FBM 3Q19 Earnings Presentation November 4, 2019 Disclosures - PowerPoint PPT Presentation

FBM 3Q19 Earnings Presentation November 4, 2019

Disclosures Forward-Looking Statements This presentation contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” or words or phrases with similar meaning. Forward-looking statements contained in this presentation relate to, among other things, the Company's projected financial performance and operating results, including projected net sales, gross margin, SG&A, capital expenditures, adjusted EBITDA, net debt leverage ratio, free cash flow, adjusted EBITDA margin and adjusted earnings per share (“EPS”), as well as statements regarding the Company's progress towards its strategic objectives, including the performance of current greenfield branches, the opening of additional greenfield branches, the Company's acquisition pipeline, and the successful integration and performance of the Company's acquisitions. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on our management’s current expectations, forecasts and assumptions that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control, that may cause our business, strategy or actual results to differ materially from those expressed or implied by the forward- looking statements. We do not intend, and undertake no obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. Investors are referred to the Company’s filings with the Securities and Exchange Commission, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed or implied by any forward-looking statement. Non-GAAP Financial Measures In addition to presenting financial results prepared in accordance with generally accepted accounting principles (“GAAP”), this presentation contains certain non-GAAP financial measures, including adjusted net income, adjusted EPS, adjusted EBITDA, adjusted EBITDA margin and net debt leverage ratio, which are provided as supplemental measures of financial performance. These non-GAAP financial measures are presented because they are important metrics used by management as one of the means by which it assesses financial performance. One or more of these measures may also be used by analysts, investors and other interested parties to evaluate companies in our industry. These non-GAAP financial measures, when used in conjunction with the most directly comparable GAAP financial measures, provide investors with an additional financial analytical framework that may be useful in assessing our financial condition and results of operations. These non-GAAP financial measures have certain limitations, which are discussed in greater detail in the Company’s filings with the Securities and Exchange Commission and its earnings releases and should not be considered as an alternative to measures of financial performance prepared in accordance with GAAP. Other companies, including other companies in our industry, may not use such measures or may calculate one or more of the measures differently than we do, limiting their usefulness as a comparative measure. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is set forth in the Appendix to this presentation. 2

Q3 2019 Highlights  Total net sales increased 4.2% YoY  Total base business net sales increased 1.1% YoY Delivering Sales  Wallboard base business decrease of 2.0%; 1.1% unit volume/0.9% price/mix  Suspended ceilings base business increase of 11.0% Growth  Metal framing base business decrease of 3.3%  Complementary and other products base business increase of 2.0%  Gross profit of $171.8M, up 11.5% YoY Driving Margin  Gross margin of 30.4% compared to 28.4% YoY  Net income from continuing operations of $12.7M compared to a net loss of $37.6 million Expansion Adjusted EBITDA 1 of $50.0M up 14.4% YoY; adjusted EBITDA margin 1 of 8.9% compared to 8.1% YoY   On October 1, 2019, the Company acquired Wallboard Supply and The Supply Guy  Wallboard Supply was an independent distributor of drywall and drywall accessories serving the Colorado Springs M&A and Greenfield market Expansion  The Supply Guy was an independent distributor of tools and fasteners serving Washington state  Opened greenfield branch location in Bakersfield, California  Opened 3 greenfield branches year-to-date; expect to open 1 to 2 more this year  2019 Financial Guidance Raising Full-Year  Net sales $2.10B to $2.25B  Gross margin range from 29.7% to 30.2% 2019 Adjusted EPS Adjusted EBITDA 1 range from $165M to $185M  Guidance  Raising adjusted EPS 1,2 range from $0.80 to $1.00 to $0.95 to $1.05 Net debt leverage ratio 1,3 from 2.9x to 3.2X  1 Adjusted EBITDA, adjusted EBITDA margin, adjusted EPS, and net debt leverage ratio are non-GAAP financial measures. Adjusted EBITDA margin represents adjusted EBITDA divided by net sales. For a 3 reconciliation of net income (loss) to adjusted EBITDA, please refer to the Appendix 2 We are increasing adjusted EPS guidance 3 For a calculation of net debt leverage ratio, see Item 2, Management’s Discussion and Analysis of Financial Condition and Results from Operations in our Quarterly Report on Form 10-Q for the three months ended September 30, 2019.

Long-Term Strategic Priorities 1 Strengthen Balance Sheet   Disciplined capital spending Reduce net debt leverage  Drive working capital efficiency 2 Drive Organic Growth   Greenfield expansion opportunities in Optimize the pricing of the products we sell underserved markets to our customers   Expand the products we offer our customers Grow market share 3 Expand Profit Margins   Drive procurement savings Execute our cost-out initiatives   Leverage our economies of scale Grow wallboard net sales 4 Platform Expansion   Grow asset base through strategic Grow complementary and other products acquisitions net sales  Scalable infrastructure facilitates efficient integration of acquisitions 4

Q3 Overview YoY Net Sales Mix YoY Net Sales 37.6% 36.7% ($M) $565 +4.2% 24.9% 24.8% $542 21.0% 19.3% 18.2% 17.5% 3Q18 3Q19 Wallboard Suspended Ceilings Metal Framing Complementary YoY Gross Profit & Margin & Other Products 3Q18 3Q19 ($M) $172 +11.5%  Shift in product mix reflects strong commercial repair and $154 remodel activity in suspended ceilings 30.4% 28.4%  Net sales growth of 4.2% and base business growth of 1.1% YoY 3Q18  Gross margin increased to 30.4% 3Q19 5

Q3 Net Sales By Product Wallboard Net Sales Suspended Ceilings Net Sales ($M) ($M) $119 +1.6% $207 $204 +13.8% $104 3Q18 3Q19 3Q18 3Q19 -2.0% YoY Base Business Change 11.0% YoY Base Business Change Complementary & Other Products Net Metal Framing Net Sales ($M) Sales ($M) +3.4% +0.2% $99 $140 $99 $135 3Q18 3Q19 3Q18 3Q19 -3.3% YoY Base Business Change 2.0% YoY Base Business Change 6

Q3 2019 Trends SG&A Leverage 1 Adj. EBITDA Margin 2 Gross Margin 21.9% 8.9% 30.4% 20.9% 8.1% 28.4% 3Q18 3Q19 3Q18 3Q19 3Q18 3Q19 Adjusted EBITDA 2 ($M) Gross Profit ($M) SG&A Expenses ($M) $154.0 $171.8 $113.3 $123.9 $43.7 $50.0  Gross margin increased 200bps primarily due to improved profitability across product lines, ongoing pricing and purchasing initiatives, and continued stabilization of product costs SG&A leverage 1 increased YoY primarily due to continued investment in various company-wide initiatives  Adjusted EBITDA 2 of $50.0M and 8.9% margin 2  1 SG&A leverage is calculated as SG&A expenses divided by net sales. 7 2 Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted EBITDA margin represents adjusted EBITDA divided by net sales. For a reconciliation of net income (loss) to adjusted EBITDA, please refer to the Appendix.

Capital Allocation Framework  2019 capital expenditures expected to be approximately 1.4%-1.5% of net sales Reinvest In  The Business Continued investment in greenfield branches; 3 opened year-to-date; expect to open 1 to 2 additional greenfield branches in 2019  Strong acquisition pipeline targeting market leaders in a highly fragmented industry Pursue Strategic  On October 1, 2019, completed the acquisitions of Wallboard Supply and The Supply Acquisitions Guy  Expect to generate $60M to $80M of free cash flow in 2019 which has been used primarily for debt reduction Manage Debt Leverage  Expect to reduce net debt leverage ratio from 3.1x to between 2.5x and 2.8x by the end of 2020 8