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, 2018.
Highlights of Second Quarter 2018 as Compared to Second
Quarter 2017
- Earnings per share increased 84.4% to
$0.59
- Net income increased 76.6% to
$21.9 million
- EBITDA1 increased 21.3% to
$41.4 million
- Net sales increased 15.5% to
$139.3 million
- Gross margin increased to 29.4%
compared to 25.5%
- Operating cash flow improved 62.9% to
$39.0 million
- Deployed $7.4 million in capital
investments
- Deployed $10.0 million to
repurchase 0.3 million shares of common stock
"We delivered higher earnings per share reflecting strong
momentum in sales and a rigorous focus on operating discipline,"
stated Jay Bachmann, President and Chief Executive Officer. "We are
especially pleased by our 63% improvement in operating cash flows
where we converted essentially all of our EBITDA into cash. This
accomplishment is reflective of our relentless focus on improving
our efficient, low cost operations while we continue to combat
persistent inflationary pressures."
Mr. Bachmann continued, "We improved EBITDA in the quarter by
21% against the backdrop of tightening freight and labor markets.
Higher earnings also reflected our commitment to the Bison Way
continuous improvement effort as all of our associates work
together to streamline operations and better serve our customers.
As we look forward to the balance of the year, we expect demand to
remain strong, and our volumes to be in line with industry
wallboard growth, which we now anticipate will be 3% to 4% which
represents the high end of our previously communicated range of 2%
to 4% for the full year 2018. We are encouraged by the momentum of
wallboard demand in our markets, and even more so by the commitment
and hard work of everyone in the Company to ensure that we deliver
exceptional value to our customers."
Second Quarter 2018 Results vs. Second Quarter 2017
Net sales were up 15.5% to $139.3 million for the second
quarter 2018, compared to $120.6 million in the prior year
quarter, primarily due to a 11.6% increase in wallboard volumes.
Wallboard sales volumes increased to 722 million square
feet (MMSF), compared to 647 MMSF in the prior year quarter,
attributable to strong demand in the Company's markets.
Operating income was $30.6 million, compared to
$21.6 million in the prior year quarter. This increase was
primarily attributable to higher net sales which more than offset
an increase in input costs per unit. SG&A expense was
$10.4 million compared to $9.2 million in the prior year
quarter, or 7.5% of net sales compared to 7.6% in the prior year
quarter.
Interest expense decreased 12.0% to $2.7 million, compared
to $3.1 million in the prior year quarter, reflecting higher
investment income and capitalized interest, partially offset by the
rise in LIBOR.
Net income for the second quarter 2018 increased 76.6% to
$21.9 million, or $0.59 per share, compared to
$12.4 million, or $0.32 per share, in the prior year quarter.
The $9.5 million increase in net income is primarily a result
of the increase in net sales and the decrease in provision for
income taxes under the new federal and state tax rates effective
for 2018.
Balance Sheet and Cash Flow
As of June 30, 2018, the Company had cash on hand of
$84.4 million and total outstanding borrowing under the term
loan agreement of $270.2 million. During the second quarter
2018, the Company generated cash flows from operations of
$39.0 million and deployed $7.4 million in capital
investments.
During the second quarter 2018, the Company repurchased
0.3 million shares of its common stock under its recently
expanded repurchase program for an aggregate purchase price of
$10.0 million, representing 0.9% of its outstanding shares as
of December 31, 2017. As of June 30, 2018, against the
program, the Company has repurchased $127.9 million of common
stock at an average price of $22.27 per share and had a remaining
capacity of $172.1 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
compared to the prior year is expected to be in the range of 3% -
4%, down from the prior guidance of 3% - 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 $29 - $33 million as compared to the prior
guidance of $30 - $35 million
- Maintenance capital spending is
expected to be in the range of $14 - $15 million as compared to the
prior guidance of $15 million
- High-return capital spending is
expected to be in the range of $15 - $18 million as compared to the
prior guidance of $15 - $20 million
- Depreciation and amortization is
expected to be in the range of $43 - $45 million
- Effective tax rate is expected to be in
the range of 21% - 22% as compared to the prior guidance of 22% -
24%
Investor Conference Webcast and Conference Call
The Company will host a webcast and conference call on Thursday,
August 2, 2018 at 5:00 p.m. Eastern Time to review second
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 September
2, 2018, by dialing (844) 512-2921 (domestic) or (412) 317-6671
(international) and entering the pass code number 13681324.
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 non-GAAP financial measures, 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 For the Six Months
Ended June 30, 2018 June 30, 2017 June 30, 2018 June
30, 2017 (in thousands, except share data and per share amounts)
Net sales $ 139,268 $ 120,630 $ 256,070 $ 241,245 Costs, expenses
and other income: Cost of goods sold 98,263 89,817 184,879 179,441
Selling and administrative 10,445 9,193 19,869
18,497 Total costs and operating expenses 108,708
99,010 204,748 197,938 Operating
income 30,560 21,620 51,322 43,307 Other expense, net (87 ) (135 )
(227 ) (779 ) Interest expense, net (2,694 ) (3,062 ) (5,414
) (5,978 ) Income before (losses)/income from equity method
investment and provision for income taxes 27,779 18,423 45,681
36,550 (Losses)/income from equity method investment (391 ) 345
(755 ) 175 Income before provision for income
taxes 27,388 18,768 44,926 36,725 Provision for income taxes (5,493
) (6,370 ) (9,385 ) (12,100 ) Net income $ 21,895 $
12,398 $ 35,541 $ 24,625 Net
income per share: Basic $ 0.59 $ 0.32 $ 0.96 $ 0.63 Diluted $ 0.59
$ 0.32 $ 0.95 $ 0.62 Weighted average shares outstanding: Basic
36,879,774 39,125,571 37,154,750 39,349,674 Diluted 37,027,997
39,210,219 37,314,947 39,454,928
Continental
Building Products, Inc. Consolidated Balance Sheets
June 30, 2018 December 31, 2017 (unaudited)
(in thousands) Assets: Cash and cash equivalents $ 84,365 $ 72,521
Trade receivables, net 43,314 38,769 Inventories, net 27,662 24,882
Prepaid and other current assets 8,280 11,267 Total
current assets 163,621 147,439 Property, plant and equipment, net
292,451 294,003 Customer relationships and other intangibles, net
66,284 70,807 Goodwill 119,945 119,945 Equity method investment
8,867 9,263 Debt issuance costs 387 477 Total Assets
$ 651,555 $ 641,934 Liabilities and Shareholders'
Equity: Liabilities: Accounts payable $ 30,437 $ 30,809 Accrued and
other liabilities 10,259 11,940 Notes payable, current portion
1,685 1,702 Total current liabilities 42,381 44,451
Deferred taxes and other long-term liabilities 15,456 15,847 Notes
payable, non-current portion 262,807 263,610 Total
Liabilities 320,644 323,908 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; 44,413,204 and 44,321,776 shares issued and 36,748,879
and 37,532,959 shares outstanding as of June 30, 2018 and December
31, 2017, respectively 44 44 Additional paid-in capital 326,594
325,391 Less: Treasury stock (167,919 ) (143,357 ) Accumulated
other comprehensive loss (1,946 ) (2,649 ) Accumulated earnings
174,138 138,597 Total Shareholders' Equity 330,911
318,026 Total Liabilities and Shareholders' Equity $
651,555 $ 641,934
Continental
Building Products, Inc. Consolidated Statements of Cash
Flows
(unaudited)
For the Six Months Ended June 30, 2018 June
30, 2017 (in thousands) Cash flows from operating activities: Net
income $ 35,541 $ 24,625 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 21,386 23,760 Amortization of debt issuance costs and
debt discount 629 586 Losses/(income) from equity method investment
755 (175 ) Amortization of deferred gain on terminated swaps (317 )
Loss on debt extinguishment — 686 Share-based compensation 1,611
1,479 Deferred taxes — 92 Change in assets and liabilities: Trade
receivables (4,647 ) (4,942 ) Inventories (2,896 ) (1,811 ) Prepaid
expenses and other current assets 4,369 984 Accounts payable (2,078
) (564 ) Accrued and other current liabilities (955 ) (2,038 )
Other long-term liabilities (622 ) (188 ) Net cash provided by
operating activities 52,776 42,494 Cash flows from investing
activities: Capital expenditures (13,006 ) (8,070 ) Software
purchased or developed (790 ) (133 ) Capital contributions to
equity method investment (438 ) (647 ) Distributions from equity
method investment 78 214 Net cash used in investing
activities (14,156 ) (8,636 ) Cash flows from financing activities:
Proceeds from exercise of stock options 11 230 Tax withholdings on
share-based compensation (547 ) (240 ) Proceeds from debt
refinancing — 273,625 Disbursements for debt refinancing — (273,625
) Payments of financing costs — (649 ) Principal payments for debt
(1,358 ) (1,368 ) Payments to repurchase common stock (24,562 )
(27,836 ) Net cash used in financing activities (26,456 ) (29,863 )
Effect of foreign exchange rates on cash and cash equivalents (320
) 316 Net change in cash and cash equivalents 11,844
4,311 Cash, beginning of period 72,521 51,536
Cash, end of period $ 84,365 $ 55,847
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 For the Six Months Ended June 30, 2018
June 30, 2017 June 30, 2018 June 30, 2017 (unaudited,
in thousands) Net income $ 21,895 $ 12,398 $ 35,541 $ 24,625
Adjustments:
Other expense, net 87 135 227 779 Interest expense, net 2,694 3,062
5,414 5,978 Losses/(income) from equity method investment 391 (345
) 755 (175 ) Provision for income taxes 5,493 6,370 9,385 12,100
Depreciation and amortization 10,805 12,474 21,386
23,760 EBITDA - Non-GAAP measure $ 41,365 $
34,094 $ 72,708 $ 67,067 EBITDA Margin -
EBITDA as a percentage of net sales - Non-GAAP measure 29.7 % 28.3
% 28.4 % 27.8 %
Reconciliation of Net Income and
Earnings Per Share to Adjusted Net Income and Adjusted Earnings Per
Share For the Three Months Ended For the Six
Months Ended June 30, 2018 June 30, 2017 June 30, 2018
June 30, 2017 (unaudited, in thousands, except share data
and per share amounts) Net income - GAAP measure $ 21,895 $ 12,398
$ 35,541 $ 24,625 Debt related expenses, net of tax (1) —
— 454 Adjusted net income - Non-GAAP measure $ 21,895
$ 12,398 $ 35,541 $ 25,079 Earnings per
share - GAAP measure $ 0.59 $ 0.32 $ 0.96 $ 0.63 Debt related
expenses, net of tax (1) — — — 0.01 Adjusted
earnings per share - Non-GAAP measure $ 0.59 $ 0.32 $
0.96 $ 0.64 (1) Expenses related to debt
repricing activities are 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,
2018 June 30, 2017 June 30, 2018 June 30, 2017 (in
thousands, except mill net) Capital expenditures and software
purchased or developed $ 7,359 $ 2,843 $ 13,796 $ 8,203 Wallboard
sales volume (million square feet) 722 647 1,337 1,297 Mill net
sales price (1) $ 153.88 $ 150.32 $ 152.83 $ 149.11 (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
June 30,2017
September 30,2017
December 31,2017
March 31,2018
June 30,2018
Volumes (million square feet) 647 644 725 615 722 Mill net sales
price (1) $ 150.32 $ 144.90 $ 144.78 $ 151.60 $ 153.88 (1)
Mill net sales price represents average selling price per
thousand square feet net of freight and delivery costs.
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version on businesswire.com: https://www.businesswire.com/news/home/20180802005876/en/
Continental Building Products, Inc.Investor Relations:Tel.:
(703) 480-3980Investorrelations@continental-bp.com
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