Continental Building Products Reports Fourth Quarter and Full Year 2018 Results
HERNDON, Va.--(BUSINESS WIRE)--Feb 21, 2019--Continental Building Products, Inc. (NYSE: CBPX) (the “Company”), a leading manufacturer of gypsum wallboard and complementary finishing products, announced today results for the fourth quarter and year ended December 31, 2018.
Highlights of Fourth Quarter 2018 as Compared to Fourth Quarter 2017
Highlights of Full Year 2018 as Compared to Full Year 2017
“We finished the year on a strong note, generating strong earnings growth and achieving record setting results in 2018 driven by higher sales and our highly efficient low cost operations,” stated Jay Bachmann, President and Chief Executive Officer. “This positive performance reflected our relentless focus on our Bison Way continuous improvement effort as our associates worked together to streamline our operations against a backdrop of inflationary pressures.”
Mr. Bachmann further stated, “As we look into 2019, we remain focused on deploying our strong cash flow to improve our operations and cost position through investments in high-return capital projects while continuing to repurchase shares as a key avenue to return value to shareholders.”
Fourth Quarter 2018 Results vs. Fourth Quarter 2017
Net sales were up 7.1% to $140.8 million for the fourth quarter 2018, compared to $131.4 million in the prior year quarter, primarily due to a 6.5% increase in average mill net price on wallboard sales. Wallboard sales volumes were flat at 725 million square feet (MMSF) for both quarters.
Operating income was $29.0 million, compared to $26.6 million in the prior year quarter. This increase was primarily attributable to higher net sales partially offset by an increase in input costs per unit. SG&A expense was $10.5 million compared to $10.4 million in the prior year quarter, or 7.5% of net sales compared to 7.9% in the prior year quarter.
Interest expense, net, decreased 18.3% to $2.3 million, compared to $2.8 million in the prior year quarter, reflecting higher investment income and capitalized interest, along with the benefits of lower spreads obtained on the term debt, partially offset by the rise in LIBOR.
Net income for the fourth quarter 2018 decreased 16.9% to $20.1 million, or $0.56 per share, compared to $24.2 million, or $0.64 per share, in the prior year quarter. This decrease is a result of the tax adjustment in the fourth quarter 2017 related to the Tax Cuts and Jobs Act of 2017. Adjusted net income 1 increased $5.0 million, or 32.5%, from $15.4 million to $20.4 million and adjusted earnings per share increased 36.6% from $0.41 per share to $0.56 per share. The $5.0 million increase in net income was primarily a result of the increase in net sales.
Full Year 2018 Results vs. Full Year 2017
Net sales were up 8.0% to $528.1 million, compared to $489.2 million in the prior year, primarily due to a 4.7% increase in average mill net price on wallboard sales. Wallboard sales volumes for the year increased 2.6% to 2,736 million square feet (MMSF) compared to 2,666 MMSF in the prior year.
Operating income was $107.3 million, compared to $89.6 million in the prior year. This increase was primarily attributable to higher net sales partially offset by an increase in input costs per unit. SG&A expense was $40.4 million compared to $37.8 million in the prior year, or 7.6% of net sales compared to 7.7% in the prior year.
Interest expense, net, decreased 12.9% to $10.3 million, compared to $11.8 million in the prior year, reflecting higher investment income and capitalized interest, along with the benefits of lower spreads obtained on the term debt, partially offset by the rise in LIBOR.
Net income increased $14.4 million to $74.2 million, or $2.02 per share, compared to $59.8 million, or $1.55 per share, in the prior year. Adjusted net income 1 increased $23.0 million, or 44.8%, from $51.5 million to $74.5 million and adjusted earnings per share 1 increased 51.9% from $1.33 per share to $2.02 per share. The $23.0 million increase in adjusted net income 1 was primarily a result of the increase in net sales as a result of increased average mill net price and increase volumes.
Balance Sheet and Cash Flow
As of December 31, 2018, the Company had a cash balance of $102.6 million and total outstanding borrowing under the term loan agreement and industrial revenue bonds of $268.9 million. During the fourth quarter 2018, the Company generated cash flows from operations of $46.8 million and deployed $9.6 million in capital investments.
During the fourth quarter 2018, the Company repurchased 1.3 million shares of its common stock under its expanded repurchase program for an aggregate purchase price of $38.3 million, representing 3.5% of its outstanding shares as of December 31, 2017. As of December 31, 2018, against the program, the Company has repurchased $169.0 million of common stock at an average price of $23.65 per share and had a remaining capacity of $131.0 million for future repurchases.
Buchanan Plant Update
As previously announced, in January 2019 the Company’s Buchanan, New York plant experienced a significant equipment malfunction, resulting in an outage at the plant. The plant is off-line while repairs are being made. No injuries occurred from this event. The company is working to resolve the outage and expects the plant to resume operations by mid-March upon completion of repairs.
While the Buchanan plant is down, the Company has increased production at its plants in Silver Grove, Kentucky and Palatka, Florida to offset a portion of the lost production from the Buchanan plant.
Continental has standard insurance coverage that is intended to respond to circumstances such as these, including business interruption insurance. Our insurance coverage is designed to cover not only the direct costs of the damaged equipment, but also the lost contribution margin of the sales that otherwise would have been made by the plant.
Mr Bachmann commented, “Our teams are making strong progress to resolve the malfunction and ready the plant for startup by mid-March. I thank all of our people who are working safe and hard to ensure the plant is once again ready to operate in a highly efficient, safe manner.”
Outlook for the Full Year 2019
Investor Conference Webcast and Conference Call
The Company will host a webcast and conference call on Thursday, February 21, 2019 at 5:00 p.m. Eastern Time to review fourth quarter and full year 2018 financial results, discuss recent events and conduct a question-and-answer period. The live webcast will be available on the Investor Relations section of the Company’s website at www.continental-bp.com. To participate in the call, please dial (877) 407-0789 (domestic) or (201) 689-8562 (international). A replay of the conference call will be available through March 21, 2019, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the pass code number 13687008.
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.
This press release contains forward-looking statements. Forward-looking statements may be identified by the use of words such as “anticipate”, “believe”, “expect”, “estimate”, “plan”, “outlook”, and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on historical information available at the time the statements are made and are based on management’s reasonable belief or expectations with respect to future events, and are subject to risks and uncertainties, many of which are beyond the Company’s control, that could cause actual performance or results to differ materially from the belief or expectations expressed in or suggested by the forward-looking statements. Forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to update any forward-looking statement to reflect future events, developments or otherwise, except as may be required by applicable law. Investors are referred to the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.
1 See the financial schedules at the end of this press release for a reconciliation of EBITDA, adjusted net income and adjusted earnings per share, which are non-GAAP financial measures, to relevant GAAP financial measures, and a discussion of why they are useful to investors.
Reconciliation of Non-GAAP Measures
EBITDA, EBITDA Margin, Adjusted Net Income, and Adjusted Earnings Per Share have been presented in this press release as supplemental measures of financial performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). This release presents EBITDA, EBITDA Margin, Adjusted Net Income, and Adjusted Earnings Per Share as supplemental performance measures because management believes that they facilitate a comparative assessment of the Company’s operating performance relative to its performance based on results under GAAP while isolating the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect the Company’s operations and underlying operational performance. Furthermore, the Company’s Board of Directors’ compensation committee uses EBITDA to evaluate management’s compensation. Management also believes that EBITDA, EBITDA Margin, Adjusted Net Income, and Adjusted Earnings Per Share are useful to investors because they allow investors to view the business through the eyes of management and the Board of Directors, facilitating comparison of results across historical periods.
EBITDA, EBITDA Margin, Adjusted Net Income, and Adjusted Earnings Per Share may not be comparable to similarly titled measures of other companies because other companies may not calculate EBITDA, EBITDA Margin, Adjusted Net Income, and Adjusted Earnings Per Share in the same manner. EBITDA, EBITDA Margin, Adjusted Net Income, and Adjusted Earnings Per Share are not measurements of the Company’s financial performance under GAAP and should not be considered in isolation or as alternatives to net income or earnings per share determined in accordance with GAAP or any other financial statement data presented as indicators of financial performance or liquidity, each as calculated and presented in accordance with GAAP.
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CONTACT: Investor Relations:
Tel.: (703) 480-3980
KEYWORD: UNITED STATES NORTH AMERICA VIRGINIA
INDUSTRY KEYWORD: BUILDING SYSTEMS MANUFACTURING OTHER MANUFACTURING NATURAL RESOURCES ARCHITECTURE OTHER NATURAL RESOURCES REIT CONSTRUCTION & PROPERTY COMMERCIAL BUILDING & REAL ESTATE RESIDENTIAL BUILDING & REAL ESTATE
SOURCE: Continental Building Products, Inc.
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PUB: 02/21/2019 04:05 PM/DISC: 02/21/2019 04:05 PM