- Delivered earnings of 21 cents per diluted share, a 50 percent
improvement over prior year
- Achieved fifth consecutive quarter of Adjusted EBITDA1 margin
enhancement in all segments
- Backlog for residential exterior building products are at
record levels from positive market momentum
- Reduced net debt by $44 million and increased liquidity with
$483 million of cash and cash equivalents
Cornerstone Building Brands, Inc. (NYSE: CNR) (the
“Company”), a leading provider of exterior building products, today
reported second-quarter 2020 net sales of $1,084.9 million and net
income of $26.5 million or 21 cents per diluted share. This
compares with net sales of $1,295.5 million and net income of $17.3
million or 14 cents per diluted share in the same quarter last
year. Adjusted for the March 2020 acquisition of Kleary Masonry,
Inc. first-half 2020 pro forma net sales1 were $2,207.1 million,
down 7.9 percent compared with pro forma net sales1 for first-half
2019. The decrease was driven by lower volumes as a result of the
COVID-19 pandemic.
Adjusted EBITDA1 for the second quarter of 2020 was $159.1
million or 14.7 percent of net sales, an improvement of 130 basis
points from the same pro forma period a year ago. The improvement
was due to effective near-term expense management and structural
cost reductions partially offset by the impacts from lower demand
as a result of the COVID-19 pandemic. For the first-half 2020, pro
forma Adjusted EBITDA1 was $257.2 million or 11.7 percent of pro
forma net sales1, an improvement of 4 percent or 140 basis points
from the same pro forma period a year ago.
"I am proud of the Cornerstone Building Brands team, which is
made up of people from many backgrounds, each unique, and valued as
part of our organization. As a result of their efforts, we continue
to foster a safe work environment while delivering quality products
to our customers every day,” said James S. Metcalf, Chairman and
Chief Executive Officer.
“Our culture of continuous improvement delivered the fifth
consecutive quarter of Adjusted EBITDA margin expansion in all
segments. We generated positive cash flow and structurally reduced
our operating cost structure during this unprecedented market
environment,” Metcalf continued.
“At the same time, we're also pushing forward with our growth
strategy that is centered around our differentiated and profitable
products and services, securing our leadership position in exterior
building products. While it remains unclear how long this pandemic
and the related economic challenges will last, I believe in the
resiliency of Cornerstone Building Brands and I remain confident
that the actions we are taking will make us a stronger Company,”
Metcalf concluded.
Segment Results Versus Prior
Year
Following are the Company’s results by segment for the second
quarter of 2020 and year to date. All segments delivered
consecutive margin expansion over the prior year as a result of the
quick and effective management of near-term expenses and
acceleration of the Company's strategy to permanently improve its
highly variable cost structure, despite the challenges in
end-markets due to the COVID-19 pandemic.
- Windows segment net sales for the quarter were $428.3 million,
a decrease of 15.8 percent, and operating income was $23.1 million,
a decrease of 27.6 percent. Adjusted EBITDA1 was $60.6 million or
14.2 percent of net sales, an improvement of 140 basis points. On a
year-to-date basis, Adjusted EBITDA margin1 improved 210 basis
points, while net sales were 5.8 percent lower.
- Siding segment net sales for the quarter were $285.2 million, a
decrease of 10.4 percent, and operating income was $30.6 million,
an increase of 18.1 percent. Adjusted EBITDA1 was $63.3 million or
22.2 percent of net sales, an improvement of 170 basis points. On a
year-to-date basis, Adjusted EBITDA margin1 improved 220 basis
points, while net sales were 4.6 percent lower.
- Commercial segment net sales for the quarter were $371.4
million, a decrease of 22.7 percent, and operating income was $36.7
million, a decrease of 37.7 percent. Adjusted EBITDA1 was $56.5
million or 15.2 percent of net sales, an improvement of 10 basis
points. On a year-to-date basis, Adjusted EBITDA1 margin improved
30 basis points, while net sales were 12.1 percent lower.
COVID-19 Response and
Update
The health and safety of our employees, customers, and
communities are our number one priority. We remain flexible and
adjust our cost structure as we navigate the uncertainties created
by the pandemic. Across all businesses, our teams are in constant
communication with customers, along with suppliers and government
officials, to maintain business continuity without disruption. The
Company operates as an “essential” business, delivering quality
products to our customers. We believe Cornerstone Building Brands’
broad and diverse product mix, extensive operating footprint, and
resilient business model positions us well to continue to navigate
the uncertainty in the current environment and emerge stronger than
before.
Balance Sheet and
Liquidity
In the second quarter of 2020, the Company generated strong cash
flow from operations of $69.1 million compared with $18.8 million
for the same period last year, a cash generation improvement of
$50.3 million. Capital expenditures were $20.0 million, as the
Company remains committed to investing in innovative product
offerings and process automation that are expected to generate
profitable growth in the future. During the second quarter, we
commissioned an automated glass line at the Toledo, Ohio Window’s
facility, that doubled operating capacity and improved productivity
by 50 percent.
Free cash flow was $49.1 million during the second quarter of
2020 compared with free cash flow usage of $11.2 million during the
second quarter of 2019. The improvement was driven by net cash tax
benefits from the CARES Act and other COVID-19 related government
stimulus programs as well as effective working capital
management.
The Company ended the quarter with approximately $483.5 million
of unrestricted cash on hand and $145.8 million of excess
availability on its asset-based revolving credit facility.
Additionally, the net debt leverage ratio1 improved to 5.3x at the
end of the second quarter of 2020 compared with 6.1x for the same
period last year. We believe our liquidity is sufficient to weather
the economic uncertainty related to the ongoing impact of the
COVID-19 pandemic while providing the Company flexibility needed to
continue executing our growth strategy.
Outlook
Third-Quarter 2020 Guidance
- Expect net sales to be between $1,160 million and $1,240
million
- Positive residential end-market momentum
- Backlog at historic levels in Windows and Siding segments
- Stable non-residential end-markets
- Anticipate gross profit to be between $275 million and $300
million.
- Expect Adjusted EBITDA2 to be between $170 million and $195
million
- Lower cost structure from run rate of achieved and continued
execution of cost savings
Additional Fiscal Year 2020
Guidance
- 2020 capital spending is projected to be approximately $85
million.
- Cash interest expense is expected to be approximately $200
million.
- Cash tax benefit of approximately $10 million.
- Benefits from targeted primary working capital improvements are
expected to generate approximately $50 million of cash.
- Cash restructuring costs are expected to be approximately $35
million to achieve between $80 and $100 million of structural
savings.
(1)
Adjusted financial metrics used in this
release are non-GAAP measures and refer to the results for 2020 and
2019. Pro forma financial metrics used in this release for results
in 2020 and 2019 are also non-GAAP measures and adjust for other
items affecting comparability. See reconciliations of GAAP results
to adjusted results and pro forma results in the accompanying
tables.
(2)
Adjusted EBITDA is a non-GAAP financial
measure. A reconciliation of the forecasted range for the third
quarter of 2020 is not included in this release. See "Non-GAAP
Financial Measures" below.
Conference Call
Information
The Company will host a conference call at 9:00 a.m. EDT on
Wednesday, August 12 to discuss its financial performance with
investors and securities analysts. The financial results and
supplemental information will be available online at
investors.cornerstonebuildingbrands.com.
To register, please use this link
http://www.directeventreg.com/registration/event/8147407. After
registering, an email confirmation will be sent providing dial-in
details and a unique code for entry. Registration is open
throughout the live call, however, to ensure you are connected for
the entirety, please register a day in advance or at least 10
minutes before the start of the call. Additional call participation
options are as follows:
By Webcast:
Cornerstone Building Brands 2Q20 Earnings
Call
Date:
Wednesday, August 12, 2020
Time:
9:00 a.m. Eastern Daylight Time
Access link:
Visit the Events & Presentations
section of the Investors Page at
investors.cornerstonebuildingbrands.com or access directly at
https://event.on24.com/wcc/r/2403452/DFF10E9EA779D4793B94879DCAA90D0E
Replay dial-in will be available
through August 26, 2020
Dial-in number:
855-859-2056
Replay code:
8147407
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
approximately 20,000 employees at manufacturing, distribution and
office locations throughout North America. For more information,
visit us at www.cornerstonebuildingbrands.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 expectations for residential and non-residential end
markets and our financial outlook and guidance, including our third
quarter 2020 forecasted net sales, gross profit and Adjusted
EBITDA, and our fiscal year 2020 forecasted capital spending, cash
interest expense, cash tax expense, benefits from primary working
capital, cash restructuring costs and other consolidated financial
performance guidance. 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; the outbreak of a health epidemic or pandemic,
including the coronavirus disease 2019 (“COVID-19”) pandemic;
precautions taken due to the recent COVID-19 pandemic that could
harm our business; impairment of goodwill and/or intangible assets;
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 the
Investors; the effect on our common stock price caused by
transactions engaged in by the 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, Quarterly Report on
Form 10-Q for the quarterly period ended April 4, 2020 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. A reconciliation of the forecasted range for Adjusted
EBITDA for the third quarter of 2020 is not included in this
presentation due to the number of variables in the projected range
and because we are currently unable to quantify accurately certain
amounts that would be required to be included in the GAAP measure
or the individual adjustments for such reconciliation. In addition,
we believe such reconciliation would imply a degree of precision
that would be confusing or misleading to investors.
CORNERSTONE BUILDING BRANDS,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
Six Months Ended
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
Net sales
$
1,084,936
$
1,295,457
$
2,198,747
$
2,360,289
Cost of sales
830,205
990,794
1,713,129
1,869,709
Gross profit
254,731
304,663
485,618
490,580
23.5
%
23.5
%
22.1
%
20.8
%
Selling, general and administrative
expenses
134,371
158,028
299,325
312,334
Intangible asset amortization
45,240
46,511
90,101
87,974
Restructuring and impairment charges,
net
15,411
7,107
29,246
10,538
Strategic development and acquisition
related costs
784
12,086
5,641
26,168
Goodwill impairment
—
—
503,171
—
Income (loss) from operations
58,925
80,931
(441,866
)
53,566
Interest income
341
121
679
336
Interest expense
(52,384
)
(58,299
)
(107,219
)
(116,585
)
Foreign exchange gain (loss)
2,025
523
(2,112
)
1,700
Other income (expense), net
660
(397
)
(2
)
(52
)
Income (loss) before income taxes
9,567
22,879
(550,520
)
(61,035
)
Provision (benefit) for income taxes
(17,332
)
5,346
(35,346
)
(18,551
)
(181.2
)
%
23.4
%
6.4
%
30.4
%
Net income (loss)
26,899
17,533
(515,174
)
(42,484
)
Net income allocated to participating
securities
(442
)
(270
)
—
—
Net income (loss) applicable to common
shares
$
26,457
$
17,263
$
(515,174
)
$
(42,484
)
Income (loss) per common share:
Basic
$
0.21
$
0.14
$
(4.09
)
$
(0.34
)
Diluted
$
0.21
$
0.14
$
(4.09
)
$
(0.34
)
Weighted average number of common shares
outstanding:
Basic
125,754
125,516
125,927
125,510
Diluted
125,755
125,516
125,927
125,510
Increase (decrease) in sales
(16.3
)
%
183.4
%
(6.8
)
%
168.7
%
Selling, general and administrative
expenses percentage of net sales
12.4
%
12.2
%
13.6
%
13.2
%
CORNERSTONE BUILDING BRANDS,
INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
July 4, 2020
December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents
$
483,497
$
98,386
Restricted cash
6,223
3,921
Accounts receivable, net
522,612
491,740
Inventories, net
402,994
439,194
Income taxes receivable
36,741
48,466
Investments in debt and equity securities,
at market
3,531
3,776
Prepaid expenses and other
67,933
78,516
Assets held for sale
2,646
1,750
Total current assets
1,526,177
1,165,749
Property, plant and equipment, net
644,284
652,841
Lease right-of-use assets
300,849
316,155
Goodwill
1,187,788
1,669,594
Intangible assets, net
1,665,591
1,740,700
Deferred income taxes
1,272
7,510
Other assets, net
11,884
11,797
Total assets
$
5,337,845
$
5,564,346
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Current portion of long-term debt
$
25,600
$
25,600
Accounts payable
198,936
205,629
Accrued compensation and benefits
54,590
92,130
Accrued interest
20,126
19,070
Accrued income taxes
501
—
Current portion of lease liabilities
71,294
72,428
Other accrued expenses
222,425
233,687
Total current liabilities
593,472
648,544
Long-term debt
3,578,341
3,156,924
Deferred income taxes
221,078
291,987
Long-term lease liabilities
226,371
243,780
Other long-term liabilities
340,371
287,793
Total long-term liabilities
4,366,161
3,980,484
Common stock
1,252
1,261
Additional paid-in capital
1,249,852
1,248,787
Accumulated deficit
(797,081
)
(281,229
)
Accumulated other comprehensive loss,
net
(75,300
)
(32,398
)
Treasury stock, at cost
(511
)
(1,103
)
Total stockholders’ equity
378,212
935,318
Total liabilities and stockholders’
equity
$
5,337,845
$
5,564,346
CORNERSTONE BUILDING BRANDS,
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
July 4, 2020
June 29, 2019
Cash flows from operating activities:
Net loss
$
(515,174
)
$
(42,484
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
140,480
127,476
Non-cash interest expense
4,593
3,954
Share-based compensation expense
8,543
7,479
Non-cash fair value premium on purchased
inventory
—
16,249
Goodwill impairment
503,171
—
Asset impairment
3,490
—
Loss (gain) on asset sales, net
169
(277
)
Provision for doubtful accounts
252
(205
)
Deferred income taxes
(48,190
)
(48,515
)
Changes in operating assets and
liabilities, net of effect of acquisitions:
Accounts receivable
(24,844
)
(133,820
)
Inventories
36,872
29,430
Income taxes
12,226
2,245
Prepaid expenses and other
9,782
(706
)
Accounts payable
(7,818
)
15,079
Accrued expenses
(53,834
)
(2,952
)
Other, net
(2,756
)
(2,867
)
Net cash provided by (used in) operating
activities
66,962
(29,914
)
Cash flows from investing activities:
Acquisitions, net of cash acquired
(41,841
)
(179,184
)
Capital expenditures
(47,609
)
(57,220
)
Proceeds from sale of property, plant and
equipment
114
873
Net cash used in investing activities
(89,336
)
(235,531
)
Cash flows from financing activities:
Proceeds from ABL facility
345,000
270,000
Payments on ABL facility
(30,000
)
(50,000
)
Proceeds from cash flow revolver
115,000
—
Payments on term loan
(12,810
)
(12,810
)
Payments related to tax withholding for
share-based compensation
(467
)
(167
)
Purchases of treasury stock
(6,428
)
—
Net cash provided by financing
activities
410,295
207,023
Effect of exchange rate changes on cash
and cash equivalents
(508
)
2,300
Net increase (decrease) in cash, cash
equivalents and restricted cash
387,413
(56,122
)
Cash, cash equivalents and restricted cash
at beginning of period
102,307
147,607
Cash, cash equivalents and restricted cash
at end of period
$
489,720
$
91,485
CORNERSTONE BUILDING BRANDS,
INC.
NON-GAAP FINANCIAL MEASURES
AND RECONCILIATIONS
ADJUSTED NET INCOME (LOSS) PER
DILUTED COMMON SHARE AND
NET INCOME (LOSS)
COMPARISON
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
Six Months Ended
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
Net income (loss) per diluted common
share, GAAP basis
$
0.21
$
0.14
$
(4.09
)
$
(0.34
)
Restructuring and impairment charges,
net
0.12
0.06
0.23
0.08
Strategic development and acquisition
related costs
0.01
0.10
0.04
0.21
Non cash loss (gain) on foreign currency
transactions
(0.02
)
—
0.02
(0.01
)
Non cash charge of purchase price
allocated to inventories
—
—
—
0.13
Goodwill impairment
—
—
4.00
—
Customer inventory buybacks
—
—
—
—
COVID-19(3)
0.05
—
0.06
—
Other, net
—
0.01
0.01
0.02
Tax effect of applicable non-GAAP
adjustments(1)
(0.04
)
(0.04
)
(1.14
)
(0.11
)
Adjusted net income (loss) per diluted
common share(2)
$
0.34
$
0.26
$
(0.86
)
$
(0.02
)
Three Months Ended
Six Months Ended
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
Net income (loss) applicable to common
shares, GAAP basis
$
26,457
$
17,263
$
(515,174
)
$
(42,484
)
Restructuring and impairment charges,
net
15,411
7,107
29,403
10,538
Strategic development and acquisition
related costs
784
12,086
5,641
26,168
Non cash loss (gain) on foreign currency
transactions
(2,025
)
(523
)
2,112
(1,700
)
Non cash charge of purchase price
allocated to inventories
—
—
—
16,249
Goodwill impairment
—
—
503,171
—
Customer inventory buybacks
193
175
313
417
COVID-19(3)
6,805
—
8,035
—
Other, net
474
1,357
1,612
2,081
Tax effect of applicable non-GAAP
adjustments(1)
(5,627
)
(5,396
)
(143,075
)
(14,357
)
Adjusted net income (loss) applicable
to common shares(2)
$
42,914
$
32,069
$
(107,962
)
$
(3,088
)
(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.
(3)
Costs included within the COVID-19 line
item for the three and six months ended July 4, 2020 include
incremental labor costs due to quarantine related absenteeism,
incremental facility cleaning costs, pandemic related supplies and
personal protective equipment for employees, among other costs.
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)
Consolidated
Three Months Ended
Six Months Ended
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
Operating income (loss), GAAP
$
58,925
$
80,931
$
(441,866
)
$
53,566
Restructuring and impairment charges,
net
15,411
7,107
29,403
10,538
Strategic development and acquisition
related costs
784
12,086
5,641
26,168
Non cash charge of purchase price
allocated to inventories
—
—
—
16,249
Goodwill impairment
—
—
503,171
—
Customer inventory buybacks
193
175
313
417
COVID-19
6,805
—
8,035
—
Other, net
474
1,357
1,612
2,081
Adjusted operating income
82,592
101,656
106,309
109,019
Other income (expense), net
660
(397
)
(2
)
(52
)
Depreciation and amortization
70,711
67,529
140,480
127,476
Share-based compensation expense
5,156
3,474
8,543
7,479
Adjusted EBITDA
159,119
172,262
255,330
243,922
Impact of Environmental Stoneworks and
Kleary acquisitions(1)
—
2,676
1,869
3,157
Pro Forma Adjusted EBITDA
$
159,119
$
174,938
$
257,199
$
247,079
(1)
Reflects the Adjusted EBITDA of
Environmental Stoneworks for the period January 1, 2019 to the
acquisition date of February 20, 2019 and Kleary Masonry, Inc. for
the periods January 1, 2019 to June 29, 2019 and January 1, 2020 to
March 1, 2020.
Windows
Three Months Ended
Six Months Ended
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
Net Sales
$
428,275
$
508,647
$
876,725
$
930,241
Operating income (loss), GAAP
$
23,101
$
31,912
$
(290,089
)
$
27,593
Restructuring and impairment charges,
net
4,184
900
5,650
1,021
Strategic development and acquisition
related costs
—
8,052
16
12,061
Goodwill impairment
—
—
320,990
—
COVID-19
3,964
—
4,892
—
Other, net
(785
)
(424
)
—
(40
)
Adjusted operating income
30,464
40,440
41,459
40,635
Other income (expense), net
—
(411
)
—
(738
)
Depreciation and amortization
30,182
24,848
60,035
48,825
Adjusted EBITDA
$
60,646
$
64,877
$
101,494
$
88,722
Adjusted EBITDA as a % of Net
Sales
14.2
%
12.8
%
11.6
%
9.5
%
CORNERSTONE BUILDING BRANDS,
INC.
NON-GAAP FINANCIAL MEASURES
AND RECONCILIATIONS
(In thousands)
(Unaudited)
Siding
Three Months Ended
Six Months Ended
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
Net Sales
$
285,249
$
306,525
$
526,292
$
524,802
Pro Forma Net Sales
285,249
318,255
534,650
560,441
Operating income (loss), GAAP
$
30,638
$
25,937
$
(138,229
)
$
14,283
Restructuring and impairment charges,
net
2,524
5,544
3,615
5,631
Strategic development and acquisition
related costs
955
—
976
—
Non cash charge of purchase price
allocated to inventories
—
—
—
16,249
Goodwill impairment
—
—
176,774
—
Customer inventory buybacks
193
175
313
417
COVID-19
43
—
43
—
Other, net
412
1,202
—
1,435
Adjusted operating income
34,765
32,858
43,492
38,015
Other income (expense), net
(6
)
(750
)
(6
)
(1,016
)
Depreciation and amortization
28,514
30,415
56,521
54,765
Adjusted EBITDA
63,273
62,523
100,007
91,764
Impact of Environmental Stoneworks and
Kleary acquisitions(1)
—
2,676
1,869
3,157
Pro Forma Adjusted EBITDA
$
63,273
$
65,199
$
101,876
$
94,921
Pro Forma Adjusted EBITDA as a % of Pro
Forma Net Sales
22.2
%
20.5
%
19.1
%
16.9
%
(1)
Reflects the Adjusted EBITDA of
Environmental Stoneworks for the period January 1, 2019 to the
acquisition date of February 20, 2019 and Kleary Masonry, Inc. for
the periods January 1, 2019 to June 29, 2019 and January 1, 2020 to
March 1, 2020.
Commercial
Three Months Ended
Six Months Ended
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
Net Sales
$
371,412
$
480,285
$
795,730
$
905,246
Operating income, GAAP
$
36,664
$
58,809
$
53,505
$
83,119
Restructuring and impairment charges,
net
7,364
132
19,069
1,165
Strategic development and acquisition
related costs
(149
)
733
(254
)
6,255
Goodwill impairment
—
—
5,407
—
COVID-19
1,220
—
1,522
—
Other, net
289
1,082
1,100
1,082
Adjusted operating income
45,388
60,756
80,349
91,621
Other income (expense), net
123
213
237
708
Depreciation and amortization
11,020
11,399
21,921
22,174
Adjusted EBITDA
$
56,531
$
72,368
$
102,507
$
114,503
Net Sales as a % of Adjusted
EBITDA
15.2
%
15.1
%
12.9
%
12.6
%
CORNERSTONE BUILDING BRANDS,
INC.
BUSINESS SEGMENTS
(In thousands)
(Unaudited)
Three Months Ended
July 4, 2020
June 29, 2019
% of Net Sales
% of Net Sales
% Change
Net Sales
Windows
$
428,275
39.5
%
$
508,647
39.2
%
(15.8
)
%
Siding
285,249
26.3
%
306,525
23.7
%
(6.9
)
%
Commercial
371,412
34.2
%
480,285
37.1
%
(22.7
)
%
Total net sales
$
1,084,936
100.0
%
$
1,295,457
100.0
%
(16.3
)
%
Gross Profit
Windows
$
84,363
19.7
%
$
98,187
19.3
%
(14.1
)
%
Siding
78,137
27.4
%
85,042
27.7
%
(8.1
)
%
Commercial
92,231
24.8
%
121,434
25.3
%
(24.0
)
%
Total gross profit
$
254,731
23.5
%
$
304,663
23.5
%
(16.4
)
%
Operating Income (Loss)
Windows
$
23,101
5.4
%
$
31,912
6.3
%
(27.6
)
%
Siding
30,638
10.7
%
25,937
8.5
%
18.1
%
Commercial
36,664
9.9
%
58,809
12.2
%
(37.7
)
%
Corporate
(31,478
)
—
(35,727
)
—
%
(11.9
)
%
Total operating income
$
58,925
5.4
%
$
80,931
6.2
%
(27.2
)
%
Six Months Ended
July 4, 2020
June 29, 2019
% of Net Sales
% of Net Sales
% Change
Net Sales
Windows
$
876,725
39.9
%
$
930,241
39.4
%
(5.8
)
%
Siding
526,292
23.9
%
524,802
22.2
%
0.3
%
Commercial
795,730
36.2
%
905,246
38.4
%
(12.1
)
%
Total net sales
$
2,198,747
100.0
%
$
2,360,289
100.0
%
(6.8
)
%
Gross Profit
Windows
$
158,364
18.1
%
$
160,527
17.3
%
(1.3
)
%
Siding
137,179
26.1
%
118,218
22.5
%
16.0
%
Commercial
190,075
23.9
%
211,835
23.4
%
(10.3
)
%
Total gross profit
$
485,618
22.1
%
$
490,580
20.8
%
(1.0
)
%
Operating Income (Loss)
Windows
$
(290,089
)
(33.1
)
%
$
27,593
3.0
%
(1,151.3
)
%
Siding
(138,229
)
(26.3
)
%
14,283
2.7
%
(1,067.8
)
%
Commercial
53,505
6.7
%
83,119
9.2
%
(35.6
)
%
Corporate
(67,053
)
—
(71,429
)
—
%
(6.1
)
%
Total operating income (loss)
$
(441,866
)
(20.1
)
%
$
53,566
2.3
%
(924.9
)
%
CORNERSTONE BUILDING BRANDS,
INC.
NON-GAAP FINANCIAL MEASURES
AND RECONCILIATIONS
RECONCILIATION OF PRO FORMA
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Reported
Acquisitions (1)
Pro Forma
Three months ended June 29,
2019
Net Sales
Windows
$
508,647
$
—
$
508,647
Siding
306,525
11,730
318,255
Commercial
480,285
—
480,285
Total Net Sales
$
1,295,457
$
11,730
$
1,307,187
Gross Profit
% of Net Sales
Windows
$
98,187
$
—
$
98,187
19.3
%
Siding
85,042
3,569
88,611
27.8
%
Commercial
121,434
—
121,434
25.3
%
Total Gross Profit
$
304,663
$
3,569
$
308,232
23.6
%
Reported
Acquisitions
Pro Forma
Three months ended July 4, 2020
Net Sales
Windows
$
428,275
$
—
$
428,275
Siding
285,249
—
285,249
Commercial
371,412
—
371,412
Total Net Sales
$
1,084,936
$
—
$
1,084,936
Gross Profit
% of Net Sales
Windows
$
84,363
$
—
$
84,363
19.7
%
Siding
78,137
—
78,137
27.4
%
Commercial
92,231
—
92,231
24.8
%
Total Gross Profit
$
254,731
$
—
$
254,731
23.5
%
(1)
Acquisitions reflect the estimated impact
for Kleary Masonry, Inc.
CORNERSTONE BUILDING BRANDS,
INC.
NON-GAAP FINANCIAL MEASURES
AND RECONCILIATIONS
RECONCILIATION OF PRO FORMA
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Reported
Acquisitions (1)(2)
Pro Forma
Six months ended June 29, 2019
Net Sales
Windows
$
930,241
$
—
$
930,241
Siding
524,802
35,639
560,441
Commercial
905,246
—
905,246
Total Net Sales
$
2,360,289
$
35,639
$
2,395,928
Gross Profit
% of Net Sales
Windows
$
160,527
$
—
$
160,527
17.3
%
Siding
118,218
24,439
142,657
25.5
%
Commercial
211,835
—
211,835
23.4
%
Total Gross Profit
$
490,580
$
24,439
$
515,019
21.5
%
Reported
Acquisitions (1)
Pro Forma
Six months ended July 04, 2020
Net Sales
Windows
$
876,725
$
—
$
876,725
Siding
526,292
8,358
534,650
Commercial
795,730
—
795,730
Total Net Sales
$
2,198,747
$
8,358
$
2,207,105
Gross Profit
% of Net Sales
Windows
$
158,364
$
—
$
158,364
18.1
%
Siding
137,179
2,300
139,479
26.1
%
Commercial
190,075
—
190,075
23.9
%
Total Gross Profit
$
485,618
$
2,300
$
487,918
22.1
%
(1)
Acquisitions reflect the estimated impact
for Environmental Stoneworks and Kleary Masonry, Inc.
(2)
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 source
version on businesswire.com: https://www.businesswire.com/news/home/20200811005816/en/
Investor Relations Tina
Beskid 1-866-419-0042
info@investors.cornerstonebuildingbrands.com
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