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8-K - 8-K - Continental Building Products, Inc.d701018d8k.htm

Exhibit 99.1

 

LOGO

CONTINENTAL BUILDING PRODUCTS REPORTS FOURTH QUARTER

AND FULL YEAR 2013 RESULTS

- Wallboard Mill Net Price Increases 18% for 2013 -

- Wallboard Volume Rises 14% to 2.2 BSF in 2013 -

- Company Completes Initial Public Offering In February 2014 -

Reston, Virginia, March 27, 2014. Continental Building Products, Inc. (NYSE: CBPX), a leading manufacturer of wallboard and gypsum-based products, announced today results for the fourth quarter and fiscal year ended December 31, 2013.

Highlights of Fourth Quarter 2013 (Successor) as Compared to Fourth Quarter 2012 (Predecessor)

 

    Net sales increase 30% to $114.4 million

 

    Operating income of $15.9 million, up from $2.8 million

 

    Adjusted EBITDA1 more than doubles to $29.8 million

 

    Net income increases 125% to $6.7 million

 

    Wallboard volume grows 18% to 632 million square feet (MMSF)

 

    Wallboard mill net price increases 14% to $143.04 per thousand square feet (MSF)

Highlights of Full Year 2013 as compared to Full Year 2012 on a pro forma basis2

 

    Net sales increase 29% to $402.3 million

 

    Operating income improves to $29.8 million, up from an operating loss of $45.4 million

 

    Adjusted EBITDA increases 152% to $102.6 million

 

    Net income increases to $4.9 million compared to a net loss of $68.7 million

“The positive momentum in our business continued into the year end, resulting in a net sales increase of 30% during the fourth quarter,” stated Ike Preston, Continental’s CEO. “As we progressed though the year, rising housing starts provided favorable residential construction activity, our repair and remodel end markets improved, and commercial orders started to show early signs of a recovery. The improvement in our performance reflects the improved demand environment, but is even more reflective of our market leading positions that we have forged in attractive regions throughout the Eastern United States.”

Mr. Preston continued, “The significant investments we have made to modernize our capacity allowed us to more than double our adjusted EBITDA in the fourth quarter 2013. We believe we are well positioned to continue growing our business as we leverage our existing capacity and low cost production capabilities to support additional profit expansion and cash generation over time.”

 

1  See the financial schedules at the end of this press release for a reconciliation of adjusted EBITDA, a non-GAAP financial measure, to operating income.
2  Pro forma results are presented as a result of the acquisition that was completed on August 30, 2013. See the financial schedules at the end of this press release and the discussion below for more information regarding the acquisition and the pro forma adjustments.


Fourth Quarter 2013 (Successor) Vs Fourth Quarter 2012 (Predecessor)

Net sales for the fourth quarter of 2013 totaled $114.4 million, up 30.1%, compared to $88.0 million in the fourth quarter of 2012. The increase in sales was primarily driven by a 17.7% increase in wallboard volume to 632 MMSF compared to 537 MMSF in the prior year quarter, and a 13.8% increase in the average wallboard mill net price3 to $143.04 per MSF from $125.71 in the prior year quarter. The increase in wallboard volume was primarily driven by improved demand from residential, nonresidential and repair and remodel end markets. The improvement in average wallboard mill net price was a result of better demand and increased effective capacity utilization rates at our plants.

Gross profit was $24.6 million, up 114.2% compared to $11.5 million in the prior year quarter. The gross margin of 21.5% increased from 13.1% in the prior year quarter, primarily as a result of higher average wallboard mill net prices and the Company’s focus on cost reduction and efficiencies.

Selling and administrative (SG&A) expense was $8.8 million, up less than 1% from $8.7 million in the prior year quarter. Services performed by Lafarge North America, which were allocated costs in the prior year, are now performed by us directly or through a transition services agreement with Lafarge North America. In the current quarter, all of these costs were captured in direct SG&A.

Operating income was $15.9 million, up $13.1 million from $2.8 million in the prior year quarter. Net income during the quarter was $6.7 million, or $0.21 per diluted share, up 125% from $3.0 million in the prior year quarter.

Interest expense was $8.2 million, up $8.1 million from $0.1 million in the prior year quarter, reflecting an increase in long-term debt.

Adjusted EBITDA totaled $29.8 million, up $15.9 million, or 109%, compared to $14.3 million in the prior year quarter.

At the end of the quarter on December 31, 2013, the Company had cash of $11.8 million and total debt outstanding of $564.1 million. On February 10, 2014, the Company used proceeds from its initial public offering to reduce debt through the repayment of its second lien term loan of $155.0 million.

Jay Bachmann, Continental’s Chief Financial Officer commented, “We achieved operating leverage on Adjusted EBITDA of nearly 60% in the fourth quarter and nearly 70% for the full year, reflecting higher wallboard sales and dramatic improvements to our cost structure. Our fourth quarter gross margin increased 840 basis points to 21.5% and SG&A as a percent of sales improved 230 basis points to 7.6% due to the efficiencies we have extracted from our low cost plant operations as market conditions have continued to improve. Our successful investments in our capacity in previous years have allowed us to keep capital expenditures down and maximize free cash flow. As we move forward, we remain committed to maintaining strict capital discipline and reducing our debt leverage.”

 

3  Mill net sales price represents average selling price per thousand square feet net of freight and delivery costs.

 

2


Full Year 2013 Vs Full Year 2012 on a Pro Forma Basis

Net sales for the full year of 2013 totaled $402.3 million, up 29.2% compared to $311.4 million for the full year of 2012. Wallboard volumes increased 13.6% to 2.2 billion square feet (BSF) compared 1.9 BSF in the prior year. The average wallboard mill net price increased 17.7% to $145.92 per MSF from $124.02 in the prior year.

Gross profit was $69.5 million, up from a $10.7 million loss in the prior year.

Selling and administrative (SG&A) expense was $39.8 million, up 14.4% from $34.7 million in the prior year. Acquisition closing costs of $3.3 million contributed to the increase versus last year.

Operating income was $29.8 million, up from an operating loss of $45.4 million in the prior year. Net income was $4.9 million, up from a net loss of $68.7 million in the prior year.

Interest expense was $23.4 million, up $0.2 million from $23.2 million in the prior year.

Adjusted EBITDA totaled $102.6 million, up $61.9 million, or 152.6% compared to $40.7 million in the prior year.

2014 Outlook

For the full year 2014, the Company expects net sales and adjusted EBITDA to increase compared to full year 2013, largely due to improving demand and pricing. The Company believes that economic fundamentals remain strong for rising construction activity, although during first quarter 2014, wallboard volumes have been adversely affected by weather conditions in the eastern United States.

About Continental Building Products

Continental Building Products is a leading North American manufacturer of gypsum wallboard, joint compound and complementary finishing products. The Company is headquartered in Reston, 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.

On August 30, 2013, an affiliate of our controlling stockholder acquired substantially all of the assets of the gypsum business that was part of Lafarge North America Inc. (Lafarge) for a purchase price of approximately $700 million. The financial statements presented for periods prior to August 30, 2013, or the Predecessor statements, are derived from Lafarge’s consolidated financial statements and accounting records of its gypsum division. Continental, which was formed on July 26, 2013, had no operating results prior to its acquisition of the Lafarge gypsum division. The financial statements after August 30, 2013, or the Successor statements, reflect the net assets acquired at fair value and also include additional indebtedness arising from the acquisition.

Full year 2013 operating figures are presented on a pro forma basis to reflect the acquisition that was completed on August 30, 2013. The unaudited pro forma combined statements of operations give effect to the pro forma transactions as though the pro forma transactions had occurred as of January 1, 2012.

 

3


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 for fiscal year 2013 expected to be filed on March 27, 2014, for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.

Contact Information:

Investor Relations:

703 480-3980

Investorrelations@continental-bp.com

 

4


Continental Building Products, Inc.

Consolidated (Successor) / Combined (Predecessor) Statements of Operations

(dollars in thousands except per share data)

(Unaudited)

 

     Successor
Three Months
Ended
December 31,
2013
          Predecessor
Three Months
Ended
December 31,
2012
 
 

Net Sales

   $ 114,436          $ 87,961   

Costs, expenses and other income:

         

Cost of goods sold

     89,798            76,461   

Selling and administrative:

         

Direct

     8,753            7,116   

Allocated from Lafarge

     —               1,561   
  

 

 

        

 

 

 

Total selling and administrative

     8,753            8,677   
  

 

 

        

 

 

 

Total costs and operating expenses

     98,551            85,138   
  

 

 

        

 

 

 

Operating income

     15,885            2,823   

Other (expense) income, net

     (106 )          (72

Interest expense, net

     (8,178 )          (62
  

 

 

        

 

 

 

Income (loss) before earnings (losses) on equity method investment and income tax

     7,601            2,689   

Earnings (losses) from equity method investment

     —               18   
  

 

 

        

 

 

 

Income (loss) before income tax benefit

     7,601            2,707   

Income tax (expense) benefit

     (856 )          287   
  

 

 

        

 

 

 

Net income (loss)

   $ 6,745          $ 2,994   
  

 

 

        

 

 

 
 

Net income per share, basic and diluted

         

Basic

   $ 0.21         

Diluted

   $ 0.21         
 

Weighted average shares outstanding

         

Basic

     32,304         

Diluted

     32,304         

 

5


Continental Building Products, Inc.

Consolidated (Successor) / Combined (Predecessor) Statements of Operations

(dollars in thousands except per share data)

(Unaudited)

 

     Successor           Predecessor  
     July 26 to
December 31,
2013
          January 1 to
August 30,
2013
    Year Ended
December 31,
2012
 

Net Sales

   $ 150,066           $ 252,248      $ 311,410   

Costs, expenses and other income:

           

Cost of goods sold

     121,335             195,338        289,936   

Selling and administrative:

           

Direct

     14,953             19,338        27,194   

Allocated from Lafarge

     —               4,945        7,037   
  

 

 

        

 

 

   

 

 

 

Total selling and administrative

     14,953             24,283        34,231   
  

 

 

        

 

 

   

 

 

 

Total costs and operating expenses

     136,288             219,621        324,167   

Operating income

     13,778             32,627        (12,757

Other (expense) income, net

     (21          (191     (87

Interest expense, net

     (10,542          (91     (212
  

 

 

        

 

 

   

 

 

 

Income (loss) before earnings (losses) on equity method investment and income tax

     3,215             32,345        (13,056

Earnings (losses) from equity method investment

     —               (30     (138
  

 

 

        

 

 

   

 

 

 

Income (loss) before income tax benefit

     3,215             32,315        (13,194

Income tax (expense) benefit

     (1,110          (130     352   
  

 

 

        

 

 

   

 

 

 

Net income (loss)

   $ 2,105           $ 32,185      $ (12,842
  

 

 

        

 

 

   

 

 

 
 

Net income per share, basic and diluted

           

Basic

   $ 0.07            

Diluted

   $ 0.07            
 

Weighted average shares outstanding

           

Basic

     32,304            

Diluted

     32,304            

 

6


Continental Building Products, Inc.

Pro Forma Combined Statements of Operations

(dollars in thousands)

(Unaudited)

 

     Year Ended
December 31,
2013
    Year Ended
December 31,
2012
 

Net Sales

   $ 402,314      $ 311,410   

Costs, expenses and other income:

    

Cost of goods sold

     332,773        322,068   

Selling and administrative:

    

Direct

     34,806        27,709   

Allocated from Lafarge

     4,945        7,037   
  

 

 

   

 

 

 

Total selling and administrative

     39,751        34,746   
  

 

 

   

 

 

 

Total costs and operating expenses

     372,524        356,814   

Operating income

     29,790        (45,404

Other (expense) income, net

     (212     (448

Interest expense, net

     (23,443     (23,151
  

 

 

   

 

 

 

Income (loss) before earnings (losses) on equity method investment and income tax

     6,135        (69,003

Earnings (losses) from equity method investment

     —          —     
  

 

 

   

 

 

 

Income (loss) before income tax benefit

     6,135        (69,003

Income tax (expense) benefit

     (1,240     352   
  

 

 

   

 

 

 

Net income (loss)

   $ 4,895      $ (68,651
  

 

 

   

 

 

 

See the accompanying notes to the unaudited pro forma statements of operations.

 

7


Continental Building Products, Inc.

Pro Forma Combined Statement of Operations

Full Year Ended December 31, 2013

(Unaudited)

 

(in thousands)    Predecessor           Successor              
     January 1 to           July 26 to           December 31,  
     August 30,           December 31,     Pro Forma     2013  
     2013           2013     Adjustments     Pro forma  

Net Sales

   $ 252,248           $ 150,066      $ —        $ 402,314   

Costs, expenses and other income:

             

Cost of goods sold

     195,338             121,335        16,100  (a)      332,773   

Selling and administrative:

             

Direct

     19,338             14,953        515  (b)      34,806   

Allocated from Lafarge

     4,945             —          —          4,945   
  

 

 

        

 

 

   

 

 

   

 

 

 

Total selling and administrative

     24,283             14,953        515        39,751   
  

 

 

        

 

 

   

 

 

   

 

 

 

Total costs and operating expenses

     219,621             136,288        16,615        372,524   
  

 

 

        

 

 

   

 

 

   

 

 

 

Operating income

     32,627             13,778        (16,615     29,790   

Other (expense) income, net

     (191          (21     —          (212

Interest expense, net

     (91          (10,542     (12,810 ) (c)      (23,443
  

 

 

        

 

 

   

 

 

   

 

 

 

Income (loss) before earnings (losses) on equity method investment and income tax

     32,345             3,215        (29,425     6,135   
  

 

 

        

 

 

   

 

 

   

 

 

 

Earnings (losses) from equity method investment

     (30          —          30  (d)      —     
  

 

 

        

 

 

   

 

 

   

 

 

 

Income (loss) before income tax benefit

     32,315             3,215        (29,395     6,135   

Income tax (expense) benefit

     (130          (1,110     —    (e)      (1,240
  

 

 

        

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 32,185           $ 2,105      $ (29,395   $ 4,895   
  

 

 

        

 

 

   

 

 

   

 

 

 

See the accompanying notes to the unaudited pro forma statements of operations.

 

8


Continental Building Products, Inc.

Pro Forma Combined Statement of Operations

Full Year Ended December 31, 2012

(Unaudited)

 

(in thousands)    Predecessor              
     Year Ended           December 31,  
     December 31,     Pro Forma     2012  
     2012     Adjustments     Pro forma  

Net Sales

   $ 311,410      $ —        $ 311,410   

Costs, expenses and other income:

      

Cost of goods sold

     289,936        32,132  (a)      322,068   

Selling and administrative:

      

Direct

     27,194        515  (b)      27,709   

Allocated from Lafarge

     7,037        —          7,037   
  

 

 

   

 

 

   

 

 

 

Total selling and administrative

     34,231        515        34,746   
  

 

 

   

 

 

   

 

 

 

Total costs and operating expenses

     324,167        32,647        356,814   

Operating income

     (12,757     (32,647     (45,404

Other (expense) income, net

     (87     (361     (448

Interest expense, net

     (212     (22,939 ) (c)      (23,151
  

 

 

   

 

 

   

 

 

 

Income (loss) before earnings (losses) on equity method investment and income tax

     (13,056     (55,947     (69,003
  

 

 

   

 

 

   

 

 

 

Earnings (losses) from equity method investment

     (138     138  (d)      —     
  

 

 

   

 

 

   

 

 

 

Income (loss) before income tax benefit

     (13,194     (55,809     (69,003

Income tax (expense) benefit

     352        —    (e)      352   
  

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (12,842   $ (55,809   $ (68,651
  

 

 

   

 

 

   

 

 

 

See the accompanying notes to the unaudited pro forma statements of operations.

 

9


Notes to the unaudited pro forma statements of operations:

(a) Purchase Accounting

The unaudited pro forma combined statements of operations reflect an adjustment for the increase in depreciation and amortization expenses related to the fair value adjustments to tangible and long-lived intangible assets with definite lives assuming the Acquisition occurred at January 1, 2012. The incremental pro forma amortization expense for long-lived intangible assets with definite lives was $10.4 and $20.4 million for the full year 2013 and 2012, respectively. The incremental pro forma depreciation expense for long-lived tangible assets was $7.2 and $10.2 million for the full year 2013 and 2012, respectively. We are in the process of finalizing third-party valuations of certain acquired assets; thus, the measurement of assets giving rise to these pro forma adjustments is subject to change.

The unaudited combined statements of operations also reflect an adjustment to increase cost of sales by $1.5 million for the 2012, with a corresponding reduction to cost of sales for 2013. This reflects the turn through cost of sales of inventory that was stepped up to fair value assuming that the transaction occurred on January 1, 2012.

(b) Equity Awards

In conjunction with our initial public offering that we completed in February 2014, we granted approximately 142,000 stock options and 75,000 restricted shares to employees. The fair value of the restricted shares is based on the share price on the date of grant, which was the offering price of $14.00 per share. The unaudited combined statements of operations reflect compensation expense for this award assuming the awards were granted on January 1, 2012. Pro forma compensation expense of $0.5 million has been recognized in selling and administrative expense for 2013 and 2012 based on a vesting period of four years.

(c) Debt financing

In connection with the Acquisition, we entered into a $320 million First Lien Credit Agreement that also included a revolving credit facility of up to $50 million U.S. dollars, and a $120 million Second Lien Credit Agreement. At the closing of the Acquisition, US $28.5 million was borrowed under the Revolver. On December 2, 2013, we entered into amendments to the First Lien Credit Agreement and the Second Lien Credit Agreement pursuant to which we issued additional term loans in an aggregate principal amount of $95 million under the First Lien Credit Agreement and $35 million under the Second Lien Credit Agreement with the proceeds distributed as a return of capital to our owner, Lone Star. On February 10, we used the proceeds from our initial public offering to completely repay the $155 million due under the Second Lien Credit Agreement. For our pro forma statements of operations, all three of these events are assumed to have happened on January 1, 2012 and result in the unaudited pro forma combined statements of operations reflecting an adjustment for interest expense and the amortization of deferred financing costs on the $415 million First Lien term loans and approximately $28.5 million Revolver borrowings. Incremental pro forma interest expense was $12.8 and $22.9 for 2013 and 2012, respectively.

The termination fee of $2.0 million for the asset advisory agreement with an affiliate of Lone Star and the $3.1 million for the 2% call premium on early repayment of our Second Lien Credit Agreement were not included in the pro forma income statement as each represents a non-recurring expense.

 

10


(d) Interest in Seven Hills

As of the Acquisition and through December 31, 2013, the equity interest in Seven Hills remained with Lafarge. Under the terms of the Asset Purchase Agreement entered into in connection with the Acquisition, Lafarge is passing through all of the benefits and burdens of the Joint Venture Agreement and the other operative agreements to us, and our supply of paper from the joint venture has continued after the closing of the Acquisition under the same terms and conditions as prior to the Acquisition. We elected to measure this financial interest in Seven Hills at fair value and the pro forma combined statements of operations eliminate the equity earnings of this investment.

(e) Income taxes

Due to our limited history and the history of pre-tax losses generated by the Predecessor, deferred tax benefits were not recorded on the pro forma adjustments.

 

11


Continental Building Products, Inc.

Consolidated (Successor) / Combined (Predecessor) Balance Sheets

(dollars in thousands except share data)

(Unaudited)

 

     Successor           Predecessor  
     December 31,           December 31,  
     2013           2012  

Assets

         

Cash

   $ 11,822           $ —     

Receivables, net

     32,328             23,350   

Inventories

     28,120             29,206   

Prepaid and other current assets

     4,523             1,026   

Deferred taxes, current

     2,137             —     
  

 

 

        

 

 

 

Total current assets

     78,930             53,582   

Property, plant and equipment, net

     383,625             386,270   

Customer relationships and other intangibles, net

     126,126             3,829   

Goodwill

     119,945             94,360   

Equity method investment

     —               18,276   

Financial interest in Seven Hills

     13,000             —     

Debt issuance costs

     17,800             —     

Deferred taxes, non-current

     950             —     

Other assets

     —               429   
  

 

 

        

 

 

 

Total Assets

   $ 740,376           $ 556,746   
  

 

 

        

 

 

 
 

Liabilities and Equity

         

Accounts payable

   $ 28,126           $ 30,168   

Accrued and other liabilities

     11,325             7,361   

Notes payable, current portion

     4,150             —     
  

 

 

        

 

 

 

Total current liabilities

     43,601             37,529   

Deferred Taxes

     —               6,145   

Capital lease obligations

     —               2,839   

Notes payable, non-current portion

     559,924             —     
  

 

 

        

 

 

 

Total liabilities

     603,525             46,513   
  

 

 

        

 

 

 

Equity

         

Common stock

     32             —     

Additional paid-in capital

     134,968             —     

Accumulated other comprehensive income (loss)

     (254          (5,560

Accumulated earnings (deficit)

     2,105             —     

Accumulated net contributions from parent

     —               515,793   
  

 

 

        

 

 

 

Total equity

     136,851             510,233   
  

 

 

        

 

 

 

Total liabilities and equity

   $ 740,376           $ 556,746   
  

 

 

        

 

 

 

 

12


Continental Building Products, Inc.

Consolidated (Successor) / Combined (Predecessor) Statements of Cash Flows

(dollars in thousands)

(Unaudited)

 

     Successor           Predecessor  
     July 26 to           January 1 to        
     December 31,           August 30,     December 31,  
     2013           2013     2012  

Cash flows from operating activities:

           

Net income (loss)

   $ 2,105           $ 32,185      $ (12,842

Adjustments to reconcile net income to net cash provided by operating activities:

           

Depreciation and amortization

     18,529             16,886        36,331   

Amortization of debt issuance costs and debt discount

     808             —          —     

(Gain) loss on disposal of property, plant and equipment

     199             1,115        87   

Loss from equity method investment

     —               30        138   

Deferred taxes

     (3,087          182        190   

Change in assets and liabilities:

           

Receivables

     (451          (8,655     (12,338

Inventories

     8,268             (5,827     (154

Prepaid expenses and other current assets

     (2,509          (1,783     (133

Other long-term assets

     —               429        —     

Accounts payable

     2,777             (5,738     5,396   

Accrued and other liabilities

     10,718             (3,996     (109

Other long term liabilities

     —               (126     (168
  

 

 

        

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     37,357             24,702        16,398   
 

Cash flows from investing activities:

           

Capital expenditures

     (2,798          (2,506     (5,205

Acquisition of predecessor

     (703,141          —          —     

Software purchased or developed

     —               —          (27

Proceeds from the sale of property, plant, and equipment

     —               —          21   

Capital contributions to equity method investment

     —               (66     (84

Distributions from equity method investment

     —               552        855   
  

 

 

        

 

 

   

 

 

 

Net cash used in investing activities

     (705,939          (2,020     (4,440
 

Cash flows from financing activities:

           

Capital contribution (distribution) from (to) Lafarge NA, net

     —               (22,682     (11,958

Capital contribution from Lone Star Funds

     265,000             —          —     

Proceeds from issuance of long-term debt, net of original issue discount

     564,965             —          —     

Proceeds from revolving credit facility, net

     —               —          —     

Capital distribution to Lone Star Funds

     (130,000          —          —     

Principal payments on long-term debt

     (1,038          —          —     

Debt issuance costs

     (18,461          —          —     
  

 

 

        

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     680,466             (22,682     (11,958
  

 

 

        

 

 

   

 

 

 

Effect of foreign exchange rates on cash and cash equivalents

     (62          —          —     

Net change in cash and cash equivalents

     11,822             —          —     

Cash, beginning of period

     —               —          —     
  

 

 

        

 

 

   

 

 

 

Cash, end of period

   $ 11,822           $ —        $ —     
  

 

 

        

 

 

   

 

 

 

 

13


Reconciliation of GAAP Measure to Non-GAAP Measure

EBITDA and Adjusted EBITDA have been presented in this press release as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We have presented EBITDA and Adjusted EBITDA as supplemental performance measures because we believe that they facilitate a comparative assessment of our operating performance relative to our performance based on our 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 we believe do not reflect our operations and underlying operational performance. Management also believes that EBITDA and Adjusted EBITDA are useful to investors because they present a better reflection of our performance as an independent company following the acquisition and allows investors to view our business through the eyes of management and the Board of Directors, facilitating comparison of results across historical periods.

EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate EBITDA and Adjusted EBITDA in the same manner as we do. EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered in isolation or as alternatives to operating income 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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The following is a reconciliation of operating income to EBITDA and adjusted EBITDA:

Continental Building Products, Inc.

Reconciliation of Non-GAAP Measure to GAAP Measure

(dollars in thousands)

(Unaudited)

 

           Successor           Predecessor  
           Three
Months
Ended
December 31,
2013
          Three
Months
Ended
December 31,
2012
 

Operating Income (loss) - GAAP Measure

     $ 15,885             2,823   
 

Adjustments:

           
 

Depreciation and amortization

       13,935             6,403   
    

 

 

        

 

 

 
 

EBITDA - Non-GAAP Measure

       29,820             9,226   

Pension and post-retiree costs retained by Lafarge

     (a )      —               3,985   
 

Master Brand Agreement

     (b )      —               1,062   
    

 

 

        

 

 

 

Adjusted EBITDA - Non-GAAP Measure

     $ 29,820           $ 14,273   
    

 

 

        

 

 

 

 

          Successor           Predecessor     Pro Forma  
          July 26 to
December 31,
2013
          January 1 to
August 30,
2013
     Year Ended
December 31,
2012
    Year Ended
December 31,
2013
     Year Ended
December 31,
2012
 

Operating Income

      $ 13,778           $ 32,627       $ (12,757   $ 29,790       $ (45,404
 

Adjustments:

                    
 

Depreciation and amortization

        18,529             16,886         36,331        53,015         66,963   
     

 

 

        

 

 

    

 

 

   

 

 

    

 

 

 
 

EBITDA - Non-GAAP Measure

        32,307             49,513         23,574        82,805         21,559   

Pension and post-retiree costs retained by Lafarge

   (a)      —               7,636         11,925        7,636         11,925   
 

Master Brand Agreement

   (b)      —               3,004         3,602        3,004         3,602   
 

Special bonus

   (c)      —               —           904        —           904   
 

Spare parts write-off

   (d)      —               —           1,205        —           1,205   
 

Newark lease termination costs

   (e)      —               2,556         —          2,556         —     

Co-generation lease termination costs

   (f)      2,075             1,195         —          3,270         —     
 

Acquisition closing costs

   (g)      3,296             —           —          3,296         —     
 

Inventory step-up impacting margin

   (h)      1,500             —           —          —           1,500   
     

 

 

        

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted EBITDA - Non-GAAP Measure

      $ 39,178           $ 63,904       $ 41,210      $ 102,567       $ 40,695   
     

 

 

        

 

 

    

 

 

   

 

 

    

 

 

 

 

15


(a) Lafarge retained the pension and post-retiree liabilities related to its gypsum division and no new plans have been established by Continental. The adjustment represents pension and post-retiree benefit costs allocated to the Predecessor.
(b) Adjusts for the amounts paid to Lafarge under the master brand agreements by Lafarge that were discontinued after the Acquisition.
(c) Adjusts for special payouts paid by Lafarge related to a retention program due to the process of disposing of its gypsum business.
(d) Adjusts for the write-off of spare parts related to the closure of the Newark, New Jersey gypsum wallboard plant.
(e) Adjusts for the payment of a lease termination fee to the Port of Newark related the Newark, New Jersey plant closure.
(f) Adjusts for the payment of a lease termination fee to discontinue the use of the co-generation power plant.
(g) Adjusts for the transaction costs associated with the Acquisition.
(h) Adjusts for step-up to fair value of inventory that increased cost of sales for one month after the Acquisition.

Interim Volumes and Mill Net Prices

(unaudited)

 

     Predecessor           Successor  
     Three
Months
Ended
March 31,
2013
     Three
Months
Ended
June 30,
2013
     July 1,
2013 to
August 30,
2013
          July 26,
2013 to
September 30,
2013
     Three
Months
Ended
December 31,
2013
 

Volumes (million square feet)

     438         523         373             195         632   

Mill net Price per MSF

   $ 146.97       $ 149.56       $ 145.43           $ 144.06       $ 143.04   

 

16