Business Wire | Nov 9, 2021 05:06PM EST

Cornerstone Building Brands Reports Strong Third-Quarter 2021 Results; Agrees to Acquire Union Corrugating Company

Nov. 09, 2021

CARY, N.C.--(BUSINESS WIRE)--Nov. 09, 2021--Cornerstone Building Brands, Inc. (NYSE: CNR) (the "Company"), the largest manufacturer of exterior building products in North America, today reported strong financial results for the third quarter of 2021 that reflected net sales growth and strategic actions taken to advance long-term value creation.

Acquisition of Union Corrugating Company

The Company has entered into a definitive agreement to acquire Union Corrugating Company Holdings, Inc. ("UCC"), a leading provider of metal roofing, roofing components and accessories. Headquartered in Fayetteville, North Carolina, UCC has approximately 700 employees across the Central and Eastern U.S. regions.

"The addition of UCC advances our growth strategy by expanding our offerings to customers in the high-growth residential metal roofing market," said Rose Lee, President and Chief Executive Officer. "Additionally, the acquisition positions us to realize greater manufacturing economies of scale. I look forward to welcoming our colleagues from UCC to the Cornerstone Building Brands family."

UCC generated approximately $250 million in net sales during the trailing twelve months ended August 2021. The transaction, subject to regulatory approval and customary closing conditions, is expected to be funded with cash on hand and close in the fourth quarter. The Company expects UCC results to be reported through the Commercial business segment.

Third-Quarter 2021 Financial Highlights

Net sales for the third quarter were $1,444.4 million, an increase of 17.7 percent compared with net sales of $1,227.3 million in the same quarter last year, and an increase of 12.4 percent from the third quarter 2019. Pro forma net sales1 of $1,428.0 million were 20.2 percent higher than in the third quarter of 2020, with one fewer fiscal day. The net sales growth versus prior year was driven by price actions in response to rising commodity costs and other inflationary impacts. For the nine months ended October 2, 2021, net sales were $4,111.6 million, an increase of 20.0 percent over prior year. Pro forma net sales1 were $4,012.4 million, a 21.6 percent increase, driven by disciplined price actions of 13.6 percent, to offset inflationary impacts, and strong volume growth of 7.9 percent with three fewer fiscal days as compared to the same prior-year period.

Net income applicable to common shares was $612.2 million or $4.82 per diluted common share compared with $30.0 million or $0.24 per diluted common share in the same quarter last year. Adjusted net income applicable to common shares1 was $49.6 million or $0.39 per diluted common share, a 32.1 percent decrease compared to the prior year. For the nine months ended October 2, 2021, net income applicable to common shares was $620.0 million as compared to a loss of $484.7 million in the prior year. Adjusted net income applicable to common shares1 was $172.9 million or $1.37 per diluted common share compared to $32.2 million in the same period last year.

Pro forma Adjusted EBITDA1 for the third quarter of 2021 was $181.6 million, which was 3.5 percent higher than the same pro forma period a year ago and 8.2 percent higher than the comparable 2019 period. Pro forma Adjusted EBITDA1 growth was driven by strong residential demand and price actions offsetting inflationary impacts partially reduced by higher manufacturing and SG&A costs. For the nine months ended October 2, 2021, pro forma Adjusted EBITDA1 of $503.8 million was 12.6 percent of pro forma net sales1, which increased 30 basis points over the same pro forma period a year ago and 180 basis points from the comparable 2019 period.

Lee continued, "We delivered strong results in the third quarter, as demand remained favorable across our businesses, and our team continued to navigate through supply chain disruptions and labor challenges. Additionally, we remained steadfast on positioning the Company for long-term growth by investing in operational improvements and deploying portfolio actions to strengthen our core capabilities. We are committed to our capital allocation priorities focused on high-return investments and debt reduction."

Segment Results Versus Prior Year

Due to the timing of the Company's fiscal calendar, third-quarter 2021 had one fewer fiscal day than third-quarter 2020.

* Windows segment net sales for the quarter were $596.5 million, an increase of 19.0 percent versus the same period last year. On a pro forma basis, net sales1 increased 11.6 percent. Disciplined price actions in response to rising commodity costs and other inflationary impacts drove the increase in pro forma net sales1 as compared to the same period last year. Labor shortages and supply chain disruptions constrained shipments. As such, volumes were slightly favorable by 1.3 percent over pro forma third quarter 2020. Operating income was $15.8 million for the quarter, a decrease of $21.5 million or 57.8 percent from the prior-year quarter. Pro forma Adjusted EBITDA1 was $53.3 million or 8.6 percent of pro forma net sales1, a decrease of 31.7 percent, primarily due to manufacturing inefficiencies associated with market-driven labor shortages and supply chain disruptions. Positive price mix net of inflation of $8 million was partially offset by higher SG&A costs of $6 million.

* Siding segment net sales for the quarter were $357.9 million, an increase of 11.2 percent versus third-quarter 2020. For the quarter, positive price/mix of $62 million more than offset lower volume due to raw material and labor constraints during the quarter. Operating income was $46.1 million for the quarter, an increase of $0.8 million or 1.8 percent from the prior-year quarter. Adjusted EBITDA1 was $75.2 million or 21.0 percent of net sales, a decrease of 4.9 percent, primarily due to lower volume, increased manufacturing costs to serve customers, and return of near-term costs in SG&A offset by positive price mix net of inflation of 16.1 percent.

* Commercial segment net sales for the quarter were $490.0 million, an increase of 21.3 percent versus the same period last year. On a pro forma basis, net sales1 increased 45.0 percent. Disciplined price actions of approximately 42.7 percent taken to mitigate rising steel costs drove the increase in pro forma net sales1 as compared to the same period last year. Operating income was $908.5 million for the quarter, an increase of $852.3 million from the prior year primarily due to the gain on the sales of the insulated metal panels ("IMP") and roll-up sheet doors ("DBCI") businesses, which were divested as part of the Company's strategic portfolio optimization actions to accelerate long-term value creation. Excluding the gain on the sales, operating income increased 37.5 percent from the realization of price actions taken to offset rising steel and other manufacturing costs coupled with higher volume from positive end-market demand, which offset return of near-term costs and manufacturing inefficiencies as a result of supply constraints. Pro forma Adjusted EBITDA1 was $86.3 million or 19.2 percent of pro forma net sales1, an increase of 91.9 percent over the same quarter last year, primarily due to positive price mix net of commodity and other inflation impacts of $49 million, partially offset by manufacturing inefficiencies caused by raw material constraints and higher SG&A costs together totaling $16 million.

Balance Sheet and Liquidity

The Company's cash flow used in operations during the third quarter of approximately $171.9 million was driven by investments in net working capital to support the strong demand environment and increased inventory valuations from rising commodity costs and other inflationary aspects. Capital expenditures for the quarter were $27.5 million, with greater than 50 percent invested in innovative product offerings and process automation that are expected to generate profitable growth and structural cost improvements in the future.

The Company continues to strengthen the balance sheet and improve its leverage position. As previously disclosed, during the second quarter, the Company fully redeemed its $645 million, 8.00% Senior Notes due April 2026 using available cash from the balance sheet and net proceeds from its extended and upsized senior term loan facility. Additionally, the Company refinanced its credit facilities, meaningfully extending its debt maturities and reducing annual interest costs by more than $50 million a year.

During the third quarter of 2021, the Company repaid the $190 million outstanding balance of its asset-based lending facility. Unrestricted cash on hand was approximately $677 million and liquidity was approximately $1,356 million as of October 2, 2021. The net debt leverage ratio improved to 3.7x at the end of the third-quarter 2021 compared with 4.9x at the end of the third-quarter 2020.

Fourth-Quarter 2021 Guidance

* The Company expects net sales to be between $1,425 million and $1,475 million Strong single-family and repair and remodel end-market momentum Positive non-residential end-markets Material shortages and inflation impacts driving price actions * Gross Profit is anticipated to be between $310 million and $350 million * Expect Adjusted EBITDA1 to be between $170 million and $185 million

Fiscal Year 2021 Guidance

* Capital spending is projected to be between $90 million to $110 million * Cash interest expense is expected to be approximately $170 million * Cash tax rate is expected to be approximately 30% * Year end net debt leverage ratio expected to be between 3.2x-3.5x

Adjusted and pro forma financial metrics used in this release, including(1) Adjusted EBITDA, are non-GAAP measures. See reconciliations of GAAP results to non-GAAP and pro forma adjusted results in the accompanying tables.

Conference Call Information

The Company will host a conference call at 9:00 a.m. EST on Wednesday, November 10, to discuss its third-quarter financial performance with investors and securities analysts. The financial results and supplemental information will be available online at investors.cornerstonebuildingbrands.com.

To register, please use this link http://www.directeventreg.com/registration/event/4490324

After registering, an email confirmation with dial-in details and a unique code for entry will be sent. To ensure you are connected for the entirety of the call, please register a day in advance or at least 10 minutes before the start of the call. Additional call participation options are as follows:

By Cornerstone Building Brands 3Q21 Earnings CallWebcast:

Date: Wednesday, November 10, 2021

Time: 9:00 a.m. Eastern Standard Time

Access Visit the Events & Presentations section of the link: Investors Page at

investors.cornerstonebuildingbrands.com or access directly at

http://www.directeventreg.com/registration/event/4490324

Registration is open throughout the live call.

Replay dial-in will be available through November 24, 2021

Dial-in number:

800-585-8367

Replay code:

4490324

About Cornerstone Building Brands

Cornerstone Building Brands is the largest manufacturer of exterior building products for residential and low-rise non-residential buildings in North America. Headquartered in Cary, N.C., we serve residential and commercial customers across the new construction and repair and remodel markets. Our market-leading portfolio of products spans vinyl windows, vinyl siding, stone veneer, metal roofing, metal wall systems and metal accessories. Cornerstone Building Brands' broad, multichannel distribution platform and expansive national footprint includes more than 20,000 employees at manufacturing, distribution and office locations throughout North America. Corporate stewardship and environmental, social and governance (ESG) responsibility are embedded in our culture. We are committed to contributing positively to the communities where we live, work and play. For more information, visit us at www.cornerstonebuildingbrands.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "anticipate," "guidance," "plan," "potential," "expect," "should," "will," "forecast," "target" and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current expectations, assumptions and/ or beliefs concerning future events. As a result, these forward-looking statements rely on a number of assumptions, forecasts, and estimates and, therefore, these forward-looking statements are subject to a number of risks and uncertainties that may cause the Company's actual performance to differ materially from that projected in such statements. Such forward-looking statements may include, but are not limited to, statements concerning our market commentary and performance expectations, including our fourth quarter 2021 forecasted net sales, gross profit, and Adjusted EBITDA, and our fiscal year 2021 forecasted capital spending, cash interest expense, cash tax rate, net debt leverage ratio and other consolidated financial performance guidance, and statements concerning our acquisition of UCC, including anticipated benefits of the acquisition and expecting timing for closing the acquisition. Among the factors that could cause actual results to differ materially include, but are not limited to: industry cyclicality; seasonality of the business and adverse weather conditions; challenging economic conditions affecting the residential, non-residential and repair and remodeling construction industry and markets; commodity price volatility and/or limited availability of raw materials, including polyvinyl chloride ("PVC") resin, glass, aluminum, and steel due to supply chain disruptions; our ability to identify and develop relationships with a sufficient number of qualified suppliers to mitigate risk in the event a significant supplier experiences a significant production or supply chain interruption; increasing difficulty in credit or financing availability of consumers or builders; increase in inflationary activity; ability to successfully achieve price increases to offset cost increases; ability to successfully implement operational efficiency initiatives, including automation; ability to successfully integrate our acquired businesses; ability to attract and retain employees, including through various initiatives and actions; volatility in the United States ("U.S.") and international economies and in the credit markets; the severity, duration and spread of the COVID-19 pandemic, as well as actions that may be taken by the Company or governmental authorities to contain COVID-19 or to treat its impact; including the Emergency Temporary Standard issued by the Occupational Safety and Health Administration on September 9, 2021; an impairment of our goodwill and/or intangible assets; our ability to successfully develop new products or improve existing products; our ability to retain and replace key personnel; enforcement and obsolescence of our intellectual property rights; costs related to compliance with, violations of or liabilities under environmental, health and safety laws; competitive activity and pricing pressure in our industry; our ability to make strategic acquisitions accretive to earnings and dispositions at favorable prices and terms; our ability to fund acquisitions using available liquidity; our ability to carry out our restructuring plans and to fully realize the expected cost savings; global climate change, including legal, regulatory or market responses thereto; breaches of our information system security measures; damage to our computer infrastructure and software systems; necessary maintenance or replacements to our enterprise resource planning technologies; potential personal injury, property damage or product liability claims or other types of litigation; compliance with certain laws related to our international business operations; increases in labor costs, potential labor disputes, union organizing activity and work stoppages at our facilities or the facilities of our suppliers; significant changes in factors and assumptions used to measure certain of our defined benefit plan obligations and the effect of actual investment returns on pension assets; ability to compete effectively against competitors with substitutable products; additional costs from new regulations which relate to the utilization or manufacturing of our products or services; our ability to realize the anticipated benefits of acquisitions and dispositions and to use the proceeds from dispositions; volatility of the Company's stock price; substantial governance and other rights held by the Investors; the effect on our common stock price caused by transactions engaged in by the Investors, our directors or executives; our substantial indebtedness and our ability to incur substantially more indebtedness; limitations that our debt agreements place on our ability to engage in certain business and financial transactions; our ability to obtain financing on acceptable terms; downgrades of our credit ratings; and the effect of increased interest rates on our ability to service our debt. See also the "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and other risks described in documents subsequently filed by the Company from time to time with the SEC, which identify other important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measures

This press release includes certain "non-GAAP financial measures" as defined under the Securities Exchange Act of 1934. Management believes the use of such non-GAAP financial measures assists investors in understanding the ongoing operating performance of the Company by presenting the financial results between periods on a more comparable basis. Such non-GAAP financial measures should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. We have included reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and provided in accordance with U.S. GAAP at the end of this release. A reconciliation of the forecasted range for Adjusted EBITDA for the fourth quarter of 2021 is not included in this release due to the number of variables in the projected range and because we are currently unable to quantify accurately certain amounts that would be required to be included in the GAAP measure or the individual adjustments for such reconciliation. In addition, we believe such reconciliation would imply a degree of precision that would be confusing or misleading to investors.

Where items are referred to in this presentation as "pro forma", such item gives effect to the Company's acquisitions of Prime Windows LLC, Cascade Windows Inc. and Kleary Masonry, Inc., and the IMP and DBCI divestitures as if these transactions had occurred at the beginning of the comparable period through the date of the respective transaction. Such adjustments are not consistent with the pro forma basis as defined under Article 11 of Regulation S-X.

Replay dial-in will be available through November 24, 2021

Dial-in number: 800-585-8367

Replay code: 4490324

About Cornerstone Building Brands

Cornerstone Building Brands is the largest manufacturer of exterior building products for residential and low-rise non-residential buildings in North America. Headquartered in Cary, N.C., we serve residential and commercial customers across the new construction and repair and remodel markets. Our market-leading portfolio of products spans vinyl windows, vinyl siding, stone veneer, metal roofing, metal wall systems and metal accessories. Cornerstone Building Brands' broad, multichannel distribution platform and expansive national footprint includes more than 20,000 employees at manufacturing, distribution and office locations throughout North America. Corporate stewardship and environmental, social and governance (ESG) responsibility are embedded in our culture. We are committed to contributing positively to the communities where we live, work and play. For more information, visit us at www.cornerstonebuildingbrands.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "anticipate," "guidance," "plan," "potential," "expect," "should," "will," "forecast," "target" and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current expectations, assumptions and/ or beliefs concerning future events. As a result, these forward-looking statements rely on a number of assumptions, forecasts, and estimates and, therefore, these forward-looking statements are subject to a number of risks and uncertainties that may cause the Company's actual performance to differ materially from that projected in such statements. Such forward-looking statements may include, but are not limited to, statements concerning our market commentary and performance expectations, including our fourth quarter 2021 forecasted net sales, gross profit, and Adjusted EBITDA, and our fiscal year 2021 forecasted capital spending, cash interest expense, cash tax rate, net debt leverage ratio and other consolidated financial performance guidance, and statements concerning our acquisition of UCC, including anticipated benefits of the acquisition and expecting timing for closing the acquisition. Among the factors that could cause actual results to differ materially include, but are not limited to: industry cyclicality; seasonality of the business and adverse weather conditions; challenging economic conditions affecting the residential, non-residential and repair and remodeling construction industry and markets; commodity price volatility and/or limited availability of raw materials, including polyvinyl chloride ("PVC") resin, glass, aluminum, and steel due to supply chain disruptions; our ability to identify and develop relationships with a sufficient number of qualified suppliers to mitigate risk in the event a significant supplier experiences a significant production or supply chain interruption; increasing difficulty in credit or financing availability of consumers or builders; increase in inflationary activity; ability to successfully achieve price increases to offset cost increases; ability to successfully implement operational efficiency initiatives, including automation; ability to successfully integrate our acquired businesses; ability to attract and retain employees, including through various initiatives and actions; volatility in the United States ("U.S.") and international economies and in the credit markets; the severity, duration and spread of the COVID-19 pandemic, as well as actions that may be taken by the Company or governmental authorities to contain COVID-19 or to treat its impact; including the Emergency Temporary Standard issued by the Occupational Safety and Health Administration on September 9, 2021; an impairment of our goodwill and/or intangible assets; our ability to successfully develop new products or improve existing products; our ability to retain and replace key personnel; enforcement and obsolescence of our intellectual property rights; costs related to compliance with, violations of or liabilities under environmental, health and safety laws; competitive activity and pricing pressure in our industry; our ability to make strategic acquisitions accretive to earnings and dispositions at favorable prices and terms; our ability to fund acquisitions using available liquidity; our ability to carry out our restructuring plans and to fully realize the expected cost savings; global climate change, including legal, regulatory or market responses thereto; breaches of our information system security measures; damage to our computer infrastructure and software systems; necessary maintenance or replacements to our enterprise resource planning technologies; potential personal injury, property damage or product liability claims or other types of litigation; compliance with certain laws related to our international business operations; increases in labor costs, potential labor disputes, union organizing activity and work stoppages at our facilities or the facilities of our suppliers; significant changes in factors and assumptions used to measure certain of our defined benefit plan obligations and the effect of actual investment returns on pension assets; ability to compete effectively against competitors with substitutable products; additional costs from new regulations which relate to the utilization or manufacturing of our products or services; our ability to realize the anticipated benefits of acquisitions and dispositions and to use the proceeds from dispositions; volatility of the Company's stock price; substantial governance and other rights held by the Investors; the effect on our common stock price caused by transactions engaged in by the Investors, our directors or executives; our substantial indebtedness and our ability to incur substantially more indebtedness; limitations that our debt agreements place on our ability to engage in certain business and financial transactions; our ability to obtain financing on acceptable terms; downgrades of our credit ratings; and the effect of increased interest rates on our ability to service our debt. See also the "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and other risks described in documents subsequently filed by the Company from time to time with the SEC, which identify other important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measures

This press release includes certain "non-GAAP financial measures" as defined under the Securities Exchange Act of 1934. Management believes the use of such non-GAAP financial measures assists investors in understanding the ongoing operating performance of the Company by presenting the financial results between periods on a more comparable basis. Such non-GAAP financial measures should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. We have included reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and provided in accordance with U.S. GAAP at the end of this release. A reconciliation of the forecasted range for Adjusted EBITDA for the fourth quarter of 2021 is not included in this release due to the number of variables in the projected range and because we are currently unable to quantify accurately certain amounts that would be required to be included in the GAAP measure or the individual adjustments for such reconciliation. In addition, we believe such reconciliation would imply a degree of precision that would be confusing or misleading to investors.

Where items are referred to in this presentation as "pro forma", such item gives effect to the Company's acquisitions of Prime Windows LLC, Cascade Windows Inc. and Kleary Masonry, Inc., and the IMP and DBCI divestitures as if these transactions had occurred at the beginning of the comparable period through the date of the respective transaction. Such adjustments are not consistent with the pro forma basis as defined under Article 11 of Regulation S-X.

CORNERSTONE BUILDING BRANDS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)



Three Months Ended Nine Months Ended

October 2, October 3, October 2, October 3, 2021 2020 2021 2020

Net sales $ 1,444,405 $ 1,227,253 $ 4,111,558 $ 3,426,000

Cost of sales 1,134,909 929,751 3,230,605 2,642,880

Gross profit 309,496 297,502 880,953 783,120

21.4 % 24.2 % 21.4 % 22.9 %



Selling, generaland 161,134 137,250 477,820 436,575 administrativeexpenses

Intangible asset 45,667 45,446 138,678 135,547 amortization

Restructuring andimpairment 971 2,918 7,461 32,164 charges, net

Strategicdevelopment and 22,250 7,909 25,502 13,550 acquisitionrelated costs

Gain on (831,252 ) - (831,252 ) - divestitures

Goodwill - - - 503,171 impairment

Income (loss) 910,726 103,979 1,062,744 (337,887 )from operations

Interest income 71 328 211 1,007

Interest expense (43,731 ) (51,519 ) (147,688 ) (158,738 )

Foreign exchange (1,270 ) 812 (1,067 ) (1,300 )gain (loss)

Loss onextinguishment of - - (42,234 ) - debt

Other income 337 (23 ) 1,167 (25 )(expense), net

Income (loss)before income 866,133 53,577 873,133 (496,943 )taxes

Provision(benefit) for 245,598 23,061 245,326 (12,285 )income taxes

28.4 % 43.0 % 28.1 % 2.5 %



Net income (loss) 620,535 30,516 627,807 (484,658 )

Net incomeallocated to (8,380 ) (488 ) (7,837 ) - participatingsecurities

Net income (loss)applicable to $ 612,155 $ 30,028 $ 619,970 $ (484,658 )common shares



Income (loss) per common share:

Basic $ 4.85 $ 0.24 $ 4.93 $ (3.86 )

Diluted $ 4.82 $ 0.24 $ 4.90 $ (3.86 )



Weighted averagenumber of common sharesoutstanding:

Basic 126,159 125,100 125,840 125,655

Diluted 127,079 125,289 126,602 125,655



Increase ) )(decrease) in 17.7 % (4.5 % 20.0 % (6.0 %sales



Selling, generalandadministrative 11.2 % 11.2 % 11.6 % 12.7 %expensespercentage of netsales

CORNERSTONE BUILDING BRANDS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

October 2,2021

December 31,2020

ASSETS

Current assets:

Cash and cash equivalents

$

677,187

$

674,255

Restricted cash

2,211

6,223

Accounts receivable, net

645,298

554,649

Inventories, net

614,573

431,937

Income taxes receivable

11,611

39,379

Investments in debt and equity securities, at market

2,567

2,333

Prepaid expenses and other

119,234

77,751

Assets held for sale

3,909

4,644

Total current assets

2,076,590

1,791,171

Property, plant and equipment, net

583,371

631,821

Lease right-of-use assets

278,316

264,107

Goodwill

1,326,411

1,194,729

Intangible assets, net

1,438,039

1,584,604

Deferred income taxes

2,109

1,867

Other assets, net

26,259

10,191

Total assets

$

5,731,095

$

5,478,490

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt

$

26,000

$

25,600

Accounts payable

307,153

211,441

Accrued compensation and benefits

96,794

81,548

Accrued interest

12,722

25,485

Accrued income taxes

8,216

5,060

Current portion of lease liabilities

72,983

70,125

Other accrued expenses

294,074

247,893

Total current liabilities

817,942

667,152

Long-term debt

3,015,795

3,563,429

Deferred income taxes

248,544

269,792

Long-term lease liabilities

207,570

198,875

Other long-term liabilities

329,189

337,437

Total long-term liabilities

3,801,098

4,369,533

Common stock

1,263

1,255

Additional paid-in capital

1,272,999

1,257,262

Accumulated deficit

(136,878

)

(764,685

)

Accumulated other comprehensive loss, net

(24,905

)

(51,517

)

Treasury stock, at cost

(424

)

(510

)

Total stockholders' equity

1,112,055

441,805

Total liabilities and stockholders' equity

$

5,731,095

$

5,478,490

CORNERSTONE BUILDING BRANDS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



October 2, December 31, 2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 677,187 $ 674,255

Restricted cash 2,211 6,223

Accounts receivable, net 645,298 554,649

Inventories, net 614,573 431,937

Income taxes receivable 11,611 39,379

Investments in debt and equity securities, at 2,567 2,333 market

Prepaid expenses and other 119,234 77,751

Assets held for sale 3,909 4,644

Total current assets 2,076,590 1,791,171



Property, plant and equipment, net 583,371 631,821

Lease right-of-use assets 278,316 264,107

Goodwill 1,326,411 1,194,729

Intangible assets, net 1,438,039 1,584,604

Deferred income taxes 2,109 1,867

Other assets, net 26,259 10,191

Total assets $ 5,731,095 $ 5,478,490



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt $ 26,000 $ 25,600

Accounts payable 307,153 211,441

Accrued compensation and benefits 96,794 81,548

Accrued interest 12,722 25,485

Accrued income taxes 8,216 5,060

Current portion of lease liabilities 72,983 70,125

Other accrued expenses 294,074 247,893

Total current liabilities 817,942 667,152



Long-term debt 3,015,795 3,563,429

Deferred income taxes 248,544 269,792

Long-term lease liabilities 207,570 198,875

Other long-term liabilities 329,189 337,437

Total long-term liabilities 3,801,098 4,369,533



Common stock 1,263 1,255

Additional paid-in capital 1,272,999 1,257,262

Accumulated deficit (136,878 ) (764,685 )

Accumulated other comprehensive loss, net (24,905 ) (51,517 )

Treasury stock, at cost (424 ) (510 )

Total stockholders' equity 1,112,055 441,805



Total liabilities and stockholders' equity $ 5,731,095 $ 5,478,490

CORNERSTONE BUILDING BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended

October 2,2021

October 3,2020

Cash flows from operating activities:

Net income (loss)

$

627,807

$

(484,658

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

216,956

212,413

Non-cash interest expense

19,857

6,948

Share-based compensation expense

16,946

12,568

Loss on extinguishment of debt

42,234

-

Goodwill impairment

-

503,171

Asset impairment

4,091

3,490

Gain on divestitures

(831,252

)

-

Loss on sale of assets, net

-

710

Provision for credit losses

2,289

3,762

Deferred income taxes

(23,441

)

(27,052

)

Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:

Accounts receivable

(137,424

)

(84,309

)

Inventories

(241,068

)

30,980

Income taxes

27,768

16,886

Prepaid expenses and other

(41,355

)

6,246

Accounts payable

100,402

22,669

Accrued expenses

31,554

12,920

Other, net

996

132

Net cash provided by (used in) operating activities

(183,640

)

236,876

Cash flows from investing activities:

Acquisitions, net of cash acquired

(331,010

)

(41,841

)

Capital expenditures

(75,183

)

(62,535

)

Proceeds from divestitures, net of cash divested

1,187,307

-

Proceeds from sale of property, plant and equipment

4,615

1,538

Net cash provided by (used in) investing activities

785,729

(102,838

)

Cash flows from financing activities:

Proceeds from ABL facility

190,000

345,000

Payments on ABL facility

(190,000

)

(415,000

)

Proceeds from cash flow revolver

-

115,000

Payments on cash flow revolver

-

(115,000

)

Proceeds from term loan

108,438

-

Payments on term loan

(19,405

)

(19,215

)

Proceeds from senior notes

-

500,000

Payments on senior notes

(670,800

)

-

Payments of financing costs

(13,187

)

(6,905

)

Purchases of treasury stock

-

(6,428

)

Payments on derivative financing obligations

(6,131

)

-

Other

(1,300

)

(478

)

Net cash provided by (used in) financing activities

(602,385

)

396,974

Effect of exchange rate changes on cash and cash equivalents

(784

)

507

Net increase (decrease) in cash, cash equivalents and restricted cash

(1,080

)

531,519

Cash, cash equivalents and restricted cash at beginning of period

680,478

102,307

Cash, cash equivalents and restricted cash at end of period

$

679,398

$

633,826

Supplemental disclosure of cash flow information

Interest paid, net of amounts capitalized

$

149,025

$

138,325

Taxes paid, net

$

232,755

$

(1,881

)

CORNERSTONE BUILDING BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Nine Months Ended

October 2, October 3, 2021 2020

Cash flows from operating activities:

Net income (loss) $ 627,807 $ (484,658 )

Adjustments to reconcile net income (loss) tonet cash provided by (used in) operating activities:

Depreciation and amortization 216,956 212,413

Non-cash interest expense 19,857 6,948

Share-based compensation expense 16,946 12,568

Loss on extinguishment of debt 42,234 -

Goodwill impairment - 503,171

Asset impairment 4,091 3,490

Gain on divestitures (831,252 ) -

Loss on sale of assets, net - 710

Provision for credit losses 2,289 3,762

Deferred income taxes (23,441 ) (27,052 )

Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:

Accounts receivable (137,424 ) (84,309 )

Inventories (241,068 ) 30,980

Income taxes 27,768 16,886

Prepaid expenses and other (41,355 ) 6,246

Accounts payable 100,402 22,669

Accrued expenses 31,554 12,920

Other, net 996 132

Net cash provided by (used in) operating (183,640 ) 236,876 activities

Cash flows from investing activities:

Acquisitions, net of cash acquired (331,010 ) (41,841 )

Capital expenditures (75,183 ) (62,535 )

Proceeds from divestitures, net of cash divested 1,187,307 -

Proceeds from sale of property, plant and 4,615 1,538 equipment

Net cash provided by (used in) investing 785,729 (102,838 ) activities

Cash flows from financing activities:

Proceeds from ABL facility 190,000 345,000

Payments on ABL facility (190,000 ) (415,000 )

Proceeds from cash flow revolver - 115,000

Payments on cash flow revolver - (115,000 )

Proceeds from term loan 108,438 -

Payments on term loan (19,405 ) (19,215 )

Proceeds from senior notes - 500,000

Payments on senior notes (670,800 ) -

Payments of financing costs (13,187 ) (6,905 )

Purchases of treasury stock - (6,428 )

Payments on derivative financing obligations (6,131 ) -

Other (1,300 ) (478 )

Net cash provided by (used in) financing (602,385 ) 396,974 activities

Effect of exchange rate changes on cash and cash (784 ) 507 equivalents

Net increase (decrease) in cash, cash (1,080 ) 531,519 equivalents and restricted cash

Cash, cash equivalents and restricted cash at 680,478 102,307 beginning of period

Cash, cash equivalents and restricted cash at $ 679,398 $ 633,826 end of period

Supplemental disclosure of cash flow information

Interest paid, net of amounts capitalized $ 149,025 $ 138,325

Taxes paid, net $ 232,755 $ (1,881 )

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

ADJUSTED NET INCOME (LOSS) PER DILUTED COMMON SHARE AND

NET INCOME (LOSS) COMPARISON

(In thousands, except per share data)

(Unaudited)

Three Months Ended

Nine Months Ended

October 2,2021

October 3,2020

October 2,2021

October 3,2020

Net income (loss) per diluted common share, GAAP basis

$

4.82

$

0.24

$

4.90

$

(3.86

)

Restructuring and impairment charges, net

0.01

0.02

0.06

0.26

Strategic development and acquisition related costs

0.18

0.06

0.20

0.11

Gain on divestitures

(6.54

)

-

(6.57

)

-

Non-cash loss (gain) on foreign currency transactions

0.01

(0.01

)

0.01

0.01

Goodwill impairment

-

-

-

4.00

Intangible asset amortization(4)

0.36

0.36

1.10

1.08

Customer inventory buybacks

-

-

-

-

COVID-19(3)

-

0.02

-

0.08

Other, net(5)

0.01

-

0.43

0.01

Tax effect of applicable non-GAAP adjustments(1)

1.56

(0.12

)

1.24

(1.45

)

Adjusted net income (loss) per diluted common share(2)

$

0.39

$

0.58

$

1.37

$

0.26

Three Months Ended

Nine Months Ended

October 2,2021

October 3,2020

October 2,2021

October 3,2020

Net income (loss) applicable to common shares, GAAP basis

$

612,155

$

30,028

$

619,970

$

(484,658

)

Restructuring and impairment charges, net

971

2,918

7,461

32,321

Strategic development and acquisition related costs

22,250

7,909

25,502

13,550

Gain on divestitures

(831,252

)

-

(831,252

)

-

Non-cash loss (gain) on foreign currency transactions

1,270

(812

)

1,067

1,300

Goodwill impairment

-

-

-

503,171

Intangible asset amortization(4)

45,667

45,446

138,678

135,547

Customer inventory buybacks

-

140

-

453

COVID-19(3)

6

2,599

(393

)

10,634

Other, net(5)

853

(153

)

54,855

1,459

Tax effect of applicable non-GAAP adjustments(1)

197,661

(15,092

)

157,061

(181,593

)

Adjusted net income (loss) applicable to common shares(2)

$

49,581

$

72,983

$

172,949

$

32,184

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

ADJUSTED NET INCOME (LOSS) PER DILUTED COMMON SHARE AND

NET INCOME (LOSS) COMPARISON

(In thousands, except per share data)

(Unaudited)



Three Months Ended Nine Months Ended

October 2, October 3, October 2, October 3, 2021 2020 2021 2020

Net income (loss)per diluted $ 4.82 $ 0.24 $ 4.90 $ (3.86 ) common share,GAAP basis

Restructuring andimpairment 0.01 0.02 0.06 0.26 charges, net

Strategicdevelopment and 0.18 0.06 0.20 0.11 acquisitionrelated costs

Gain on (6.54 ) - (6.57 ) - divestitures

Non-cash loss(gain) on foreign 0.01 (0.01 ) 0.01 0.01 currencytransactions

Goodwill - - - 4.00 impairment

Intangible asset 0.36 0.36 1.10 1.08 amortization^(4)

Customerinventory - - - - buybacks

COVID-19^(3) - 0.02 - 0.08

Other, net^(5) 0.01 - 0.43 0.01

Tax effect ofapplicable 1.56 (0.12 ) 1.24 (1.45 ) non-GAAPadjustments^(1)

Adjusted netincome (loss) per $ 0.39 $ 0.58 $ 1.37 $ 0.26 diluted commonshare^(2)



Three Months Ended Nine Months Ended

October 2, October 3, October 2, October 3, 2021 2020 2021 2020

Net income (loss)applicable to $ 612,155 $ 30,028 $ 619,970 $ (484,658 ) common shares,GAAP basis

Restructuring andimpairment 971 2,918 7,461 32,321 charges, net

Strategicdevelopment and 22,250 7,909 25,502 13,550 acquisitionrelated costs

Gain on (831,252 ) - (831,252 ) - divestitures

Non-cash loss(gain) on foreign 1,270 (812 ) 1,067 1,300 currencytransactions

Goodwill - - - 503,171 impairment

Intangible asset 45,667 45,446 138,678 135,547 amortization^(4)

Customerinventory - 140 - 453 buybacks

COVID-19^(3) 6 2,599 (393 ) 10,634

Other, net^(5) 853 (153 ) 54,855 1,459

Tax effect ofapplicable 197,661 (15,092 ) 157,061 (181,593 ) non-GAAPadjustments^(1)

Adjusted netincome (loss) $ 49,581 $ 72,983 $ 172,949 $ 32,184 applicable tocommon shares^(2)

(1)

The Company calculated the tax effect of non-GAAP adjustments by applying the applicable federal and state statutory tax rate for the period to each applicable non-GAAP item.

(2)

The Company discloses a tabular comparison of Adjusted Net Income (Loss) per diluted common share and Adjusted Net Income (Loss) applicable to common shares, which are non-GAAP measures, because they are referred to in the text of our press releases and are instrumental in comparing the results from period to period. Adjusted Net Income (Loss) per diluted common share and Adjusted Net Income (Loss) applicable to common shares should not be considered in isolation or as a substitute for Net Income (Loss) per diluted common share and Net Income (Loss) applicable to common shares as reported on the face of our consolidated statements of operations.

(3)

Costs included within the COVID-19 line item for the three and nine months ended October 2, 2021 and October 3, 2020 include incremental labor costs due to quarantine related absenteeism, incremental facility cleaning costs, pandemic related supplies and personal protective equipment for employees, among other costs.

(4)

Effective July 3, 2021, we revised the definition of Adjusted Net Income to exclude intangible amortization expense.

(5)

Costs within the Other, net line item for the nine months ended October 2, 2021 primarily included $11.6 million of non-capitalizable debt issuance costs and $42.2 million of loss on extinguishment of debt.

Certain amounts in this release have been subject to rounding adjustments. Accordingly, amounts shown as totals may not be the arithmetic aggregation of the individual amounts that comprise or precede them.

The Company calculated the tax effect of non-GAAP adjustments by applying(1) the applicable federal and state statutory tax rate for the period to each applicable non-GAAP item.

The Company discloses a tabular comparison of Adjusted Net Income (Loss) per diluted common share and Adjusted Net Income (Loss) applicable to common shares, which are non-GAAP measures, because they are referred to in the text of our press releases and are instrumental in comparing the(2) results from period to period. Adjusted Net Income (Loss) per diluted common share and Adjusted Net Income (Loss) applicable to common shares should not be considered in isolation or as a substitute for Net Income (Loss) per diluted common share and Net Income (Loss) applicable to common shares as reported on the face of our consolidated statements of operations.

Costs included within the COVID-19 line item for the three and nine months ended October 2, 2021 and October 3, 2020 include incremental labor costs(3) due to quarantine related absenteeism, incremental facility cleaning costs, pandemic related supplies and personal protective equipment for employees, among other costs.

(4) Effective July 3, 2021, we revised the definition of Adjusted Net Income to exclude intangible amortization expense.

Costs within the Other, net line item for the nine months ended October 2,(5) 2021 primarily included $11.6 million of non-capitalizable debt issuance costs and $42.2 million of loss on extinguishment of debt.

Certain amounts in this release have been subject to rounding adjustments.Accordingly, amounts shown as totals may not be the arithmetic aggregation ofthe individual amounts that comprise or precede them.

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)

Consolidated

Three Months Ended

Nine Months Ended

October 2,2021

October 3,2020

September 28,2019

October 2,2021

October 3,2020

September 28,2019

Net sales

$

1,444,405

$

1,227,253

$

1,285,043

$

4,111,558

$

3,426,000

$

3,645,332

Impact of acquisitions and divestitures(1)

(16,393

)

(39,216

)

(46,151

)

(99,205

)

(125,421

)

(142,204

)

Pro forma net sales

$

1,428,012

$

1,188,037

$

1,238,892

$

4,012,353

$

3,300,579

$

3,503,128

Gross profit

$

309,496

$

297,502

$

309,803

$

880,953

$

783,120

$

800,383

21.4

%

24.2

%

24.1

%

21.4

%

22.9

%

22.0

%

Operating income (loss), GAAP

$

910,726

$

103,979

$

95,560

$

1,062,744

$

(337,887

)

$

149,126

Restructuring and impairment charges, net

971

2,918

4,984

7,461

32,321

15,522

Strategic development and acquisition related costs

22,250

7,909

10,500

25,502

13,550

36,668

Gain on divestitures

(831,252

)

-

-

(831,252

)

-

-

Non-cash charge of purchase price allocated to inventories

-

-

-

-

-

16,249

Goodwill impairment

-

-

-

-

503,171

-

Customer inventory buybacks

-

140

159

-

453

576

COVID-19

6

2,599

-

(393

)

10,634

-

Other, net

851

(153

)

1,699

12,617

1,459

3,780

Adjusted operating income

103,552

117,392

112,902

276,679

223,701

221,921

Other income (expense), net

337

(23

)

717

1,167

(25

)

665

Depreciation and amortization

71,055

71,933

64,009

216,956

212,413

191,485

Share-based compensation expense

8,353

4,025

3,134

16,946

12,568

10,613

Adjusted EBITDA

183,297

193,327

180,762

511,748

448,657

424,684

Impact of acquisitions and divestitures(1)

(1,710

)

(17,884

)

(12,861

)

(7,953

)

(41,091

)

(44,681

)

Pro Forma Adjusted EBITDA

$

181,587

$

175,443

$

167,901

$

503,795

$

407,566

$

380,003

Adjusted EBITDA as a % of Net Sales

12.7

%

15.8

%

14.1

%

12.4

%

13.1

%

11.7

%

Pro forma Adjusted EBITDA as a % of Pro Forma Net sales

12.7

%

14.8

%

13.6

%

12.6

%

12.3

%

10.8

%

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)





Consolidated



Three Months Ended Nine Months Ended

October 2, October 3, September 28, October 2, October 3, September 28, 2021 2020 2019 2021 2020 2019

Net sales $ 1,444,405 $ 1,227,253 $ 1,285,043 $ 4,111,558 $ 3,426,000 $ 3,645,332

Impact ofacquisitionsand (16,393 ) (39,216 ) (46,151 ) (99,205 ) (125,421 ) (142,204 )divestitures^(1)

Pro forma net $ 1,428,012 $ 1,188,037 $ 1,238,892 $ 4,012,353 $ 3,300,579 $ 3,503,128 sales



Gross profit $ 309,496 $ 297,502 $ 309,803 $ 880,953 $ 783,120 $ 800,383

21.4 % 24.2 % 24.1 % 21.4 % 22.9 % 22.0 %



Operatingincome $ 910,726 $ 103,979 $ 95,560 $ 1,062,744 $ (337,887 ) $ 149,126 (loss), GAAP

Restructuringand 971 2,918 4,984 7,461 32,321 15,522 impairmentcharges, net

Strategicdevelopmentand 22,250 7,909 10,500 25,502 13,550 36,668 acquisitionrelated costs

Gain on (831,252 ) - - (831,252 ) - - divestitures

Non-cashcharge ofpurchase - - - - - 16,249 priceallocated toinventories

Goodwill - - - - 503,171 - impairment

Customerinventory - 140 159 - 453 576 buybacks

COVID-19 6 2,599 - (393 ) 10,634 -

Other, net 851 (153 ) 1,699 12,617 1,459 3,780

Adjustedoperating 103,552 117,392 112,902 276,679 223,701 221,921 income



Other income(expense), 337 (23 ) 717 1,167 (25 ) 665 net

Depreciationand 71,055 71,933 64,009 216,956 212,413 191,485 amortization

Share-basedcompensation 8,353 4,025 3,134 16,946 12,568 10,613 expense

Adjusted 183,297 193,327 180,762 511,748 448,657 424,684 EBITDA



Impact ofacquisitionsand (1,710 ) (17,884 ) (12,861 ) (7,953 ) (41,091 ) (44,681 )divestitures^(1)

Pro FormaAdjusted $ 181,587 $ 175,443 $ 167,901 $ 503,795 $ 407,566 $ 380,003 EBITDA

AdjustedEBITDA as a % 12.7 % 15.8 % 14.1 % 12.4 % 13.1 % 11.7 %of Net Sales

Pro formaAdjustedEBITDA as a % 12.7 % 14.8 % 13.6 % 12.6 % 12.3 % 10.8 %of Pro FormaNet sales

(1)

Reflects the acquisition impact of the net sales and Adjusted EBITDA of Environmental Stoneworks through February 20, 2019, Kleary Masonry, Inc. through March 1, 2020, Prime Windows LLC through April 29, 2021, and Cascade Windows Inc. through August 19, 2021; and reflects the impact of the divestitures of the IMP and DBCI businesses through the divestiture dates of August 9, 2021 and August 18, 2021, respectively.

Reflects the acquisition impact of the net sales and Adjusted EBITDA of Environmental Stoneworks through February 20, 2019, Kleary Masonry, Inc.(1) through March 1, 2020, Prime Windows LLC through April 29, 2021, and Cascade Windows Inc. through August 19, 2021; and reflects the impact of the divestitures of the IMP and DBCI businesses through the divestiture dates of August 9, 2021 and August 18, 2021, respectively.

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)

Windows

Three Months Ended

Nine Months Ended

October 2,2021

October 3,2020

October 2,2021

October 3,2020

Net Sales

$

596,486

$

501,314

$

1,703,493

$

1,378,039

Impact of acquisitions(1)

23,577

54,439

132,142

147,950

Pro forma net sales

$

620,063

$

555,753

$

1,835,635

$

1,525,989

Gross profit

$

86,344

$

99,125

$

281,198

$

257,489

14.5

%

19.8

%

16.5

%

18.7

%

Operating income (loss), GAAP

$

15,756

$

37,295

$

83,901

$

(252,794

)

Restructuring and impairment charges, net

258

1,539

1,213

7,189

Strategic development and acquisition related costs

831

-

2,145

16

Goodwill impairment

-

-

-

320,990

COVID-19

-

1,031

-

5,923

Other, net

-

252

-

252

Adjusted operating income

16,845

40,117

87,259

81,576

Other income (expense), net

38

(115

)

(36

)

(115

)

Depreciation and amortization

34,876

30,644

97,848

90,679

Adjusted EBITDA

51,759

70,646

185,071

172,140

Impact of acquisitions(1)

1,588

7,499

15,315

17,097

Pro Forma Adjusted EBITDA

$

53,347

$

78,145

$

200,386

$

189,237

Adjusted EBITDA as a % of Net Sales

8.7

%

14.1

%

10.9

%

12.5

%

Pro Forma Adjusted EBITDA as a % of Pro Forma Net Sales

8.6

%

14.1

%

10.9

%

12.4

%

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)





Windows



Three Months Ended Nine Months Ended

October 2, October 3, October 2, October 3, 2021 2020 2021 2020

Net Sales $ 596,486 $ 501,314 $ 1,703,493 $ 1,378,039

Impact of 23,577 54,439 132,142 147,950 acquisitions^(1)

Pro forma net sales $ 620,063 $ 555,753 $ 1,835,635 $ 1,525,989



Gross profit $ 86,344 $ 99,125 $ 281,198 $ 257,489

14.5 % 19.8 % 16.5 % 18.7 %



Operating income $ 15,756 $ 37,295 $ 83,901 $ (252,794 )(loss), GAAP

Restructuring andimpairment charges, 258 1,539 1,213 7,189 net

Strategic developmentand acquisition 831 - 2,145 16 related costs

Goodwill impairment - - - 320,990

COVID-19 - 1,031 - 5,923

Other, net - 252 - 252

Adjusted operating 16,845 40,117 87,259 81,576 income



Other income 38 (115 ) (36 ) (115 )(expense), net

Depreciation and 34,876 30,644 97,848 90,679 amortization

Adjusted EBITDA 51,759 70,646 185,071 172,140



Impact of 1,588 7,499 15,315 17,097 acquisitions^(1)

Pro Forma Adjusted $ 53,347 $ 78,145 $ 200,386 $ 189,237 EBITDA

Adjusted EBITDA as a 8.7 % 14.1 % 10.9 % 12.5 %% of Net Sales

Pro Forma AdjustedEBITDA as a % of Pro 8.6 % 14.1 % 10.9 % 12.4 %Forma Net Sales

(1)

Reflects the impact of the net sales and Adjusted EBITDA of Prime Windows LLC through April 29, 2021 and Cascade Windows Inc. through August 19, 2021.

Reflects the impact of the net sales and Adjusted EBITDA of Prime Windows(1) LLC through April 29, 2021 and Cascade Windows Inc. through August 19, 2021.

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)

Siding

Three Months Ended

Nine Months Ended

October 2,2021

October 3,2020

October 2,2021

October 3,2020

Net Sales

$

357,870

$

321,898

$

1,036,448

$

848,190

Impact of acquisition(1)

-

-

-

8,358

Pro forma net sales

$

357,870

$

321,898

$

1,036,448

$

856,548

Gross profit

$

94,931

$

92,882

$

270,797

$

230,061

26.5

%

28.9

%

26.1

%

27.1

%

Operating income (loss), GAAP

$

46,108

$

45,313

$

127,019

$

(92,916

)

Restructuring and impairment charges, net

133

(714

)

287

2,901

Strategic development and acquisition related costs

(50

)

7,139

(2,894

)

8,115

Goodwill impairment

-

-

-

176,774

Customer inventory buybacks

-

140

-

453

COVID-19

19

24

26

67

Other, net

(10

)

(1,351

)

30

(1,351

)

Adjusted operating income

46,200

50,551

124,468

94,043

Other income (expense), net

(54

)

(4

)

(120

)

(10

)

Depreciation and amortization

29,084

28,547

87,441

85,068

Adjusted EBITDA

75,230

79,094

211,789

179,101

Impact of acquisition(1)

-

-

-

1,869

Pro Forma Adjusted EBITDA

$

75,230

$

79,094

$

211,789

$

180,970

Adjusted EBITDA as a % of Net Sales

21.0

%

24.6

%

20.4

%

21.1

%

Pro Forma Adjusted EBITDA as a % of Pro Forma Net Sales

21.0

%

24.6

%

20.4

%

21.1

%

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)





Siding



Three Months Ended Nine Months Ended

October 2, October 3, October 2, October 3, 2021 2020 2021 2020

Net Sales $ 357,870 $ 321,898 $ 1,036,448 $ 848,190

Impact of acquisition^ - - - 8,358 (1)

Pro forma net sales $ 357,870 $ 321,898 $ 1,036,448 $ 856,548



Gross profit $ 94,931 $ 92,882 $ 270,797 $ 230,061

26.5 % 28.9 % 26.1 % 27.1 %



Operating income $ 46,108 $ 45,313 $ 127,019 $ (92,916 )(loss), GAAP

Restructuring and 133 (714 ) 287 2,901 impairment charges, net

Strategic developmentand acquisition related (50 ) 7,139 (2,894 ) 8,115 costs

Goodwill impairment - - - 176,774

Customer inventory - 140 - 453 buybacks

COVID-19 19 24 26 67

Other, net (10 ) (1,351 ) 30 (1,351 )

Adjusted operating 46,200 50,551 124,468 94,043 income



Other income (expense), (54 ) (4 ) (120 ) (10 )net

Depreciation and 29,084 28,547 87,441 85,068 amortization

Adjusted EBITDA 75,230 79,094 211,789 179,101



Impact of acquisition^ - - - 1,869 (1)

Pro Forma Adjusted $ 75,230 $ 79,094 $ 211,789 $ 180,970 EBITDA

Adjusted EBITDA as a % 21.0 % 24.6 % 20.4 % 21.1 %of Net Sales

Pro Forma AdjustedEBITDA as a % of Pro 21.0 % 24.6 % 20.4 % 21.1 %Forma Net Sales

(1)

Reflects the impact of the net sales and Adjusted EBITDA of Kleary Masonry, Inc. through March 1, 2020.

(1) Reflects the impact of the net sales and Adjusted EBITDA of Kleary Masonry, Inc. through March 1, 2020.

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)

Commercial

Three Months Ended

Nine Months Ended

October 2,2021

October 3,2020

October 2,2021

October 3,2020

Net Sales

$

490,049

$

404,041

$

1,371,617

$

1,199,771

Impact of divestitures(1)

(39,970

)

(93,655

)

(231,347

)

(281,729

)

Pro forma net sales

$

450,079

$

310,386

$

1,140,270

$

918,042

Gross profit

$

128,221

$

105,495

$

328,958

$

295,570

26.2

%

26.1

%

24.0

%

24.6

%

Operating income, GAAP

$

908,458

$

56,137

$

1,003,373

$

109,642

Restructuring and impairment charges, net

2,673

1,358

5,719

20,427

Strategic development and acquisition related costs

2,263

(8

)

3,095

(262

)

Gain on divestitures

(831,252

)

-

(831,252

)

-

Goodwill impairment

-

-

-

5,407

COVID-19

-

1,063

(774

)

2,585

Other, net

95

(155

)

272

945

Adjusted operating income

82,237

58,395

180,433

138,744

Other income (expense), net

301

200

1,026

437

Depreciation and amortization

7,012

11,743

29,015

33,664

Adjusted EBITDA

89,550

70,338

210,474

172,845

Impact of divestitures(1)

(3,298

)

(25,383

)

(23,268

)

(60,057

)

Pro Forma Adjusted EBITDA

$

86,252

$

44,955

$

187,206

$

112,788

Adjusted EBITDA as a % of Net Sales

18.3

%

17.4

%

15.3

%

14.4

%

Pro Forma Adjusted EBITDA as a % of Pro Forma Net Sales

19.2

%

14.5

%

16.4

%

12.3

%

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)





Commercial



Three Months Ended Nine Months Ended

October 2, October 3, October 2, October 3, 2021 2020 2021 2020

Net Sales $ 490,049 $ 404,041 $ 1,371,617 $ 1,199,771

Impact of (39,970 ) (93,655 ) (231,347 ) (281,729 )divestitures^(1)

Pro forma net sales $ 450,079 $ 310,386 $ 1,140,270 $ 918,042



Gross profit $ 128,221 $ 105,495 $ 328,958 $ 295,570

26.2 % 26.1 % 24.0 % 24.6 %



Operating income, $ 908,458 $ 56,137 $ 1,003,373 $ 109,642 GAAP

Restructuring andimpairment charges, 2,673 1,358 5,719 20,427 net

Strategic developmentand acquisition 2,263 (8 ) 3,095 (262 )related costs

Gain on divestitures (831,252 ) - (831,252 ) -

Goodwill impairment - - - 5,407

COVID-19 - 1,063 (774 ) 2,585

Other, net 95 (155 ) 272 945

Adjusted operating 82,237 58,395 180,433 138,744 income



Other income 301 200 1,026 437 (expense), net

Depreciation and 7,012 11,743 29,015 33,664 amortization

Adjusted EBITDA 89,550 70,338 210,474 172,845



Impact of (3,298 ) (25,383 ) (23,268 ) (60,057 )divestitures^(1)

Pro Forma Adjusted $ 86,252 $ 44,955 $ 187,206 $ 112,788 EBITDA

Adjusted EBITDA as a 18.3 % 17.4 % 15.3 % 14.4 %% of Net Sales

Pro Forma AdjustedEBITDA as a % of Pro 19.2 % 14.5 % 16.4 % 12.3 %Forma Net Sales

(1)

Reflects the net adjustments of IMP and DBCI through the divestiture dates of August 9, 2021 and August 18, 2021, respectively.

(1) Reflects the net adjustments of IMP and DBCI through the divestiture dates of August 9, 2021 and August 18, 2021, respectively.

CORNERSTONE BUILDING BRANDS, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

(In thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

October 2,2021

October 3,2020

October 2,2021

October 3,2020

Net cash provided (used) in operating activities

$

(171,919

)

$

169,914

$

(183,640

)

$

236,876

Less: Capital expenditures

(27,540

)

(14,926

)

(75,183

)

(62,535

)

Free cash flow

$

(199,459

)

$

154,988

$

(258,823

)

$

174,341

View source version on businesswire.com: https://www.businesswire.com/news/home/20211109006596/en/

CONTACT: Investor Relations Tina Beskid Vice President, Finance and Investor Relations 1-866-419-0042 info@investors.cornerstonebuildingbrands.com