EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT:
- --------------------- JOHN F. REBELE
WEDNESDAY, NOVEMBER 14, 2007 SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND
CHIEF ADMINISTRATIVE OFFICER
BUILDING MATERIALS
CORPORATION OF AMERICA
(973) 628-4038
BUILDING MATERIALS CORPORATION OF AMERICA ANNOUNCES
THIRD QUARTER RESULTS
Building Materials Corporation of America ("BMCA" or "the Company")
announced today, a net loss of $11.2 million in the third quarter of 2007
compared to net income of $17.1 million in the third quarter of 2006. The
Company's net loss in the third quarter of 2007 included $21.9 million of
after-tax ($31.8 million pre-tax) restructuring and other expenses, of which
$5.0 million after-tax ($7.2 million pre-tax) was included in cost of products
sold related to the integration of ElkCorp ("Elk") operations. Included in
restructuring and other expenses are plant closing expenses related to the
closure of several manufacturing facilities together with the write-down of
plant assets at these facilities, integration related costs and the write-down
of selected inventories. Excluding these items, third quarter of 2007 net income
was $10.7 million, which included the results of operations of Elk. The decrease
in reported net income for the third quarter of 2007 was primarily attributable
to approximately $28.5 million of higher interest expense and restructuring and
other expenses due to the acquisition of Elk.
-continued-
The Company had income before interest expense and income taxes in the
third quarter of 2007 of $25.7 million compared to income before interest
expense and income taxes of $43.3 million in the third quarter of 2006. Income
before interest expense and income taxes in the third quarter of 2007 included
the results of operations of Elk and $31.8 million of restructuring and other
expenses, of which $7.2 million was included in cost of products sold. Income
before interest expense and income taxes in the third quarter of 2007 was
positively affected by the operating results of Elk, lower raw material costs,
including asphalt, and lower selling, general and administrative expenses mostly
due to a decline in volume related distribution costs, which was more than
offset by a decrease in net sales of residential roofing products.
Interest expense in the third quarter of 2007 increased to $44.3 million
as compared to $15.8 million in the third quarter of 2006. The increase in third
quarter of 2007 interest expense was primarily due to higher average borrowings
and a slightly higher average interest rate due to the acquisition of Elk.
Net sales for the third quarter of 2007 were $680.7 million, which
included net sales related to Elk compared to third quarter of 2006 net sales of
$530.3 million. Excluding net sales of Elk, the decrease in third quarter of
2007 net sales was primarily due to lower net sales of residential roofing
products primarily driven by lower unit volumes resulting from softer market
demand.
Earnings before interest expense, income taxes, depreciation and
amortization of intangibles and other assets ("EBITDA") for the third quarter of
2007 was $47.5 million as compared to $56.7 million for the third quarter of
2006. Included in EBITDA for the third quarter of 2007 were $31.8 million of
restructuring and other expenses, of which $7.2 million was included in cost of
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2
products sold. Excluding the impact of these items, Adjusted EBITDA amounted to
$79.3 million for the third quarter of 2007. A reconciliation of net income
(loss) to EBITDA and descriptions of this measure and the reasons for presenting
it, as well as its limitations are explained below in Exhibit II.
FIRST NINE MONTH RESULTS
------------------------
For the first nine months of 2007, BMCA announced a net loss of $70.9
million compared to net income of $47.6 million in the first nine months of
2006. The Company's net loss in the first nine months of 2007 included $67.3
million of after-tax ($97.6 million pre-tax) restructuring and other expenses,
of which $12.4 million after-tax ($18.0 million pre-tax) was included in cost of
products sold related to the integration of Elk operations and $16.0 million of
after-tax ($23.2 million pre-tax) debt restructuring costs also related to the
acquisition. Included in restructuring and other expenses are plant closing
expenses related to the closure of several manufacturing facilities together
with the write-down of plant assets at these facilities, integration related
costs and the write-down of selected inventories. Excluding these items, the
first nine months of 2007 net income was $12.4 million, which included Elk's
operations from the date of acquisition. The decrease in reported net income for
the first nine months of 2007 was primarily attributable to approximately $92.8
million of higher interest expense and restructuring and other expenses due to
the acquisition of Elk.
Income before interest expense and income taxes in the first nine months
of 2007 was $36.4 million compared to $123.2 million in the first nine months of
2006. The Company's income before interest expense and income taxes in the first
nine months of 2007 included the results of operations of Elk and $97.6 million
of restructuring and other expenses, of which $18.0 million was included in cost
-continued-
3
of products sold. Income before interest expense and income taxes in the first
nine months of 2007 was positively affected by the operating results of Elk,
lower raw material costs, including asphalt, and lower selling, general and
administrative expenses mostly due to a decline in volume related distribution
costs, which was more than offset by a decrease in net sales of residential
roofing products and commercial roofing products.
Interest expense in the first nine months of 2007 increased to $139.2
million as compared to $46.4 million in the first nine months of 2006. Interest
expense in the first nine months of 2007 includes $23.2 million of debt
restructuring costs and an additional $3.2 million of interest expense of Elk
from the date of acquisition. Included in debt restructuring costs are the
tender premiums and write-off of the remaining deferred financing fees and
discounts associated with the then outstanding 2007 and 2008 senior notes of
BMCA and all of the then outstanding senior notes of Elk, all of which were
redeemed in the first quarter of 2007. Excluding the impact of the debt
restructuring costs and the additional Elk interest, interest expense for the
first nine months of 2007 was $112.8 million. The increase in the first nine
months of 2007 interest expense was primarily due to higher average borrowings
and a slightly higher average interest rate, due to the acquisition of Elk.
Net sales for the first nine months of 2007 were $1,874.0 million, which
included net sales related to Elk from the date of acquisition compared to the
first nine months of 2006 net sales of $1,571.2 million. Excluding net sales of
Elk, the decrease in the first nine months of 2007 net sales was primarily due
to lower net sales of both residential and commercial roofing products. The
decrease in net sales of residential roofing products was primarily driven by
lower unit volumes resulting from the softer market demand, while the decrease
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4
in commercial roofing products was primarily driven by lower unit volumes,
partially offset by a higher average selling price.
EBITDA for the first nine months of 2007 was $93.5 million as compared to
$161.9 million for the first nine months of 2006. Included in EBITDA for the
first nine months of 2007 were $97.6 million of restructuring and other
expenses, of which $18.0 million was included in cost of products sold.
Excluding the impact of these items, Adjusted EBITDA amounted to $191.1 million
for the first nine months of 2007. A reconciliation of net income (loss) to
EBITDA and descriptions of this measure and the reasons for presenting it, as
well as its limitations are explained below in Exhibit II.
OTHER MATTERS
-------------
At September 30, 2007, cash and cash equivalents amounting to $34.5
million were on hand, and long-term debt including current maturities was
$1,857.3 million, which amount includes $281.0 million outstanding under the
Company's $600.0 million Senior Secured Revolving Credit Facility.
* * * *
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5
Building Materials Corporation of America is North America's largest
manufacturer of residential and commercial roofing products and specialty
building products with pro-forma annual net sales of approximately $2.9 billion.
BMCA operates under the name GAF Materials Corporation and distributes its
product under the GAF and GAF-ELK brand names.
This press release contains "forward looking statements" within the
meaning of the federal securities laws with respect to the Company's financial
results and future operations and, as such, concerns matters that are not
historical facts. These statements are subject to risks and uncertainties that
could cause actual results to differ materially from those expressed in such
statements. Important factors that could cause such differences are discussed in
the Company's filings with the U.S. Securities and Exchange Commission and are
incorporated herein by reference.
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EXHIBIT I
BUILDING MATERIALS CORPORATION OF AMERICA
SALES AND EARNINGS DATA (UNAUDITED)
(DOLLARS IN MILLIONS)
- --------------------------------------------------------------------------------
THIRD QUARTER ENDED NINE MONTHS ENDED
------------------- -----------------
SEPT. 30, OCT. 1, SEPT. 30, OCT. 1,
2007 2006 2007 2006
-------- -------- ---------- ----------
Net sales $ 680.7 $ 530.3 $ 1,874.0 $ 1,571.2
-------- -------- ---------- ----------
Costs and expenses, net:
Cost of products sold 493.4 372.2 1,372.3 1,100.8
Selling, general and
administrative 134.1 114.7 383.1 347.6
Amortization of intangible
assets 3.9 -- 3.9 --
Restructuring and other
expenses 24.6 -- 79.6 --
Other (income) expense, net (1.0) 0.1 (1.3) (0.4)
-------- -------- ---------- ----------
Total costs and expenses, net 655.0 487.0 1,837.6 1,448.0
-------- -------- ---------- ----------
Income before interest expense
and income taxes 25.7 43.3 36.4 123.2
Interest expense (44.3) (15.8) (139.2) (46.4)
-------- -------- ---------- ----------
Income (loss) before income
taxes (18.6) 27.5 (102.8) 76.8
Income tax (expense) benefit 7.4 (10.4) 31.9 (29.2)
-------- -------- ---------- ----------
Net income (loss) $ (11.2) $ 17.1 $ (70.9) $ 47.6
======== ======== ========== ==========
-continued-
EXHIBIT II
BUILDING MATERIALS CORPORATION OF AMERICA
ADJUSTED EBITDA (UNAUDITED)
(DOLLARS IN MILLIONS)
THIRD QUARTER ENDED NINE MONTHS ENDED
RECONCILIATION OF GAAP ------------------- -----------------
TO NON-GAAP FINANCIALS SEPT. 30, 2007 OCT. 1, 2006 SEPT. 30, 2007 OCT. 1, 2006
- ---------------------- -------------- -------------- -------------- --------------
Net income (loss) $ (11.2) $ 17.1 $ (70.9) $ 47.6
ADD BACK:
Interest expense 44.3 15.8 139.2 46.4
Income tax expense (benefit) (7.4) 10.4 (31.9) 29.2
Depreciation 17.0 12.6 50.6 36.5
Amortization of intangibles and
other assets 4.8 0.8 6.5 2.2
------- ------- ------- -------
EBITDA (1) 47.5 56.7 93.5 161.9
------- ------- ------- -------
Restructuring and other
expenses(2) 31.8 -- 97.6 --
------- ------- ------- -------
ADJUSTED EBITDA (1) $ 79.3 $ 56.7 $ 191.1 $ 161.9
======= ======= ======= =======
(1) EBITDA is defined as net income increased by interest expense, income
taxes, depreciation and the amortization of intangibles and other assets,
including software. Adjusted EBITDA is defined as EBITDA further adjusted
to give effect to the plant closure related and restructuring and other
expenses incurred as a result of the acquisition of Elk. EBITDA and
Adjusted EBITDA are not measures of financial performance under U.S.
generally accepted accounting principles, or GAAP, and should not be
considered as alternatives to net income (loss) or any other measure of
performance under GAAP. The Company has included EBITDA and Adjusted
EBITDA primarily as performance measures because management believes they
are useful measures of the Company's performance and ability to generate
cash necessary to meet its future requirements for debt service, capital
expenditures, working capital and taxes. The Company's method of
calculating EBITDA and Adjusted EBITDA may not be the same as similarly
titled measures used by other companies.
(2) Restructuring and other expenses for the three month and nine month
periods ended September 30, 2007 includes $7.2 and $18.0 million,
respectively, which were included in cost of products sold.