Delaware | 1-36293 | 61-1718923 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S Employer Identification No.) |
12950 Worldgate Drive, Suite 700, Herndon, VA | 20170 | |
(Address of principal executive offices) | (Zip Code) |
(703) 480-3800 |
(Registrant's telephone number, including the area code) |
Securities Registered Pursuant to Section 12(b) of the Act: | ||||
Title of Each Class | Trading Symbol (s) | Name of Exchange on Which Registered | ||
Common Stock, $0.001 par value per share | CBPX | New York Stock Exchange |
(d) | Exhibits. Press Release issued by Continental Building Products, Inc. dated May 2, 2019. |
Continental Building Products, Inc. | ||
May 2, 2019 | /s/ Timothy A. Power | |
Date | Timothy A. Power | |
Senior Vice President and General Counsel |
• | Net sales increased 4.5% to $122.0 million |
• | Wallboard sales volumes increased 5.5% to 649 million square feet |
• | Net income increased 16.7% to $15.9 million; adjusted net income1 increased 8.1% to $14.8 million from $13.6 million |
• | Earnings per share increased 25.0% to $0.45; adjusted earnings per share1 increased 16.7% to $0.42 |
• | Adjusted EBITDA1 increased 2.5% to $32.1 million |
• | Deployed $5.6 million in capital investments, excluding $1.8 million incurred as a result of the Buchanan outage, and $5.0 million to repurchase 191,907 shares of common stock |
• | As previously disclosed, the Company resumed operations at its Buchanan, New York plant on March 15, 2019, following a significant equipment malfunction on January 24, 2019 which resulted in a temporary outage of the plant |
Details of Insurance Claims and Cash Payments Related to Buchanan Outage | |||||||||||||||||||
Claim Details | Cash Details | ||||||||||||||||||
Claim Amount | Insurance Deductible | Net recovery recorded in first quarter 2019 | Cash received in first quarter 2019 | Receivable Recorded as of March 31, 2019 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Rebuild of property, plant and equipment damaged (a) | $ | 1,839 | $ | 250 | $ | 1,589 | $ | 1,589 | $ | — | |||||||||
Directs costs associated with business interruption (b) | 2,932 | — | 2,932 | 2,661 | 271 | ||||||||||||||
Estimated lost operating income and EBITDA1 associated with lost sales from business interruption (c) | 4,500 | — | — | — | — | ||||||||||||||
$ | 9,271 | $ | 250 | $ | 4,521 | $ | 4,250 | $ | 271 |
(a) | The rebuild of property, plant and equipment damaged and related net recovery resulted in a net gain of $1.5 million. |
(b) | Direct costs associated with the business interruption include various expenses such as additional freight to ship to customers at greater distances from other plants, additional freight costs to reroute incoming raw materials and other various costs that were incurred as a result of the Buchanan outage and are expected to be covered by our insurance policy. The amounts reported are for the first quarter 2019; additional expenses might be incurred in the second quarter, which the Company believes would be recoverable from the insurance policy. The net recovery of direct costs associated with business interruption were netted against actual costs incurred resulting in a net impact of zero to the income statement. |
(c) | This represents the midpoint of the estimated $4.0 - $5.0 million of insurance proceeds for the lost operating income and EBITDA1 the Company expects to receive related to the Buchanan outage. This amount is still being finalized and was not recorded in the first quarter 2019. |
Details of Gain from insurance recoveries, net | |||
For the Three Months Ended | |||
March 31, 2019 | |||
(in thousands) | |||
Cost to rebuild property, plant and equipment (capitalized) | $ | 1,839 | |
Insurance deductible | 250 | ||
Net recoveries from insurance policy | 1,589 | ||
Write-off of property, plant and equipment | 76 | ||
Gain from insurance recoveries, net | $ | 1,513 |
Reconciliation of Operating Income to Adjusted Operating Income1 | |||
For the Three Months Ended | |||
March 31, 2019 | |||
(in thousands) | |||
Operating Income (as reported in income statement) | $ | 23,106 | |
Remove: Gain from insurance recoveries, net (as reported in income statement) (a) | (1,513 | ) | |
Adjusted operating income1 to remove the effects of Buchanan outage (a) | $ | 21,593 |
(a) | This calculation does not include the $4.0 - $5.0 million of insurance proceeds for the lost operating income and EBITDA1 the Company expects to receive related to the Buchanan outage. |
• | Cost of goods sold inflation per unit compared to the prior year is expected to be in the range of 2% - 3%, down from the previously estimated range of 4.5% - 6.5%. We expect to partly offset this inflation by approximately $3 million of savings from high return capital projects. |
• | Total capital expenditures are now in the range of $30 - $34 million to reflect the Buchanan outage. |
◦ | Maintenance capital spending is expected to be in the range of $14 - $16 million. |
◦ | High-return capital spending is expected to be in the range of $14 - $16 million. |
◦ | Approximately $1.8 million incurred as a result of the Buchanan outage. |
• | Depreciation and amortization is expected to be in the range of $43 - $45 million. |
• | Effective tax rate is expected to be in the range of 22% - 23%, up from the previous range of 21% - 22%. |
For the Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
(in thousands, except share data and per share amounts) | |||||||
Net sales | $ | 122,032 | $ | 116,802 | |||
Cost of goods sold | 90,786 | 86,616 | |||||
Gross profit | 31,246 | 30,186 | |||||
Selling and administrative | 9,653 | 9,424 | |||||
Gain from insurance recoveries, net | 1,513 | — | |||||
Operating income | 23,106 | 20,762 | |||||
Other expense, net | (36 | ) | (140 | ) | |||
Interest expense, net | (2,492 | ) | (2,720 | ) | |||
Income before losses from equity method investment and provision for income taxes | 20,578 | 17,902 | |||||
Losses from equity method investment | (45 | ) | (364 | ) | |||
Income before provision for income taxes | 20,533 | 17,538 | |||||
Provision for income taxes | (4,607 | ) | (3,892 | ) | |||
Net income | $ | 15,926 | $ | 13,646 | |||
Net income per share: | |||||||
Basic | $ | 0.45 | $ | 0.36 | |||
Diluted | $ | 0.45 | $ | 0.36 | |||
Weighted average shares outstanding: | |||||||
Basic | 35,248,280 | 37,432,782 | |||||
Diluted | 35,350,259 | 37,604,953 |
March 31, 2019 | December 31, 2018 | ||||||
(unaudited) | |||||||
(in thousands) | |||||||
Assets: | |||||||
Cash and cash equivalents | $ | 101,081 | $ | 102,633 | |||
Trade receivables, net | 43,985 | 38,454 | |||||
Inventories, net | 37,513 | 32,225 | |||||
Prepaid and other current assets | 5,264 | 19,805 | |||||
Total current assets | 187,843 | 193,117 | |||||
Property, plant and equipment, net | 285,701 | 288,368 | |||||
Customer relationships and other intangibles, net | 60,971 | 62,680 | |||||
Goodwill | 119,945 | 119,945 | |||||
Equity method investment | 7,832 | 7,975 | |||||
Operating lease - right of use assets | 918 | — | |||||
Debt issuance costs | 252 | 296 | |||||
Total Assets | $ | 663,462 | $ | 672,381 | |||
Liabilities and Shareholders' Equity: | |||||||
Liabilities: | |||||||
Accounts payable | $ | 34,706 | $ | 48,060 | |||
Accrued and other liabilities | 5,595 | 12,815 | |||||
Debt, current portion | 1,720 | 1,669 | |||||
Operating lease liabilities, current portion | 625 | — | |||||
Total current liabilities | 42,646 | 62,544 | |||||
Deferred taxes and other long-term liabilities | 19,651 | 20,204 | |||||
Debt, non-current portion | 261,420 | 261,886 | |||||
Operating lease liabilities, non-current portion | 978 | — | |||||
Total Liabilities | 324,695 | 344,634 | |||||
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; 44,537,285 and 44,472,214 shares issued and 35,275,032 and 35,401,868 shares outstanding as of March 31, 2019 and December 31, 2018, respectively | 44 | 44 | |||||
Additional paid-in capital | 327,668 | 327,515 | |||||
Less: Treasury stock | (214,055 | ) | (209,050 | ) | |||
Accumulated other comprehensive loss | (3,445 | ) | (3,391 | ) | |||
Accumulated earnings | 228,555 | 212,629 | |||||
Total Shareholders' Equity | 338,767 | 327,747 | |||||
Total Liabilities and Shareholders' Equity | $ | 663,462 | $ | 672,381 |
For the Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
(in thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 15,926 | $ | 13,646 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 10,520 | 10,581 | |||||
Amortization of debt issuance costs and debt discount | 309 | 334 | |||||
Losses from equity method investment | 45 | 364 | |||||
Amortization of deferred gain on terminated swaps | (288 | ) | — | ||||
Gain from insurance recoveries | (1,513 | ) | — | ||||
Share-based compensation | 570 | 600 | |||||
Change in assets and liabilities: | |||||||
Trade receivables | (5,553 | ) | (7,562 | ) | |||
Inventories | (5,244 | ) | (2,913 | ) | |||
Prepaid expenses and other current assets | 14,562 | 1,144 | |||||
Accounts payable | (12,107 | ) | (1,353 | ) | |||
Accrued and other current liabilities | (6,537 | ) | (1,042 | ) | |||
Other long-term liabilities | (54 | ) | (56 | ) | |||
Net cash provided by operating activities | 10,636 | 13,743 | |||||
Cash flows from investing activities: | |||||||
Payments for property, plant and equipment | (6,656 | ) | (5,955 | ) | |||
Payments for intangible assets | (701 | ) | (482 | ) | |||
Proceeds from insurance recoveries | 1,589 | — | |||||
Capital contributions to equity method investment | (58 | ) | (251 | ) | |||
Distributions from equity method investment | 156 | 78 | |||||
Net cash used in investing activities | (5,670 | ) | (6,610 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from exercise of stock options | 118 | 11 | |||||
Tax withholdings on share-based compensation | (1,137 | ) | (421 | ) | |||
Principal payments for debt | (679 | ) | (679 | ) | |||
Payments to repurchase common stock | (5,005 | ) | (14,550 | ) | |||
Net cash used in financing activities | (6,703 | ) | (15,639 | ) | |||
Effect of foreign exchange rates on cash and cash equivalents | 185 | (167 | ) | ||||
Net change in cash and cash equivalents | (1,552 | ) | (8,673 | ) | |||
Cash, beginning of period | 102,633 | 72,521 | |||||
Cash, end of period | $ | 101,081 | $ | 63,848 |
Reconciliation of Net Income to EBITDA and Adjusted EBITDA - Non-GAAP Measures | |||||||
For the Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
(unaudited, in thousands) | |||||||
Net income | $ | 15,926 | $ | 13,646 | |||
Adjustments: | |||||||
Other expense, net | 36 | 140 | |||||
Interest expense, net | 2,492 | 2,720 | |||||
Losses from equity method investment | 45 | 364 | |||||
Provision for income taxes | 4,607 | 3,892 | |||||
Depreciation and amortization | 10,520 | 10,581 | |||||
EBITDA - Non-GAAP measure | $ | 33,626 | $ | 31,343 | |||
Gain from insurance recoveries, net | (1,513 | ) | — | ||||
Adjusted EBITDA—Non-GAAP Measure (a) | $ | 32,113 | $ | 31,343 | |||
Adjusted EBITDA Margin - Adjusted EBITDA as a percentage of net sales - Non-GAAP measure | 26.3 | % | 26.8 | % |
(a) | The calculation does not include the $4.0 - $5.0 million of insurance proceeds from the lost profits for the Buchanan outage that the Company expects to receive. |
Reconciliation of Net Income and Earnings Per Share to Adjusted Net Income and Adjusted Earnings Per Share | |||||||
For the Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
(unaudited, in thousands, except share data and per share amounts) | |||||||
Net income - GAAP measure | $ | 15,926 | $ | 13,646 | |||
Gain from insurance recoveries, net of tax (a) | (1,176 | ) | — | ||||
Adjusted net income - Non-GAAP measure (b) | $ | 14,750 | $ | 13,646 | |||
Earnings per share - GAAP measure | $ | 0.45 | $ | 0.36 | |||
Gain from insurance recoveries, net of tax (a) | (0.03 | ) | — | ||||
Adjusted earnings per share - Non-GAAP measure (b) | $ | 0.42 | $ | 0.36 |
(a) | Gain from insurance recoveries is show net of tax benefit of $0.3 million for the three months ended March 31, 2019. |
(b) | The calculation does not include the $4.0 - $5.0 million of insurance proceeds from the lost profits, or approximately $0.13 per share assuming recovery at the mid-point of the range, for the Buchanan closure that the Company expects to receive. |
Other Financial and Operating Data | |||||||
For the Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
(in thousands, except mill net) | |||||||
Capital expenditures and software purchased or developed | $ | 7,357 | $ | 6,437 | |||
Wallboard sales volume (million square feet) | 649 | 615 | |||||
Mill net sales price (a) | $ | 149.48 | $ | 151.60 |
(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 | |||||||||||||||||||
For the Three Months Ended | |||||||||||||||||||
March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | March 31, 2019 | |||||||||||||||
Volumes (million square feet) | 615 | 722 | 674 | 725 | 649 | ||||||||||||||
Mill net sales price (a) | $ | 151.60 | $ | 153.88 | $ | 155.43 | $ | 154.20 | $ | 149.48 |
(a) | Mill net sales price represents average selling price per thousand square feet net of freight and delivery costs. |
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