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Cornerstone Building Brands Announces Fourth-Quarter and Full-Year 2020 Results; Expects Strong Growth in 2021

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·19-min read
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  • Delivered seventh consecutive quarter of year-over-year Adjusted EBITDA margin expansion in all segments

  • Improved cost structure by approximately $113 million over prior year, better than expected

  • Generated strong 2020 net operating cash flow of $308 million, a 34 percent improvement over prior year

  • Strong financial position with liquidity of $1,317 million

  • Reduced net debt leverage ratio to 4.9x; 0.4x better than prior year

  • Expect strong revenue growth in 2021 from single-family housing outlook

Cornerstone Building Brands, Inc. (NYSE: CNR) (the "Company"), the largest manufacturer of exterior building products, today reported fourth-quarter 2020 net sales of $1,191.4 million and net income of $1.9 million or one cent per diluted share. This compares with net sales of $1,244.4 million and net income of $1.9 million or two cents per diluted share in the same quarter last year.

Adjusted EBITDA1 for the fourth quarter of 2020 was $158.1 million or 13.3 percent of net sales, an improvement of 40 basis points from the same pro forma period a year ago, with 5 percent fewer ship days. The improvement was primarily due to effective structural cost reductions and better price/mix, partially offset by the impacts from lower non-residential demand. These results represent the seventh consecutive quarter of year-over-year Adjusted EBITDA1 margin expansion for the Company.

"We delivered strong fourth-quarter results, rounding out a year of record performance despite a challenging market environment," said James S. Metcalf, Chairman and Chief Executive Officer. "The resilience of our business model and strength of our dedicated team helped us deliver on our strategic priorities. 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."

2020 Full Year Results and Highlights

Net sales for 2020 were $4,617.4 million, 5.6 percent lower than in 2019. The decline was primarily driven by lower end market demand across all segments as a result of the COVID-19 pandemic. Loss from operations was $266.5 million, including a non-cash, pre-tax goodwill impairment accounting adjustment of $503.2 million.

Pro forma net sales1 were $4,625.7 million, a 6.5 percent decrease over prior year. Pro forma Adjusted EBITDA1 for 2020 was $608.7 million or 13.2 percent of pro forma net sales1, an improvement of 2.6 percent or 120 basis points from the same pro forma period a year ago. The improvement was due to structural cost reductions, effective near-term expense management, and strong price/mix, net of inflation partially offset by the impacts from lower demand and shift in product mix as a result of the COVID-19 pandemic.

"Our focus on our customer partnerships, expanding our product offerings and developing innovative solutions, positions us to expand our market leadership as residential markets continue their strong recovery." Metcalf continued. "Moving forward, we will continue to execute on our priorities which include maintaining price discipline, driving operational excellence and investing in growth opportunities to deliver enhanced profitability and value to our stakeholders."

Segment Results Versus Prior Year

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.

Due to the timing of the Company’s fiscal calendar, the fourth quarter of 2020 had three fewer ship days than the fourth quarter of 2019, which was approximately 5 percent less ship days.

  • Windows segment net sales for the quarter were $511.6 million, an increase of 3.2 percent from the prior-year quarter. Effective price discipline coupled with volume leverage on higher demand from both distribution and retail channels supporting single family new home construction and repair and remodel were the primary drivers of the increase. Adjusted EBITDA1 was $61.6 million or 12.0 percent of net sales, an improvement of 20 basis points. For the full year, Adjusted EBITDA margin1 improved 140 basis points, while net sales were 2.1 percent lower.

  • Siding segment net sales for the quarter were $293.8 million an increase of 4.4 percent versus the pro forma1 fourth-quarter 2019. Adjusted EBITDA1 was $62.1 million or 21.1 percent of net sales, an improvement of 180 basis points. For the full year, pro forma Adjusted EBITDA margin1 improved 220 basis points, while pro forma net sales1 were 1.8 percent lower than in the prior year. Effective price discipline coupled with cost management contributed to the favorable year-over-year variances.

  • Commercial segment net sales for the quarter were $386.0 million, a decrease of 19.2 percent from the prior-year quarter. Adjusted EBITDA1 was $61.7 million or 16.0 percent of net sales, an improvement of 20 basis points. For the full year, Adjusted EBITDA margin1 improved 60 basis points, while net sales were 14.2 percent lower. Delays in construction activity and shifts in product mix toward less complex projects because of the impact of the COVID-19 pandemic were more than offset by effective management of price with declining steel costs, and execution of cost savings initiatives.

Balance Sheet and Liquidity

The Company generated strong cash flow in 2020, with cash from operations of $308.4 million, a cash generation improvement of $78.8 million over 2019. Capital expenditures were $81.9 million, with approximately 50 percent invested in innovative product offerings and process automation that are expected to generate profitable growth in the future.

Free cash flow2 of $226.6 million was an increase of 108.8 percent over 2019. The improvement was primarily driven by lower cash interest expenses, net cash tax benefits from the CARES Act and other COVID-19 related government stimulus programs, and reduced capital spend.

During the year, the Company issued $500 million of senior unsecured notes due January 2029 bearing interest at 6.125% per year. The proceeds were used to repay debt under the asset-based revolving credit facility and cash flow revolver, and to pay transaction fees. The transaction improved liquidity, strengthened the Company’s financial flexibility, and advanced our deleveraging strategy. The Company ended the year with approximately $674 million of unrestricted cash on hand and $1,317 million of liquidity. Additionally, the net debt leverage ratio1 improved to 4.9x at the end of 2020 compared with 5.3x at the end of 2019.

Outlook

First-Quarter 2021 Guidance

  • The first quarter of fiscal 2021 will have three fewer ship days; 64 ship days as compared to 67 ship days in the first quarter of 2020

  • The Company expects net sales to be between $1,195 million and $1,240 million as a result of:

    • Strong single-family housing end-market momentum; expect double digit growth in residential businesses over prior year

    • Improving non-residential end-markets

  • Gross Profit is anticipated to be between $250 million and $265 million.

  • Adjusted EBITDA1 is expected to be between $110 million and $125 million based on the following assumption:

    • Disciplined price leadership to more than offset increasing raw material costs

Additional Fiscal Year 2021 Guidance

  • Cost savings initiatives of $75 million to $80 million

  • Return of near-term costs of approximately $20 million to $30 million

  • Capital spending is projected to be approximately 2.5% of net sales

  • Cash interest expense is expected to be approximately $215 million

  • Cash tax rate expected to be approximately 30%

  • Expect to improve net debt leverage by 3/4 to one turn

(1)

Adjusted and pro forma financial metrics used in this release, including Adjusted EBITDA, are non-GAAP measures. See reconciliations of GAAP results to adjusted results and pro forma results in the accompanying tables. A reconciliation of the forecasted range for the first quarter of 2021 is not included in this release. See "Non-GAAP Financial Measures" below.

(2)

Free cash flow is defined as net cash provided by operating activities less capital expenditures.

Conference Call

The Company will host a conference call at 9:00 a.m. EST on Thursday, March 4 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/5127615. 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 4Q and Full Year 2020 Earnings Call

Date:

Thursday, March 4, 2021

Time:

9:00 a.m. Eastern Standard Time

Access link:

Visit the Events & Presentations section of the Investors Page on the website at

investors.cornerstonebuildingbrands.com or access directly at

https://event.on24.com/wcc/r/2947400/F3D9A2AE5F2573255A3FF97E0A1A5760

Replay dial-in will be available through March 18, 2021

Dial-in number:

855-859-2056

Replay code:

5127615

About Cornerstone Building Brands

Cornerstone Building Brands is the largest manufacturer of exterior building products for residential and low-rise non-residential buildings in North America. Headquartered in Cary, North Carolina, the organization serves residential and commercial customers across new construction and repair and remodel markets. As the #1 manufacturer of vinyl windows, vinyl siding, insulated metal panels, metal roofing and wall systems and metal accessories, Cornerstone Building Brands combines an expansive portfolio of strong brands and quality products with a broad multi-channel distribution platform that includes approximately 20,500 employees at manufacturing, distribution and branch office locations throughout North America. At Cornerstone Building Brands, corporate stewardship is a responsibility that is deeply embedded in our 75-year history. We are committed to our purpose of contributing positively to the communities where we live, work and play. 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 performance expectations, including our first quarter 2021 forecasted net sales, gross profit, and Adjusted EBITDA, and our fiscal year 2021 forecasted capital spending, cash interest expense, cash tax rate 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 severity, duration and spread of the COVID-19 pandemic, as well as actions that may be taken by the Company or governmental authorities to contain COVID-19 or to treat its impact; an impairment of our 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 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, 2020, 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. A reconciliation of the forecasted range for Adjusted EBITDA for the first quarter of 2021 is not included in this release 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

Year Ended

December 31,
2020

December 31,
2019

December 31,
2020

December 31,
2019

Net sales

$

1,191,369

$

1,244,415

$

4,617,369

$

4,889,747

Cost of sales

924,169

956,379

3,567,049

3,801,328

Gross profit

267,200

288,036

1,050,320

1,088,419

22.4

%

23.1

%

22.7

%

22.3

%

Selling, general and administrative expenses

142,625

161,493

579,200

627,861

Intangible asset amortization

45,447

44,878

180,994

177,577

Restructuring and impairment charges, net

1,956

2,538

34,120

18,060

Strategic development and acquisition related costs

5,791

13,517

19,341

50,185

Goodwill impairment

503,171

Income (loss) from operations

71,381

65,610

(266,506

)

214,736

Interest income

357

183

1,364

674

Interest expense

(54,872

)

(56,128

)

(213,610

)

(229,262

)

Foreign exchange gain

2,368

970

1,068

2,054

Other income, net

494

518

469

1,183

Income (loss) before income taxes

19,728

11,153

(477,215

)

(10,615

)

Provision for income taxes

17,848

9,223

5,563

4,775

90.5

%

82.7

%

(1.2

)%

(45.0

)%

Net income (loss)

$

1,880

$

1,930

$

(482,778

)

$

(15,390

)

Net income allocated to participating securities

(25

)

(27

)

Net income (loss) applicable to common shares

$

1,855

$

1,903

$

(482,778

)

$

(15,390

)

Income (loss) per common share:

Basic

$

0.01

$

0.02

$

(3.84

)

$

(0.12

)

Diluted

$

0.01

$

0.02

$

(3.84

)

$

(0.12

)

Weighted average number of common shares outstanding:

Basic

125,271

125,722

125,562

125,576

Diluted

125,310

125,761

125,562

125,576

Increase (decrease) in sales

(4.3

)%

116.9

%

(5.6

)%

144.4

%

Selling, general and administrative expenses percentage of net sales

12.0

%

13.0

%

12.5

%

12.8

%

CORNERSTONE BUILDING BRANDS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

December 31,
2020

December 31,
2019

ASSETS

Current assets:

Cash and cash equivalents

$

674,255

$

98,386

Restricted cash

6,223

3,921

Accounts receivable, net

554,649

491,740

Inventories, net

431,937

439,194

Income taxes receivable

39,379

48,466

Investments in debt and equity securities, at market

2,333

3,776

Prepaid expenses and other

77,751

78,516

Assets held for sale

4,644

1,750

Total current assets

1,791,171

1,165,749

Property, plant and equipment, net

631,821

652,841

Lease right-of-use assets

264,107

316,155

Goodwill

1,194,729

1,669,594

Intangible assets, net

1,584,604

1,740,700

Deferred income taxes

1,867

7,510

Other assets, net

10,191

11,797

Total assets

$

5,478,490

$

5,564,346

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Current portion of long-term debt

$

25,600

$

25,600

Accounts payable

211,441

205,629

Accrued compensation and benefits

81,548

92,130

Accrued interest

25,485

19,070

Accrued income taxes

5,060

Current portion of lease liabilities

70,125

72,428

Other accrued expenses

247,893

233,687

Total current liabilities

667,152

648,544

Long-term debt

3,563,429

3,156,924

Deferred income taxes

269,792

291,987

Long-term lease liabilities

198,875

243,780

Other long-term liabilities

337,437

287,793

Total long-term liabilities

4,369,533

3,980,484

Common stock

1,255

1,261

Additional paid-in capital

1,257,262

1,248,787

Accumulated deficit

(764,685

)

(281,229

)

Accumulated other comprehensive loss, net

(51,517

)

(32,398

)

Treasury stock, at cost

(510

)

(1,103

)

Total stockholders’ equity

441,805

935,318

Total liabilities and stockholders’ equity

$

5,478,490

$

5,564,346

CORNERSTONE BUILDING BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Year Ended

December 31,
2020

December 31,
2019

Cash flows from operating activities:

Net loss

$

(482,778

)

$

(15,390

)

Adjustments to reconcile net loss to net cash from operating activities:

Depreciation and amortization

284,602

263,764

Non-cash interest expense

9,589

8,504

Share-based compensation expense

17,056

14,078

Non-cash fair value premium on purchased inventory

16,249

Goodwill impairment

503,171

Asset impairment

4,905

Losses (gains) on asset sales, net

(1,252

)

321

Provision for doubtful accounts

5,390

2,035

Deferred income taxes

(4,319

)

(6,085

)

Changes in operating assets and liabilities, net of effect of acquisitions:

Accounts receivable

(61,976

)

(38,242

)

Inventories

7,927

91,822

Income taxes

14,146

(32,719

)

Prepaid expenses and other

3,415

(10,279

)

Accounts payable

4,663

(21,141

)

Accrued expenses

8,276

(40,403

)

Other, net

(4,398

)

(2,906

)

Net cash provided by operating activities

308,417

229,608

Cash flows from investing activities:

Acquisitions, net of cash acquired

(41,841

)

(179,184

)

Capital expenditures

(81,851

)

(121,085

)

Proceeds from sale of property, plant and equipment

3,569

5,511

Net cash used in investing activities

(120,123

)

(294,758

)

Cash flows from financing activities:

Proceeds from ABL facility

345,000

290,000

Payments on ABL facility

(415,000

)

(220,000

)

Proceeds from cash flow revolver

115,000

Payments on cash flow revolver

(115,000

)

Payments on term loan

(25,620

)

(25,620

)

Proceeds from senior notes

500,000

Payments of financing costs

(6,731

)

Payments related to tax withholding for share-based compensation

(1,566

)

(1,934

)

Purchases of treasury stock

(6,428

)

Payments on tax receivable agreement

(24,906

)

Net cash provided by financing activities

389,655

17,540

Effect of exchange rate changes on cash and cash equivalents

222

2,310

Net increase (decrease) in cash, cash equivalents and restricted cash

578,171

(45,300

)

Cash, cash equivalents and restricted cash at beginning of period

102,307

147,607

Cash, cash equivalents and restricted cash at end of period

$

680,478

$

102,307

Supplemental disclosure of cash flow information

Interest paid, net of amounts capitalized

$

196,770

$

240,063

Taxes paid (refunded), net (excluding tax receivable agreement payments)

$

(3,316

)

$

51,001

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,
2020

December 31,
2019

December 31,
2020

December 31,
2019

Net income (loss) per diluted common share, GAAP basis

$

0.01

$

0.02

$

(3.84

)

$

(0.12

)

Restructuring and impairment charges, net

0.02

0.02

0.27

0.14

Strategic development and acquisition related costs

0.05

0.11

0.15

0.40

Non cash gain on foreign currency transactions

(0.02

)

(0.01

)

(0.01

)

(0.02

)

Non cash charge of purchase price allocated to inventories

0.13

Goodwill impairment

4.01

Customer inventory buybacks

0.01

COVID-19

0.01

0.10

Other, net

0.01

0.01

0.04

Tax effect of applicable non-GAAP adjustments(1)

(0.01

)

(0.03

)

(1.18

)

(0.18

)

Adjusted net income per diluted common share(2)

$

0.06

$

0.11

$

(0.48

)

$

0.39

Three Months Ended

Year Ended

December 31,
2020

December 31,
2019

December 31,
2020

December 31,
2019

Net income (loss) applicable to common shares, GAAP basis

$

1,855

$

1,903

$

(482,778

)

$

(15,390

)

Restructuring and impairment charges, net

1,956

2,538

34,120

18,060

Strategic development and acquisition related costs

5,791

13,517

19,341

50,185

Non cash gain on foreign currency transactions

(2,368

)

(970

)

(1,068

)

(2,054

)

Non cash charge of purchase price allocated to inventories

16,249

Goodwill impairment

503,171

...

Customer inventory buybacks

188

641

576

COVID-19

1,874

12,508

Other, net

(214

)

946

1,245

4,726

Tax effect of applicable non-GAAP adjustments(1)

(1,879

)

(4,168

)

(148,230

)

(22,813

)

Adjusted net income applicable to common shares(2)

$

7,203

$

13,766

$

(61,050

)

$

49,539

(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 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)

Consolidated

Three Months Ended

Year Ended

December 31,
2020

December 31,
2019

December 31,
2020

December 31,
2019

Net sales

$

1,191,369

$

1,244,415

$

4,617,369

$

4,889,747

Impact of Environmental Stoneworks and Kleary acquisitions(1)

10,561

8,358

59,464

Pro forma net sales

$

1,191,369

$

1,254,976

$

4,625,727

$

4,949,211

Gross profit

$

267,200

$

288,036

$

1,050,320

$

1,088,419

22.4

%

23.1

%

22.7

%

22.3

%

Operating income, GAAP

$

71,381

$

65,610

$

(266,506

)

$

214,736

Restructuring and impairment charges, net

1,956

2,538

34,277

18,060

Strategic development and acquisition related costs

5,791

13,517

19,341

50,185

Non cash charge of purchase price allocated to inventories

16,249

Goodwill impairment

503,171

Customer inventory buybacks

188

641

576

COVID-19

1,874

12,508

Other, net

(214

)

946

1,245

4,726

Adjusted operating income

80,976

82,611

304,677

304,532

Other income (loss), net

494

518

469

1,183

Depreciation and amortization

72,189

72,279

284,602

263,764

Share-based compensation expense

4,488

3,465

17,056

14,078

Adjusted EBITDA

$

158,147

$

158,873

$

606,804

$

583,557

Impact of Environmental Stoneworks and Kleary acquisitions(1)

2,638

1,869

9,626

Pro forma Adjusted EBITDA

$

158,147

$

161,511

$

608,673

$

593,183

Pro forma Adjusted EBITDA as a % of pro forma net sales

13.3

%

12.9

%

13.2

%

12.0

%

(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 period January 1, 2019 to March 1, 2020.

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)

Windows

Three Months Ended

Year Ended

December 31,
2020

December 31,
2019

December 31,
2020

December 31,
2019

Net sales

$

511,586

$

495,868

$

1,889,625

$

1,930,447

Gross profit

$

90,367

$

94,243

$

347,856

$

353,089

17.7

%

19.0

%

18.4

%

18.3

%

Operating income (loss), GAAP

$

29,148

$

30,499

$

(223,646

)

$

92,538

Restructuring and impairment charges, net

310

339

7,499

1,865

Strategic development and acquisition related costs

2,893

16

19,947

Goodwill impairment

320,990

COVID-19

921

6,844

Other, net

349

2,905

601

3,442

Adjusted operating income

30,728

36,636

112,304

117,792

Other income (expense), net

8

(385

)

(107

)

(838

)

Depreciation and amortization

30,840

22,134

121,519

94,737

Adjusted EBITDA

$

61,576

$

58,385

$

233,716

$

211,691

Adjusted EBITDA as a % of net sales

12.0

%

11.8

%

12.4

%

11.0

%

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)

Siding

Three Months Ended

Year Ended

December 31,
2020

December 31,
2019

December 31,
2020

December 31,
2019

Net sales

$

293,756

$

270,806

$

1,141,946

$

1,111,407

Impact of Environmental Stoneworks and Kleary acquisitions(1)

10,561

8,358

59,464

Pro forma net sales

293,756

281,367

1,150,304

1,170,871

Gross profit

$

78,405

$

68,757

$

308,466

$

277,583

26.7

%

25.4

%

27.0

%

25.0

%

Operating income (loss), GAAP

$

30,986

$

14,927

$

(61,930

)

$

66,273

Restructuring and impairment charges, net

65

599

2,966

8,761

Strategic development and acquisition related costs

2,043

10,158

Non-cash charge of purchase price allocated to inventories

16,249

Goodwill impairment

176,774

Customer inventory buybacks

188

641

576

COVID-19

14

81

Other, net

138

(1,458

)

(1,213

)

(1,195

)

Adjusted operating income

33,434

14,068

127,477

90,664

Other income (expense), net

(22

)

264

(32

)

(52

)

Depreciation and amortization

28,669

37,435

113,737

121,004

Adjusted EBITDA

62,081

51,767

241,182

211,616

Impact of Environmental Stoneworks and Kleary acquisitions(1)

2,638

1,869

9,626

Pro forma Adjusted EBITDA

$

62,081

$

54,405

$

243,051

$

221,242

Pro forma Adjusted EBITDA as a % of pro forma net sales

21.1

%

19.3

%

21.1

%

18.9

%

(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 September 28, 2019 and January 1, 2020 to March 1, 2020.

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)

Commercial

Three Months Ended

Year Ended

December 31,
2020

December 31,
2019

December 31,
2020

December 31,
2019

Net sales

$

386,027

$

477,741

$

1,585,798

$

1,847,893

Gross profit

$

98,428

$

125,036

$

393,998

$

457,747

25.5

%

26.2

%

24.8

%

24.8

%

Operating income, GAAP

$

49,944

$

58,637

$

159,586

$

201,073

Restructuring and impairment charges, net

(157

)

823

20,270

2,790

Strategic development and acquisition related costs

4,041

(262

)

10,534

Goodwill impairment

5,407

COVID-19

60

2,645

Other, net

76

345

1,021

2,636

Adjusted operating income

49,923

63,846

188,667

217,033

Other income (expense), net

243

(102

)

680

753

Depreciation and amortization

11,549

11,591

45,213

44,550

Adjusted EBITDA

$

61,715

$

75,335

$

234,560

$

262,336

Adjusted EBITDA as a % of net sales

16.0

%

15.8

%

14.8

%

14.2

%

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)

Year Ended

December 31,
2020

December 31,
2019

Net cash provided by operating activities

$

308,417

$

229,608

Less: Capital expenditures

(81,851

)

(121,085

)

Free cash flow

$

226,566

$

108,523

View source version on businesswire.com: https://www.businesswire.com/news/home/20210303006035/en/

Contacts

Investor Relations
Tina Beskid
1-866-419-0042
info@investors.cornerstonebuildingbrands.com