Continental Building Products Earned 36 Cents per Share

Continental Building Products, Inc. (NYSE:CPBX) (the “Company”), a leading manufacturer of gypsum wallboard and complementary finishing products, announced today results for the first quarter ended March 31, 2018.

Highlights of First Quarter 2018 as Compared to First Quarter 2017

Net income increased 11.6% to $13.6 million
Earnings per share increased 16.1% to $0.36
Net sales decreased 3.2% to $116.8 million on wallboard volumes down 5.4%
Gross margin increased to 25.8% compared to 25.7%
EBITDA1 decreased to $31.3 million down 4.9% compared to $33.0 million
Deployed $6.4 million in capital investments
Deployed $14.6 million to repurchase 530,600 shares of common stock
Outlook for full year 2018 unchanged

“We delivered higher gross margins in the first quarter while facing a challenging operating environment, including lower volumes as expected given strong pre-buy activity in advance of our January 1, 2018 price increase and poor weather for our regions. Our ability to improve gross margins while overcoming a tightening freight and labor market reflects our sharp focus on operating discipline and our low cost highly efficient assets” stated Jay Bachmann, President and Chief Executive Officer.

Mr. Bachmann continued, “We delivered strong quarterly earnings of $0.36 per share. In addition to the benefits of tax reform and the accretive benefit of our stock repurchase plan, we believe this is a direct result of our Bison Way continuous improvement efforts and the payback we are already receiving from high-return capital projects. As we look forward to the balance of the year, we are encouraged by the pace of wallboard demand in our markets, which supports our unchanged outlook for full year 2018. At the same time, we remain focused on deploying our strong cash flow to improve our cost position through further investments in high-return capital projects while continuing to repurchase shares as a key avenue to return value to shareholders.”

First Quarter 2018 Results vs. First Quarter 2017

Wallboard sales volumes decreased to 615 million square feet (MMSF) for the first quarter 2018, compared to 650 MMSF in the prior year quarter. Net sales were down 3.2% to $116.8 million, compared to $120.6 million in the prior year quarter, primarily due to a 5.4% decrease in wallboard volumes attributable to strong customer pre-buy activity during the fourth quarter 2017 in anticipation of a previously announced January 1, 2018 price increase, partially offset by an increase in average mill net price compared to the prior year quarter.

Operating income was $20.8 million, compared to $21.7 million in the prior year quarter. This decrease was primarily attributable to lower wallboard volumes. SG&A expense was $9.4 million compared to $9.3 million in the prior year quarter, or 8.1% of net sales compared to 7.7% in the prior year quarter.

Interest expense decreased 6.7% to $2.7 million, compared to $2.9 million in the prior year quarter, reflecting higher investment income and capitalized interest partially offset by the rise in LIBOR.

Net income for the first quarter 2018 increased 11.6% to $13.6 million, or $0.36 per share, compared to $12.2 million, or $0.31 per share, in the prior year quarter. The $1.4 million increase in net income is primarily a result of the decrease in provision for income taxes under the new tax rates effective for 2018.

Balance Sheet and Cash Flow

As of March 31, 2018, the Company had cash on hand of $63.8 million and total outstanding borrowing under the term loan agreement of $270.9 million. During the first quarter 2018, the Company generated cash flows from operations of $13.7 million and deployed $6.4 million in capital investments.

In February 2018, the Company’s Board of Directors authorized an expansion of its stock repurchase program from up to $200 million to up to $300 million. The program’s expiration date was also extended from the end of 2018 to the end of 2019. During the first quarter 2018, the Company repurchased 530,600 shares of its common stock under its repurchase program at an aggregate purchase price of $14.6 million, representing 1.4% of its outstanding shares as of December 31, 2017. As of March 31, 2018, against the expanded program, the Company has repurchased $117.9 million of our common stock at an average price of $21.84 per share and had a remaining capacity of $182.1 million for future repurchases.

Forward-Looking Outlook For the Full Year 2018

SG&A is expected to be in the range of $39 – $40 million
Cost of goods sold inflation per unit is expected to be at 3% to 5% partly offset by approximately $5 million of savings from high return capital projects
Total capital expenditures are expected to be in the range of $30 – $35 million
Maintenance capital spending is expected to be approximately $15 million
High-return capital spending is expected to be in the range of $15 – $20 million
Depreciation and amortization is expected to be in the range of $43 – $46 million
Effective tax rate is expected to be in the range of 22% – 24%

Posted by on May 3rd, 2018 at 4:11 pm


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