Specialty dealer Foundation Building Materials (FBM) saw net sales shrink 0.3% year over year (YOY) in the fourth quarter of 2019 to $514.8 million. Sales from base business branches decreased $4.1 million compared to the fourth quarter in 2018, primarily due to ongoing softness in Canadian markets and lower residential construction volumes, according to the company’s fourth quarter earnings report.
Despite the quarterly decrease in sales, FBM’s net sales for the full fiscal year increased 5.4% YOY to $2.15 billion. Average daily sales for the dealer increased 5.8% compared to 2018, and net sales from base business branches contributed $47.0 million of the net sales increase. Net sales from acquired branches and existing branches that were strategically combined contributed $63.3 million of the net sales increase for the full fiscal year. Strong growth in base business net sales was primarily attributable to strong commercial activity and product expansion into new geographic markets, according to FBM.
Santa Ana, Calif.-based FBM posted a net income of $9.6 million in the fourth quarter of 2019, a $7.6 million increase compared to the prior year period. For the full fiscal year, net income was $41.8 million, an increase of $78.2 million compared to the net loss from continuing operations posted at the end of the 2018 fiscal year.
“We are pleased to deliver strong fourth quarter and full-year results. As our results demonstrate, 2019 was a year of focus and execution, and we achieved our financial goals with solid sales growth and profit margin expansion, which contributed to our reduction of debt,” Ruben Mendoza, president and CEO, said in a news release. “For 2020, our strategic priorities are to drive organic growth, further reduce our debt, and continue to drive profit margin expansion that will deliver long-term value to our shareholders.”
Gross profit during the fourth quarter increased $4.7 million YOY to $160.3 million. The dealer attributed the YOY growth in gross profit to an expansion of the company’s gross margin and an increase in sales from acquisitions. Gross margin in the fourth quarter of 2019 was 31.1%, an increase of 100 basis points compared to the fourth quarter of 2018. The increase in gross margin was primarily due to improved profitability across product lines, driven by FBM’s ongoing pricing and purchasing initiatives.
FBM posted a gross profit of $656.6 million for the full fiscal year, an 11.2% increase from the 2018 fiscal year. Gross margin for the full year was 30.5%, an increase from the gross margin of 28.9% posted in the 2018 full fiscal year.
In the 2019 fiscal year, FBM completed five acquisitions with combined annual net sales of more than $52 million. The dealer also opened four greenfield branches in 2019 and plans to open four to six more branches by the end of 2020.
FBM is a specialty distributor of wallboard, suspended ceiling systems, and metal framing with more than 175 locations in the United States and Canada. The company ranked 9th on the 2019 ProSales 100 list.
