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Share Name | Share Symbol | Market | Type |
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Continental Building Products Inc | NYSE:CBPX | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 36.99 | 0 | 01:00:00 |
Continental Building Products, Inc. (NYSE: CBPX) (the "Company"), a leading manufacturer of gypsum wallboard and complementary finishing products, announced today results for the third quarter ended September 30, 2018.
Highlights of Third Quarter 2018 as Compared to Third Quarter 2017
"We executed strong operational and financial results in the quarter with a 76% increase in earnings per share and significant operating cash flow driven by higher net sales and our highly efficient low cost operations," stated Jay Bachmann, President and Chief Executive Officer. "We achieved a 21% increase in EBITDA and a 360 basis point improvement in gross margin, marking the fifth straight quarter that we have expanded gross margin. This overall improvement reflects our relentless focus on our Bison Way continuous improvement effort as our associates work together to streamline our operations and elevate our service to customers. We are especially pleased to deliver these results against a backdrop of continuing inflationary pressures in freight, labor and raw materials."
Mr. Bachmann continued, "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 share owners. We are excited about the rewards to come from reinvesting in our people and our business and inspired by the commitment and hard work of everyone in the Company to ensure we deliver exceptional value to our customers."
Third Quarter 2018 Results vs. Third Quarter 2017
Net sales were up 12.6% to $131.2 million for the third quarter 2018, compared to $116.5 million in the prior year quarter, primarily due to a 7.3% increase in average mill net price on wallboard sales and a 4.7% increase in wallboard volumes. Wallboard sales volumes increased to 674 million square feet (MMSF), compared to 644 MMSF in the prior year quarter, attributable to strong demand in the Company's markets.
Operating income was $27.0 million, compared to $19.7 million in the prior year quarter. This increase was primarily attributable to higher net sales which more than offset an increase in input costs per unit. SG&A expense was $10.0 million compared to $8.9 million in the prior year quarter, or 7.6% of net sales in both periods.
Interest expense decreased 14.7% to $2.5 million, compared to $3.0 million in the prior year quarter, reflecting higher investment income and capitalized interest, partially offset by the rise in LIBOR.
Net income for the third quarter 2018 increased 69.0% to $18.6 million, or $0.51 per share, compared to $11.0 million, or $0.29 per share, in the prior year quarter. The $7.6 million increase in net income was primarily a result of the increase in net sales and the decrease in provision for income taxes under the new federal and state tax rates effective for 2018.
Balance Sheet and Cash Flow
As of September 30, 2018, the Company had a cash balance of $105.5 million and total outstanding borrowing under the term loan agreement of $269.5 million. During the third quarter 2018, the Company generated cash flows from operations of $31.3 million and deployed $7.3 million in capital investments.
During the third quarter 2018, the Company repurchased 76,600 shares of its common stock under its expanded repurchase program for an aggregate purchase price of $2.9 million, representing 0.2% of its outstanding shares as of December 31, 2017. As of September 30, 2018, against the program, the Company has repurchased $130.7 million of common stock at an average price of $22.47 per share and had a remaining capacity of $169.3 million for future repurchases.
Forward-Looking Outlook for the Full Year 2018
Investor Conference Webcast and Conference Call
The Company will host a webcast and conference call on Thursday, November 8, 2018 at 5:00 p.m. Eastern Time to review third quarter 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 December 8, 2018, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the pass code number 13683730.
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 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.
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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. Continental Building Products, Inc. Consolidated Statements of Operations(unaudited)
For the Three Months Ended For the Nine Months EndedSeptember 30,2018
September 30,2017
September 30,2018
September 30,2017
(in thousands, except share data and per share amounts) Net sales $ 131,234 $ 116,526 $ 387,304 $ 357,771 Costs, expenses and other income: Cost of goods sold 94,306 87,952 279,185 267,393 Selling and administrative 9,957 8,867 29,826 27,364 Total costs and operating expenses 104,263 96,819 309,011 294,757 Operating income 26,971 19,707 78,293 63,014 Other (expense)/income, net (29 ) 146 (256 ) (633 ) Interest expense, net (2,549 ) (2,988 ) (7,963 ) (8,966 ) Income before losses from equity method investment and provision for income taxes 24,393 16,865 70,074 53,415 Losses from equity method investment (393 ) (204 ) (1,148 ) (29 ) Income before provision for income taxes 24,000 16,661 68,926 53,386 Provision for income taxes (5,436 ) (5,674 ) (14,821 ) (17,774 ) Net income $ 18,564 $ 10,987 $ 54,105 $ 35,612 Net income per share: Basic $ 0.51 $ 0.29 $ 1.46 $ 0.91 Diluted $ 0.50 $ 0.29 $ 1.46 $ 0.91 Weighted average shares outstanding: Basic 36,732,746 38,212,869 37,012,536 38,966,575 Diluted 36,918,904 38,345,556 37,181,387 39,080,973 Continental Building Products, Inc. Consolidated Balance Sheets September 30, 2018 December 31, 2017(unaudited)
(in thousands) Assets: Cash and cash equivalents $ 105,452 $ 72,521 Trade receivables, net 39,597 38,769 Inventories, net 32,439 24,882 Prepaid and other current assets 11,605 11,267 Total current assets 189,093 147,439 Property, plant and equipment, net 290,670 294,003 Customer relationships and other intangibles, net 64,661 70,807 Goodwill 119,945 119,945 Equity method investment 8,194 9,263 Debt issuance costs 341 477 Total Assets $ 672,904 $ 641,934 Liabilities and Shareholders' Equity: Liabilities: Accounts payable $ 32,253 $ 30,809 Accrued and other liabilities 13,239 11,940 Notes payable, current portion 1,670 1,702 Total current liabilities 47,162 44,451 Deferred taxes and other long-term liabilities 15,392 15,847 Notes payable, non-current portion 262,400 263,610 Total Liabilities 324,954 323,908 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; 44,422,804 and 44,321,776 shares issued and 36,681,879 and 37,532,959 shares outstanding as of September 30, 2018 and December 31, 2017, respectively 44 44 Additional paid-in capital 327,643 325,391 Less: Treasury stock (170,782 ) (143,357 ) Accumulated other comprehensive loss (1,656 ) (2,649 ) Accumulated earnings 192,701 138,597 Total Shareholders' Equity 347,950 318,026 Total Liabilities and Shareholders' Equity $ 672,904 $ 641,934 Continental Building Products, Inc. Consolidated Statements of Cash Flows(unaudited)
For the Nine Months Ended September 30, 2018 September 30, 2017 (in thousands) Cash flows from operating activities: Net income $ 54,105 $ 35,612 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32,966 35,817 Amortization of debt issuance costs and debt discount 931 885 Losses from equity method investment 1,148 29 Amortization of deferred gain on terminated swaps (632 ) — Loss on debt extinguishment — 686 Share-based compensation 2,459 2,101 Deferred taxes (457 ) 92 Change in assets and liabilities: Trade receivables (914 ) 1,420 Inventories (7,627 ) (872 ) Prepaid expenses and other current assets 1,264 (350 ) Accounts payable (52 ) (87 ) Accrued and other current liabilities 1,089 4 Other long-term liabilities (226 ) (245 ) Net cash provided by operating activities 84,054 75,092 Cash flows from investing activities: Capital expenditures (19,761 ) (14,077 ) Software purchased or developed (1,359 ) (183 ) Proceeds from the sale of property, plant and equipment 125 — Capital contributions to equity method investment (548 ) (1,929 ) Distributions from equity method investment 468 641 Net cash used in investing activities (21,075 ) (15,548 ) Cash flows from financing activities: Proceeds from exercise of stock options 145 230 Tax withholdings on share-based compensation (547 ) (240 ) Proceeds from debt refinancing — 273,625 Disbursements for debt refinancing — (273,625 ) Payments of financing costs — (649 ) Principal payments for debt (2,037 ) (2,052 ) Payments to repurchase common stock (27,425 ) (49,128 ) Net cash used in financing activities (29,864 ) (51,839 ) Effect of foreign exchange rates on cash and cash equivalents (184 ) 707 Net change in cash and cash equivalents 32,931 8,412 Cash, beginning of period 72,521 51,536 Cash, end of period $ 105,452 $ 59,948Reconciliation 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.
Reconciliation of Net Income to EBITDA For the Three Months Ended For the Nine Months EndedSeptember 30,2018
September 30,2017
September 30,2018
September 30,2017
(unaudited, in thousands) Net income $ 18,564 $ 10,987 $ 54,105 $ 35,612Adjustments:
Other expense/(income), net 29 (146 ) 256 633 Interest expense, net 2,549 2,988 7,963 8,966 Losses from equity method investment 393 204 1,148 29 Provision for income taxes 5,436 5,674 14,821 17,774 Depreciation and amortization 11,580 12,057 32,966 35,817 EBITDA - Non-GAAP measure $ 38,551 $ 31,764 $ 111,259 $ 98,831 EBITDA Margin - EBITDA as a percentage of net sales - Non-GAAP measure 29.4 % 27.3 % 28.7 % 27.6 % Reconciliation of Net Income and Earnings Per Share to Adjusted Net Income and Adjusted Earnings Per Share For the Three Months Ended For the Nine Months EndedSeptember 30,2018
September 30,2017
September 30,2018
September 30,2017
(unaudited, in thousands, except share data and per share amounts) Net income - GAAP measure $ 18,564 $ 10,987 $ 54,105 $ 35,612 Debt related expenses, net of tax (1) — — — 454 Adjusted net income - Non-GAAP measure $ 18,564 $ 10,987 $ 54,105 $ 36,066 Earnings per share - GAAP measure $ 0.51 $ 0.29 $ 1.46 $ 0.91 Debt related expenses, net of tax (1) — — — 0.02 Adjusted earnings per share - Non-GAAP measure $ 0.51 $ 0.29 $ 1.46 $ 0.93 (1) Expenses related to debt repricing activities are shown net of income tax benefit of $0.2 million. Other Financial and Operating Data For the Three Months Ended For the Nine Months EndedSeptember 30,2018
September 30,2017
September 30,2018
September 30,2017
(in thousands, except mill net) Capital expenditures and software purchased or developed $ 7,324 $ 6,057 $ 21,120 $ 14,260 Wallboard sales volume (million square feet) 674 644 2,011 1,941 Mill net sales price (1) $ 155.43 $ 144.90 $ 153.70 $ 147.72 (1) 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 EndedSeptember 30,2017
December 31,2017
March 31,2018
June 30,2018
September 30,2018
Volumes (million square feet) 644 725 615 722 674 Mill net sales price (1) $ 144.90 $ 144.78 $ 151.60 $ 153.88 $ 155.43 (1) Mill net sales price represents average selling price per thousand square feet net of freight and delivery costs.
View source version on businesswire.com: https://www.businesswire.com/news/home/20181108005772/en/
Continental Building Products, Inc.Investor Relations:Tel.: (703) 480-3980Investorrelations@continental-bp.com
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