Continental Building Products, Inc. (NYSE: CBPX) (the
"Company"), a leading manufacturer of gypsum wallboard and
complementary finishing products, announced today results for the
third quarter ended September 30, 2018.
Highlights of Third Quarter 2018 as Compared to Third Quarter
2017
- Earnings per share increased 75.9% to
$0.51
- Net income increased 69.0% to
$18.6 million
- EBITDA1 increased 21.4% to
$38.6 million
- Net sales increased 12.6% to
$131.2 million
- Gross margin increased to 28.1%
compared to 24.5%
- Deployed $7.3 million in capital
investments
- Deployed $2.9 million to
repurchase 76,600 shares of common stock
"We executed strong operational and financial results in the
quarter with a 76% increase in earnings per share and significant
operating cash flow driven by higher net sales and our highly
efficient low cost operations," stated Jay Bachmann, President and
Chief Executive Officer. "We achieved a 21% increase in EBITDA and
a 360 basis point improvement in gross margin, marking the fifth
straight quarter that we have expanded gross margin. This overall
improvement reflects our relentless focus on our Bison Way
continuous improvement effort as our associates work together to
streamline our operations and elevate our service to customers. We
are especially pleased to deliver these results against a backdrop
of continuing inflationary pressures in freight, labor and raw
materials."
Mr. Bachmann continued, "We remain focused on deploying our
strong cash flow to improve our operations and cost position
through investments in high-return capital projects while
continuing to repurchase shares as a key avenue to return value to
share owners. We are excited about the rewards to come from
reinvesting in our people and our business and inspired by the
commitment and hard work of everyone in the Company to ensure we
deliver exceptional value to our customers."
Third Quarter 2018 Results vs. Third Quarter 2017
Net sales were up 12.6% to $131.2 million for the third
quarter 2018, compared to $116.5 million in the prior year
quarter, primarily due to a 7.3% increase in average mill net price
on wallboard sales and a 4.7% increase in wallboard volumes.
Wallboard sales volumes increased to 674 million square
feet (MMSF), compared to 644 MMSF in the prior year quarter,
attributable to strong demand in the Company's markets.
Operating income was $27.0 million, compared to
$19.7 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
$10.0 million compared to $8.9 million in the prior year
quarter, or 7.6% of net sales in both periods.
Interest expense decreased 14.7% to $2.5 million, compared
to $3.0 million in the prior year quarter, reflecting higher
investment income and capitalized interest, partially offset by the
rise in LIBOR.
Net income for the third quarter 2018 increased 69.0% to
$18.6 million, or $0.51 per share, compared to
$11.0 million, or $0.29 per share, in the prior year quarter.
The $7.6 million increase in net income was 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 September 30, 2018, the Company had a cash balance of
$105.5 million and total outstanding borrowing under the term
loan agreement of $269.5 million. During the third quarter
2018, the Company generated cash flows from operations of
$31.3 million and deployed $7.3 million in capital
investments.
During the third quarter 2018, the Company repurchased 76,600
shares of its common stock under its expanded repurchase program
for an aggregate purchase price of $2.9 million, representing
0.2% of its outstanding shares as of December 31, 2017. As of
September 30, 2018, against the program, the Company has
repurchased $130.7 million of common stock at an average price
of $22.47 per share and had a remaining capacity of
$169.3 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 3.5% -
4% which is at the higher end of the previous range of 3% - 4%. We
expect to partly offset this inflation by approximately
$5 million of savings from high return capital projects.
- Total capital expenditures are expected
to be in the range of $28 - $31 million
- Maintenance capital spending is
expected to be in the range of $14 - $15 million
- High-return capital spending is
expected to be in the range of $14 - $16 million
- Depreciation and amortization is
expected to be in the range of $44 - $45 million which is at the
higher end of the previous range of $43 - $45 million
- Effective tax rate is expected to be in
the range of 21% - 22%
Investor Conference Webcast and Conference Call
The Company will host a webcast and conference call on Thursday,
November 8, 2018 at 5:00 p.m. Eastern Time to review third
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 December 8,
2018, by dialing (844) 512-2921 (domestic) or (412) 317-6671
(international) and entering the pass code number 13683730.
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 Nine Months Ended
September 30,2018
September 30,2017
September 30,2018
September 30,2017
(in thousands, except share data and per share amounts) Net sales $
131,234 $ 116,526 $ 387,304 $ 357,771 Costs, expenses and
other income: Cost of goods sold 94,306 87,952 279,185 267,393
Selling and administrative 9,957 8,867 29,826
27,364 Total costs and operating expenses 104,263
96,819 309,011 294,757 Operating income 26,971
19,707 78,293 63,014 Other (expense)/income, net (29 ) 146 (256 )
(633 ) Interest expense, net (2,549 ) (2,988 ) (7,963 ) (8,966 )
Income before losses from equity method investment and provision
for income taxes 24,393 16,865 70,074 53,415 Losses from equity
method investment (393 ) (204 ) (1,148 ) (29 ) Income before
provision for income taxes 24,000 16,661 68,926 53,386 Provision
for income taxes (5,436 ) (5,674 ) (14,821 ) (17,774 ) Net income $
18,564 $ 10,987 $ 54,105 $ 35,612
Net income per share: Basic $ 0.51 $ 0.29 $ 1.46 $ 0.91
Diluted $ 0.50 $ 0.29 $ 1.46 $ 0.91 Weighted average shares
outstanding: Basic 36,732,746 38,212,869 37,012,536 38,966,575
Diluted 36,918,904 38,345,556 37,181,387 39,080,973
Continental Building Products, Inc. Consolidated Balance
Sheets September 30, 2018 December 31, 2017
(unaudited)
(in thousands) Assets: Cash and cash equivalents $ 105,452 $ 72,521
Trade receivables, net 39,597 38,769 Inventories, net 32,439 24,882
Prepaid and other current assets 11,605 11,267 Total
current assets 189,093 147,439 Property, plant and equipment, net
290,670 294,003 Customer relationships and other intangibles, net
64,661 70,807 Goodwill 119,945 119,945 Equity method investment
8,194 9,263 Debt issuance costs 341 477 Total Assets
$ 672,904 $ 641,934 Liabilities and Shareholders'
Equity: Liabilities: Accounts payable $ 32,253 $ 30,809 Accrued and
other liabilities 13,239 11,940 Notes payable, current portion
1,670 1,702 Total current liabilities 47,162 44,451
Deferred taxes and other long-term liabilities 15,392 15,847 Notes
payable, non-current portion 262,400 263,610 Total
Liabilities 324,954 323,908 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; 44,422,804 and 44,321,776 shares issued and 36,681,879
and 37,532,959 shares outstanding as of September 30, 2018 and
December 31, 2017, respectively 44 44 Additional paid-in capital
327,643 325,391 Less: Treasury stock (170,782 ) (143,357 )
Accumulated other comprehensive loss (1,656 ) (2,649 ) Accumulated
earnings 192,701 138,597 Total Shareholders' Equity
347,950 318,026 Total Liabilities and Shareholders'
Equity $ 672,904 $ 641,934
Continental Building Products, Inc. Consolidated
Statements of Cash Flows
(unaudited)
For the Nine Months Ended September 30, 2018
September 30, 2017 (in thousands) Cash flows from operating
activities: Net income $ 54,105 $ 35,612 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization 32,966 35,817 Amortization of debt
issuance costs and debt discount 931 885 Losses from equity method
investment 1,148 29 Amortization of deferred gain on terminated
swaps (632 ) — Loss on debt extinguishment — 686 Share-based
compensation 2,459 2,101 Deferred taxes (457 ) 92 Change in assets
and liabilities: Trade receivables (914 ) 1,420 Inventories (7,627
) (872 ) Prepaid expenses and other current assets 1,264 (350 )
Accounts payable (52 ) (87 ) Accrued and other current liabilities
1,089 4 Other long-term liabilities (226 ) (245 ) Net cash provided
by operating activities 84,054 75,092 Cash flows from investing
activities: Capital expenditures (19,761 ) (14,077 ) Software
purchased or developed (1,359 ) (183 ) Proceeds from the sale of
property, plant and equipment 125 — Capital contributions to equity
method investment (548 ) (1,929 ) Distributions from equity method
investment 468 641 Net cash used in investing
activities (21,075 ) (15,548 ) Cash flows from financing
activities: Proceeds from exercise of stock options 145 230 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 (2,037 ) (2,052 ) Payments to repurchase common
stock (27,425 ) (49,128 ) Net cash used in financing activities
(29,864 ) (51,839 ) Effect of foreign exchange rates on cash and
cash equivalents (184 ) 707 Net change in cash and cash
equivalents 32,931 8,412 Cash, beginning of period
72,521 51,536 Cash, end of period $ 105,452 $
59,948
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 Nine Months Ended
September 30,2018
September 30,2017
September 30,2018
September 30,2017
(unaudited, in thousands) Net income $ 18,564 $ 10,987 $ 54,105 $
35,612
Adjustments:
Other expense/(income), net 29 (146 ) 256 633 Interest expense, net
2,549 2,988 7,963 8,966 Losses from equity method investment 393
204 1,148 29 Provision for income taxes 5,436 5,674 14,821 17,774
Depreciation and amortization 11,580 12,057 32,966
35,817 EBITDA - Non-GAAP measure $ 38,551 $
31,764 $ 111,259 $ 98,831 EBITDA Margin -
EBITDA as a percentage of net sales - Non-GAAP measure 29.4 % 27.3
% 28.7 % 27.6 %
Reconciliation of Net Income and
Earnings Per Share to Adjusted Net Income and Adjusted Earnings Per
Share For the Three Months Ended For the Nine
Months Ended
September 30,2018
September 30,2017
September 30,2018
September 30,2017
(unaudited, in thousands, except share data and per share amounts)
Net income - GAAP measure $ 18,564 $ 10,987 $ 54,105 $ 35,612 Debt
related expenses, net of tax (1) — — — 454
Adjusted net income - Non-GAAP measure $ 18,564 $ 10,987
$ 54,105 $ 36,066 Earnings per share - GAAP
measure $ 0.51 $ 0.29 $ 1.46 $ 0.91 Debt related expenses, net of
tax (1) — — — 0.02 Adjusted earnings per share
- Non-GAAP measure $ 0.51 $ 0.29 $ 1.46 $ 0.93
(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 Nine Months Ended
September 30,2018
September 30,2017
September 30,2018
September 30,2017
(in thousands, except mill net) Capital expenditures and software
purchased or developed $ 7,324 $ 6,057 $ 21,120 $ 14,260 Wallboard
sales volume (million square feet) 674 644 2,011 1,941 Mill net
sales price (1) $ 155.43 $ 144.90 $ 153.70 $ 147.72 (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
September 30,2017
December 31,2017
March 31,2018
June 30,2018
September 30,2018
Volumes (million square feet) 644 725 615 722 674 Mill net sales
price (1) $ 144.90 $ 144.78 $ 151.60 $ 153.88 $ 155.43 (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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