HERNDON, Va.--(BUSINESS WIRE)--Continental Building Products, Inc. (NYSE: CBPX), a leading manufacturer of gypsum wallboard and complementary finishing products, announced today results for the third quarter ended September 30, 2019. The Company also announced that it has entered into a definitive agreement pursuant to which it will be acquired by Compagnie de Saint-Gobain S.A. (PAR: SGO) for $37.00 per share in cash.

Highlights of Third Quarter 2019 as Compared to Third Quarter 2018

• Wallboard sales volumes increased 4.6% to 705 million square feet
• Net sales decreased 2.9% to $127.4 million
• Generated cash flows from operations of $24.2 million
• Deployed $7.5 million in capital investments, primarily for high-return initiatives
• Fully settled previously-disclosed Buchanan insurance claim and recovered all estimated operating income lost due to the business interruption

"During the quarter we generated significant cash flows from operations and demonstrated the strength of our low cost, highly efficient operations," stated Jay Bachmann, President and Chief Executive Officer. "Sales volumes improved in the quarter and we continue to be encouraged by strengthening demand in the new home construction market. We remain laser focused on our Bison Way efforts and continue to invest in high-return capital projects to ensure that we are well positioned to provide exceptional value to customers for years to come. I would like to thank all of our associates for their hard work and contributions to our achievements and success."

Details of Saint-Gobain Acquisition

The Company has signed a definitive merger agreement to be acquired by Saint-Gobain, a worldwide manufacturer and distributor of high performance materials and solutions in the building, transportation, infrastructure and industry markets, in a transaction representing an enterprise value of approximately $1.4 billion. The purchase price represents a premium of approximately 34.4% over Continental Building Product’s volume weighted average share price during the 60 days ended November 11, 2019.

Edward Bosowski, Chairman of Continental Building Products and Mr. Bachmann, stated, "Building on our successful accomplishments since 2013, we are pleased to reach this agreement with Saint-Gobain and to provide liquidity, certainty and compelling value to our stockholders. We believe our combined business will be better positioned to enhance our product offerings, customer relationships and operating platform. With our mutual focus on dedicated service to customers and operational excellence, we believe this transaction provides an opportunity to benefit all of our stakeholders.”

Under the terms of the agreement, the Company will be merged with and into a newly-formed subsidiary of Saint-Gobain and each issued and outstanding share of the Company’s common stock will be converted into the right to receive $37.00 per share in cash.

The transaction has been unanimously approved by the Company’s Board of Directors. The transaction is subject to customary closing conditions, including approval by Continental stockholders and required antitrust approvals.

Citi is serving as exclusive financial advisor and Gibson, Dunn & Crutcher LLP is serving as legal counsel to Continental Building Products.

Third Quarter 2019 Results vs. Third Quarter 2018

Net sales of $127.4 million decreased 2.9%, compared to $131.2 million in the prior year quarter. Wallboard sales volumes increased 4.6% to 705 million square feet (MMSF), compared to 674 MMSF in the prior year quarter, primarily attributable to stronger demand. Average mill net price decreased by 8.4% compared to the prior year quarter, and was down 0.9% sequentially compared to the second quarter 2019.

Operating income was down 26.3% to $19.9 million, compared to $27.0 million in the prior year quarter, mainly due to lower pricing. SG&A expense was $9.6 million compared to $10.0 million in the prior year quarter, or 7.6% of net sales for both periods.

Net interest expense decreased 12.0% to $2.2 million, compared to $2.5 million in the prior year quarter, primarily a result of higher investment income, along with the benefits of a lower spread obtained on the term debt in the fourth quarter 2018.

Net income decreased $5.1 million or 27.6% to $13.4 million, or $0.39 per share, compared to $18.6 million, or $0.51 per share, in the prior year quarter. The $5.1 million decrease in net income was primarily a result of the decrease in net sales.

Balance Sheet and Cash Flow

As of September 30, 2019, the Company had a cash balance of $126.4 million and total outstanding borrowings of $266.8 million. During the third quarter 2019, the Company generated cash flows from operations of $24.2 million and deployed $7.5 million in capital investments.

Buchanan Plant Update

As previously announced, in January 2019 the Company's Buchanan, New York plant experienced a significant equipment malfunction, resulting in a temporary outage at the plant. The Company has standard insurance coverage that is intended to cover circumstances such as these, including business interruption insurance. During the nine months ended September 30, 2019, the Company recorded $4.9 million of insurance claim proceeds to compensate for estimated operating income associated with the lost sales from business interruption that otherwise would have been made if the plant had been operating normally. As of September 30, 2019, the Company has fully settled the claim and has received all anticipated insurance payments associated with the outage.

About Continental Building Products

Continental Building Products is a leading North American manufacturer of gypsum wallboard and complementary finishing products. The Company is headquartered in Herndon, Virginia with operations serving the residential, commercial and repair and remodel construction markets primarily in the eastern United States and eastern Canada. For additional information, visit www.continental-bp.com.

About Saint-Gobain

Saint-Gobain designs, manufactures and distributes materials and solutions which are key ingredients in the wellbeing of each of us and the future of all. They can be found everywhere in our living places and our daily life: in buildings, transportation, infrastructure and in many industrial applications. They provide comfort, performance and safety while addressing the challenges of sustainable construction, resource efficiency and climate change. With 2018 sales of $41.8 billion, Saint-Gobain operates in 68 countries and has more than 180,000 employees. For more information about Saint-Gobain, visit www.saint-gobain.com and the twitter account @saintgobain.