Cornerstone Building Brands Announces Fourth-Quarter and Full-Year 2021 Results
Cornerstone Building Brands, Inc. (the “Company”), the largest manufacturer of exterior building products in North America, today reported fourth-quarter 2021 net sales of $1,471.6 million and net income of $38.1 million or twenty-nine cents per diluted share. This compares with net sales of $1,191.4 million and net income of $1.9 million or one cent per diluted share in the same quarter last year.
Pro Forma Adjusted EBITDA1 for the fourth quarter of 2021 was $184.2 million, 25.3 percent higher than the same quarter last year. The improvement was primarily due to favorable price mix net of inflation of $94 million partially offset by higher SG&A expense and manufacturing costs related to supply chain disruptions and labor constraints.
2021 Full Year Results and Highlights
Net sales for 2021 were $5,583.1 million and net income was $665.9 million or $5.19 per diluted share. This compares with net sales of $4,617.4 million and net loss of $482.8 million or loss per diluted share of $3.84.
Pro forma net sales1 were $5,483.9 million, a 23.0 percent increase over prior year. The growth was primarily driven by favorable price actions across all segments and strong underlying market demands.
Pro forma Adjusted EBITDA1 for 2021 was $688.0 million or 12.5 percent of pro forma net sales1, an improvement of 24.1 percent or ten basis points from the same pro forma period a year ago. The increase was primarily driven by an increase in price mix net of inflation of 37.9 percent and higher volumes of $85.0 million over the same pro forma period last year. Additionally, we experienced higher manufacturing costs to serve our customers as a result of supply chain disruptions and labor constraints. Increases in SG&A of $69.3 million were primarily the result of the return of near-term costs, such as variable compensation and professional service expenses.
“We delivered strong financial results in 2021,” said Rose Lee, President and Chief Executive Officer. “For the second consecutive year, we realized record pro forma net sales and pro forma Adjusted EBITDA while navigating challenging supply chain distributions and changing market conditions. In addition to our strong performance, we remained focused on enhancing long-term growth by taking actions to optimize our portfolio. During the year, we divested the Insulated Metal Panels and Roll-Up Door businesses, which immediately unlocked shareholder value and enabled investments that furthered growth in the large, deep windows market and high growth residential metal roofing market.”
Segment Results Versus Prior Year
Due to the timing of the Company’s fiscal calendar, the fourth quarter of 2021 had two, or approximately 3 percent, more ship days than the fourth quarter of 2020.
- Windows segment net sales for the quarter were $618.8 million, an increase of 21.0 percent versus the same period last year. On a pro forma basis, net sales1 for the quarter increased 8.5 percent driven by positive price mix of 12.9 percent partially offset by 4.4 percent lower volume. Operating income was $16.8 million, a decrease of $12.3 million or 42.3 percent, from the prior-year quarter. Adjusted EBITDA1 was $54.4 million or 8.8 percent of net sales, a decrease of 22.5 percent compared to pro forma Adjusted EBITDA1 from the prior year quarter, primarily due to manufacturing inefficiencies and lower volume associated with market-driven labor shortages and supply chain disruptions. Disciplined price actions in response to rising commodity costs and other inflationary impacts resulted in positive price mix net of inflation of $11 million. SG&A costs for the quarter were $5 million higher than pro forma SG&A in fourth-quarter 2020 primarily due to the return of near-term costs, such as variable compensation and professional service expenses.
- Siding segment net sales for the quarter were $327.6 million, an increase of 11.5 percent versus the fourth-quarter 2020. For the quarter, increase in price mix of 17.0 percent was partially offset by lower volume. Operating income was $10.8 million, a decrease of $20.2 million or 65.3 percent from the prior year quarter, primarily due to $13.9 million of asset impairment related a discontinued product line. Adjusted EBITDA1 was $53.9 million or 16.4 percent of net sales, a decrease of 13.2 percent primarily due to lower volume, increased manufacturing costs to serve the customers and return of near-term costs (such as variable compensation and professional service expenses) in SG&A offset by positive price mix net of inflation of 15.4 percent.
- Commercial segment net sales for the quarter were $525.2 million, an increase of 36.0 percent over the prior year quarter, including $21.9 million of sales from the Union Corrugating Company acquisition. Pro forma net sales1 increased 79.5 percent, driven by disciplined price actions of approximately 67.0 percent taken to mitigate rising steel costs partially offset by lower volume. Operating income was $101.0 million, an increase of $51.0 million from the prior-year quarter. Pro forma Adjusted EBITDA1 was $113.1 million or 21.5 percent of pro forma net sales1, an increase of $71.1 million or 169.6 percent over the same quarter last year, primarily due to positive price mix net of commodity and other inflationary impacts of $73 million. Partially offsetting the favorability was lower volumes caused by raw material constraints. Included in pro forma Adjusted EBITDA1 is $2.2 million related to the acquisition of Union Corrugating Company, which closed on December 3, 2021 and furthers our presence in the high-growth residential metal roofing market.
Balance Sheet and Liquidity
The Company’s cash flow used in operations during 2021 was $215.9 million, primarily for investments in net working capital to support demand and increased valuations from rising commodity costs and other inflationary impacts. Capital expenditures were $114.7 million, with approximately 50 percent invested in innovative product offerings and process automation that are expected to generate profitable growth in the future.
The Company continued to strengthen the balance sheet and improve its leverage position in 2021. As previously disclosed, during the second quarter, the Company fully redeemed its $645 million, 8.00% Senior Notes due April 2026 using available cash from the balance sheet and net proceeds from its extended and upsized senior term loan facility. The Company also refinanced its credit facilities, meaningfully extending its debt maturities and reducing annual interest costs by more than $50 million a year. The Company ended the year with approximately $394 million of unrestricted cash on hand and $1,075 million of liquidity. Additionally, the net debt leverage ratio1 improved from 4.9x at the end of fiscal year 2020 to 3.7x at the end of fiscal year ended 2021.
Suspension of Guidance and Strategic Update
As previously announced on February 14, 2022, the Company is in receipt of a non-binding, best and final proposal from funds affiliated with Clayton, Dubilier & Rice, LLC (“CD&R”) to acquire all of the Company’s outstanding shares of common stock that CD&R does not already own for $24.65 in cash per share. The Company’s board of directors previously formed a special committee of independent directors (the “Special Committee”) to evaluate and consider any potential or actual proposal from CD&R and any other alternative proposals or other strategic alternatives that may be available to the Company. The Special Committee’s evaluation is ongoing and it expects to make an announcement regarding the outcome of its review upon completion. In light of the proposal and the Special Committee’s ongoing review, the Company will not be hosting a conference call in connection with its fourth quarter financial results and will not provide financial guidance for the first quarter of fiscal year 2022.
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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, N.C., we serve residential and commercial customers across the new construction and repair and remodel markets. Our market-leading portfolio of products spans vinyl windows, vinyl siding, stone veneer, metal roofing, metal wall systems and metal accessories. Cornerstone Building Brands’ broad, multichannel distribution platform and expansive national footprint includes approximately 21,700 employees at manufacturing, distribution and office locations throughout North America. Corporate stewardship and environmental, social and governance (ESG) responsibility are embedded in our culture, and we are committed to contributing positively to the communities where we live, work and play. For more information, visit us atwww.cornerstonebuildingbrands.com.
Tina Beskind – Vice President Finance & Investor Relations – email@example.com – (866) 419-0042
Source: Cornerstone Building Brands, Inc.