Cornerstone Building Brands Reports Record First-Quarter 2021 Results
Cornerstone Building Brands, Inc. (the “Company”), the largest manufacturer of exterior building products in North America, reported first-quarter 2021 net sales of $1,267.0 million and net loss of $1.7 million or one cent per diluted share. This compares with net sales of $1,113.8 million and net loss of $542.1 million or $4.30 loss per diluted share in the same quarter last year.
–Posted strong first-quarter net sales growth of 13.8%, primarily from strong residential volume
–Generated $55 million of income from operations
–Delivered $139 million of Adjusted EBITDA, 42% higher than prior year pro forma Adjusted EBITDA
–Achieved eighth consecutive quarter of year-over-year Adjusted EBITDA margin expansion in all segments
–Reduced net debt leverage ratio to 4.6x; 0.6x better than prior year
Adjusted EBITDA1 for the first quarter of 2021 was $139.1 million or 11.0 percent of net sales, an improvement of 230 basis points from the same pro forma period a year ago, with 5 percent fewer ship days. The improvement was primarily due to higher volume leverage from robust demand for residential products and benefits from cost reduction initiatives partially offset by price/mix, net of inflation. Additionally, the Company achieved its eighth consecutive quarter of year-over-year Adjusted EBITDA1 margin expansion.
“We delivered exceptional first-quarter results, achieving record growth in net sales and Adjusted EBITDA,” said James S. Metcalf, Chairman and Chief Executive Officer. “We effectively leveraged the strengths of our business model to capitalize on the strong residential end markets and navigated through the demand driven supply chain disruptions to deliver better-than-expected volumes. The team’s strong operational execution is positioning Cornerstone Building Brands for long-term profitable growth.”
Segment Results Versus Prior Year
Due to the timing of the Company’s fiscal calendar, the first quarter of 2021 had three fewer ship days than the first quarter of 2020, which was approximately 5 percent less ship days.
–Windows segment net sales for the quarter were $527.3 million, an increase of 17.6 percent from the prior-year quarter. Strong volumes across all channels of 15 percent coupled with favorable price/mix as a result of increased prices in response to rising commodity costs and other inflationary impacts drove the increase. Adjusted EBITDA1 was $61.0 million or 11.6 percent of net sales, an improvement of 250 basis points. The improvement was a result of the increased volume and benefits from cost saving initiatives.
–Siding segment net sales for the quarter were $316.4 million an increase of 26.9 percent versus the pro forma1 first- quarter 2020. During the quarter, order momentum was strong as wholesale and retail demand outpaced prior year driving 19 percent higher shipped volume and slightly favorable price/mix as a result of increased prices in response to rising commodity costs and other inflationary impacts. Adjusted EBITDA1 was $57.1 million or 18.1 percent of net sales, an improvement of 260 basis points. The improvement was a result of the increased volume and realized benefits from cost savings initiatives, primarily in selling, general and administrative expenses.
–Commercial segment net sales for the quarter were $423.4 million, essentially flat to the prior-year quarter due to unfavorable volume from three less ship days in the first quarter of 2021 as compared to the first quarter of 2020 partially offset by favorable price/mix as a result of increased prices in response to rising commodity costs and other inflationary impacts. Adjusted EBITDA1 was $53.4 million or 12.6 percent of net sales, an improvement of 180 basis points. Manufacturing efficiencies and realized benefits from cost savings initiatives were slightly offset by $7 million of unfavorable price/mix, net of inflation due to the pace of rising steel costs.
Balance Sheet and Liquidity
The Company generated strong cash flow from operations of $20.0 million, a cash generation improvement of $22.3 million over first-quarter 2020. Capital expenditures were $21.2 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 was a use of cash of $1.2 million, an increase of $28.6 million over the same period last year. The improvement was primarily driven by higher earnings generation in the period and the timing of payments associated with volume related expenses, partially offset by investments in working capital to support market demand.
The Company ended the quarter with approximately $666.7 million of unrestricted cash on hand and $1,353 million of liquidity. Additionally, the net debt leverage ratio improved to 4.6x at the end of the first quarter 2021 compared with 5.2x at the end of the first-quarter 2020.
Second-Quarter 2021 Guidance
–The Company expects net sales to be between $1,375 million and $1,425 million as a result of: Strong single-family housing and repair and remodel end-market momentum; improving non-residential end-markets; and material shortages and inflation impacts driving price actions
–Gross Profit is anticipated to be between $305 million and $325 million: Adjusted EBITDA1 is expected to be between $185 million and $200 million
Additional Fiscal Year 2021 Guidance
–Cost savings initiatives of approximately $75 million to $80 million
–Return of near-term costs of approximately $20 million to $30 million
–Capital spending is projected to be approximately 2.0% – 2.5% of net sales
–Cash interest expense is expected to be approximately $200 million
–Cash tax rate expected to be approximately 30%
–Expect to improve net debt leverage by 3/4 to one turn
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 second quarter of 2021 is not included in this release. See “Non-GAAP Financial Measures” below.
Free cash flow is defined as net cash provided by operating activities less capital expenditures.
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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 atwww.cornerstonebuildingbrands.com.
Tina Beskid – Vice President, Finance & Investor Relations – email@example.com
Source: Cornerstone Building Brands, Inc.