
income tax benefit of $0.2 million for the three months ended March
31, 2017.
Other Financial and Operating Data
For the Three Months Ended March 31, 2018 March 31, 2017 (in
thousands, except mill net) Capital expenditures and software
purchased or developed $ 6,437 $ 5,360 Wallboard sales volume
(million square feet) 615 650 Mill net sales price (1) $ 151.60 $
147.92 (1) 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
March 31,2017
June 30,2017
September 30,2017
December 31,2017
March 31,2018
Volumes (million square feet) 650 647 644 725 615 Mill net sales
price (1) $ 147.92 $ 150.32 $ 144.90 $ 144.78 $ 151.60 (1)
Mill net sales price represents average selling price per
thousand square feet net of freight and delivery costs.
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Continental Building Products, Inc.Investor Relations:Tel.:
(703) 480-3980Investorrelations@continental-bp.com
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