EX-99.1 2 d29772dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

CONTINENTAL BUILDING PRODUCTS REPORTS THIRD QUARTER 2015 RESULTS

– Adjusted EBITDA Margin1 Expands 150 Basis Points to Record 31.1%; Operating Margin of 10.2% –

– Generates Record Adjusted Cash Flow From Operations1 of $38.3 Million; Cash Flow From Operations of $28.4 Million –

– Board of Directors Authorizes New Stock Repurchase Program of Up to $50 Million –

Herndon, Virginia, November 4, 2015. 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, 2015.

Highlights of Third Quarter 2015 as Compared to Third Quarter 2014

 

    Net sales of $108.2 million, compared to $113.8 million

 

    Gross margin grows 310 basis points to 27.7%

 

    Adjusted EBITDA1 essentially flat at $33.7 million

 

    Adjusted earnings per share1 of $0.25 compared to $0.22. GAAP earnings per share of $0.10 compared to $0.22.

 

    Repurchased approximately $20.0 million of common stock in the third quarter and approximately $40.0 million during nine month period ended September 30, 2015

 

    Reduced debt by $15.0 million in the third quarter and $35.0 million during nine month period ended September 30, 2015

“In the third quarter we delivered Company record Adjusted EBITDA margin and Adjusted Cash Flow from Operations1 attributed to our efficient, low cost position despite softer demand in our primary markets east of the Mississippi,” stated Jay Bachmann, Continental’s Chief Executive Officer. “To that end, we delivered a 7.2% increase in gross profit and 310 basis point improvement in gross margin compared to a year ago. Furthermore, for the second consecutive quarter we deployed cash to repurchase approximately two percent of our outstanding shares for $20.0 million while also reducing our debt. As we move into the end of 2015, the long-term underlying fundamentals for improvement in our business remain positive. While we cannot control near-term end market fluctuations, we believe our strategy and low cost, high cash flow operations position us to take advantage of value-enhancing opportunities including the stock repurchase program announced today.”

The Company announced today that its Board of Directors has authorized a stock repurchase program under which the Company may repurchase shares of its outstanding common stock up to an aggregate amount of $50.0 million through the end of 2016.

Dennis Schemm, Chief Financial Officer, stated “this stock repurchase program is a continued demonstration of confidence in our attractive business model and commitment to delivering shareholder value. With our strong cash flow generation we are well positioned to bolster our business while decreasing debt and enhancing shareholder returns.”

 

1  See the financial schedules at the end of this press release for a reconciliation of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, and adjusted Cash Flow from Operations, which are non-GAAP financial measures, to relevant GAAP financial measures.

 

1


Third Quarter 2015 Results vs. Third Quarter 2014

Net sales for the third quarter of 2015 were $108.2 million, compared to $113.8 million in the third quarter of 2014. Wallboard volumes of 567 million square feet (MMSF) were down (3.9%) compared to 590 MMSF in the prior year quarter, mainly driven by a slower market. The average mill net price2 was $153.05 per MSF, down (0.7%) compared to $154.10 per MSF in the prior year quarter, mainly due to weaker Canadian dollar and regional sales mix. At constant currency, average mill net price increased 0.5% compared to the prior year quarter. For US shipments, the average mill net price was slightly favorable compared to the prior year quarter.

Gross profit was $30.0 million, an increase of 7.2% compared to $28.0 million in the prior year quarter. The gross margin of 27.7% expanded from 24.6% in the prior year quarter, primarily as a result of strict cost controls and favorable energy costs.

Selling and administrative (SG&A) expense was $9.0 million, compared to $7.8 million in the prior year quarter. The increase was largely due to additional amortization of software development costs of $0.4 million, professional fees of $0.2 million incurred in connection with secondary common stock offering costs in September 2015 and $0.6 million related to additional costs of being a public company.

The expense associated with the Company’s Long Term Incentive Plan, which was implemented and is funded by Lone Star (LTIP), was $9.9 million for the third quarter of 2015. Certain members of the Company’s management team earned payments under the LTIP in connection with Lone Star’s sale of common stock in the September secondary public offering.

Operating income was $11.1 million, compared to $20.2 million in the prior year quarter, mainly due to the LTIP expense in the third quarter of 2015, with no comparable expense in the prior year quarter. Excluding the expense associated with the LTIP, operating income increased 3.9% to $21.0 million, compared to the prior year quarter.

Interest expense was $4.2 million, an improvement of $0.7 million from $4.9 million in the prior year quarter, reflecting a reduction in the long-term debt and a decrease in the interest rate on the Company’s borrowings.

Adjusted net income1 grew to $10.7 million, or $0.25 per share, compared to adjusted net income of $9.5 million, or $0.22 per share, in the prior year quarter. GAAP net income was $4.2 million, or $0.10 per share, compared to net income of $9.5 million, or $0.22 per share, in the prior year quarter.

Adjusted EBITDA was essentially flat at $33.7 million compared to the prior year quarter. Adjusted EBITDA as a percentage of net sales was 31.1% compared to 29.6% in the prior year quarter.

Balance Sheet and Cash Flow

At the end of the quarter on September 30, 2015, the Company had cash of $17.3 million and total debt outstanding of $314.5 million. In the third quarter of 2015, the Company generated cash flow from operations of $28.4 million and incurred $1.4 million of capital expenditures and software development costs. Excluding the net impact of the LTIP, the Company produced adjusted cash flow from operations1 of $38.3 million in the third quarter of 2015, an improvement of $4.9 million over the prior year.

 

2  Mill net price represents average selling price per thousand square feet (MSF), net of freight and delivery costs.

 

2


In the third quarter of 2015, the Company repurchased approximately 1,007,500 shares of its common stock at an aggregate purchase price of $20.0 million from an affiliate of Lone Star in a private, non-underwritten transaction in connection with the secondary public offering in September 2015. In the third quarter of 2015, the Company also used cash flow from operations for the voluntary repayment of $15.0 million of debt with the next principal payment on the Company’s debt not due until August 2020.

Investor Conference Webcast and Conference Call:

The Company will host a webcast and conference call on Wednesday, November 4, 2015 at 5:00 p.m. Eastern time to review third quarter 2015 financial results and discuss recent events and conduct a question-and-answer session. 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 4, 2015, by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the pass code 13622462.

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 fiscal year 2014 filed on February 25, 2015, as supplemented by its Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2015 and June 30, 2015 filed on May 6, 2015 and August 6, 2015, respectively, for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.

 

3


Contact Information:

Investor Relations:

Tel.: 703-480-3980

Investorrelations@continental-bp.com

 

4


Continental Building Products, Inc.

Consolidated Statements of Operations

(dollars in thousands, except per share, mill net and volume data)

(Unaudited)

 

     Three Months
Ended
September 30, 2015
    Three Months
Ended
September 30, 2014
    Nine Months
Ended
September 30, 2015
    Nine Months
Ended
September 30, 2014
 

Net Sales

   $ 108,150      $ 113,804      $ 311,322      $ 303,692   

Costs, expenses and other income:

        

Cost of goods sold

     78,151        85,821        231,342        241,042   

Selling and administrative

     9,008        7,774        26,799        23,358   

Long Term Incentive Plan funded by Lone Star

     9,933        —          29,946        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and operating expenses

     97,092        93,595        288,087        264,400   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     11,058        20,209        23,235        39,292   

Other income (expense), net

     (283     (131     (700     (5,461

Interest expense, net

     (4,154     (4,945     (12,559     (24,518
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before loss on equity method investment and income tax

     6,621        15,133        9,976        9,313   

Loss from equity method investment

     (278     (20     (530     (257
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax

     6,343        15,113        9,446        9,056   

Income tax benefit (expense)

     (2,104     (5,627     (3,313     (3,526
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 4,239      $ 9,486      $ 6,133      $ 5,530   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per common share:

        

Basic

   $ 0.10      $ 0.22      $ 0.14      $ 0.13   

Diluted

   $ 0.10      $ 0.22      $ 0.14      $ 0.13   

Weighted average shares outstanding:

        

Basic

     43,000        44,069        43,557        42,561   

Diluted

     43,058        44,081        43,597        42,569   

Other Financial and Operating Data:

        

EBITDA (1)

   $ 23,719      $ 33,720      $ 62,166      $ 80,616   

Adjusted EBITDA (1)

   $ 33,652      $ 33,720      $ 92,112      $ 80,616   

Capital expenditures and software purchased or developed

   $ 1,444      $ 3,219      $ 3,731      $ 6,090   

Wallboard sales volume (MSF)

     567        590        1,603        1,552   

Mill net sales price (2)

   $ 153.05      $ 154.10      $ 155.68      $ 155.57   

 

(1) EBITDA and Adjusted EBITDA are non-GAAP measures. See “Reconciliation of GAAP Measures to Non-GAAP Measures” below for how we define and calculate EBITDA and Adjusted EBITDA as non-GAAP measures, reconciliations of operating income, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA, and a description of why we believe these measures are important.
(2) Mill net sales price represents average selling price per thousand square feet (MSF) net of freight and delivery costs.

 

5


Continental Building Products, Inc.

Consolidated Balance Sheets

(dollars in thousands, except share data)

 

     As of
September 30, 2015
(unaudited)
    As of
December 31,
2014
 

Assets

    

Cash

   $ 17,258      $ 15,627   

Receivables, net

     37,579        40,152   

Inventories

     31,661        29,564   

Prepaid and other current assets

     7,117        8,330   

Deferred taxes, current

     5,282        3,157   
  

 

 

   

 

 

 

Total current assets

     98,897        96,830   

Property, plant and equipment, net

     329,456        353,652   

Customer relationships and other intangibles, net

     98,289        110,809   

Goodwill

     119,945        119,945   

Equity method investment

     9,596        10,919   

Debt issuance costs

     7,409        8,826   
  

 

 

   

 

 

 

Total Assets

   $ 663,592      $ 700,981   
  

 

 

   

 

 

 

Liabilities and equity

    

Accounts payable

   $ 26,214      $ 24,561   

Accrued and other liabilities

     10,720        11,428   

Notes payable, current portion

     —          —     
  

 

 

   

 

 

 

Total current liabilities

     36,934        35,989   

Deferred taxes and other long-term liabilities

     13,986        12,494   

Notes payable, non-current portion

     314,499        349,125   
  

 

 

   

 

 

 

Total liabilities

     365,419        397,608   
  

 

 

   

 

 

 

Equity

    

Undesignated preferred stock, par value $0.001 per share; 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2015 and December 31, 2014

     —          —     

Common stock, $0.001 par value per share; 190,000,000 shares authorized; 44,122,712 and 44,069,000 shares issued at September 30, 2015 and December 31, 2014, respectively; 42,199,848 and 44,069,000 shares outstanding at September 30, 2015 and December 31, 2014, respectively

     44        44   

Additional paid-in capital

     318,873        288,393   

Less: Treasury stock

     (40,035     —     

Accumulated other comprehensive income (loss)

     (4,838     (3,060

Accumulated earnings

     24,129        17,996   
  

 

 

   

 

 

 

Total equity

     298,173        303,373   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 663,592      $ 700,981   
  

 

 

   

 

 

 

 

6


Continental Building Products, Inc.

Consolidated Statements of Cash Flows

(dollars in thousands)

 

     Nine Months
Ended
September 30, 2015
    Nine Months
Ended
September 30, 2014
 

Cash flows from operating activities:

    

Net income (loss)

   $ 6,133      $ 5,530   

Adjustments to reconcile net income (loss) to net cash

    

Depreciation and amortization

     38,931        41,324   

Bad debt recovery

     (250     —     

Amortization of debt issuance costs and debt discount

     1,742        8,560   

Loss from equity method investment

     530        257   

Share based compensation

     730        344   

Deferred taxes

     (491     6,619   

Change in assets and liabilities:

    

Receivables

     2,654        (7,202

Inventories

     (2,401     (6,731

Prepaid expenses and other current assets

     1,178        (3,616

Accounts payable

     1,955        1,394   

Accrued and other current liabilities

     275        (1,154

Other long term liabilities

     (142     383   
  

 

 

   

 

 

 

Net cash provided by operating activities

     50,844        45,708   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Capital expenditures

     (2,851     (2,910

Software purchased or developed

     (880     (3,180

Contributions to equity method investment

     (4  

Distributions from equity method investment

     797        1,754   
  

 

 

   

 

 

 

Net cash used in investing activities

     (2,938     (4,336
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Net proceeds from issuance of common stock

     —          151,354   

Principal payments for First Lien Credit Agreement

     (35,000     (36,975

Repayment of Second Lien Credit Agreement

     —          (155,000

Proceeds from revolving credit facility, net

     —          —     

Capital Contribution from Lone Star Funds

     29,750        —     

Payments to repurchase common stock

     (40,035     —     
  

 

 

   

 

 

 

Net cash used in financing activities

     (45,285     (40,621
  

 

 

   

 

 

 

Effect of foreign exchange rates on cash and cash equivalents

     (990     (417

Net change in cash and cash equivalents

     1,631        334   

Cash, beginning of period

     15,627        11,822   
  

 

 

   

 

 

 

Cash, end of period

   $ 17,258      $ 12,156   
  

 

 

   

 

 

 

 

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Reconciliation of GAAP Measures to Non-GAAP Measures

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Earnings Per Share, and Adjusted Cash Flow from Operations 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, Adjusted Earnings Per Share, and Adjusted Cash Flow from Operations 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. Management also believes that EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Earnings Per Share, and Adjusted Cash Flow from Operations are useful to investors because they present a better reflection of the Company’s performance as an independent company following the acquisition of the business from Lafarge North America and 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, Adjusted Earnings Per Share, and Adjusted Cash Flow from Operations 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, Adjusted Earnings Per Share, and Adjusted Cash Flow from Operations in the same manner. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Earnings Per Share, and Adjusted Cash Flow from Operations are not measurements of the Company’s financial performance under GAAP and should not be considered in isolation or as alternatives to operating income, net income, earnings per share or cash flow from operations 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.

The following is a reconciliation of operating income to EBITDA, Adjusted EBITDA and Adjusted EBITDA margin:

 

         Three Months Ended
September 30, 2015
    Three Months Ended
September 30, 2014
    Nine Months Ended
September 30, 2015
    Nine Months Ended
September 30, 2014
 

Operating Income - GAAP Measure

     $  11,058      $  20,209      $  23,235      $  39,292   

Depreciation and amortization

       12,661        13,511        38,931        41,324   
    

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA—Non-GAAP Measure

       23,719        33,720        62,166        80,616   

Long Term Incentive Plan funded by Lone Star

 

(a)

     9,933        —          29,946        —     
    

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA—Non-GAAP Measure

     $ 33,652      $ 33,720      $ 92,112      $ 80,616   
    

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA Margin - Adjusted EBITDA as a percentage of net sales - Non-GAAP Measure

       31.1     29.6     29.6     26.5

 

(a) Represents expense recognized pursuant to the LTIP. The amounts are funded by an affiliate of Lone Star.

 

8


The following is a reconciliation of net income to Adjusted Net Income, earnings per share to Adjusted Earnings per Share, and cash flow from operations to Adjusted Cash Flow from Operations:

 

         Three Months Ended
September 30, 2015
     Three Months Ended
September 30, 2014
     Nine Months Ended
September 30, 2015
     Nine Months Ended
September 30, 2014
 

Net income - GAAP Measure

     $ 4,239       $  9,486       $ 6,133       $ 5,530   

Long Term Incentive Plan funded by Lone Star, after tax

   (a)     6,456         —           19,465         —     

Termination fee for advisory agreement, after tax

   (b)     —           —           —           1,318   

Call premium for Second Lien Credit Agreement, after tax

   (c)     —           —           —           2,044   

Expense of original issue discount and deferred financing fees for debt repayment, after tax

   (d)     —           —           —           4,570   
    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income - non-GAAP measure

     $ 10,695       $ 9,486       $ 25,598       $ 13,462   
    

 

 

    

 

 

    

 

 

    

 

 

 
         Three Months Ended
September 30, 2015
     Three Months Ended
September 30, 2014
     Nine Months Ended
September 30, 2015
     Nine Months Ended
September 30, 2014
 

Earnings per share - GAAP measure

     $  0.10       $  0.22       $  0.14       $  0.13   

Long Term Incentive Plan funded by Lone Star, after tax

   (a)     0.15         —           0.45         —     

Termination fee for advisory agreement, after tax

   (b)     —           —           —           0.03   

Call premium for Second Lien Credit Agreement, after tax

   (c)     —           —           —           0.05   

Expense of original issue discount and deferred financing fees for debt repayment, after tax

   (d)     —           —           —           0.11   
    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted earnings per share - non-GAAP measure

     $ 0.25       $ 0.22       $ 0.59       $ 0.32   
    

 

 

    

 

 

    

 

 

    

 

 

 
         Three Months Ended
September 30, 2015
     Three Months Ended
September 30, 2014
     Nine Months Ended
September 30, 2015
     Nine Months Ended
September 30, 2014
 

Cash Flow from Operations - GAAP Measure

     $  28,396       $  33,407       $  50,844       $  45,708   

Long Term Incentive Plan funded by Lone Star

   (a)     9,933         —           29,946         —     
    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Cash Flow from Operations - non-GAAP Measure

       38,329         33,407         80,790         45,708   
    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) Represents expense recognized pursuant to the LTIP. All amounts are funded by an affiliate of Lone Star.
(b) Adjusts for one-time payment of termination fees to affiliates of Lone Star in connection with the termination of our asset advisory agreement.
(c) Adjusts for a prepayment premium for the repayment of the Second Lien Credit Agreement.
(d) Adjusts for original issue discount and deferred financing amortization accelerated by the repayment of the Second Lien Credit Agreement.

 

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Interim Volumes and Mill Net Prices (Unaudited)

 

     Three
Months
Ended
March 31,
        2014        
     Three
Months
Ended
June 30,
        2014        
     Three
Months
Ended
September 30,
        2014        
     Three
Months
Ended
December 31,
        2014        
     Three
Months
Ended
March 31,
        2015        
     Three
Months
Ended
June 30,
        2015        
     Three
Months
Ended
September 30,
        2015        
 

Volumes (million square feet)

     438         525         590         627         469         567         567   

Mill net Price per MSF - Total

   $ 157.32       $ 155.76       $ 154.10       $ 152.79       $ 157.46       $ 156.85       $ 153.05   

Mill net Price per MSF - U.S. only

   $ 160.83       $ 159.18       $ 156.72       $ 155.54       $ 162.70       $ 161.41       $ 157.05   

 

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