After mixed results during the third quarter of 2018, specialty dealer Foundation Building Materials (FBM) posted strong net sales growth and net income in the fourth quarter of 2018. Tustin, Calif.-based FBM recorded net sales of $516.2 million in the fourth quarter, a 16.3% increase year over year (YOY), and $2.0 billion net sales for the full year in 2018, a $0.2 billion increase from 2017.
FBM’s net sales from base business branches contributed $439.1 million of the fourth quarter net sales increase. The dealer attributed the growth in base business sales to strong commercial activity, price increases, and product expansion into new geographic markets. Net sales from business branches contributed 8.4% of the $0.2 billion increase in net sales for the full year period.
“We are very pleased with our fourth quarter and full year results. We delivered double-digit net sales and strong base business growth reflecting our balanced product mix and our ongoing strategies to drive organic growth,” said FBM president and CEO Ruben Mendoza in a news release from the company. “For 2019, our strategic priorities are to reduce debt, execute our business model to drive organic growth, and expand profit margin to deliver long-term value to our shareholders.”
The 10th largest company on the most recent ProSales 100 also posted a net income of $1.9 million during the fourth quarter of 2018, after posting a net loss of $37.6 million in the third quarter. However, FBM recorded a net loss from continuing operations of $36.4 million in 2018, compared to a net income of $77.9 million in 2017.
FBM’s gross profit for the fourth quarter was $155.6 million, a 16.9% increase YOY. Growth in gross profit during the quarter was primarily attributed to the increase in net sales. The company’s gross margin for the fourth quarter was 30.1%, a 0.1 percentage point increase YOY. For the full year, FBM’s gross profit increased $68.2 million YOY to $509.4 million in 2018. The gross margin for 2018 decreased 0.3% YOY to 28.9%, which the specialty dealer primarily attributed to higher product costs.
FBM measures itself in EBITDA, encompassing earnings before interest, taxes, depreciation, amortization, gains or losses on financial derivatives, stock-based compensation, losses on disposal of property and equipment, and transaction costs. FBM’s adjusted EBITDA for the fourth quarter was $41.2 million, with a margin of 8.0%, both healthy increases YOY. Adjusted EBITDA for the full year also increased YOY, while the full year margin slipped 0.1 percentage points YOY.
FBM completed four acquisitions and added 16 branches during 2018. The company said the acquired branches contributed annualized net sales of $130.0 million. The dealer also opened five greenfield branches and projected it would open an additional four to six branches in 2019. FBM now operates more than 170 branches across the U.S. and Canada.
FBM’s balance sheet as of December 31, 2018 shows goodwill accounts for $484.9 million of the company’s $1.3 billion in total assets.
