Cornerstone Building Brands Announces Fourth-Quarter and Full-Year 2019 Results
- Fourth-quarter net sales of $1,244.4 million, in line with expectations
- Full Year Income from operations increased 70.5 percent to $214.7 million, compared to prior year period
- Full Year Adjusted EBITDA(1) of $583.6 million and fourth-quarter Adjusted EBITDA(1) of $158.9 million exceeded expectations
- Achieved approximately $110 million in annual savings through merger synergies and cost-savings initiatives
- Positive order-intake moving into 2020
CARY, N.C., March 3, 2020 /PRNewswire/ -- Cornerstone Building Brands, Inc. (NYSE: CNR) (the "Company"), a leading provider of exterior building products, today reported fourth-quarter and full-year 2019 financial results.
"I am pleased with both our financial and operational performance," said James S. Metcalf, Chairman and Chief Executive Officer. "Our results demonstrate our ability to drive shareholder value by leveraging our strong market leadership position, delivering meaningful cost savings and improving the balance sheet."
GAAP performance for the fourth quarter and full year 2019 was impacted by the merger between NCI Building Systems, Inc. and Ply Gem Parent, LLC, which was completed on November 16, 2018 (the "Ply Gem Merger").
Fourth-Quarter 2019 Results
- On a GAAP basis, net sales increased 116.9 percent to $1,244.4 million, and gross profit increased 116.1 percent to $288.0 million, or 23.1 percent of net sales, compared to the prior year period.
- Net sales declined 1.8 percent from the fourth quarter 2018, on a pro forma basis. Net sales were impacted by softening market demand in the Commercial segment which was partially offset by strength in the Windows segment.
- Gross profit of $288.0 million or 23.1 percent as a percent of net sales improved 230 basis points over the pro forma fourth quarter 2018 gross profit as a percent of net sales. The increase was primarily driven by positive price, mix and realization of cost savings, which more than offset lower manufacturing leverage from reduced volumes.
- GAAP net income was $1.9 million, or $0.02 per diluted share, down from $27.4 million, or $0.41 per diluted common share in the fourth quarter of 2018. Net income was impacted by $42.5 million of increased amortization expense associated with the intangibles from the Ply Gem Merger and the Environmental Stoneworks acquisition, $13.5 million of strategic development and acquisition related costs, and $2.5 million of restructuring and impairment charges, partially offset by the $4.2 million tax effect associated with these items.
- Adjusted EBITDA1 was $158.9 million or 12.8 percent of net sales compared to pro forma Adjusted EBITDA1 of $128.6 million or 10.1 percent of pro forma net sales for the fourth quarter 2018. The 270 basis points improvement was primarily driven by favorable price and mix, net of inflation of $26.0 million, cost savings and synergies of $37.5 million, which more than offset the manufacturing leverage impact of lower volumes and increased SG&A from variable incentive compensation.
Full-Year Fiscal 2019 Results
- On a GAAP basis, net sales increased 144.4 percent to $4,889.7 million as compared to $2,000.6 million in 2018. On a pro forma basis, net sales declined 4.2 percent to $4,906.0 million as compared to $5,119.5 million in 2018.
- GAAP net loss was $15.4 million or ($0.12) per diluted share, compared with net income applicable to common shares of $62.7 million or $0.94 per diluted share in 2018.
- Pro forma Adjusted EBITDA1 was $581.9 million, or 11.9 percent of net sales, representing an improvement of 130 basis points, compared with pro forma Adjusted EBITDA1 for 2018. The improvement is primarily due to price discipline, cost management efforts and realized merger synergies.
- Total merger synergies and cost savings captured during 2019 were approximately $110 million, $10 million better than target.
- Reduced net debt to LTM Adjusted pro forma EBITDA1 to 5.4x, approximately a quarter turn better than expectations.
Fourth-Quarter 2019 Results by Segment
Windows
- On a GAAP basis, net sales were $495.9 million, which included $108.0 million attributable to Silver Line. Ply Gem's acquisition of Silver Line was completed on October 14, 2018.
- Gross profit was $94.2 million, or 19.0 percent of net sales compared to $80.3 million of gross profit or 17.0 percent of net sales, on a pro forma basis for the fourth quarter of 2018.
- The 200 basis point gross margin improvement was driven by favorable price and mix, net of inflation and realized savings, which more than offset the lower volumes and related manufacturing impacts.
Siding
- On a GAAP basis, net sales were $270.8 million, and gross profit was $68.8 million, or 25.4 percent of net sales.
- Net sales were $267.1 million, and gross profit of $65.0 million or 24.3 percent of net sales, on a pro forma basis for the fourth quarter of 2018.
- The 110 basis point gross margin improvement was mostly driven by realized cost savings.
Commercial
- On a GAAP basis, net sales were $477.7 million, and gross profit was $125.0 million, or 26.2 percent of net sales.
- Net sales were $528.6 million, and gross profit was $118.3 million, or 22.4 percent of net sales, on a pro forma basis for the fourth quarter of 2018.
- The 380 basis point gross margin improvement was driven by favorable spread and cost savings.
Guidance
First-Quarter 2020 Guidance
- The Company anticipates mid single-digit growth in net sales over pro forma first quarter 2019 in the combined Windows and Siding segments and about flat net sales in the Commercial segment.
- Adjusted EBITDA1 is expected to be between $75 million and $90 million.
Additional Fiscal Year 2020 Guidance
We expect:
- Capital expenditures to be between 2.0 percent and 2.5 percent of net sales.
- Cash interest of approximately $200 million.
- Effective tax rate of approximately 30 percent; cash taxes of approximately $60 million.
- Benefits from primary working capital improvement to generate approximately $50 million of cash.
- To incur approximately $25 million of restructuring costs to achieve $60 million of savings.
(1)
Adjusted financial metrics used in this release for results in 2019 and 2018 are non-GAAP measures and refer to the results for 2019 and 2018. Pro forma financial metrics used in this release for results in 2018 are also non-GAAP measures and assume the Ply Gem Merger occurred on January 1, 2018 and adjust for other items affecting comparability. See the reconciliations of GAAP results to adjusted results and pro forma results in the accompanying tables.
Conference Call
The Company will host a conference call at 9:00 a.m. EST on Wednesday, March 4 to discuss its financial performance with investors and securities analysts. The call will be webcast on the Company's website, www.cornerstonebuildingbrands.com, in the Events & Presentations section of the Investors Page. The dial-in number for the conference call is 1-201-389-0872. After the live webcast, a telephonic replay of the call will be available until March 18, 2020. The replay dial-in number is 1-201-612-7415 and the replay code is 13698973. Additionally, the slide presentation to be used in connection with the Company's webcast and conference call is available in the Investor Relations section of the Company's website at www.cornerstonebuildingbrands.com.
About Cornerstone Building Brands
Cornerstone Building Brands is a leading manufacturer of exterior building products in North America. Headquartered in Cary, North Carolina, the Company serves residential and commercial customers across new construction and the repair & remodel markets. As the #1 manufacturer of windows, vinyl siding, insulated metal panels, metal roofing and wall systems and metal accessories, Cornerstone Building Brands combines a comprehensive portfolio of products with an expansive national footprint that includes more than 20,000 employees at manufacturing, distribution and office locations throughout North America. For more information, visit us at www.cornerstonebuildingbrands.com.
Investor Relations
Tina Beskid
919-694-2781
tina.beskid@cornerstone-bb.com
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "anticipate," "guidance," "plan," "potential," "expect," "should," "will," "forecast," "target" and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current expectations, assumptions and/or beliefs concerning future events. As a result, these forward-looking statements rely on a number of assumptions, forecasts, and estimates and, therefore, these forward-looking statements are subject to a number of risks and uncertainties that may cause the Company's actual performance to differ materially from that projected in such statements. Such forward-looking statements may include, but are not limited to, statements concerning our market commentary and performance expectations. Among the factors that could cause actual results to differ materially include, but are not limited to, industry cyclicality and seasonality and adverse weather conditions, challenging economic conditions affecting the nonresidential construction industry, downturns in the residential new construction and repair and remodeling end markets, or the economy or the availability of consumer credit, volatility in the United States ("U.S.") economy and abroad, generally, and in the credit markets, our ability to successfully develop new products or improve existing products, the effects of manufacturing or assembly realignments, seasonality of the business and other external factors beyond our control, commodity price volatility and/or limited availability of raw materials, including steel, PVC resin, glass and aluminum, our ability to identify and develop relationships with a sufficient number of qualified suppliers and to avoid a significant interruption in our supply chains, retention and replacement of key personnel, enforcement and obsolescence of our intellectual property rights, costs related to compliance with, violations of or liabilities under environmental, health and safety laws, changes in building codes and standards, competitive activity and pricing pressure in our industry, our ability to make strategic acquisitions accretive to earnings, our ability to carry out our restructuring plans and to fully realize the expected cost savings, global climate change, including legal, regulatory or market responses thereto, breaches of our information system security measures, damage to our computer infrastructure and software systems, necessary maintenance or replacements to our enterprise resource planning technologies, potential personal injury, property damage or product liability claims or other types of litigation, compliance with certain laws related to our international business operations, increases in labor costs, potential labor disputes, union organizing activity and work stoppages at our facilities or the facilities of our suppliers, significant changes in factors and assumptions used to measure certain of our defined benefit plan obligations and the effect of actual investment returns on pension assets, the cost and difficulty associated with integrating and combining acquired businesses, volatility of the Company's stock price, substantial governance and other rights held by our sponsor investors, the effect on our common stock price caused by transactions engaged in by our sponsor investors, our directors or executives, our substantial indebtedness and our ability to incur substantially more indebtedness, limitations that our debt agreements place on our ability to engage in certain business and financial transactions, our ability to obtain financing on acceptable terms, downgrades of our credit ratings, and the effect of increased interest rates on our ability to service our debt. See also the "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, to be filed with the SEC on the date hereof, and other risks described in documents subsequently filed by the Company from time to time with the SEC, which identify other important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements, whether as a result of new information, future events, or otherwise.
Non-GAAP Financial Measures
This press release includes certain "non-GAAP financial measures" as defined under the Securities Exchange Act of 1934 and in accordance with Regulation G. Management believes the use of such non-GAAP financial measures assists investors in understanding the ongoing operating performance of the Company by presenting the financial results between periods on a more comparable basis. Such non-GAAP financial measures should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. We have included reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and provided in accordance with U.S. GAAP at the end of this release.
CORNERSTONE BUILDING BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
Year Ended
December 31,
2019
October 28,
2018
December 31,
2019
October 28,
2018
Sales
$
1,244,415
$
573,634
$
4,889,747
$
2,000,577
Cost of sales
956,379
440,353
3,801,328
1,537,895
Gross profit
288,036
133,281
1,088,419
462,682
23.1
%
23.2
%
22.3
%
23.1
%
Selling, general and administrative expenses
161,493
78,875
627,861
307,106
Intangible asset amortization
44,878
2,411
177,577
9,648
Restructuring and impairment charges, net
2,538
769
18,060
1,912
Strategic development and acquisition related costs
13,517
11,661
50,185
17,164
Loss on disposition of business
—
—
—
5,673
Gain on insurance recovery
—
—
—
(4,741)
Income from operations
65,610
39,565
214,736
125,920
Interest income
183
22
674
140
Interest expense
(56,128)
(4,895)
(229,262)
(21,808)
Foreign exchange gain (loss)
970
(152)
2,054
(244)
Loss on extinguishment of debt
—
—
—
(21,875)
Other income (expense), net
518
(110)
1,183
962
Income (loss) before income taxes
11,153
34,430
(10,615)
83,095
Provision for income taxes
9,223
6,875
4,775
19,989
82.7
%
20.0
%
(45.0)
%
24.1
%
Net income (loss)
$
1,930
$
27,555
$
(15,390)
$
63,106
Net income allocated to participating securities
(27)
(138)
—
(412)
Net income (loss) applicable to common shares
$
1,903
$
27,417
$
(15,390)
$
62,694
Income (loss) per common share:
Basic
$
0.02
$
0.41
$
(0.12)
$
0.95
Diluted
$
0.02
$
0.41
$
(0.12)
$
0.94
Weighted average number of common shares outstanding:
Basic
125,722
66,262
125,576
66,260
Diluted
125,761
66,326
125,576
66,362
Increase in sales
116.9
%
17.4
%
144.4
%
13.0
%
Selling, general and administrative expenses percentage of net sales
13.0
%
13.8
%
12.8
%
15.4
%
CORNERSTONE BUILDING BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
December 31,
2019
December 31,
2018
ASSETS
Current assets:
Cash and cash equivalents
$
98,386
$
143,847
Restricted cash
3,921
3,760
Accounts receivable, net
491,740
438,505
Inventories, net
439,194
536,675
Income taxes receivable
48,466
1,027
Investments in debt and equity securities, at market
3,776
3,414
Prepaid expenses and other
78,516
69,291
Assets held for sale
1,750
7,272
Total current assets
1,165,749
1,203,791
Property, plant and equipment, net
652,841
614,007
Lease right-of-use assets
316,155
—
Goodwill
1,669,594
1,640,211
Intangible assets, net
1,740,700
1,669,901
Deferred income taxes
7,510
1,198
Other assets, net
11,797
12,079
Total assets
$
5,564,346
$
5,141,187
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
$
25,600
$
25,600
Payable pursuant to a tax receivable agreement
—
24,760
Accounts payable
205,629
220,857
Accrued compensation and benefits
92,130
72,630
Accrued interest
19,070
41,185
Current portion of lease liabilities
72,428
—
Other accrued expenses
233,687
265,138
Total current liabilities
648,544
650,170
Long-term debt
3,156,924
3,085,163
Deferred income taxes
291,987
295,675
Long-term lease liabilities
243,780
—
Other long-term liabilities
287,793
150,197
Total long-term liabilities
3,980,484
3,531,035
Common stock
1,261
1,256
Additional paid-in capital
1,248,787
1,237,056
Accumulated deficit
(281,229)
(265,839)
Accumulated other comprehensive loss, net
(32,398)
(10,813)
Treasury stock, at cost
(1,103)
(1,678)
Total stockholders' equity
935,318
959,982
Total liabilities and stockholders' equity
$
5,564,346
$
5,141,187
CORNERSTONE BUILDING BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Year Ended
December 31,
2019
October 28,
2018
Cash flows from operating activities:
Net income (loss)
$
(15,390)
$
63,106
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization
263,764
42,325
Non-cash interest expense
8,504
1,501
Loss on extinguishment of debt
—
21,875
Share-based compensation expense
14,078
11,638
Loss on disposition of business, net
—
5,092
Gain on insurance recovery
—
(4,741)
Non-cash fair value premium on purchased inventory
16,249
—
Losses (gains) on asset sales, net
321
(502)
Provision for doubtful accounts
2,035
(491)
Deferred income taxes
(6,085)
(889)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable
(38,242)
(35,397)
Inventories
91,822
(58,534)
Income taxes
(32,719)
2,605
Prepaid expenses and other
(10,279)
(5,479)
Accounts payable
(21,141)
24,465
Accrued expenses
(40,403)
16,284
Other, net
(2,906)
(395)
Net cash provided by operating activities
229,608
82,463
Cash flows from investing activities:
Acquisitions, net of cash acquired
(179,184)
—
Capital expenditures
(121,085)
(47,827)
Proceeds from sale of property, plant and equipment
5,511
6,338
Business disposition, net
—
(1,426)
Proceeds from insurance
—
4,741
Net cash used in investing activities
(294,758)
(38,174)
Cash flows from financing activities:
Proceeds from stock options exercised
—
1,279
Proceeds from ABL facility
290,000
100,000
Payments on ABL facility
(220,000)
(100,000)
Proceeds from term loan
—
415,000
Payments on term loan
(25,620)
(146,221)
Payments on senior notes
—
(265,470)
Payments on note payable
—
(1,742)
Payments of financing costs
—
(6,546)
Payments related to tax withholding for share-based compensation
(1,934)
(5,068)
Purchases of treasury stock
—
(46,705)
Payments on tax receivable agreement
(24,906)
—
Net cash provided by (used in) financing activities
17,540
(55,473)
Effect of exchange rate changes on cash and cash equivalents
2,310
(93)
Net decrease in cash, cash equivalents and restricted cash
(45,300)
(11,277)
Cash, cash equivalents and restricted cash at beginning of period
147,607
65,794
Cash, cash equivalents and restricted cash at end of period
$
102,307
$
54,517
CORNERSTONE BUILDING BRANDS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
ADJUSTED NET INCOME PER DILUTED COMMON SHARE AND
NET INCOME (LOSS) COMPARISON
(In thousands, except per share data)
(Unaudited)
Three Months Ended
Year Ended
December 31,
2019
October 28,
2018
December 31,
2019
October 28,
2018
Net income (loss) per diluted common share, GAAP basis
$
0.02
$
0.41
$
(0.12)
$
0.94
Restructuring and impairment charges, net
0.02
0.01
0.14
0.03
Strategic development and acquisition related costs
0.11
0.18
0.40
0.26
Loss on disposition of business
—
—
—
0.08
Loss on extinguishment of debt
—
—
—
0.33
Acceleration of CEO retirement benefits
—
—
—
0.07
Gain on insurance recovery
—
—
—
(0.07)
Non cash loss (gain) on foreign currency transactions
(0.01)
—
(0.02)
—
Non cash charge of purchase price allocated to inventories
—
—
0.13
—
Customer inventory buybacks
—
—
—
—
Other, net
0.01
—
0.04
—
Tax effect of applicable non-GAAP adjustments(1)
(0.03)
(0.05)
(0.18)
(0.19)
Adjusted net income per diluted common share(2)
$
0.11
$
0.55
$
0.39
$
1.45
Three Months Ended
Year Ended
December 31,
2019
October 28,
2018
December 31,
2019
October 28,
2018
Net income (loss) applicable to common shares, GAAP basis
$
1,903
$
27,417
$
(15,390)
$
62,694
Restructuring and impairment charges, net
2,538
769
18,060
1,912
Strategic development and acquisition related costs
13,517
11,661
50,185
17,164
Loss on disposition of business
—
—
—
5,673
Loss on extinguishment of debt
—
—
—
21,875
Acceleration of CEO retirement benefits
—
—
—
4,600
Gain on insurance recovery
—
—
—
(4,741)
Non cash loss (gain) on foreign currency transactions
(970)
152
(2,054)
244
Non cash charge of purchase price allocated to inventories
—
—
16,249
—
Customer inventory buybacks
—
—
576
—
Other, net
946
—
4,726
(323)
Tax effect of applicable non-GAAP adjustments(1)
(4,168)
(3,460)
(22,813)
(12,850)
Adjusted net income applicable to common shares(2)
$
13,766
$
36,539
$
49,539
$
96,248
(1)
The Company calculated the tax effect of non-GAAP adjustments by applying the applicable federal and state statutory tax rate for the period to each applicable non-GAAP item.
(2)
The Company discloses a tabular comparison of Adjusted net income (loss) per diluted common share and Adjusted net income (loss) applicable to common shares, which are non-GAAP measures, because they are referred to in the text of our press releases and are instrumental in comparing the results from period to period. Adjusted net income (loss) per diluted common share and Adjusted net income (loss) applicable to common shares should not be considered in isolation or as a substitute for net income (loss) per diluted common share and net income (loss) applicable to common shares as reported on the face of our consolidated statements of operations.
Certain amounts in this release have been subject to rounding adjustments. Accordingly, amounts shown as totals may not be the arithmetic aggregation of the individual amounts that comprise or precede them.
CORNERSTONE BUILDING BRANDS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(In thousands)
(Unaudited)
Three Months Ended
Year Ended
December 31,
2019
October 28,
2018
December 31,
2019
October 28,
2018
Operating income, GAAP
$
65,610
$
39,565
$
214,736
$
125,920
Restructuring and impairment charges, net
2,538
769
18,060
1,912
Strategic development and acquisition related costs
13,517
11,661
50,185
17,164
Loss on disposition of business
—
—
—
5,673
Acceleration of CEO retirement benefits
—
—
—
4,600
Gain on insurance recovery
—
—
—
(4,741)
Non cash charge of purchase price allocated to inventories
—
—
16,249
—
Customer inventory buybacks
—
—
576
—
Other, net
946
—
4,726
(323)
Adjusted operating income
82,611
51,995
304,532
150,205
Other income (loss), net
518
(110)
1,183
962
Depreciation and amortization
72,279
11,351
263,764
42,325
Share-based compensation expense
3,465
2,729
14,078
8,038
Adjusted EBITDA
$
158,873
$
65,965
$
583,557
$
201,530
Impact of Environmental Stoneworks acquisition(1)
—
—
(1,679)
—
Impact of other acquisitions(2)
—
78,771
—
349,049
Change in fiscal period(3)(4)
—
(16,161)
—
(10,612)
Pro Forma Adjusted EBITDA
$
158,873
$
128,575
$
581,878
$
539,967
(1) Reflects the Adjusted EBITDA of Environmental Stoneworks for the period January 1, 2019 to the acquisition date of February 20, 2019.
(2) Acquisitions reflect the estimated impact of combining Ply Gem, Atrium, Silver Line and Environmental Stoneworks.
(3) The change in fiscal period reflects the estimated impact from moving from a 52/53 week fiscal year-end to a four-four-five week calendar year.
(4) Includes change to FX gain/loss recognition.
CORNERSTONE BUILDING BRANDS, INC.
BUSINESS SEGMENTS
(In thousands)
(Unaudited)
Three Months Ended
December 31, 2019
October 28, 2018
% of
Net Sales
% of
Net Sales
% Change
Net Sales
Commercial
$
477,741
38.4
%
$
573,634
100.0
%
(16.7)
%
Siding
270,806
21.8
%
—
—
%
100.0
%
Windows
495,868
39.8
%
—
—
%
100.0
%
Total net sales
$
1,244,415
100.0
%
$
573,634
100.0
%
116.9
%
Gross Profit
Commercial
$
125,036
26.2
%
$
133,281
23.2
%
(6.2)
%
Siding
68,757
25.4
%
—
—
%
100.0
%
Windows
94,243
19.0
%
—
—
%
100.0
%
Total gross profit
$
288,036
23.1
%
$
133,281
23.2
%
116.1
%
Operating Income
Commercial
$
58,637
12.3
%
$
72,580
12.7
%
(19.2)
%
Siding
14,927
5.5
%
—
—
%
100.0
%
Windows
30,499
6.2
%
—
—
%
100.0
%
Corporate
(38,453)
—
(33,015)
—
%
(16.5)
%
Total operating income
$
65,610
5.3
%
$
39,565
6.9
%
65.8
%
Year Ended
December 31, 2019
October 28, 2018
% of
Net Sales
% of
Net Sales
% Change
Net Sales
Commercial
$
1,847,893
37.8
%
$
2,000,577
100.0
%
(7.6)
%
Siding
1,111,407
22.7
%
—
—
%
100.0
%
Windows
1,930,447
39.5
%
—
—
%
100.0
%
Total net sales
$
4,889,747
100.0
%
$
2,000,577
100.0
%
144.4
%
Gross Profit
Commercial
$
457,747
24.8
%
$
462,682
23.1
%
(1.1)
%
Siding
277,583
25.0
%
—
—
%
100.0
%
Windows
353,089
18.3
%
—
—
%
100.0
%
Total gross profit
$
1,088,419
22.3
%
$
462,682
23.1
%
135.2
%
Operating Income
Commercial
$
201,073
10.9
%
$
230,365
11.5
%
(12.7)
%
Siding
66,273
6.0
%
—
—
%
100.0
%
Windows
92,538
4.8
%
—
—
%
100.0
%
Corporate
(145,148)
—
(104,445)
—
%
(39.0)
%
Total operating income
$
214,736
4.4
%
$
125,920
6.3
%
70.5
%
CORNERSTONE BUILDING BRANDS, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
RECONCILIATION OF PRO FORMA SEGMENT INFORMATION
(In thousands)
(Unaudited)
Reported
Acquisitions (1)
Change in Fiscal
Period (2)
Pro Forma
% of
Net Sales
Three months ended October 28, 2018
Net Sales
Commercial
$
573,634
$
—
$
(45,024)
$
528,610
Siding
—
267,118
—
267,118
Windows
—
471,825
—
471,825
Total Net Sales
$
573,634
$
738,943
$
(45,024)
$
1,267,553
Gross Profit
Commercial
$
133,281
$
—
$
(14,938)
$
118,343
22.4
%
Siding
—
64,973
—
64,973
24.3
%
Windows
—
80,316
—
80,316
17.0
%
Total Gross Profit
$
133,281
$
145,289
$
(14,938)
$
263,632
20.8
%
Year Ended December 31, 2018
Net Sales
Commercial
$
2,000,577
$
—
$
14,376
$
2,014,953
Siding
—
1,127,331
—
1,127,331
Windows
—
1,977,203
—
1,977,203
Total Net Sales
$
2,000,577
$
3,104,534
$
14,376
$
5,119,487
Gross Profit
Commercial
$
462,682
$
—
$
(3,660)
$
459,022
22.8
%
Siding
—
284,123
—
284,123
25.2
%
Windows
—
347,950
—
347,950
17.6
%
Total Gross Profit
$
462,682
$
632,073
$
(3,660)
$
1,091,095
21.3
%
Reported
Acquisitions (1)(3)
Pro Forma
% of Net Sales
Year Ended December 31, 2019
Net Sales
Commercial
$
1,847,893
$
—
$
1,847,893
Siding
1,111,407
16,229
1,127,636
Windows
1,930,447
—
1,930,447
Total Net Sales
$
4,889,747
$
16,229
$
4,905,976
Gross Profit
Commercial
$
457,747
$
—
$
457,747
24.8
%
Siding
277,583
18,015
295,598
26.2
%
Windows
353,089
—
353,089
18.3
%
Total Gross Profit
$
1,088,419
$
18,015
$
1,106,434
22.6
%
(1) Acquisitions reflect the estimated impact of combining Ply Gem, Atrium, Silver Line and Environmental Stoneworks.
(2) Change in fiscal period reflects the estimated impact from moving from a 52/53 week fiscal year-end to a four-four-five calendar year.
(3) Gross margin adjustment for the non-cash inventory fair value step-up of $16.2 million associated with the Ply Gem merger and Environmental Stoneworks acquisition.
View original content:http://www.prnewswire.com/news-releases/cornerstone-building-brands-announces-fourth-quarter-and-full-year-2019-results-301015811.html
SOURCE Cornerstone Building Brands, Inc.
CARY, N.C., March 3, 2020 /PRNewswire/ -- Cornerstone Building Brands, Inc. (NYSE: CNR) (the "Company"), a leading provider of exterior building products, today reported fourth-quarter and full-year 2019 financial results.
"I am pleased with both our financial and operational performance," said James S. Metcalf, Chairman and Chief Executive Officer. "Our results demonstrate our ability to drive shareholder value by leveraging our strong market leadership position, delivering meaningful cost savings and improving the balance sheet."
GAAP performance for the fourth quarter and full year 2019 was impacted by the merger between NCI Building Systems, Inc. and Ply Gem Parent, LLC, which was completed on November 16, 2018 (the "Ply Gem Merger").
Fourth-Quarter 2019 Results
- On a GAAP basis, net sales increased 116.9 percent to $1,244.4 million, and gross profit increased 116.1 percent to $288.0 million, or 23.1 percent of net sales, compared to the prior year period.
- Net sales declined 1.8 percent from the fourth quarter 2018, on a pro forma basis. Net sales were impacted by softening market demand in the Commercial segment which was partially offset by strength in the Windows segment.
- Gross profit of $288.0 million or 23.1 percent as a percent of net sales improved 230 basis points over the pro forma fourth quarter 2018 gross profit as a percent of net sales. The increase was primarily driven by positive price, mix and realization of cost savings, which more than offset lower manufacturing leverage from reduced volumes.
- GAAP net income was $1.9 million, or $0.02 per diluted share, down from $27.4 million, or $0.41 per diluted common share in the fourth quarter of 2018. Net income was impacted by $42.5 million of increased amortization expense associated with the intangibles from the Ply Gem Merger and the Environmental Stoneworks acquisition, $13.5 million of strategic development and acquisition related costs, and $2.5 million of restructuring and impairment charges, partially offset by the $4.2 million tax effect associated with these items.
- Adjusted EBITDA1 was $158.9 million or 12.8 percent of net sales compared to pro forma Adjusted EBITDA1 of $128.6 million or 10.1 percent of pro forma net sales for the fourth quarter 2018. The 270 basis points improvement was primarily driven by favorable price and mix, net of inflation of $26.0 million, cost savings and synergies of $37.5 million, which more than offset the manufacturing leverage impact of lower volumes and increased SG&A from variable incentive compensation.
Full-Year Fiscal 2019 Results
- On a GAAP basis, net sales increased 144.4 percent to $4,889.7 million as compared to $2,000.6 million in 2018. On a pro forma basis, net sales declined 4.2 percent to $4,906.0 million as compared to $5,119.5 million in 2018.
- GAAP net loss was $15.4 million or ($0.12) per diluted share, compared with net income applicable to common shares of $62.7 million or $0.94 per diluted share in 2018.
- Pro forma Adjusted EBITDA1 was $581.9 million, or 11.9 percent of net sales, representing an improvement of 130 basis points, compared with pro forma Adjusted EBITDA1 for 2018. The improvement is primarily due to price discipline, cost management efforts and realized merger synergies.
- Total merger synergies and cost savings captured during 2019 were approximately $110 million, $10 million better than target.
- Reduced net debt to LTM Adjusted pro forma EBITDA1 to 5.4x, approximately a quarter turn better than expectations.
Fourth-Quarter 2019 Results by Segment
Windows
- On a GAAP basis, net sales were $495.9 million, which included $108.0 million attributable to Silver Line. Ply Gem's acquisition of Silver Line was completed on October 14, 2018.
- Gross profit was $94.2 million, or 19.0 percent of net sales compared to $80.3 million of gross profit or 17.0 percent of net sales, on a pro forma basis for the fourth quarter of 2018.
- The 200 basis point gross margin improvement was driven by favorable price and mix, net of inflation and realized savings, which more than offset the lower volumes and related manufacturing impacts.
Siding
- On a GAAP basis, net sales were $270.8 million, and gross profit was $68.8 million, or 25.4 percent of net sales.
- Net sales were $267.1 million, and gross profit of $65.0 million or 24.3 percent of net sales, on a pro forma basis for the fourth quarter of 2018.
- The 110 basis point gross margin improvement was mostly driven by realized cost savings.
Commercial
- On a GAAP basis, net sales were $477.7 million, and gross profit was $125.0 million, or 26.2 percent of net sales.
- Net sales were $528.6 million, and gross profit was $118.3 million, or 22.4 percent of net sales, on a pro forma basis for the fourth quarter of 2018.
- The 380 basis point gross margin improvement was driven by favorable spread and cost savings.
Guidance
First-Quarter 2020 Guidance
- The Company anticipates mid single-digit growth in net sales over pro forma first quarter 2019 in the combined Windows and Siding segments and about flat net sales in the Commercial segment.
- Adjusted EBITDA1 is expected to be between $75 million and $90 million.
Additional Fiscal Year 2020 Guidance
We expect:
- Capital expenditures to be between 2.0 percent and 2.5 percent of net sales.
- Cash interest of approximately $200 million.
- Effective tax rate of approximately 30 percent; cash taxes of approximately $60 million.
- Benefits from primary working capital improvement to generate approximately $50 million of cash.
- To incur approximately $25 million of restructuring costs to achieve $60 million of savings.
|
(1) |
Adjusted financial metrics used in this release for results in 2019 and 2018 are non-GAAP measures and refer to the results for 2019 and 2018. Pro forma financial metrics used in this release for results in 2018 are also non-GAAP measures and assume the Ply Gem Merger occurred on January 1, 2018 and adjust for other items affecting comparability. See the reconciliations of GAAP results to adjusted results and pro forma results in the accompanying tables. |
Conference Call
The Company will host a conference call at 9:00 a.m. EST on Wednesday, March 4 to discuss its financial performance with investors and securities analysts. The call will be webcast on the Company's website, www.cornerstonebuildingbrands.com, in the Events & Presentations section of the Investors Page. The dial-in number for the conference call is 1-201-389-0872. After the live webcast, a telephonic replay of the call will be available until March 18, 2020. The replay dial-in number is 1-201-612-7415 and the replay code is 13698973. Additionally, the slide presentation to be used in connection with the Company's webcast and conference call is available in the Investor Relations section of the Company's website at www.cornerstonebuildingbrands.com.
About Cornerstone Building Brands
Cornerstone Building Brands is a leading manufacturer of exterior building products in North America. Headquartered in Cary, North Carolina, the Company serves residential and commercial customers across new construction and the repair & remodel markets. As the #1 manufacturer of windows, vinyl siding, insulated metal panels, metal roofing and wall systems and metal accessories, Cornerstone Building Brands combines a comprehensive portfolio of products with an expansive national footprint that includes more than 20,000 employees at manufacturing, distribution and office locations throughout North America. For more information, visit us at www.cornerstonebuildingbrands.com.
Investor Relations
Tina Beskid
919-694-2781
tina.beskid@cornerstone-bb.com
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "anticipate," "guidance," "plan," "potential," "expect," "should," "will," "forecast," "target" and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current expectations, assumptions and/or beliefs concerning future events. As a result, these forward-looking statements rely on a number of assumptions, forecasts, and estimates and, therefore, these forward-looking statements are subject to a number of risks and uncertainties that may cause the Company's actual performance to differ materially from that projected in such statements. Such forward-looking statements may include, but are not limited to, statements concerning our market commentary and performance expectations. Among the factors that could cause actual results to differ materially include, but are not limited to, industry cyclicality and seasonality and adverse weather conditions, challenging economic conditions affecting the nonresidential construction industry, downturns in the residential new construction and repair and remodeling end markets, or the economy or the availability of consumer credit, volatility in the United States ("U.S.") economy and abroad, generally, and in the credit markets, our ability to successfully develop new products or improve existing products, the effects of manufacturing or assembly realignments, seasonality of the business and other external factors beyond our control, commodity price volatility and/or limited availability of raw materials, including steel, PVC resin, glass and aluminum, our ability to identify and develop relationships with a sufficient number of qualified suppliers and to avoid a significant interruption in our supply chains, retention and replacement of key personnel, enforcement and obsolescence of our intellectual property rights, costs related to compliance with, violations of or liabilities under environmental, health and safety laws, changes in building codes and standards, competitive activity and pricing pressure in our industry, our ability to make strategic acquisitions accretive to earnings, our ability to carry out our restructuring plans and to fully realize the expected cost savings, global climate change, including legal, regulatory or market responses thereto, breaches of our information system security measures, damage to our computer infrastructure and software systems, necessary maintenance or replacements to our enterprise resource planning technologies, potential personal injury, property damage or product liability claims or other types of litigation, compliance with certain laws related to our international business operations, increases in labor costs, potential labor disputes, union organizing activity and work stoppages at our facilities or the facilities of our suppliers, significant changes in factors and assumptions used to measure certain of our defined benefit plan obligations and the effect of actual investment returns on pension assets, the cost and difficulty associated with integrating and combining acquired businesses, volatility of the Company's stock price, substantial governance and other rights held by our sponsor investors, the effect on our common stock price caused by transactions engaged in by our sponsor investors, our directors or executives, our substantial indebtedness and our ability to incur substantially more indebtedness, limitations that our debt agreements place on our ability to engage in certain business and financial transactions, our ability to obtain financing on acceptable terms, downgrades of our credit ratings, and the effect of increased interest rates on our ability to service our debt. See also the "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, to be filed with the SEC on the date hereof, and other risks described in documents subsequently filed by the Company from time to time with the SEC, which identify other important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements, whether as a result of new information, future events, or otherwise.
Non-GAAP Financial Measures
This press release includes certain "non-GAAP financial measures" as defined under the Securities Exchange Act of 1934 and in accordance with Regulation G. Management believes the use of such non-GAAP financial measures assists investors in understanding the ongoing operating performance of the Company by presenting the financial results between periods on a more comparable basis. Such non-GAAP financial measures should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. We have included reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and provided in accordance with U.S. GAAP at the end of this release.
|
CORNERSTONE BUILDING BRANDS, INC. | |||||||||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
|
(In thousands, except per share data) | |||||||||||||||
|
(Unaudited) | |||||||||||||||
|
Three Months Ended |
Year Ended |
||||||||||||||
|
December 31, |
October 28, |
December 31, |
October 28, |
||||||||||||
|
Sales |
$ |
1,244,415 |
$ |
573,634 |
$ |
4,889,747 |
$ |
2,000,577 |
|||||||
|
Cost of sales |
956,379 |
440,353 |
3,801,328 |
1,537,895 |
|||||||||||
|
Gross profit |
288,036 |
133,281 |
1,088,419 |
462,682 |
|||||||||||
|
23.1 |
% |
23.2 |
% |
22.3 |
% |
23.1 |
% |
||||||||
|
Selling, general and administrative expenses |
161,493 |
78,875 |
627,861 |
307,106 |
|||||||||||
|
Intangible asset amortization |
44,878 |
2,411 |
177,577 |
9,648 |
|||||||||||
|
Restructuring and impairment charges, net |
2,538 |
769 |
18,060 |
1,912 |
|||||||||||
|
Strategic development and acquisition related costs |
13,517 |
11,661 |
50,185 |
17,164 |
|||||||||||
|
Loss on disposition of business |
— |
— |
— |
5,673 |
|||||||||||
|
Gain on insurance recovery |
— |
— |
— |
(4,741) |
|||||||||||
|
Income from operations |
65,610 |
39,565 |
214,736 |
125,920 |
|||||||||||
|
Interest income |
183 |
22 |
674 |
140 |
|||||||||||
|
Interest expense |
(56,128) |
(4,895) |
(229,262) |
(21,808) |
|||||||||||
|
Foreign exchange gain (loss) |
970 |
(152) |
2,054 |
(244) |
|||||||||||
|
Loss on extinguishment of debt |
— |
— |
— |
(21,875) |
|||||||||||
|
Other income (expense), net |
518 |
(110) |
1,183 |
962 |
|||||||||||
|
Income (loss) before income taxes |
11,153 |
34,430 |
(10,615) |
83,095 |
|||||||||||
|
Provision for income taxes |
9,223 |
6,875 |
4,775 |
19,989 |
|||||||||||
|
82.7 |
% |
20.0 |
% |
(45.0) |
% |
24.1 |
% |
||||||||
|
Net income (loss) |
$ |
1,930 |
$ |
27,555 |
$ |
(15,390) |
$ |
63,106 |
|||||||
|
Net income allocated to participating securities |
(27) |
(138) |
— |
(412) |
|||||||||||
|
Net income (loss) applicable to common shares |
$ |
1,903 |
$ |
27,417 |
$ |
(15,390) |
$ |
62,694 |
|||||||
|
Income (loss) per common share: |
|||||||||||||||
|
Basic |
$ |
0.02 |
$ |
0.41 |
$ |
(0.12) |
$ |
0.95 |
|||||||
|
Diluted |
$ |
0.02 |
$ |
0.41 |
$ |
(0.12) |
$ |
0.94 |
|||||||
|
Weighted average number of common shares outstanding: |
|||||||||||||||
|
Basic |
125,722 |
66,262 |
125,576 |
66,260 |
|||||||||||
|
Diluted |
125,761 |
66,326 |
125,576 |
66,362 |
|||||||||||
|
Increase in sales |
116.9 |
% |
17.4 |
% |
144.4 |
% |
13.0 |
% |
|||||||
|
Selling, general and administrative expenses percentage of net sales |
13.0 |
% |
13.8 |
% |
12.8 |
% |
15.4 |
% |
|||||||
|
CORNERSTONE BUILDING BRANDS, INC. | |||||||||||||||
|
CONSOLIDATED BALANCE SHEETS | |||||||||||||||
|
(In thousands) | |||||||||||||||
|
(Unaudited) | |||||||||||||||
|
December 31, |
December 31, |
||||||||||||||
|
ASSETS |
|||||||||||||||
|
Current assets: |
|||||||||||||||
|
Cash and cash equivalents |
$ |
98,386 |
$ |
143,847 |
|||||||||||
|
Restricted cash |
3,921 |
3,760 |
|||||||||||||
|
Accounts receivable, net |
491,740 |
438,505 |
|||||||||||||
|
Inventories, net |
439,194 |
536,675 |
|||||||||||||
|
Income taxes receivable |
48,466 |
1,027 |
|||||||||||||
|
Investments in debt and equity securities, at market |
3,776 |
3,414 |
|||||||||||||
|
Prepaid expenses and other |
78,516 |
69,291 |
|||||||||||||
|
Assets held for sale |
1,750 |
7,272 |
|||||||||||||
|
Total current assets |
1,165,749 |
1,203,791 |
|||||||||||||
|
Property, plant and equipment, net |
652,841 |
614,007 |
|||||||||||||
|
Lease right-of-use assets |
316,155 |
— |
|||||||||||||
|
Goodwill |
1,669,594 |
1,640,211 |
|||||||||||||
|
Intangible assets, net |
1,740,700 |
1,669,901 |
|||||||||||||
|
Deferred income taxes |
7,510 |
1,198 |
|||||||||||||
|
Other assets, net |
11,797 |
12,079 |
|||||||||||||
|
Total assets |
$ |
5,564,346 |
$ |
5,141,187 |
|||||||||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||||||||||
|
Current liabilities: |
|||||||||||||||
|
Current portion of long-term debt |
$ |
25,600 |
$ |
25,600 |
|||||||||||
|
Payable pursuant to a tax receivable agreement |
— |
24,760 |
|||||||||||||
|
Accounts payable |
205,629 |
220,857 |
|||||||||||||
|
Accrued compensation and benefits |
92,130 |
72,630 |
|||||||||||||
|
Accrued interest |
19,070 |
41,185 |
|||||||||||||
|
Current portion of lease liabilities |
72,428 |
— |
|||||||||||||
|
Other accrued expenses |
233,687 |
265,138 |
|||||||||||||
|
Total current liabilities |
648,544 |
650,170 |
|||||||||||||
|
Long-term debt |
3,156,924 |
3,085,163 |
|||||||||||||
|
Deferred income taxes |
291,987 |
295,675 |
|||||||||||||
|
Long-term lease liabilities |
243,780 |
— |
|||||||||||||
|
Other long-term liabilities |
287,793 |
150,197 |
|||||||||||||
|
Total long-term liabilities |
3,980,484 |
3,531,035 |
|||||||||||||
|
Common stock |
1,261 |
1,256 |
|||||||||||||
|
Additional paid-in capital |
1,248,787 |
1,237,056 |
|||||||||||||
|
Accumulated deficit |
(281,229) |
(265,839) |
|||||||||||||
|
Accumulated other comprehensive loss, net |
(32,398) |
(10,813) |
|||||||||||||
|
Treasury stock, at cost |
(1,103) |
(1,678) |
|||||||||||||
|
Total stockholders' equity |
935,318 |
959,982 |
|||||||||||||
|
Total liabilities and stockholders' equity |
$ |
5,564,346 |
$ |
5,141,187 |
|||||||||||
|
CORNERSTONE BUILDING BRANDS, INC. | |||||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
|
(In thousands) | |||||||
|
(Unaudited) | |||||||
|
Year Ended |
|||||||
|
December 31, |
October 28, |
||||||
|
Cash flows from operating activities: |
|||||||
|
Net income (loss) |
$ |
(15,390) |
$ |
63,106 |
|||
|
Adjustments to reconcile net income (loss) to net cash from operating activities: |
|||||||
|
Depreciation and amortization |
263,764 |
42,325 |
|||||
|
Non-cash interest expense |
8,504 |
1,501 |
|||||
|
Loss on extinguishment of debt |
— |
21,875 |
|||||
|
Share-based compensation expense |
14,078 |
11,638 |
|||||
|
Loss on disposition of business, net |
— |
5,092 |
|||||
|
Gain on insurance recovery |
— |
(4,741) |
|||||
|
Non-cash fair value premium on purchased inventory |
16,249 |
— |
|||||
|
Losses (gains) on asset sales, net |
321 |
(502) |
|||||
|
Provision for doubtful accounts |
2,035 |
(491) |
|||||
|
Deferred income taxes |
(6,085) |
(889) |
|||||
|
Changes in operating assets and liabilities, net of effect of acquisitions: |
|||||||
|
Accounts receivable |
(38,242) |
(35,397) |
|||||
|
Inventories |
91,822 |
(58,534) |
|||||
|
Income taxes |
(32,719) |
2,605 |
|||||
|
Prepaid expenses and other |
(10,279) |
(5,479) |
|||||
|
Accounts payable |
(21,141) |
24,465 |
|||||
|
Accrued expenses |
(40,403) |
16,284 |
|||||
|
Other, net |
(2,906) |
(395) |
|||||
|
Net cash provided by operating activities |
229,608 |
82,463 |
|||||
|
Cash flows from investing activities: |
|||||||
|
Acquisitions, net of cash acquired |
(179,184) |
— |
|||||
|
Capital expenditures |
(121,085) |
(47,827) |
|||||
|
Proceeds from sale of property, plant and equipment |
5,511 |
6,338 |
|||||
|
Business disposition, net |
— |
(1,426) |
|||||
|
Proceeds from insurance |
— |
4,741 |
|||||
|
Net cash used in investing activities |
(294,758) |
(38,174) |
|||||
|
Cash flows from financing activities: |
|||||||
|
Proceeds from stock options exercised |
— |
1,279 |
|||||
|
Proceeds from ABL facility |
290,000 |
100,000 |
|||||
|
Payments on ABL facility |
(220,000) |
(100,000) |
|||||
|
Proceeds from term loan |
— |
415,000 |
|||||
|
Payments on term loan |
(25,620) |
(146,221) |
|||||
|
Payments on senior notes |
— |
(265,470) |
|||||
|
Payments on note payable |
— |
(1,742) |
|||||
|
Payments of financing costs |
— |
(6,546) |
|||||
|
Payments related to tax withholding for share-based compensation |
(1,934) |
(5,068) |
|||||
|
Purchases of treasury stock |
— |
(46,705) |
|||||
|
Payments on tax receivable agreement |
(24,906) |
— |
|||||
|
Net cash provided by (used in) financing activities |
17,540 |
(55,473) |
|||||
|
Effect of exchange rate changes on cash and cash equivalents |
2,310 |
(93) |
|||||
|
Net decrease in cash, cash equivalents and restricted cash |
(45,300) |
(11,277) |
|||||
|
Cash, cash equivalents and restricted cash at beginning of period |
147,607 |
65,794 |
|||||
|
Cash, cash equivalents and restricted cash at end of period |
$ |
102,307 |
$ |
54,517 |
|||
|
CORNERSTONE BUILDING BRANDS, INC. | |||||||||||||||
|
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS | |||||||||||||||
|
ADJUSTED NET INCOME PER DILUTED COMMON SHARE AND | |||||||||||||||
|
NET INCOME (LOSS) COMPARISON | |||||||||||||||
|
(In thousands, except per share data) | |||||||||||||||
|
(Unaudited) | |||||||||||||||
|
Three Months Ended |
Year Ended |
||||||||||||||
|
December 31, |
October 28, |
December 31, |
October 28, |
||||||||||||
|
Net income (loss) per diluted common share, GAAP basis |
$ |
0.02 |
$ |
0.41 |
$ |
(0.12) |
$ |
0.94 |
|||||||
|
Restructuring and impairment charges, net |
0.02 |
0.01 |
0.14 |
0.03 |
|||||||||||
|
Strategic development and acquisition related costs |
0.11 |
0.18 |
0.40 |
0.26 |
|||||||||||
|
Loss on disposition of business |
— |
— |
— |
0.08 |
|||||||||||
|
Loss on extinguishment of debt |
— |
— |
— |
0.33 |
|||||||||||
|
Acceleration of CEO retirement benefits |
— |
— |
— |
0.07 |
|||||||||||
|
Gain on insurance recovery |
— |
— |
— |
(0.07) |
|||||||||||
|
Non cash loss (gain) on foreign currency transactions |
(0.01) |
— |
(0.02) |
— |
|||||||||||
|
Non cash charge of purchase price allocated to inventories |
— |
— |
0.13 |
— |
|||||||||||
|
Customer inventory buybacks |
— |
— |
— |
— |
|||||||||||
|
Other, net |
0.01 |
— |
0.04 |
— |
|||||||||||
|
Tax effect of applicable non-GAAP adjustments(1) |
(0.03) |
(0.05) |
(0.18) |
(0.19) |
|||||||||||
|
Adjusted net income per diluted common share(2) |
$ |
0.11 |
$ |
0.55 |
$ |
0.39 |
$ |
1.45 |
|||||||
|
Three Months Ended |
Year Ended |
||||||||||||||
|
December 31, |
October 28, |
December 31, |
October 28, |
||||||||||||
|
Net income (loss) applicable to common shares, GAAP basis |
$ |
1,903 |
$ |
27,417 |
$ |
(15,390) |
$ |
62,694 |
|||||||
|
Restructuring and impairment charges, net |
2,538 |
769 |
18,060 |
1,912 |
|||||||||||
|
Strategic development and acquisition related costs |
13,517 |
11,661 |
50,185 |
17,164 |
|||||||||||
|
Loss on disposition of business |
— |
— |
— |
5,673 |
|||||||||||
|
Loss on extinguishment of debt |
— |
— |
— |
21,875 |
|||||||||||
|
Acceleration of CEO retirement benefits |
— |
— |
— |
4,600 |
|||||||||||
|
Gain on insurance recovery |
— |
— |
— |
(4,741) |
|||||||||||
|
Non cash loss (gain) on foreign currency transactions |
(970) |
152 |
(2,054) |
244 |
|||||||||||
|
Non cash charge of purchase price allocated to inventories |
— |
— |
16,249 |
— |
|||||||||||
|
Customer inventory buybacks |
— |
— |
576 |
— |
|||||||||||
|
Other, net |
946 |
— |
4,726 |
(323) |
|||||||||||
|
Tax effect of applicable non-GAAP adjustments(1) |
(4,168) |
(3,460) |
(22,813) |
(12,850) |
|||||||||||
|
Adjusted net income applicable to common shares(2) |
$ |
13,766 |
$ |
36,539 |
$ |
49,539 |
$ |
96,248 |
|||||||
|
(1) |
The Company calculated the tax effect of non-GAAP adjustments by applying the applicable federal and state statutory tax rate for the period to each applicable non-GAAP item. |
|
(2) |
The Company discloses a tabular comparison of Adjusted net income (loss) per diluted common share and Adjusted net income (loss) applicable to common shares, which are non-GAAP measures, because they are referred to in the text of our press releases and are instrumental in comparing the results from period to period. Adjusted net income (loss) per diluted common share and Adjusted net income (loss) applicable to common shares should not be considered in isolation or as a substitute for net income (loss) per diluted common share and net income (loss) applicable to common shares as reported on the face of our consolidated statements of operations. |
|
Certain amounts in this release have been subject to rounding adjustments. Accordingly, amounts shown as totals may not be the arithmetic aggregation of the individual amounts that comprise or precede them. | |
|
CORNERSTONE BUILDING BRANDS, INC. | |||||||||||||||||||||||||||||
|
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS | |||||||||||||||||||||||||||||
|
(In thousands) | |||||||||||||||||||||||||||||
|
(Unaudited) | |||||||||||||||||||||||||||||
|
Three Months Ended |
Year Ended |
||||||||||||||||||||||||||||
|
December 31, |
October 28, |
December 31, |
October 28, |
||||||||||||||||||||||||||
|
Operating income, GAAP |
$ |
65,610 |
$ |
39,565 |
$ |
214,736 |
$ |
125,920 |
|||||||||||||||||||||
|
Restructuring and impairment charges, net |
2,538 |
769 |
18,060 |
1,912 |
|||||||||||||||||||||||||
|
Strategic development and acquisition related costs |
13,517 |
11,661 |
50,185 |
17,164 |
|||||||||||||||||||||||||
|
Loss on disposition of business |
— |
— |
— |
5,673 |
|||||||||||||||||||||||||
|
Acceleration of CEO retirement benefits |
— |
— |
— |
4,600 |
|||||||||||||||||||||||||
|
Gain on insurance recovery |
— |
— |
— |
(4,741) |
|||||||||||||||||||||||||
|
Non cash charge of purchase price allocated to inventories |
— |
— |
16,249 |
— |
|||||||||||||||||||||||||
|
Customer inventory buybacks |
— |
— |
576 |
— |
|||||||||||||||||||||||||
|
Other, net |
946 |
— |
4,726 |
(323) |
|||||||||||||||||||||||||
|
Adjusted operating income |
82,611 |
51,995 |
304,532 |
150,205 |
|||||||||||||||||||||||||
|
Other income (loss), net |
518 |
(110) |
1,183 |
962 |
|||||||||||||||||||||||||
|
Depreciation and amortization |
72,279 |
11,351 |
263,764 |
42,325 |
|||||||||||||||||||||||||
|
Share-based compensation expense |
3,465 |
2,729 |
14,078 |
8,038 |
|||||||||||||||||||||||||
|
Adjusted EBITDA |
$ |
158,873 |
$ |
65,965 |
$ |
583,557 |
$ |
201,530 |
|||||||||||||||||||||
|
Impact of Environmental Stoneworks acquisition(1) |
— |
— |
(1,679) |
— |
|||||||||||||||||||||||||
|
Impact of other acquisitions(2) |
— |
78,771 |
— |
349,049 |
|||||||||||||||||||||||||
|
Change in fiscal period(3)(4) |
— |
(16,161) |
— |
(10,612) |
|||||||||||||||||||||||||
|
Pro Forma Adjusted EBITDA |
$ |
158,873 |
$ |
128,575 |
$ |
581,878 |
$ |
539,967 |
|||||||||||||||||||||
|
(1) Reflects the Adjusted EBITDA of Environmental Stoneworks for the period January 1, 2019 to the acquisition date of February 20, 2019. | |||||||||||||||||||||||||||||
|
(2) Acquisitions reflect the estimated impact of combining Ply Gem, Atrium, Silver Line and Environmental Stoneworks. | |||||||||||||||||||||||||||||
|
(3) The change in fiscal period reflects the estimated impact from moving from a 52/53 week fiscal year-end to a four-four-five week calendar year. | |||||||||||||||||||||||||||||
|
(4) Includes change to FX gain/loss recognition. | |||||||||||||||||||||||||||||
|
CORNERSTONE BUILDING BRANDS, INC. | ||||||||||||||||||||||||||||||
|
BUSINESS SEGMENTS | ||||||||||||||||||||||||||||||
|
(In thousands) | ||||||||||||||||||||||||||||||
|
(Unaudited) | ||||||||||||||||||||||||||||||
|
Three Months Ended |
||||||||||||||||||||||||||||||
|
December 31, 2019 |
October 28, 2018 |
|||||||||||||||||||||||||||||
|
% of |
% of |
% Change |
||||||||||||||||||||||||||||
|
Net Sales |
||||||||||||||||||||||||||||||
|
Commercial |
$ |
477,741 |
38.4 |
% |
$ |
573,634 |
100.0 |
% |
(16.7) |
% |
||||||||||||||||||||
|
Siding |
270,806 |
21.8 |
% |
— |
— |
% |
100.0 |
% |
||||||||||||||||||||||
|
Windows |
495,868 |
39.8 |
% |
— |
— |
% |
100.0 |
% |
||||||||||||||||||||||
|
Total net sales |
$ |
1,244,415 |
100.0 |
% |
$ |
573,634 |
100.0 |
% |
116.9 |
% |
||||||||||||||||||||
|
Gross Profit |
||||||||||||||||||||||||||||||
|
Commercial |
$ |
125,036 |
26.2 |
% |
$ |
133,281 |
23.2 |
% |
(6.2) |
% |
||||||||||||||||||||
|
Siding |
68,757 |
25.4 |
% |
— |
— |
% |
100.0 |
% |
||||||||||||||||||||||
|
Windows |
94,243 |
19.0 |
% |
— |
— |
% |
100.0 |
% |
||||||||||||||||||||||
|
Total gross profit |
$ |
288,036 |
23.1 |
% |
$ |
133,281 |
23.2 |
% |
116.1 |
% |
||||||||||||||||||||
|
Operating Income |
||||||||||||||||||||||||||||||
|
Commercial |
$ |
58,637 |
12.3 |
% |
$ |
72,580 |
12.7 |
% |
(19.2) |
% |
||||||||||||||||||||
|
Siding |
14,927 |
5.5 |
% |
— |
— |
% |
100.0 |
% |
||||||||||||||||||||||
|
Windows |
30,499 |
6.2 |
% |
— |
— |
% |
100.0 |
% |
||||||||||||||||||||||
|
Corporate |
(38,453) |
— |
(33,015) |
— |
% |
(16.5) |
% |
|||||||||||||||||||||||
|
Total operating income |
$ |
65,610 |
5.3 |
% |
$ |
39,565 |
6.9 |
% |
65.8 |
% |
||||||||||||||||||||
|
Year Ended |
||||||||||||||||||||||||||||||
|
December 31, 2019 |
October 28, 2018 |
|||||||||||||||||||||||||||||
|
% of |
% of |
% Change |
||||||||||||||||||||||||||||
|
Net Sales |
||||||||||||||||||||||||||||||
|
Commercial |
$ |
1,847,893 |
37.8 |
% |
$ |
2,000,577 |
100.0 |
% |
(7.6) |
% |
||||||||||||||||||||
|
Siding |
1,111,407 |
22.7 |
% |
— |
— |
% |
100.0 |
% |
||||||||||||||||||||||
|
Windows |
1,930,447 |
39.5 |
% |
— |
— |
% |
100.0 |
% |
||||||||||||||||||||||
|
Total net sales |
$ |
4,889,747 |
100.0 |
% |
$ |
2,000,577 |
100.0 |
% |
144.4 |
% |
||||||||||||||||||||
|
Gross Profit |
||||||||||||||||||||||||||||||
|
Commercial |
$ |
457,747 |
24.8 |
% |
$ |
462,682 |
23.1 |
% |
(1.1) |
% |
||||||||||||||||||||
|
Siding |
277,583 |
25.0 |
% |
— |
— |
% |
100.0 |
% |
||||||||||||||||||||||
|
Windows |
353,089 |
18.3 |
% |
— |
— |
% |
100.0 |
% |
||||||||||||||||||||||
|
Total gross profit |
$ |
1,088,419 |
22.3 |
% |
$ |
462,682 |
23.1 |
% |
135.2 |
% |
||||||||||||||||||||
|
Operating Income |
||||||||||||||||||||||||||||||
|
Commercial |
$ |
201,073 |
10.9 |
% |
$ |
230,365 |
11.5 |
% |
(12.7) |
% |
||||||||||||||||||||
|
Siding |
66,273 |
6.0 |
% |
— |
— |
% |
100.0 |
% |
||||||||||||||||||||||
|
Windows |
92,538 |
4.8 |
% |
— |
— |
% |
100.0 |
% |
||||||||||||||||||||||
|
Corporate |
(145,148) |
— |
(104,445) |
— |
% |
(39.0) |
% |
|||||||||||||||||||||||
|
Total operating income |
$ |
214,736 |
4.4 |
% |
$ |
125,920 |
6.3 |
% |
70.5 |
% |
||||||||||||||||||||
|
CORNERSTONE BUILDING BRANDS, INC. | |||||||||||||||||||
|
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS | |||||||||||||||||||
|
RECONCILIATION OF PRO FORMA SEGMENT INFORMATION | |||||||||||||||||||
|
(In thousands) | |||||||||||||||||||
|
(Unaudited) | |||||||||||||||||||
|
Reported |
Acquisitions (1) |
Change in Fiscal |
Pro Forma |
% of |
|||||||||||||||
|
Three months ended October 28, 2018 |
|||||||||||||||||||
|
Net Sales |
|||||||||||||||||||
|
Commercial |
$ |
573,634 |
$ |
— |
$ |
(45,024) |
$ |
528,610 |
|||||||||||
|
Siding |
— |
267,118 |
— |
267,118 |
|||||||||||||||
|
Windows |
— |
471,825 |
— |
471,825 |
|||||||||||||||
|
Total Net Sales |
$ |
573,634 |
$ |
738,943 |
$ |
(45,024) |
$ |
1,267,553 |
|||||||||||
|
Gross Profit |
|||||||||||||||||||
|
Commercial |
$ |
133,281 |
$ |
— |
$ |
(14,938) |
$ |
118,343 |
22.4 |
% |
|||||||||
|
Siding |
— |
64,973 |
— |
64,973 |
24.3 |
% |
|||||||||||||
|
Windows |
— |
80,316 |
— |
80,316 |
17.0 |
% |
|||||||||||||
|
Total Gross Profit |
$ |
133,281 |
$ |
145,289 |
$ |
(14,938) |
$ |
263,632 |
20.8 |
% |
|||||||||
|
Year Ended December 31, 2018 |
|||||||||||||||||||
|
Net Sales |
|||||||||||||||||||
|
Commercial |
$ |
2,000,577 |
$ |
— |
$ |
14,376 |
$ |
2,014,953 |
|||||||||||
|
Siding |
— |
1,127,331 |
— |
1,127,331 |
|||||||||||||||
|
Windows |
— |
1,977,203 |
— |
1,977,203 |
|||||||||||||||
|
Total Net Sales |
$ |
2,000,577 |
$ |
3,104,534 |
$ |
14,376 |
$ |
5,119,487 |
|||||||||||
|
Gross Profit |
|||||||||||||||||||
|
Commercial |
$ |
462,682 |
$ |
— |
$ |
(3,660) |
$ |
459,022 |
22.8 |
% |
|||||||||
|
Siding |
— |
284,123 |
— |
284,123 |
25.2 |
% |
|||||||||||||
|
Windows |
— |
347,950 |
— |
347,950 |
17.6 |
% |
|||||||||||||
|
Total Gross Profit |
$ |
462,682 |
$ |
632,073 |
$ |
(3,660) |
$ |
1,091,095 |
21.3 |
% |
|||||||||
|
Reported |
Acquisitions (1)(3) |
Pro Forma |
% of Net Sales |
||||||||||||
|
Year Ended December 31, 2019 |
|||||||||||||||
|
Net Sales |
|||||||||||||||
|
Commercial |
$ |
1,847,893 |
$ |
— |
$ |
1,847,893 |
|||||||||
|
Siding |
1,111,407 |
16,229 |
1,127,636 |
||||||||||||
|
Windows |
1,930,447 |
— |
1,930,447 |
||||||||||||
|
Total Net Sales |
$ |
4,889,747 |
$ |
16,229 |
$ |
4,905,976 |
|||||||||
|
Gross Profit |
|||||||||||||||
|
Commercial |
$ |
457,747 |
$ |
— |
$ |
457,747 |
24.8 |
% |
|||||||
|
Siding |
277,583 |
18,015 |
295,598 |
26.2 |
% |
||||||||||
|
Windows |
353,089 |
— |
353,089 |
18.3 |
% |
||||||||||
|
Total Gross Profit |
$ |
1,088,419 |
$ |
18,015 |
$ |
1,106,434 |
22.6 |
% |
|||||||
|
(1) Acquisitions reflect the estimated impact of combining Ply Gem, Atrium, Silver Line and Environmental Stoneworks. | |||||||||||||||
|
(2) Change in fiscal period reflects the estimated impact from moving from a 52/53 week fiscal year-end to a four-four-five calendar year. | |||||||||||||||
|
(3) Gross margin adjustment for the non-cash inventory fair value step-up of $16.2 million associated with the Ply Gem merger and Environmental Stoneworks acquisition. | |||||||||||||||
View original content:http://www.prnewswire.com/news-releases/cornerstone-building-brands-announces-fourth-quarter-and-full-year-2019-results-301015811.html
SOURCE Cornerstone Building Brands, Inc.