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Section 1: 8-K (8-K)

fbm-8k_20181101.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 1, 2018

 

FOUNDATION BUILDING MATERIALS, INC.

(Exact Name of the Registrant as Specified in Charter)

 

 

Delaware

 

001-38009

 

81-4259606

(State or Other Jurisdiction of Incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

2741 Walnut Avenue, Suite 200, Tustin, California

 

92780

(Address of Principal Executive Offices)

 

(Zip Code)

 

(714) 380-3127

Registrant’s telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On November 1, 2018, Foundation Building Materials, Inc. (the “Company”) issued a press release announcing its financial results for its third quarter ended September 30, 2018. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

The information included or incorporated by reference in this Item 2.02, including Exhibit 99.1, is being furnished to the Securities and Exchange Commission (the “SEC”) and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 7.01. Regulation FD.

The Company intends to reference a slide deck (the “Presentation”) during the Company’s conference call to discuss its financial results for its third quarter ended September 30, 2018. A copy of the Presentation can be accessed on the Company’s website – investors.fbmsales.com by going to the “Events and Presentations” section and selecting “Read More Events and Presentations.”

The information included in this Item 7.01 is being furnished to the SEC and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

99.1

 

Press Release issued by Foundation Building Materials, Inc. on November 1, 2018.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

FOUNDATION BUILDING MATERIALS, INC.

 

 

 

 

 

Date: November 1, 2018

 

By:

 

/s/ Richard Tilley

 

 

Name:

 

Richard Tilley

 

 

Title:

 

Vice President, General Counsel and Secretary

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

fbm-ex991_8.htm

Exhibit 99.1

 

 

Foundation Building Materials Announces Third Quarter 2018 Results and Provides Full Year 2018 and 2019 Guidance

 

2018 Third Quarter Highlights

 

o

 

 

Record net sales of $542.3 million from continuing operations, an increase of 15.9% compared to the prior year period

 

Base business net sales of $472.1 million from continuing operations, an increase of 12.5% compared to the prior year period

 

Entered into definitive agreement to sell the Mechanical Insulation segment for $122.5 million, expected net proceeds of $116.0 million will be used to pay down debt

 

Completed refinance of Senior Secured Notes; expected to save $12.0 million to $15.0 million per year in cash interest

 

Net loss of $37.6 million from continuing operations; loss per share of $0.88; net loss primarily due to loss of $58.5 million related to refinancing of debt

 

Adjusted net income(1) of $8.2 million and adjusted earnings per share(1) of $0.19

 

Adjusted EBITDA(1) of $43.7 million from continuing operations, an increase of 20.3% compared to the prior year period; Adjusted EBITDA margin(1) of 8.1% compared to 7.8% in the prior year period

 

 

Tustin, CA, November 1, 2018 (Business Wire) - Foundation Building Materials, Inc. (the "Company") (NYSE: FBM), one of the largest specialty building product distributors of wallboard, suspended ceiling systems and metal framing in North America, today reported third quarter 2018 financial results and provided updated full year 2018 and full year 2019 financial guidance.

“We delivered strong third-quarter results highlighted by year-over-year net sales growth of 15.9% and base business growth of 12.5%,” said Ruben Mendoza, President and CEO. “Our record results demonstrate the on-going strength of our non-residential construction and commercial repair and remodel markets.”

 

On September 26, 2018, the Company entered into a definitive agreement to sell its mechanical insulation business. The previously reported amounts for the mechanical insulation segment have now been reclassified as discontinued operations. Our continuing operations now consist of what was previously reported as the Specialty Building Products segment. The transaction is expected to close during the fourth quarter of 2018.

 

The discussion below represents our continuing operations, unless otherwise noted.

 

2018 Third Quarter Results

 

Net sales for the three months ended September 30, 2018, were $542.3 million compared to $467.9 million for the three months ended September 30, 2017, representing an increase of $74.4 million, or 15.9%. Net sales from base business branches contributed $52.3 million, or 12.5%, of the increase which was driven by strong commercial activity, price increases and product expansion into new geographic markets. Net sales from acquired branches and existing branches that were strategically combined contributed $22.1 million of the increase.

 

Gross profit for the three months ended September 30, 2018, was $154.0 million compared to $135.9 million for the three months ended September 30, 2017, representing an increase of $18.2 million, or 13.4%. The increase in gross profit was primarily due to the increase in net sales. Gross margin for the three months ended September 30, 2018, was 28.4% compared to 29.0% for the three months ended September 30, 2017. The decrease in gross margin was primarily due to higher product costs.

(1) Adjusted net income, Adjusted earnings per share, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. See “Non-GAAP (Generally Accepted Accounting Principles) Financial Measures” section below for a discussion of how the Company defines and calculates this measure, why the Company believes it is important, and a reconciliation thereof to the most directly comparable GAAP measure.

 


 

Selling, general and administrative, or SG&A, expenses for the three months ended September 30, 2018, were $113.3 million compared to $102.3 million for the three months ended September 30, 2017, representing an increase of $11.0 million, or 10.8%. As a percentage of net sales, SG&A expenses were 20.9% for the three months ended September 30, 2018, compared to 21.9% for the three months ended September 30, 2017. Excluding non-recurring adjustments of $3.0 million and $2.5 million for the three months ended September 30, 2018 and 2017, respectively, SG&A expenses as a percentage of net sales for the three months ended September 30, 2018, were 20.3% compared to 21.3% for the three months ended September 30, 2017. The decrease in SG&A expenses as a percentage of net sales was due to our continued focus on operating efficiencies, cost reduction initiatives and leveraging costs with the increase in net sales.  

 

In August 2018, the Company completed the refinancing of its $575 million Senior Secured Notes. The refinancing resulted in a loss of $58.5 million consisting primarily of a write off of deferred financing costs and original issuance discounts and a prepayment premium. The Company expects to save $12.0 million to $15.0 million in cash interest on an annual basis.

 

Net loss for the three months ended September 30, 2018, was $37.6 million, or $0.88 per share, compared to net income of $0.1 million, or $0.00 per share for the three months ended September 30, 2017. Adjusted net income(1) for the three months ended September 30, 2018, was $8.2 million, or $0.19 per share, an increase of $6.4 million compared to an Adjusted net income(1) of $1.9 million, or $0.04 per share, for the three months ended September 30, 2017.

 

Adjusted EBITDA(1) was $43.7 million and Adjusted EBITDA margin(1) was 8.1% for the three months ended September 30, 2018, compared to Adjusted EBITDA(1) of $36.4 million and Adjusted EBITDA margin(1) of 7.8% for the three months ended September 30, 2017.

2018 Year-To-Date Results

 

Net sales for the nine months ended September 30, 2018, were $1,528.2 million compared to $1,346.4 million for the nine months ended September 30, 2017, representing an increase of $181.7 million, or 13.5%. Net sales from base business branches contributed $95.1 million, or 7.6%, of the increase which was driven by strong commercial activity, price increases and product expansion into new geographic markets. Net sales from acquired branches and existing branches that were strategically combined contributed $86.6 million of the increase.

 

Gross profit for the nine months ended September 30, 2018, was $434.7 million compared to $389.0 million for the nine months ended September 30, 2017, representing an increase of $45.7 million, or 11.7%. The increase in gross profit was primarily due to the increase in net sales. Gross margin for the nine months ended September 30, 2018, was 28.4% compared to 28.9% for the nine months ended September 30, 2017. The decrease in gross margin was primarily due to higher product costs.

 

SG&A expenses for the nine months ended September 30, 2018, were $328.1 million compared to $299.3 million for the nine months ended September 30, 2017, representing an increase of $28.8 million, or 9.6%. As a percentage of net sales, SG&A expenses were 21.5% for the nine months ended September 30, 2018 compared to 22.2% for the nine months ended September 30, 2017. Excluding non-recurring adjustments of $6.9 million and $11.1 million, respectively, SG&A expenses as a percentage of net sales for the nine months ended September 30, 2018 were 21.0% compared to 21.4% for the nine months ended September 30, 2017. The decrease in SG&A expenses as a percentage of net sales was due to our continued focus on operating efficiencies, cost reduction initiatives and leveraging costs with the increase in net sales.

 

Net loss for the nine months ended September 30, 2018, was $38.3 million, or $0.89 per share, compared to net income of $3.1 million, or $0.08 per share for the nine months ended September 30, 2017. Adjusted net income(1) for the nine months ended September 30, 2018, was $10.6 million, or $0.25 per share, an increase of $8.1 million compared to an Adjusted net income(1) of $2.5 million, or $0.06 per share, for the nine months ended September 30, 2017.

 

Adjusted EBITDA(1) was $114.0 million and Adjusted EBITDA margin(1) was 7.5% for the nine months ended September 30, 2018, compared to Adjusted EBITDA(1) of $102.0 million and Adjusted EBITDA margin(1) of 7.6% for the nine months ended September 30, 2017.

 

Acquisitions and Greenfield Branches

 

On October 1, 2018, the Company completed the acquisition of Agan Drywall Supply and its related companies ("Agan"), adding three additional branches serving the South Dakota and Iowa markets. For the fourth quarter of 2018, Agan is expected to contribute $5.0 million to $7.0 million to net sales. Through November 1, 2018, the Company has completed four acquisitions totaling 16 branches with

(1) Adjusted net income, Adjusted earnings per share, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. See “Non-GAAP (Generally Accepted Accounting Principles) Financial Measures” section below for a discussion of how the Company defines and calculates this measure, why the Company believes it is important, and a reconciliation thereof to the most directly comparable GAAP measure.

 


combined annualized net sales in excess of $130.0 million. The Company expects to continue to supplement organic growth with strategic acquisitions.

As of September 30, 2018, the Company has opened four specialty building products greenfield branches and expects to open one to two more branches by the end of 2018, for a total of five to six branches. These greenfield branches are projected to yield high returns on invested capital within the first few years of startup. They also serve to further leverage the Company’s national scale, increase the Company’s market share, generate economies of scale and support the Company’s organic growth.

 

2018 and 2019 Outlook for Continuing Operations

For 2018, the Company expects full year net sales to be in the range of $2.0 billion to $2.06 billion. The Company expects Adjusted EBITDA margin(2) for full year 2018 to be between 7.3% and 7.5%, with expected full year 2018 Adjusted EBITDA(2) of $146.0 million to $150.0 million. These expected results include anticipated contributions from acquisitions and greenfield branches.

 

For 2019, the Company expects full year net sales to be in the range of $2.10 billion to $2.25 billion. The Company expects Adjusted EBITDA margin(2) for full year 2019 to be between 7.6% and 8.0%, with expected full year 2019 Adjusted EBITDA(2) of $160.0 million to $180.0 million. These expected results include anticipated contributions from acquisitions and greenfield branches.

 

Third Quarter Earnings Release and Conference Call

 

In conjunction with this release, the Company will host a conference call today, Thursday, November 1, 2018, at 8:30 AM Eastern Time. Ruben Mendoza, President and Chief Executive Officer, John Gorey, Chief Financial Officer, and John Moten, Vice President Investor Relations, will host the call.

 

The call can be accessed three ways:

 

At the FBM website: www.fbmsales.com in the Investors section of the Company’s website;

 

By telephone: For both listen only participants and those who wish to take part in the question and answer portion of the call, the telephone dial-in number in the U.S. is (855) 327-6837. For participation outside the U.S., the dial-in number is (631) 891-4304; and

 

Audio Replay: A replay of the call will be available beginning at 11:30 AM Eastern Time on Thursday, November 1, 2018, and ending 11:59 PM Eastern Time November 8, 2018. Dial-in numbers for U.S. based participants are (844) 512-2921.  Participants outside the U.S. should use the replay dial-in number of (412) 317-6671. All callers will be required to provide the Conference ID of 10005665

 

About Foundation Building Materials

 

Foundation Building Materials, Inc. is a specialty building products distributor of wallboard, suspended ceiling systems, and metal framing throughout North America. Based in Tustin, California, the Company employs more than 3,400 people and operates more than 170, branches across the U.S. and Canada.

 

Forward-Looking Statements

 

This press release contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” or words or phrases with similar meaning. Forward-looking statements contained in this press release relate to, among other things, the Company’s projected financial performance, including cash interest savings, and operating results, including net sales, Adjusted EBITDA and Adjusted EBITDA margin, and the Company’s strategic plans and objectives including acquisitions and greenfields. 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 our management’s current expectations, forecasts and assumptions that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of the Company’s control, that may cause the Company’s business, strategy or actual results to differ materially from the forward-looking statements.  The Company does not intend, and undertakes no obligation, to update any forward-looking statements, whether as a result of new information, future events 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 Reports 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.

(2) Adjusted net income, Adjusted earnings per share, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. See “Non-GAAP (Generally Accepted Accounting Principles) Financial Measures” section below for a discussion of how the Company defines and calculates this measure and why the Company believes it is important.

 


 

 

 

 

Contact Information:

 

Investor Relations:

John Moten

Foundation Building Materials, Inc.

657-900-3200

Investors@fbmsales.com

 

Media Relations:

Joele Frank, Wilkinson Brimmer Katcher

Jed Repko or Ed Trissel

212-355-4449

 

 

- Financial Tables Follow -

 


FOUNDATION BUILDING MATERIALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

(in thousands, except share and per share data)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net sales

 

$

542,273

 

 

$

467,891

 

 

$

1,528,153

 

 

$

1,346,441

 

Cost of goods sold

 

 

388,236

 

 

 

332,008

 

 

 

1,093,412

 

 

 

957,404

 

Gross profit

 

 

154,037

 

 

 

135,883

 

 

 

434,741

 

 

 

389,037

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

113,279

 

 

 

102,259

 

 

 

328,088

 

 

 

299,298

 

Depreciation and amortization

 

 

19,771

 

 

 

18,234

 

 

 

56,922

 

 

 

52,662

 

Total operating expenses

 

 

133,050

 

 

 

120,493

 

 

 

385,010

 

 

 

351,960

 

Income from operations

 

 

20,987

 

 

 

15,390

 

 

 

49,731

 

 

 

37,077

 

Loss on extinguishment of debt

 

 

(58,475

)

 

 

-

 

 

 

(58,475

)

 

 

-

 

Interest expense

 

 

(12,576

)

 

 

(15,054

)

 

 

(43,028

)

 

 

(45,147

)

Other (expense) income, net

 

 

(8

)

 

 

25

 

 

 

126

 

 

 

13,424

 

(Loss) income before income taxes

 

 

(50,072

)

 

 

361

 

 

 

(51,646

)

 

 

5,354

 

Income tax (benefit) expense

 

 

(12,519

)

 

 

239

 

 

 

(13,299

)

 

 

2,205

 

(Loss) income from continuing operations

 

 

(37,553

)

 

 

122

 

 

 

(38,347

)

 

 

3,149

 

Income from discontinued operations, net of tax

 

 

2,772

 

 

 

1,277

 

 

 

7,913

 

 

 

3,439

 

Net (loss) income

 

$

(34,781

)

 

$

1,399

 

 

$

(30,434

)

 

$

6,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings from continuing operations per share - basic

 

$

(0.88

)

 

$

0.00

 

 

$

(0.89

)

 

$

0.08

 

(Loss) earnings from continuing operations per share - diluted

 

$

(0.88

)

 

$

0.00

 

 

$

(0.89

)

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from discontinued operations per share - basic

 

$

0.07

 

 

$

0.03

 

 

$

0.18

 

 

$

0.08

 

Earnings from discontinued operations per share - diluted

 

$

0.07

 

 

$

0.03

 

 

$

0.18

 

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per share - basic

 

$

(0.81

)

 

$

0.03

 

 

$

(0.71

)

 

$

0.16

 

(Loss) earnings per share - diluted

 

$

(0.81

)

 

$

0.03

 

 

$

(0.71

)

 

$

0.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

42,894,474

 

 

 

42,865,407

 

 

 

42,889,430

 

 

 

41,021,808

 

Diluted

 

 

42,917,230

 

 

 

42,870,391

 

 

 

42,905,273

 

 

 

41,023,935

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(34,781

)

 

$

1,399

 

 

$

(30,434

)

 

$

6,588

 

Foreign currency translation adjustment

 

 

1,481

 

 

 

3,037

 

 

 

(2,724

)

 

 

5,695

 

Unrealized (loss) gain on derivative, net of taxes of $0.5 million

   and $1.0 million, respectively and $0.5 million and

   $1.9 million, respectively

 

 

(1,420

)

 

 

(1,647

)

 

 

839

 

 

 

(3,047

)

Total other comprehensive income (loss)

 

 

61

 

 

 

1,390

 

 

 

(1,885

)

 

 

2,648

 

Total comprehensive (loss) income

 

$

(34,720

)

 

$

2,789

 

 

$

(32,319

)

 

$

9,236

 

 

 

 

 

 

 

 

 


FOUNDATION BUILDING MATERIALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share data)

 

 

 

September 30,

2018

 

 

December 31,

2017

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

10,560

 

 

$

12,101

 

Accounts receivable—net of allowance for doubtful accounts of $3,297 and $3,494,

   respectively

 

 

316,290

 

 

 

238,091

 

Other receivables

 

 

50,808

 

 

 

55,487

 

Inventories

 

 

158,766

 

 

 

148,246

 

Prepaid expenses and other current assets

 

 

12,304

 

 

 

11,785

 

Current assets held for sale

 

 

128,188

 

 

 

82,948

 

Total current assets

 

 

676,916

 

 

 

548,658

 

Property and equipment, net

 

 

153,386

 

 

 

144,524

 

Intangible assets, net

 

 

145,379

 

 

 

164,536

 

Goodwill

 

 

481,260

 

 

 

452,728

 

Other assets

 

 

6,928

 

 

 

5,604

 

Noncurrent assets held for sale

 

 

-

 

 

 

38,220

 

Total assets

 

$

1,463,869

 

 

$

1,354,270

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

130,169

 

 

$

134,460

 

Accrued payroll and employee benefits

 

 

25,777

 

 

 

17,920

 

Accrued taxes

 

 

11,775

 

 

 

7,003

 

Tax receivable agreement

 

 

15,892

 

 

 

15,892

 

Current portion of term loan

 

 

3,375

 

 

 

-

 

Other current liabilities

 

 

22,995

 

 

 

37,270

 

Current liabilities held for sale

 

 

26,599

 

 

 

29,733

 

Total current liabilities

 

 

236,582

 

 

 

242,278

 

Asset-based revolving credit facility

 

 

305,704

 

 

 

47,486

 

Long-term debt, net

 

 

438,841

 

 

 

534,379

 

Tax receivable agreement

 

 

119,912

 

 

 

119,912

 

Deferred income taxes, net

 

 

5,200

 

 

 

17,912

 

Other liabilities

 

 

9,545

 

 

 

12,657

 

Noncurrent liabilities held for sale

 

 

-

 

 

 

982

 

Total liabilities

 

 

1,115,784

 

 

 

975,606

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, authorized 10,000,000 shares; 0 shares issued

 

 

 

 

 

 

Common stock, $0.001 par value, authorized 190,000,000 shares; 42,894,965 and

   42,865,407 shares issued, respectively

 

 

13

 

 

 

13

 

Additional paid-in capital

 

 

331,667

 

 

 

330,113

 

Retained earnings

 

 

15,936

 

 

 

46,184

 

Accumulated other comprehensive income

 

 

469

 

 

 

2,354

 

Total stockholders' equity

 

 

348,085

 

 

 

378,664

 

Total liabilities and stockholders' equity

 

$

1,463,869

 

 

$

1,354,270

 

 

 

 

 


FOUNDATION BUILDING MATERIALS, INC.

NET SALES BY PRODUCT LINE, GROSS PROFIT AND GROSS MARGIN

(UNAUDITED)

 

 

 

Three Months Ended September 30,

 

 

Change

 

 

 

2018

 

 

2017

 

 

$

 

 

%

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wallboard (1)

 

$

203,991

 

 

 

37.6

%

 

$

179,362

 

 

 

38.3

%

 

$

24,629

 

 

 

13.7

%

Suspended ceiling systems

 

 

104,422

 

 

 

19.3

%

 

 

91,933

 

 

 

19.6

%

 

 

12,489

 

 

 

13.6

%

Metal framing

 

 

98,576

 

 

 

18.2

%

 

 

71,420

 

 

 

15.3

%

 

 

27,156

 

 

 

38.0

%

Complementary and other products

 

 

135,284

 

 

 

24.9

%

 

 

125,176

 

 

 

26.8

%

 

 

10,108

 

 

 

8.1

%

Total net sales

 

$

542,273

 

 

 

100.0

%

 

$

467,891

 

 

 

100.0

%

 

$

74,382

 

 

 

15.9

%

Total gross profit

 

$

154,037

 

 

 

 

 

 

$

135,883

 

 

 

 

 

 

$

18,154

 

 

 

13.4

%

Total gross margin

 

 

28.4

%

 

 

 

 

 

 

29.0

%

 

 

 

 

 

 

(0.6

)%

 

 

 

 

 

(1)

For the three months ended September 30, 2017, wallboard accessories have been reclassified from “Wallboard” to “Complementary and other products” to conform to the current year presentation.

 

 

 

 

Nine Months Ended September 30,

 

 

Change

 

 

 

2018

 

 

2017

 

 

$

 

 

%

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wallboard (1)

 

$

583,242

 

 

 

38.2

%

 

$

528,556

 

 

 

39.3

%

 

$

54,686

 

 

 

10.3

%

Suspended ceiling systems

 

 

288,356

 

 

 

18.9

%

 

 

247,921

 

 

 

18.4

%

 

$

40,435

 

 

 

16.3

%

Metal framing

 

 

264,019

 

 

 

17.3

%

 

 

212,486

 

 

 

15.8

%

 

$

51,533

 

 

 

24.3

%

Complementary and other products

 

 

392,536

 

 

 

25.7

%

 

 

357,478

 

 

 

26.5

%

 

$

35,058

 

 

 

9.8

%

Total net sales

 

$

1,528,153

 

 

 

100.0

%

 

$

1,346,441

 

 

 

100.0

%

 

$

181,712

 

 

 

13.5

%

Total gross profit

 

 

434,741

 

 

 

 

 

 

 

389,037

 

 

 

 

 

 

$

45,704

 

 

 

11.7

%

Total gross margin

 

 

28.4

%

 

 

 

 

 

 

28.9

%

 

 

 

 

 

 

(0.5

)%

 

 

 

 

 

(1)

For the nine months ended September 30, 2017, wallboard accessories have been reclassified from “Wallboard” to “Complementary and other products” to conform to the current year presentation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


FOUNDATION BUILDING MATERIALS, INC.

BASE BUSINESS AND ACQUIRED AND COMBINED NET SALES (UNAUDITED)

 

 

 

Three Months Ended September 30,

 

 

Change

 

 

 

2018

 

 

2017

 

 

$

 

 

%

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base business (1)

 

$

472,116

 

 

$

419,823

 

 

$

52,293

 

 

 

12.5

%

Acquired and combined (2)

 

 

70,157

 

 

 

48,068

 

 

 

22,089

 

 

 

46.0

%

Net sales

 

$

542,273

 

 

$

467,891

 

 

$

74,382

 

 

 

15.9

%

 

(1)

Represents net sales from branches that were owned by us since January 1, 2017 and branches that were opened by us during such period.

(2)

Represents branches acquired and existing branches combined with acquired branches after January 1, 2017.

 

 

 

Nine Months Ended September 30,

 

 

Change

 

 

 

2018

 

 

2017

 

 

$

 

 

%

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base business (1)

 

$

1,339,918

 

 

$

1,244,778

 

 

$

95,140

 

 

 

7.6

%

Acquired and combined (2)

 

 

188,235

 

 

 

101,663

 

 

 

86,572

 

 

 

85.2

%

Net sales

 

$

1,528,153

 

 

$

1,346,441

 

 

$

181,712

 

 

 

13.5

%

 

(1)

Represents net sales from branches that were owned by us since January 1, 2017 and branches that were opened by us during such period.

(2)

Represents branches acquired and existing branches combined with acquired branches after January 1, 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

FOUNDATION BUILDING MATERIALS, INC.

BASE BUSINESS AND ACQUIRED AND COMBINED NET SALES BY PRODUCT

(UNAUDITED)

 

 

 

Three Months

Ended

September 30, 2017

 

 

Base

Business

Net Sales

Change

 

 

Acquired and

Combined

Net Sales

Change

 

 

Three Months

Ended

September 30, 2018

 

 

Total Net

Sales %

Change

 

 

 

Base

Business

Net Sales

% Change (1)

 

 

Acquired and

Combined

Net Sales

% Change (2)

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wallboard (3)

 

$

179,362

 

 

$

13,766

 

 

$

10,863

 

 

$

203,991

 

 

 

13.7

%

 

 

 

8.5

%

 

 

61.3

%

Suspended ceiling systems

 

 

91,933

 

 

 

7,168

 

 

 

5,321

 

 

 

104,422

 

 

 

13.6

%

 

 

 

8.7

%

 

 

55.1

%

Metal framing

 

 

71,420

 

 

 

21,938

 

 

 

5,218

 

 

 

98,576

 

 

 

38.0

%

 

 

 

33.8

%

 

 

79.6

%

Complementary and other products

 

 

125,176

 

 

 

9,421

 

 

 

687

 

 

 

135,284

 

 

 

8.1

%

 

 

 

8.5

%

 

 

4.9

%

Total net sales

 

$

467,891

 

 

$

52,293

 

 

$

22,089

 

 

$

542,273

 

 

 

15.9

%

 

 

 

12.5

%

 

 

46.0

%

Average daily net sales

 

$

7,547

 

 

$

830

 

 

$

351

 

 

$

8,608

 

 

 

14.1

%

 

 

 

12.3

%

 

 

45.2

%

 

(1)

Represents base business net sales increase as a percentage of base business net sales for the three months ended September 30, 2017.

(2)

Represents acquired and combined net sales increase as a percentage of acquired and combined net sales for the three months ended September 30, 2017.

(3)

For the three months ended September 30, 2017, wallboard accessories have been reclassified from “Wallboard” to “Complementary and other products” to conform to the current year presentation.

 

 

 

Nine Months

Ended

September 30, 2017

 

 

Base

Business

Net

Sales

Change

 

 

Acquired

and

Combined

Net Sales

Change

 

 

Nine Months

Ended

September 30, 2018

 

 

Total Net

Sales %

Change

 

 

 

Base

Business

Net Sales

% Change (1)

 

 

Acquired

and

Combined

Net Sales

% Change (2)

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wallboard (3)

 

$

528,556

 

 

$

18,836

 

 

$

35,850

 

 

$

583,242

 

 

 

10.3

%

 

 

 

3.8

%

 

 

94.4

%

Suspended ceiling

   systems

 

 

247,921

 

 

 

20,276

 

 

 

20,159

 

 

 

288,356

 

 

 

16.3

%

 

 

 

8.8

%

 

 

113.1

%

Metal framing

 

 

212,486

 

 

 

38,750

 

 

 

12,783

 

 

 

264,019

 

 

 

24.3

%

 

 

 

19.4

%

 

 

96.7

%

Complementary and

   other products

 

 

357,478

 

 

 

17,277

 

 

 

17,781

 

 

 

392,536

 

 

 

9.8

%

 

 

 

5.3

%

 

 

54.5

%

Total net sales

 

$

1,346,441

 

 

$

95,139

 

 

$

86,573

 

 

$

1,528,153

 

 

 

13.5

%

 

 

 

7.6

%

 

 

85.2

%

Average daily net

   sales

 

$

7,087

 

 

$

498

 

 

$

453

 

 

$

8,001

 

 

 

12.9

%

 

 

 

7.6

%

 

 

84.7

%

 

(1)

Represents base business net sales increase as a percentage of base business net sales for the nine months ended September 30, 2017.

(2)

Represents acquired and combined net sales increase as a percentage of acquired and combined net sales for the nine months ended September 30, 2017.

(3)

For the nine months ended September 30, 2017, wallboard accessories have been reclassified from “Wallboard” to “Complementary and other products” to conform to the current year presentation.

 

 


Non-GAAP (Generally Accepted Accounting Principles) Financial Measures

 

In addition to results under GAAP, this press release contains certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income (loss) and Adjusted earnings per share ("EPS"), which are provided as supplemental measures of financial performance. These measures are not required by, or presented in accordance with, GAAP. The Company calculates Adjusted EBITDA as net (loss) income before interest expense net, loss on extinguishment of debt, income tax (benefit) expense, depreciation and amortization, unrealized losses on derivative financial instruments, IPO and public company readiness expenses, stock-based compensation, and other non-recurring adjustments such as non-cash purchase accounting effects, losses on the disposal of property and equipment, transaction costs, management fees and hurricane related costs. The Company calculates Adjusted EBITDA margin as Adjusted EBITDA divided by net sales. The Company calculates Adjusted net income as net income before unrealized losses (gains) on derivative financial instruments, IPO and public company readiness expenses, stock-based compensation, and other non-recurring adjustments such as non-cash purchase accounting adjustments, losses on the disposal of property and equipment, transaction costs, management fees and hurricane related costs. The Company calculates Adjusted EPS as Adjusted net income on a per weighted average share outstanding basis.

 

These non-GAAP financial measures are presented because they are important metrics used by management as a means by which it assesses financial performance. These measures may also be used by analysts, investors and other interested parties to evaluate companies in the Company’s industry. These measures, when used in conjunction with related GAAP financial measures, provide investors with an additional financial analytical framework that may be useful in assessing the Company’s financial condition and results of operations.

 

These non-GAAP financial measures have certain limitations. These measures should not be considered as alternatives to measures of financial performance derived in accordance with GAAP. In addition, these measures should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items. Furthermore, these measures are not intended to be liquidity measures. Other companies, including other companies in the Company’s industry, may not use these measures or may calculate these measures differently than the Company does, limiting their usefulness as comparative measures.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The following is a reconciliation of Adjusted EBITDA to the nearest GAAP measure, net (loss) income (unaudited):

 

 

Three Months Ended September 30,

 

Three Months Ended September 30,

 

 

2018

 

2017

 

 

Reconciliation

To Net Loss

From

Continuing

Operations

 

Reconciliation

To Net

Income From

Discontinued

Operations (e)

 

Reconciliation

To Net Loss

 

Reconciliation

To Net Income

From

Continuing

Operations

 

Reconciliation

To Net

Income From

Discontinued

Operations (e)

 

Reconciliation

To Net

Income

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(37,553

)

$

2,772

 

$

(34,781

)

$

122

 

$

1,277

 

$

1,399

 

Interest expense, net

 

12,544

 

 

11

 

 

12,555

 

 

15,028

 

 

15

 

 

15,043

 

Loss on extinguishment

   of debt

 

58,475

 

 

-

 

 

58,475

 

 

-

 

 

-

 

 

-

 

Income tax (benefit)

   expense

 

(12,519

)

 

991

 

 

(11,528

)

 

239

 

 

973

 

 

1,212

 

Depreciation and

   amortization

 

19,771

 

 

1,561

 

 

21,332

 

 

18,234

 

 

1,495

 

 

19,729

 

Unrealized losses on

   derivative financial

   instruments

 

78

 

 

-

 

 

78

 

 

111

 

 

-

 

 

111

 

IPO and public company

   readiness expenses

 

-

 

 

-