Doman Building Materials Group Ltd. (“Doman” or “the Company”)
(TSX:DBM; DBM.NT.A) announced today its second quarter 2021
financial results(1) for the period ended June 30, 2021.
For the three-month period ended June 30,
2021(1), consolidated revenues increased by 83.3% to $756.8 million
when compared to $412.9 million in the same period in 2020. The
increase in revenues was partially comprised of the results from
acquisitions, with the balance of the increase attributable to the
Company’s legacy operations, demonstrating continued resilience and
strong overall end-market demand. The increase in sales in the
Company’s legacy operations is a result of improvements in pricing.
Construction materials pricing generally continued to increase
during the second quarter of 2021, before beginning to decline in
May 2021 and continuing to decline through the second quarter. The
Company’s sales by product group in the quarter were made up of 76%
construction materials, compared to 67% last year, with the
remaining balance resulting from specialty and allied products of
21%, and other of 3%.
Gross margin dollars more than doubled to $131.2
million, compared to $58.9 million during the corresponding period
in 2020. Gross margin percentage also increased to 17.3% of
revenues versus 14.3% during the same period in 2020. The increase
in margin dollars and margin percentage is mainly attributable to
the improvements in construction materials pricing throughout the
majority of the second quarter of 2021, as well as ongoing
implementation of the Company’s strategies.
EBITDA(2) and Adjusted EBITDA(3) for the period
increased to a quarterly record at $90.5 million and $94.0 million,
respectively, compared to $32.8 million during the second quarter
of 2020. Net earnings for the quarter ended June 30, 2021 increased
to $53.1 million, compared to net earnings of $12.7 million in the
same quarter of 2020.
Subsequent to quarter-end, on July 15, 2021, the
Company paid a $0.12 per share dividend to its shareholders of
record on June 30, 2021(4).
Q2 2021 Business
Highlights:
- May 10, 2021, the Company completed
a private placement offering of $325 million aggregate principal
amount of 5.25% senior unsecured notes due May 15, 2026.
- May 11, 2021, the Company completed
a bought deal equity offering at a price of $10.00 per common
share, for aggregate gross proceeds of $86.2 million.
- May 27, 2021, the Company announced
its corporate name change to Doman Building Materials Group Ltd.
with the ticker symbol “DBM” to commence trading effective May 31,
2021, on the Toronto Stock Exchange.
- June 4, 2021, the Company completed
the acquisition of Hixson Lumber Sales, resulting in significant
expansion in Doman’s operational footprint, distribution network
and reach in the Central U.S., by adding 19 lumber treating plants,
five specialty sawmills and a captive trucking fleet.
- June 4, 2021, the Company amended
its existing senior credit facility with Wells Fargo Capital
Finance, increasing the revolving credit limit from $360 million to
$500 million.
- June 22, 2021, the Company
completed the acquisition of Fontana Wholesale and Lumber and Wood
Preserving, adding fire retardant treating along with an almost
doubling of overall capacity in Doman’s operations in Southern
California.
For the six-month period ended June 30, 2021(1),
the Company generated EBITDA and Adjusted EBITDA of $150.5 million
and $154.1 million, respectively, on revenues of $1.3 billion.
Gross margin and gross margin percentage during the period amounted
to $221.6 million, and 17.4%, respectively. This compares to 2020
EBITDA and Adjusted EBITDA of $49.3 million, on revenues of $739.7
million. Gross margin and gross margin percentage during the 2020
period amounted to $102.4 million and 13.8%. Net earnings for the
six-month period ended June 30, 2021 were $87.2 million versus
$13.6 million in the comparative period of 2020.
“The combination of strong sales growth across
all our product categories with lumber pricing at peak levels,
resulted in all of our key financial metrics coming in at new
record levels, which combined with our focus and execution on
strategic growth opportunities, resulted in yet another
transformational period for the business,” commented Amar S. Doman,
Chairman of the Board. “Shortly after the onset of COVID19,
construction material pricing experienced sharp increases that were
largely driven by changes in consumer behaviour. Although these
increases manifested over several quarters, as a result of recent
changes in demand, primarily resulting from the easing of pandemic
related restrictions, there has been a rapid decrease in
construction material pricing at the end the second quarter,
carrying over into the third quarter, which is expected to impact
our results.”
Reconciliation of Net Earnings to Earnings
before Interest, Tax, Depreciation and Amortization (EBITDA):
|
Three months ended June 30, |
Six months ended June 30, |
|
2021 |
2020 |
2021 |
2020 |
(in thousands of dollars) |
$ |
$ |
$ |
$ |
Net earnings |
53,088 |
12,708 |
87,245 |
13,557 |
Provision for income
taxes |
18,862 |
4,791 |
30,813 |
5,121 |
Finance costs |
6,480 |
4,248 |
10,059 |
9,290 |
Depreciation and
amortization |
11,940 |
11,033 |
22,275 |
21,330 |
Share-based compensation |
80 |
35 |
114 |
35 |
|
|
|
|
|
EBITDA |
90,450 |
32,815 |
150,506 |
49,333 |
Acquisition costs |
3,590 |
- |
3,590 |
- |
Adjusted EBITDA |
94,040 |
32,815 |
154,096 |
49,333 |
About Doman Building Materials Group
Ltd.
Doman is headquartered in Vancouver, British
Columbia and trades on the Toronto Stock Exchange under the symbol
DBM and is a leading North American distributor of building
materials and is Canada's only fully integrated national
distributor in the building materials and related products sector.
Doman operates several distinct divisions: CanWel Building
Materials with multiple treating plant, planing facilities and
distribution centres coast-to-coast in all major cities and
strategic locations across Canada; founded in 1959, Hixson Lumber
Company in the central United States, with 19 treating plants, two
specialty planing mills and five specialty sawmills located in
eight states, headquartered in Dallas, Texas, distributing,
producing and treating lumber, fencing and building materials;
California Cascade in the western United States near Portland,
Oregon, San Francisco and Los Angeles, California with treating
facilities and distribution of building materials, lumber and
renovation products; founded in 1935, the Honsador Building
Products Group in 14 locations in the State of Hawaii, with
treating facilities, truss plants and distribution of a wide range
of building materials, lumber, renovation and electrical products.
In addition, through its CanWel Fibre division, the Company
operates a vertically integrated forest products company based in
Western Canada, operating from British Columbia to Saskatchewan,
also servicing the US Pacific Northwest. CanWel Fibre owns
approximately 117,000 acres of private timberlands, strategic
licenses and tenures, log harvesting and trucking operations,
several post and pole peeling facilities and two pressure-treated
specialty wood production plants and a specialty sawmill. Please
see our filings on SEDAR under Doman Building Materials Group Ltd.
(formerly, CanWel Building Materials Group Ltd.) for additional
information.
For further information regarding Doman please
contact:
Ali MahdaviInvestor Relations416-962-3300
ali.mahdavi@canwel.com
Certain statements in this press release may
constitute “forward-looking” statements. When used in this press
release, forward-looking statements often but not always, can be
identified by the use of forward-looking words such as, including
but not limited to, “may”, “will”, “would”, “should”, “expect”,
“believe”, “plan”, “intend”, “anticipate”, “predict”, “remain”,
“estimate”, “potential”, “forecast”, “budget”, “schedule”,
“continue”, “could”, “might”, “project”, “targeting”, "future" and
other similar terminology or the negative or inverse of such words
or terminology. Forward-looking information in this news release
includes, without limitation, statements with respect to: the
ultimate impact (express or implied) of: a) fluctuations in
commodity and construction materials pricing; b) the performance of
recently acquired businesses; and c) the novel coronavirus COVID-19
(“COVID-19”) pandemic, on the Company’s operational and financial
results and on consumer behaviour and economic activity, including
but not limited to the second quarter and full-year 2021 results,
which impact is difficult to estimate or quantify as it will depend
on, inter alia, the duration of the contagion, the impact of
government policies, and the pace of economic recovery. These
forward-looking statements reflect the current expectations of
Doman’s management regarding future events and operating
performance, but involve other known and unknown or unpredictable
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Doman, including but not
limited, to sales, earnings, cash flow from operations, EBITDA(2)
generated, dividends generated or paid by Doman, including whether
at the rate as of the date hereof or the future rate discussed in
the Company’s press release dated June 15, 2021, or some other
dividend rate in the future which may be lower than either of the
preceding rates discussed therein, or industry results, to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such forward-looking statements should therefore be
construed in the light of such factors. Actual events could differ
materially from those projected herein and depend on a number of
factors. These factors include but are not limited to those set out
in the Company’s annual information form dated March 12, 2021, and
other public filings. By their nature, forward-looking statements
involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in the future. In addition,
a number of material factors or assumptions were utilized or
applied in making the forward-looking statements, and may include,
but are not limited to, assumptions regarding the performance of
the Canadian and U.S. economies, the relative stability of or level
of interest rates, exchange rates, volatility of commodity prices,
availability or more limited availability of access to equity and
debt capital markets to fund, at acceptable costs, Doman’s future
growth plans, the implementation and success of the integration of
Doman’s acquisitions, the ability of Doman to refinance its debts
as they mature, the Canadian and United States housing and building
materials markets; the direct and indirect effect of the U.S.
housing market and economy; exchange rate fluctuations between the
Canadian and US dollar; retention of key personnel; Doman’s ability
to sustain its level of sales and earnings margins; Doman’s ability
to grow its business long term and to manage its growth; Doman’s
management information systems upon which it is dependent are not
impaired or compromised by breaches of Doman’s cybersecurity;
Doman’s insurance is sufficient to cover losses that may occur as a
result of its operations; international trade and tariff risks,
political risks, the amount of Doman’s cash flow from operations;
tax laws; and the extent of Doman’s future acquisitions and capital
spending requirements or planning as well as the general level of
economic activity, in Canada and the U.S., and abroad,
discretionary spending and unemployment levels; the effect of
general economic conditions, including market demand for Doman’s
products, and prices for such products; the effect of forestry,
land use, environmental and other governmental regulations; and the
risk of losses from fires, floods and other natural disasters and
unemployment levels. There is a risk that some or all of these
assumptions may prove to be incorrect. These and other factors
could cause or contribute to actual results differing materially
from those contemplated by forward-looking statements. Accordingly,
readers should not place undue reliance on any forward-looking
statements or information. These forward-looking statements speak
only as of the date of this press release. We caution that the
foregoing factors that may affect future results are not
exhaustive. When relying on our forward-looking statements to make
decisions with respect to Doman, investors and others should
carefully consider the foregoing factors and other uncertainties
and potential events. Neither Doman nor any of its associates or
directors, officers, partners, affiliates, or advisers, provides
any representation, assurance or guarantee that the occurrence of
the events expressed or implied in any forward-looking statements
in these communications will actually occur. You are cautioned not
to place undue reliance on these forward-looking statements. Except
as required by applicable securities laws and legal or regulatory
obligations, Doman is not under any obligation, and expressly
disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
- Please refer to our Q2 2021
MD&A and Financial Statements for further information. Our Q2
2021 Financial Statements filings are reported under International
Financial Reporting Standards (“IFRS”).
- In the discussion, reference is
made to EBITDA, which represents earnings from continuing
operations before interest, including amortization of deferred
financing costs, provision for income taxes, depreciation and
amortization. This is not a generally accepted earnings measure
under IFRS and does not have a standardized meaning under IFRS, and
therefore the measure as calculated by Doman may not be comparable
to similarly-titled measures reported by other companies. EBITDA is
presented as we believe it is a useful indicator of a company’s
ability to meet debt service and capital expenditure requirements
and because we interpret trends in EBITDA as an indicator of
relative operating performance. EBITDA should not be considered by
an investor as an alternative to net earnings or cash flows as
determined in accordance with IFRS. For a reconciliation of EBITDA
to the most directly comparable measures calculated in accordance
with IFRS refer to “Reconciliation of Net Earnings to Earnings
before Interest, Tax, Depreciation and Amortization (EBITDA) and
Adjusted EBITDA”.
- In the discussion, reference is
made to Adjusted EBITDA, which is EBITDA as defined above, before
certain non-recurring or unusual items. This is not a generally
accepted earnings measure under IFRS and does not have a
standardized meaning under IFRS. The measure as calculated by Doman
may not be comparable to similarly-titled measures reported by
other companies. Adjusted EBITDA is presented as we believe it is a
useful indicator of Doman’s ability to meet debt service and
capital expenditure requirements from its regular business before
non-recurring items. Adjusted EBITDA should not be considered by an
investor as an alternative to net earnings or cash flows as
determined in accordance with IFRS. For a reconciliation from
Adjusted EBITDA to the most directly comparable measures calculated
in accordance with IFRS refer to “Reconciliation of Net Earnings to
Earnings before Interest, Tax, Depreciation and Amortization
(EBITDA) and Adjusted EBITDA”.
- Not including non-recurring items
and before accounting for “Other Comprehensive Income”; please
refer to our Annual and Q2 2021 Financial Statements for further
information.
- The Company adjusted its quarterly
common share dividend from $0.14 to $0.12 per share, effective for
the dividend paid on October 15, 2020, to shareholders of record on
September 30, 2020. Please refer to the press release dated June
15, 2020 for further information. On June 15, 2021, Doman declared
a quarterly dividend of $0.12 per share, which was paid on July 15,
2021 to shareholders of record on June 30, 2021. Please refer to
our Q2 2021 MD&A and our Q2 2021 Financial Statements for more
information.
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