US: Continental Building Products (CBP) has announced strong results for the fourth quarter of 2014 and the entirety of the year.
"Our results marked a solid year of progress for our company, allowing us to generate significant cash flows and dramatically improve our balance sheet," said Jay Bachmann, CBP's CEO. "The positive momentum in our business continued into the fourth quarter, with our net sales up by 5.6% and our adjusted EBITDA and operating income increasing by 15.6% and by 35.2%, respectively, reflecting favourable operating leverage driven by our low cost structure. During the full year 2014, we converted the majority of our adjusted EBITDA into free cash flow, which we used to reduce our long-term debt and strengthen our financial position. As we move into 2015, we believe that the construction markets will continue to recover and steadily improve. Amid that backdrop, we believe that our business is well-positioned to continue building on our progress by optimising our revenues and exercising strict cost controls to deliver improved returns and cash flows."
Net sales for the fourth quarter of 2014 were US$121m, up by 5.6% from US$114m in the fourth quarter of 2013. The increase in sales was primarily driven by 6.8% growth in the average mill net price. Wallboard volumes were 627Mft2 compared to 632Mft2 in the 2013 quarter, with flat US volumes offset by a single-digit percentage decline in Canada. Gross profit was US$31.7m, up by 28.6% compared to US$24.6m in the 2013 quarter. The gross margin of 26.2% increased from 21.5% in the prior year quarter, primarily as a result of higher average wallboard mill net prices and CBP's focus on leveraging its low cost structure.
Operating income was US$21.5m, up by 35.2% from US$15.9m in the 2013 quarter. Interest expenses were US$4.6m, down from US$8.2m in the 2013 quarter, reflecting a reduction in the long-term debt and a decrease in the interest rate on CBP's borrowings. Net income during the quarter was US$10.4m compared to US$6.7m in the 2013 quarter. Adjusted EBITDA increased by 15.6% to US$34.5m, compared to US$29.8m in the 2013 quarter.
Net sales for the enitrety of 2014 were US$425m, up by 5.5% from US$402m in 2013. Wallboard volumes increased by 0.9% to 2.18Bnft2 compared to 2.16Bnft2 in 2013. The average wallboard mill net price increased by 6.1% year-on-year. Gross profit was US$94.3m, up by 35.6% from US$69.5m in 2013. The gross margin of 22.2% was higher than the 17.3% margin of the prior year. Operating income was US$60.8m, up by 104% from US$29.8m in 2013. Interest expense was US$29.1m compared to US$23.4m in the prior year. Net income was US$15.9m compared to US$4.9m in 2013. Adjusted net income was US$23.8m compared to US$22.8m in 2013, excluding the impact of nonrecurring costs. Adjusted EBITDA increased by 12.2% to US$115m compared to US$103m in 2013. During the full year of 2014, CBP generated operating cash flow of US$78m, incurred US$5.7m of capital expenditures and used cash on hand for the repayment of US$65.6m of debt.
