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Contact Investor Relations

Phone:
703.480.3980

Email:
investorrelations@continental-bp.com

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Press Release Details

Continental Building Products Reports Third Quarter 2016 Results

November 07, 2016

HERNDON, Va.--(BUSINESS WIRE)-- Continental Building Products, Inc. (NYSE:CBPX) (the Company), a leading manufacturer of wallboard and gypsum-based products, announced today results for the third quarter ended September 30, 2016.

Highlights of Third Quarter 2016 as Compared to Third Quarter 2015

  • Net sales of $114.6 million rose by 5.9%
  • Cash flow from operations increased to $35.6 million, up 25.3%
  • Net income improved to $6.2 million compared to $4.2 million
  • Adjusted EBITDA1 of $30.4 million down from $33.7 million
  • Earnings per share increased 50.0% to $0.15; Adjusted earnings per share1 remained constant at $0.25
  • Deployed $11.4 million to repurchase 520,843 shares of common stock
  • Extended debt maturity and reduced interest rate through successful refinancing

“We are pleased to achieve another quarter of revenue growth and significant cash flow generation reflecting the strength of our highly efficient, low cost operations,” stated Jay Bachmann, Continental’s Chief Executive Officer. “For the third consecutive quarter, we experienced stronger demand in our markets east of the Mississippi which drove the 6% net sales growth versus last year. We converted all of our adjusted EBITDA into operating cash flow and deployed over $11 million for share repurchases to enhance shareholder returns. As we look to the remainder of 2016, we remain committed to executing our operational initiatives and taking advantage of value-enhancing opportunities.”

Third Quarter 2016 Results vs. Third Quarter 2015

Wallboard volumes increased to 634 million square feet (MMSF), compared to 567 MMSF in the prior year quarter, helped by continued stronger demand in the construction markets, specifically new residential and overall in the Southeast. Net sales were up 5.9% to $114.6 million on higher volumes, compared to $108.2 million in the prior year quarter, partially offset by lower average mill net price2 of $144.34, compared to $153.05 in the prior year quarter. Average mill net price was essentially flat on a sequential quarter basis when compared to $144.86 in the second quarter 2016.

Gross profit was $27.8 million, compared to $30.0 million in the prior year quarter. Gross margin declined to 24.3% compared to 27.7% in the prior year quarter, primarily as a result of higher raw material and maintenance costs.

SG&A expense was $9.2 million compared to $9.0 million in the prior year quarter, or 8.1% as a percentage of net sales compared to 8.3% in the prior year quarter.

Operating income was $18.6 million, compared to $11.1 million in the prior year quarter.

Other expenses, net was $5.9 million which primarily consists of $5.8 million of debt refinancing expenses which includes non-cash write-off of debt issuance costs related to the first lien credit agreement.

Interest expense decreased 24.3% to $3.1 million, compared to $4.2 million in the prior year quarter, reflecting our continued reduction of long-term debt throughout the past twelve months and our debt refinancing in August 2016.

Net income for the third quarter 2016 grew to $6.2 million, or $0.15 per share, compared to $4.2 million, or $0.10 per share, in the third quarter 2015. Adjusted net income1 decreased slightly to $10.1 million, compared to $10.7 million in the prior year quarter. Adjusted earnings per share1 remained constant at $0.25 per share for the third quarter 2016 compared to the prior year quarter. Adjusted EBITDA1 was $30.4 million, compared to $33.7 million in the prior year quarter.

Balance Sheet and Cash Flow

In August, 2016, the Company closed the refinancing of its entire outstanding long term debt. The new borrowings consist of a $275.0 million senior secured term loan facility and a $75.0 million senior secured revolving credit facility. Borrowings under the new term loan bear interest at a floating rate based on LIBOR, with a 0.75% floor, plus 2.75%, compared to the previous term loan which had a floating rate based on LIBOR, with a 1.00% floor, plus 3.00%. Additionally, the new term loan has a final maturity in 2023, compared to the prior term loan which was due in 2020.

As of September 30, 2016, the Company had cash of $34.8 million and total outstanding borrowing under the credit agreement of $274.3 million. During the three months ended September 30, 2016, the Company generated cash flows from operations of $35.6 million and incurred $3.1 million of capital expenditures and software development costs.

During the third quarter of 2016, the Company repurchased 520,843 shares of its common stock at an aggregate purchase price of $11.4 million as part of its $100.0 million share repurchase program. For the nine months ended September 30, 2016, the Company repurchased a total of 1,803,982 shares of its common stock at an aggregate purchase price of $33.4 million, representing 4.3% of its outstanding shares as of December 31, 2015.

Investor Conference Webcast and Conference Call:

The Company will host a webcast and conference call on Monday, November 7, 2016 at 5:00 p.m. Eastern time to review third quarter 2016 financial results and 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 877-407-3982 (domestic) or 201-493-6780 (international). A replay of the conference call will be available through December 7, 2016, by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the passcode 13646589.

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 for the fiscal year 2015 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 adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted earnings per share, which are non-GAAP financial measures, to relevant GAAP financial measures.
2 Mill net price represents average selling price per thousand square feet (MSF), net of freight and delivery costs.
 

Continental Building Products, Inc.

Consolidated Statements of Operations

(unaudited)

 
  For the Three Months Ended   For the Nine Months Ended

September 30,
2016

 

September 30,
2015

September 30,
2016

 

September 30,
2015

(in thousands, except share data and per share amounts)
Net sales $ 114,558 $ 108,150 $ 343,158 $ 311,322
Costs, expenses and other income:
Cost of goods sold 86,756 78,151 250,455 231,342
Selling and administrative 9,241 9,008 28,364 26,799
Long Term Incentive Plan funded by Lone Star   9,933     29,946  
Total costs and operating expenses 95,997   97,092   278,819   288,087  
Operating income 18,561 11,058 64,339 23,235
Other expense, net (5,900 ) (283 ) (5,740 ) (700 )
Interest expense, net (3,146 ) (4,154 ) (10,492 ) (12,559 )
Income before losses from equity method investment and provision for income tax 9,515 6,621 48,107 9,976
Losses from equity method investment (291 ) (278 ) (726 ) (530 )
Income before provision for income taxes 9,224 6,343 47,381 9,446
Provision for income taxes (3,014 ) (2,104 ) (15,948 ) (3,313 )
Net income $ 6,210   $ 4,239   $ 31,433   $ 6,133  
 
Net income per share:
Basic $ 0.15 $ 0.10 $ 0.77 $ 0.14
Diluted $ 0.15 $ 0.10 $ 0.77 $ 0.14
Weighted average shares outstanding:
Basic 40,318,741 42,999,654 40,836,000 43,556,876
Diluted 40,388,185 43,057,749 40,879,809 43,596,978
 
 

Continental Building Products, Inc.

Consolidated Balance Sheets

 
 

September 30, 2016

 

December 31, 2015

(unaudited)
(in thousands)
Assets:
Cash and cash equivalents $ 34,758 $ 14,729
Receivables, net 34,531 35,812
Inventories 26,965 27,080
Prepaid and other current assets 3,090   6,448  
Total current assets 99,344 84,069
Property, plant and equipment, net 307,443 326,407
Customer relationships and other intangibles, net 85,105 94,835
Goodwill 119,945 119,945
Equity method investment 8,297 9,262
Debt issuance costs 704   450  
Total Assets $ 620,838   $ 634,968  
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable $ 27,190 $ 22,788
Accrued and other liabilities 12,626 12,334
Notes payable, current portion 1,746    
Total current liabilities 41,562 35,122
Deferred taxes and other long-term liabilities 12,466 12,537
Notes payable, non-current portion 265,053   286,543  
Total Liabilities 319,081   334,202  
Equity:
Undesignated preferred stock, par value $0.001 per share; 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2016 and December 31, 2015
Common stock, $0.001 par value per share; 190,000,000 shares authorized; 44,191,370 and 44,145,080 shares issued at September 30, 2016 and December 31, 2015, respectively; 39,992,339 and 41,750,031 shares outstanding at September 30, 2016 and December 31, 2015, respectively 44 44
Additional paid-in capital 321,865 319,817
Less: Treasury stock (81,906 ) (48,479 )
Accumulated other comprehensive loss (4,403 ) (5,341 )
Accumulated earnings 66,157   34,725  
Total Equity 301,757   300,766  
Total Liabilities and Equity $ 620,838   $ 634,968  
 
 

Continental Building Products, Inc.

Consolidated Statements of Cash Flows

(unaudited)

 
  For the Nine Months Ended

September 30, 2016

  September 30, 2015
(in thousands)
Cash flows from operating activities:
Net income $ 31,433 $ 6,133
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 35,656 38,931
Bad debt expense/(recovery) 15 (250 )
Amortization of debt issuance costs and debt discount 1,651 1,742
Loss on disposal of property, plant and equipment 41
Losses from equity method investment 726 530
Loss on debt extinguishment 5,802
Stock-based compensation 1,769 730
Deferred taxes 340 (491 )
Change in assets and liabilities:
Receivables 1,303 2,654
Inventories 242 (2,401 )
Prepaid expenses and other current assets 3,147 1,178
Accounts payable 2,942 1,955
Accrued and other current liabilities 502 275
Other long term liabilities (477 ) (142 )
Net cash provided by operating activities 85,092 50,844
Cash flows from investing activities:
Capital expenditures (4,797 ) (2,851 )
Software purchased or developed (386 ) (880 )
Capital contributions to equity method investment (259 ) (4 )
Distributions from equity method investment 498   797  
Net cash used in investing activities (4,944 ) (2,938 )
Cash flows from financing activities:
Capital contribution from Lone Star Funds 29,750
Proceeds from exercise of stock options 20
Proceeds from debt refinancing 275,000
Disbursements for debt refinancing (271,988 )
Payments of financing costs (4,424 )
Principal payments for First Lien Credit Agreement (25,688 ) (35,000 )
Payments to repurchase common stock (33,427 ) (40,035 )
Net cash used in financing activities (60,507 ) (45,285 )
Effect of foreign exchange rates on cash and cash equivalents 388   (990 )
Net change in cash and cash equivalents 20,029   1,631  
Cash, beginning of period 14,729   15,627  
Cash, end of period $ 34,758   $ 17,258  
 

Reconciliation of Non-GAAP Measures

EBITDA, Adjusted EBITDA, Adjusted 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 (GAAP). This release presents EBITDA, Adjusted EBITDA, Adjusted 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 Director compensation committee uses non-GAAP EBITDA to evaluate management's compensation. Management also believes that EBITDA, Adjusted EBITDA, Adjusted 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, Adjusted EBITDA, Adjusted 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, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Earnings Per Share in the same manner. EBITDA, Adjusted EBITDA, Adjusted 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 GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA
  For the Three Months Ended   For the Nine Months Ended

September 30,
2016

 

September 30,
2015

September 30,
2016

 

September 30,
2015

(in thousands)
Net income $ 6,210 $ 4,239 $ 31,433 $ 6,133

Adjustments:

Other expense, net 5,900 283 5,740 700
Interest expense, net 3,146 4,154 10,492 12,559
Losses from equity method investment 291 278 726 530
Provision for income taxes 3,014 2,104 15,948 3,313
Depreciation and amortization 11,868   12,661   35,656   38,931  
EBITDA—Non-GAAP Measure 30,429 23,719 99,995 62,166
Long Term Incentive Plan Funded by Lone Star (a)   9,933     29,946  
Adjusted EBITDA—Non-GAAP Measure $ 30,429   $ 33,652   $ 99,995   $ 92,112  
Adjusted EBITDA Margin - Adjusted EBITDA as a percentage of net sales - Non-GAAP Measure 26.6 % 31.1 % 29.1 % 29.6 %
 
(a)   Represents expense recognized pursuant to the Long Term Incentive Plan sponsored by an affiliate of Lone Star Funds. The amounts were funded by the affiliate of Lone Star Funds.
 
Reconciliation of GAAP Net Income and Earnings Per Share (EPS) to Non-GAAP Adjusted Net Income and Adjusted EPS
  For the Three Months Ended   For the Nine Months Ended
September 30,
2016
  September 30,
2015
September 30,
2016
  September 30,
2015
(dollars in thousands, except per share amounts)
Net income - GAAP Measure $ 6,210 $ 4,239 $ 31,433 $ 6,133
Expense of original issue discount and deferred financing fees for debt refinancing, after tax 3,842 3,842
Long Term Incentive Plan funded by Lone Star, after tax (a)   6,456     19,465
Adjusted net income - non-GAAP measure $ 10,052   $ 10,695   $ 35,275   $ 25,598
 
Earnings per share - GAAP measure $ 0.15 $ 0.10 $ 0.77 $ 0.14
Expense of original issue discount and deferred financing fees for debt refinancing, after tax (b) 0.10 0.09
Long Term Incentive Plan funded by Lone Star, after tax   0.15     0.45
Adjusted earnings per share - non-GAAP measure $ 0.25   $ 0.25   $ 0.86   $ 0.59
 
(a)   Represents expense recognized pursuant to the LTIP. All amounts were funded by an affiliate of Lone Star Funds.
(b) The earnings per share for the three months and nine month ended September 30, 2016 differ due to the required method of computing the weighted average shares outstanding in interim periods.
 
Other Financial and Operating Data:
  For the Three Months Ended   For the Nine Months Ended

September 30,
2016

 

September 30,
2015

September 30,
2016

 

September 30,
2015

(dollars in thousands, except mill net)
Capital expenditures and software purchased or developed $ 3,062 $ 1,444 $ 5,183 $ 3,731
Wallboard sales volume (million square feet) 634 567 1,894 1,603
Mill net sales price (a) $ 144.34 $ 153.05 $ 144.61 $ 155.68
 
(a)   Mill net sales price represents average selling price per thousand square feet net of freight and delivery costs.
 
Interim Volumes and Mill Net Prices (Unaudited)
  For the Three Months Ended

September 30,
2015

 

December 31,
2015

 

March 31,
2016

 

June 30,
2016

 

September 30,
2016

Volumes (million square feet) 567 596 617 643 634
Mill net Price per MSF - Total $ 153.05 $ 148.37 $ 144.62 $ 144.86 $ 144.34
Mill net Price per MSF - U.S. only $ 157.05 $ 151.74 $ 147.54 $ 148.15 $ 147.96

Source: Continental Building Products, Inc.

Continental Building Products, Inc.

Investor Relations:

703-480-3980

Investorrelations@continental-bp.com

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