Specialty dealer Foundation Building Materials (FBM) reported that net sales and net income both decreased on a year-over-year (YOY) basis during the fiscal third quarter, in part due to the ongoing negative impacts of the coronavirus (COVID-19) pandemic. The company’s net sales decreased 7.7% YOY to $521.3 million during the third quarter while net income decreased $0.9 million YOY to $11.8 million during the third quarter, according to the dealer’s quarterly earnings report.
FBM’s average daily net sales decreased 9.2% compared to the third quarter of 2019 and net sales from base business decreased $51.8 million compared to the prior-year period. Net sales from acquired branches and existing branches that were strategically combined increased by $8.1 million YOY to $17.4 million during the third quarter. FBM reported net sales for all major product lines decreased on a YOY basis in the third quarter, primarily as a result of reduced business activity due to the pandemic. COVID-19 has had a greater impact on commercial construction activity compared to the residential market, leading to greater decreases in net sales for FBM’s suspended ceiling systems and metal framing product lines compared to other product lines.
“Despite the challenging market conditions in the third quarter, we have maintained profitability by optimizing our cost structure,” Ruben Mendoza, president and CEO of FBM, said in a prepared statement. “We will continue to navigate this challenging environment by focusing on driving organic growth and maximizing profitability to create long-term value for our company.”
Tustin, Calif.-based FBM reported gross profit for the third quarter of 2020 was $154.4 million, compared to $171.8 million in the previous year’s third quarter. The decrease was primarily due to lower net sales, according to the dealer. Gross margin during the third quarter decreased 80 basis points on a YOY basis to 29.6%, primarily due to COVID-19-related market disruptions.
The dealer’s adjusted EBITDA in the third quarter was $41.7 million, down from $50.0 million during the third quarter of 2019. FBM posted an adjusted EBITDA margin of 8.0%, down 90 basis points from the prior-year period.
FBM reported that through October, the pandemic has had a negative impact on most of the markets in which it operates. Average daily net sales were down approximately 6% YOY in October.
FBM operates more than 175 branches across the United States and Canada. The company distributes wallboard, suspended ceiling systems, metal framing, and complementary products.
