HERNDON, Va.--(BUSINESS WIRE)--
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.
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181108005772/en/
Continental Building Products, Inc.
Investor Relations:
Tel.:
(703) 480-3980
Investorrelations@continental-bp.com
Source: Continental Building Products, Inc.