Continental Building Products Reports Second Quarter 2016 Results
Highlights of Second Quarter 2016 as Compared to Second Quarter 2015
-
Net sales of
\\$117 .1 million rose by 5.5% -
Net income improved to
\\$12 .7 million compared to a loss of \\$0.1 million -
Adjusted EBITDA1 of
\\$35 .1 million up from\\$33 .3 million - Gross margin of 28.5%, expanded by 190 basis points
-
Earnings per share increased to
\\$0.31 - Wallboard volumes of 643 million square feet improved by 13.4%
-
Deployed
\\$15 .0 million to reduce debt and\\$5 .0 million to repurchase common stock -
Board of Directors authorizes expansion of stock repurchase program
from up to
\\$50.0 million to up to\\$100 million
“We are pleased to achieve another quarter of EBITDA 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 second consecutive quarter, we experienced stronger demand in our markets east of the Mississippi which generated a 13% increase in wallboard volume versus the prior year. We converted the majority of EBITDA into operating cash flow which we deployed in share repurchases and debt repayments to enhance shareholder returns. As we look to the back half of 2016, we remain committed to executing our operational initiatives and taking advantage of value-enhancing opportunities including the expanded stock repurchase program announced today."
The Company announced today that its Board of Directors has authorized
an expansion of its stock repurchase program from up to \\$50 million to
up to
Second Quarter 2016 Results vs. Second Quarter 2015
Wallboard volumes increased to 643 million square feet (MMSF), compared
to 567 MMSF in the prior year quarter, helped by continued stronger
demand in the construction markets. Net sales were up
Gross profit was
SG&A expense was
Operating income was
Interest expense decreased 12.8% to
Net income for the second quarter 2016 grew to
Balance Sheet and Cash Flow
As of June 30, 2016, the Company had cash of
In the second quarter of 2016, the Company repurchased 231,980 shares of
its common stock at an aggregate purchase price of
Investor Conference Webcast and Conference Call:
The Company will host a webcast and conference call on Wednesday,
August 3, 2016 at
About
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
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) |
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For the Three Months Ended | For the Six Months Ended | |||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
(in thousands, except share data and per share amounts) | ||||||||||||||||
Net Sales | \\$ | 117,115 | \\$ | 110,996 | \\$ | 228,600 | \\$ | 203,172 | ||||||||
Costs, expenses and other income: | ||||||||||||||||
Cost of goods sold | 83,744 | 81,516 | 163,699 | 153,191 | ||||||||||||
Selling and administrative | 10,163 | 9,363 | 19,123 | 17,791 | ||||||||||||
Long Term Incentive Plan funded by Lone Star | — | 15,842 | — | 20,013 | ||||||||||||
Total costs and operating expenses | 93,907 | 106,721 | 182,822 | 190,995 | ||||||||||||
Operating income | 23,208 | 4,275 | 45,778 | 12,177 | ||||||||||||
Other income/(expense), net | 6 | 31 | 160 | (417 | ) | |||||||||||
Interest expense, net | (3,648 | ) | (4,184 | ) | (7,346 | ) | (8,405 | ) | ||||||||
Income before losses from equity method investment and (provision for)/benefit from income tax | 19,566 | 122 | 38,592 | 3,355 | ||||||||||||
Losses from equity method investment | (240 | ) | (311 | ) | (435 | ) | (252 | ) | ||||||||
Income/(loss) before (provision for)/benefit from income taxes | 19,326 | (189 | ) | 38,157 | 3,103 | |||||||||||
(Provision for)/benefit from income taxes | (6,604 | ) | 63 | (12,934 | ) | (1,209 | ) | |||||||||
Net income/(loss) | \\$ | 12,722 | \\$ | (126 | ) | \\$ | 25,223 | \\$ | 1,894 | |||||||
Net income per share: | ||||||||||||||||
Basic | \\$ | 0.31 | \\$ | — | \\$ | 0.61 | \\$ | 0.04 | ||||||||
Diluted | \\$ | 0.31 | \\$ | — | \\$ | 0.61 | \\$ | 0.04 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 40,670,650 | 43,606,410 | 41,097,472 | 43,840,105 | ||||||||||||
Diluted | 40,717,162 | 43,606,410 | 41,128,466 | 43,876,757 | ||||||||||||
Continental Building Products, Inc. Consolidated Balance Sheets |
||||||||
June 30, 2016 | December 31, 2015 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Assets: | ||||||||
Cash and cash equivalents | \\$ | 15,726 | \\$ | 14,729 | ||||
Receivables, net | 37,810 | 35,812 | ||||||
Inventories | 26,199 | 27,080 | ||||||
Prepaid and other current assets | 6,897 | 6,448 | ||||||
Total current assets | 86,632 | 84,069 | ||||||
Property, plant and equipment, net | 312,122 | 326,407 | ||||||
Customer relationships and other intangibles, net | 88,500 | 94,835 | ||||||
Goodwill | 119,945 | 119,945 | ||||||
Equity method investment | 8,696 | 9,262 | ||||||
Debt issuance costs | 315 | 450 | ||||||
Total Assets | \\$ | 616,210 | \\$ | 634,968 | ||||
Liabilities and Shareholders' Equity: | ||||||||
Liabilities: | ||||||||
Accounts payable | \\$ | 22,799 | \\$ | 22,788 | ||||
Accrued and other liabilities | 11,585 | 12,334 | ||||||
Total current liabilities | 34,384 | 35,122 | ||||||
Deferred taxes and other long-term liabilities | 12,514 | 12,537 | ||||||
Notes payable, non-current portion | 262,616 | 286,543 | ||||||
Total liabilities | 309,514 | 334,202 | ||||||
Equity: | ||||||||
Undesignated preferred stock, par value \\$0.001 per share; 10,000,000 shares authorized, no shares issued and outstanding at June 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 June 30, 2016 and December 31, 2015, respectively; 40,513,182 and 41,750,031 shares outstanding at June 30, 2016 and December 31, 2015, respectively | 44 | 44 | ||||||
Additional paid-in capital | 321,250 | 319,817 | ||||||
Less: Treasury stock | (70,489 | ) | (48,479 | ) | ||||
Accumulated other comprehensive loss | (4,057 | ) | (5,341 | ) | ||||
Accumulated earnings | 59,948 | 34,725 | ||||||
Total equity | 306,696 | 300,766 | ||||||
Total liabilities and equity | \\$ | 616,210 | \\$ | 634,968 | ||||
Continental Building Products, Inc. Consolidated Statements of Cash Flows (unaudited) |
||||||||
For the Six Months Ended | ||||||||
June 30, 2016 | June 30, 2015 | |||||||
(in thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | \\$ | 25,223 | \\$ | 1,894 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 23,788 | 26,270 | ||||||
Bad debt expense/(recovery) | 28 | (250 | ) | |||||
Amortization of debt issuance costs and debt discount | 1,207 | 1,106 | ||||||
Loss on disposal of property, plant and equipment | 41 | — | ||||||
Losses from equity method investment | 435 | 252 | ||||||
Share based compensation | 1,152 | 407 | ||||||
Deferred taxes | 268 | 457 | ||||||
Change in assets and liabilities: | ||||||||
Receivables | (1,973 | ) | (1,890 | ) | ||||
Inventories | 1,053 | (1,505 | ) | |||||
Prepaid expenses and other current assets | (534 | ) | 222 | |||||
Accounts payable | (620 | ) | (1,302 | ) | ||||
Accrued and other current liabilities | (152 | ) | (3,120 | ) | ||||
Other long term liabilities | (413 | ) | (93 | ) | ||||
Net cash provided by operating activities | 49,503 | 22,448 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (1,765 | ) | (1,733 | ) | ||||
Software purchased or developed | (356 | ) | (554 | ) | ||||
Capital contributions to equity method investment | (226 | ) | — | |||||
Distributions from equity method investment | 356 | 583 | ||||||
Net cash used in investing activities | (1,991 | ) | (1,704 | ) | ||||
Cash flows from financing activities: | ||||||||
Capital contribution from Lone Star Funds | — | 19,893 | ||||||
Proceeds from exercise of stock options | 20 | — | ||||||
Principal payments for First Lien Credit Agreement | (25,000 | ) | (20,000 | ) | ||||
Payments to repurchase common stock | (22,010 | ) | (20,036 | ) | ||||
Net cash used in financing activities | (46,990 | ) | (20,143 | ) | ||||
Effect of foreign exchange rates on cash and cash equivalents | 475 | (389 | ) | |||||
Net change in cash and cash equivalents | 997 | 212 | ||||||
Cash, beginning of period | 14,729 | 15,627 | ||||||
Cash, end of period | \\$ | 15,726 | \\$ | 15,839 | ||||
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 Six Months Ended | |||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
(in thousands) | ||||||||||||||||
Net income/(loss) | \\$ | 12,722 | \\$ | (126 | ) | \\$ | 25,223 | \\$ | 1,894 | |||||||
Adjustments: |
||||||||||||||||
Other (income)/expense, net | (6 | ) | (31 | ) | (160 | ) | 417 | |||||||||
Interest expense, net | 3,648 | 4,184 | 7,346 | 8,405 | ||||||||||||
Losses from equity method investment | 240 | 311 | 435 | 252 | ||||||||||||
Provision for/(benefit from) income taxes | 6,604 | (63 | ) | 12,934 | 1,209 | |||||||||||
Depreciation and amortization | 11,842 | 13,141 | 23,788 | 26,270 | ||||||||||||
EBITDA—Non-GAAP Measure | 35,050 | 17,416 | 69,566 | 38,447 | ||||||||||||
Long Term Incentive Plan Funded by Lone Star (a) | — | 15,842 | — | 20,013 | ||||||||||||
Adjusted EBITDA—Non-GAAP Measure | 35,050 | 33,258 | 69,566 | 58,460 | ||||||||||||
Adjusted EBITDA Margin - Adjusted EBITDA as a percentage of net sales - Non-GAAP Measure | 29.9 | % | 30.0 | % | 30.4 | % | 28.8 | % |
(a) | Represents expense recognized pursuant to the Long Term Incentive Plan sponsored by an affiliate of Lone Star (the "LTIP"). The amounts were funded by the affiliate of Lone Star. | |||
Reconciliation of GAAP Net Income/(Loss) and Earnings Per Share (EPS) to Non-GAAP Adjusted Net Income and Adjusted EPS | |||||||||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | ||||||||||||
(dollars in thousands, except per share amounts) | |||||||||||||||
Net income/(loss) - GAAP Measure | \\$ | 12,722 | \\$ | (126 | ) | \\$ | 25,223 | \\$ | 1,894 | ||||||
Long Term Incentive Plan funded by Lone Star, after tax (a) | — | 10,293 | — | 13,020 | |||||||||||
Adjustment net income - non-GAAP measure | \\$ | 12,722 | \\$ | 10,167 | \\$ | 25,223 | \\$ | 14,914 | |||||||
Earnings per share - GAAP measure | \\$ | 0.31 | \\$ | — | \\$ | 0.61 | \\$ | 0.04 | |||||||
Long Term Incentive Plan funded by Lone Star, after tax | — | 0.23 | — | 0.30 | |||||||||||
Adjusted earnings per share - non-GAAP measure | \\$ | 0.31 | \\$ | 0.23 | \\$ | 0.61 | \\$ | 0.34 |
(a) | Represents expense recognized pursuant to the LTIP. All amounts were funded by an affiliate of Lone Star. | |||
Other Financial and Operating Data: | |||||||||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | ||||||||||||
(dollars in thousands, except mill net) | |||||||||||||||
Capital expenditures and software purchased or developed | \\$ | 1,854 | \\$ | 1,270 | \\$ | 2,121 | \\$ | 2,287 | |||||||
Wallboard sales volume (million square feet) | 643 | 567 | 1,260 | 1,036 | |||||||||||
Mill net sales price (a) | \\$ | 144.86 | \\$ | 156.85 | \\$ | 144.74 | \\$ | 157.13 |
(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 | |||||||||||||||||||
June 30, 2015 |
September 30, 2015 |
December 31, 2015 |
March 31, 2016 |
June 30, 2016 |
|||||||||||||||
Volumes (million square feet) | 567 | 567 | 596 | 617 | 643 | ||||||||||||||
Mill net Price per MSF - Total | \\$ | 156.85 | \\$ | 153.05 | \\$ | 148.37 | \\$ | 144.62 | \\$ | 144.86 | |||||||||
Mill net Price per MSF - U.S. only | \\$ | 161.41 | \\$ | 157.05 | \\$ | 151.74 | \\$ | 147.54 | \\$ | 148.15 |
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