Foundation Building Materials, the Tustin, Calif.,-based dealer specializing in wallboard and suspended ceilings, today reported a 3Q net income $1.4 million, up from a net loss of $15.3 million a year before. This spike came from a 28% increase of net sales ($415.6 million to $535.4 million) from 2016’s third quarter.
Powering FBM’s surge in sales was the number of acquisitions the firm completed in 2017. FBM made 10 acquisitions this year, accounting for 19 new branches across North America. In the third quarter alone, it made three acquisitions. Consolidated gross profit was $158 million, up 37 points from 2016, thanks to the increased sales volume from acquisitions.
FBM’s adjusted EBITDA was $40.3 million for the quarter. The company calculates this as net income before interest expense, income tax benefit, depreciation, and amortization and before non-recurring adjustments. Its adjusted EBITDA margin was 7.5%.
Net sales from acquired branches and those combined with existing branches increased by $122 million period over period.
The company says base business net sales, which decreased $2.7 million compared to 3Q of 2016, would have been higher if it weren’t for back-to-back hurricanes and two fewer business days for some locations in Texas, Florida, Georgia, and South Carolina.
The company also cites the acquisition of Winroc-SPI for the boost in specialty building products (SBP) and mechanical insulation (MI) net sales. SBP net sales increased 23 percentage points to $467 million compared to last year, while MI net sales increased 141 percentage points to $18.9 million (though the firm notes since Winroc was acquired in August 2016 there were less than 3 months of sales in this segment last year).
“ While our total base business net sales declined 1% in the quarter due to the impact of two hurricanes and fewer business days, our average daily net sales improved 2% compared to the prior year period,” said Ruben Mendoza, president and CEO of FBM. “While the third quarter presented unique challenges to our business, we continue to execute on our long-term strategy of profitably growing our market share, achieving economies of scale, and delivering long-term value to our customers and shareholders.”
The firm went public in February, and these numbers would put FBM in the top-10 for the ProSales 100.
FBM operates more than 220 branches across the U.S. and Canada. It has been one of the most active acquirers of dealers over the past two years. For all 2017, the company expects those acquisitions will deliver $70 million to $80 million worth of sales revenue.
