Doman Building Materials Group Ltd. (“Doman” or “the Company”)
(TSX:DBM; DBM.NT.A) announced today its fourth quarter and full
year 2021 financial results(1) for the period ended December 31,
2021.
For the year ended December 31, 2021(1),
consolidated revenues increased by 57.6% to $2.54 billion, compared
to $1.61 billion in 2020. The increase in revenues was largely due
to the results from the Company’s 2021 acquisitions, with the
balance of the increase attributable to the improvements in product
pricing within the Company’s legacy operations. Quarantine-related
activities continued to drive demand and unprecedented pricing
increases through the first half of 2021, before reaching a peak in
May 2021 and declining sharply until August 2021, but only
partially offsetting gains made during the first half of 2021. The
Company’s sales by product group in the period were made up of 74%
construction materials, compared to 65% last year, with the
remaining balance resulting from specialty and allied products of
22%, and other of 4%.
Gross margin dollars in 2021 increased by 52.6%
to $391.0 million, compared to $256.2 million in 2020. Gross margin
percentage amounted to 15.4% of revenues versus 15.9% in 2020.
Gross margins benefited from the results achieved by our 2021
acquisitions, as well as the improvements in construction materials
pricing for the Company’s legacy operations during the first half
of 2021, which were then partially offset by the impact of price
declines during the second half of the year.
Adjusted EBITDA(3) for the full year increased
by 57.7% to $225.6 million, compared to $143.0 million in 2020.
EBITDA(2) was slightly impacted by one-time acquisition costs in
both 2021 and 2020, resulting in EBITDA(2) amounting to $220.7
million in 2021, versus $142.4 million in 2020.
For the three-month period ended December 31,
2021(1), revenues increased 59.6% to $641.6 million when compared
to $402.0 million in the same period in 2020, largely due to
contributions from our 2021 acquisitions. The Company’s sales by
product group in the quarter were made up of 76% construction
materials, with the remaining balance of sales resulting from
specialty and allied products of 21%, and forestry and other of
3%.
Gross margin dollars in the fourth quarter
increased by 32.4% to $88.7 million, compared to $67.0 million
during the corresponding period in 2020. Gross margin percentage
increased to 13.8% of revenues versus 16.7% during the same period
in 2020. Gross margin dollars benefited from contributions by the
acquisitions, partially offset by the impact of price declines
during the second half of the year, which resulted in lower margin
percentages for the fourth quarter of 2021 relative to the same
period in 2020.
Adjusted EBITDA(3) for the three-month period
ended December 31, 2021(1), amounted to $37.1 million, compared to
$36.7 million in 2020.
The Company declared a total of $0.54 per
share(4) in dividends in 2021, versus $0.52 per share in 2020.
“I am pleased with how our growth strategy
continues to unfold, resulting in record annual sales and net
earnings, while remaining focused on margin protection as we worked
through pricing volatility during the second half of the year,"
commented Amar S. Doman, Chairman of the Board. "The price
volatility we experienced in the second half of the year subsided
in the fourth quarter, resulting in improved gross margin levels
when compared to the third quarter. Additionally, it is important
to note that our annual reporting only includes our Texas based
Hixson Lumber division for two full quarters. We are very pleased
with our integration efforts, and we have now commenced deploying
our information technology strategies at Hixon Lumber, and believe
we are on track to meet or exceed the internal goals we set out
during the acquisition. We continue to see robust activity and
pricing in our markets, however we are also very mindful of the
macro economic backdrop of increasing interest rates and other
similar factors which may impact market dynamics.”
Reconciliation of Net Earnings to Earnings before Interest, Tax,
Depreciation and Amortization (EBITDA):
|
Three months ended December 31, |
Years ended December 31, |
|
2021 |
2020 |
2021 |
2020 |
(in thousands of
dollars) |
$ |
$ |
$ |
$ |
Net earnings |
11,609 |
15,011 |
106,509 |
59,587 |
|
|
|
|
|
Provision for income
taxes |
1,631 |
5,677 |
31,955 |
22,451 |
Finance costs |
8,414 |
2,932 |
27,138 |
15,706 |
Depreciation and
amortization |
15,449 |
12,469 |
55,063 |
44,649 |
|
|
|
|
|
EBITDA |
37,103 |
36,089 |
220,665 |
142,393 |
|
|
|
|
|
Acquisition costs |
- |
620 |
4,893 |
620 |
|
|
|
|
|
Adjusted EBITDA |
37,103 |
36,709 |
225,558 |
143,013 |
|
|
|
|
|
About Doman Building Materials Group
Ltd.
Doman is headquartered in Vancouver, British
Columbia and trades on the Toronto Stock Exchange under the symbol
DBM and is a leading North American distributor of building
materials and is Canada's only fully integrated national
distributor in the building materials and related products sector.
Doman operates several distinct divisions: CanWel Building
Materials with multiple treating plant, planing facilities and
distribution centres coast-to-coast in all major cities and
strategic locations across Canada; founded in 1959, Hixson Lumber
Company in the central United States, with 19 treating plants, two
specialty planing mills and five specialty sawmills located in
eight states, headquartered in Dallas, Texas, distributing,
producing and treating lumber, fencing and building materials;
California Cascade in the western United States near Portland,
Oregon, San Francisco and Los Angeles, California with treating
facilities and distribution of building materials, lumber and
renovation products; founded in 1935, the Honsador Building
Products Group in 14 locations in the State of Hawaii, with
treating facilities, truss plants and distribution of a wide range
of building materials, lumber, renovation and electrical products.
In addition, through its CanWel Fibre division, the Company
operates a vertically integrated forest products company based in
Western Canada, operating in British Columbia and Saskatchewan,
also servicing the US Pacific Northwest. CanWel Fibre owns
approximately 117,000 acres of private timberlands, strategic
licenses and tenures, post and pole peeling facilities and two
pressure-treated specialty wood production plants. Please see our
filings on SEDAR under Doman Building Materials Group Ltd.
(formerly, CanWel Building Materials Group Ltd.) for additional
information.
For further information regarding Doman please
contact:
Ali MahdaviInvestor Relations416-962-3300
ali.mahdavi@domanbm.com
Certain statements in this press release may
constitute “forward-looking” statements. When used in this press
release, forward-looking statements often but not always, can be
identified by the use of forward-looking words such as, including
but not limited to, “may”, “will”, “would”, “should”, “expect”,
“believe”, “plan”, “intend”, “anticipate”, “predict”, “remain”,
“estimate”, “potential”, “forecast”, “budget”, “schedule”,
“continue”, “could”, “might”, “project”, “targeting”, "future" and
other similar terminology or the negative or inverse of such words
or terminology. Forward-looking information in this news release
includes, without limitation, statements with respect to: the
ultimate impact (express or implied) of: a) fluctuations in
commodity and construction materials pricing; b) the performance of
recently acquired businesses; and c) the novel coronavirus COVID-19
(“COVID-19”) pandemic, on the Company’s operational and financial
results and on consumer behavior and economic activity, including
but not limited to the fourth quarter and full-year 2021 results,
which impact is difficult to estimate or quantify as it will depend
on, inter alia, the duration of the contagion, the impact of
government policies, and the pace of economic recovery. These
forward-looking statements reflect the current expectations of
Doman’s management regarding future events and operating
performance, but involve other known and unknown or unpredictable
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Doman, including but not
limited, to sales, earnings, cash flow from operations, EBITDA(2)
generated, dividends generated or paid by Doman, including whether
at the rate as of the date hereof or some other dividend rate in
the future which may be lower than either of the preceding rates
discussed therein, or industry results, to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such forward-looking
statements should therefore be construed in the light of such
factors. Actual events could differ materially from those projected
herein and depend on a number of factors. These factors include but
are not limited to those set out in the Company’s annual
information form dated March 12, 2021, and other public filings. By
their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that will occur in the future. In addition, a number
of material factors or assumptions were utilized or applied in
making the forward-looking statements, and may include, but are not
limited to, assumptions regarding the performance of the Canadian
and U.S. economies, the relative stability of or level of interest
rates, exchange rates, volatility of commodity prices, availability
or more limited availability of access to equity and debt capital
markets to fund, at acceptable costs, Doman’s future growth plans,
the implementation and success of the integration of Doman’s
acquisitions and customer and supplier retention, the ability of
Doman to refinance its debts as they mature, the Canadian and
United States housing and building materials markets; the direct
and indirect effect of the U.S. housing market and economy;
exchange rate fluctuations between the Canadian and US dollar;
retention of key personnel; Doman’s ability to sustain its level of
sales and earnings margins; Doman’s ability to grow its business
long term and to manage its growth; Doman’s management information
systems upon which it is dependent are not impaired or compromised
by breaches of Doman’s cybersecurity; Doman’s insurance is
sufficient to cover losses that may occur as a result of its
operations; international trade and tariff risks, political risks,
the amount of Doman’s cash flow from operations; tax laws; and the
extent of Doman’s future acquisitions and capital spending
requirements or planning as well as the general level of economic
activity, in Canada and the U.S., and abroad, discretionary
spending and unemployment levels; the effect of general economic
conditions, including market demand for Doman’s products, and
prices for such products; the effect of forestry, land use,
environmental and other governmental regulations; and the risk of
losses from fires, floods and other natural disasters and
unemployment levels. There is a risk that some or all of these
assumptions may prove to be incorrect. These and other factors
could cause or contribute to actual results differing materially
from those contemplated by forward-looking statements. Accordingly,
readers should not place undue reliance on any forward-looking
statements or information. These forward-looking statements speak
only as of the date of this press release. We caution that the
foregoing factors that may affect future results are not
exhaustive. When relying on our forward-looking statements to make
decisions with respect to Doman, investors and others should
carefully consider the foregoing factors and other uncertainties
and potential events. Neither Doman nor any of its associates or
directors, officers, partners, affiliates, or advisers, provides
any representation, assurance or guarantee that the occurrence of
the events expressed or implied in any forward-looking statements
in these communications will actually occur. You are cautioned not
to place undue reliance on these forward-looking statements. Except
as required by applicable securities laws and legal or regulatory
obligations, Doman is not under any obligation, and expressly
disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
(1) |
Please refer to our Q4 2021 MD&A and FY 2021 Financial
Statements for further information. Our Q4 2021 and FY 2021
Financial Statements filings are reported under International
Financial Reporting Standards (“IFRS”). |
|
|
(2) |
In the discussion, reference is made to EBITDA, which represents
earnings from continuing operations before interest, including
amortization of deferred financing costs, provision for income
taxes, depreciation and amortization. This is not a generally
accepted earnings measure under IFRS and does not have a
standardized meaning under IFRS, and therefore the measure as
calculated by Doman may not be comparable to similarly-titled
measures reported by other companies. EBITDA is presented as we
believe it is a useful indicator of a company’s ability to meet
debt service and capital expenditure requirements and because we
interpret trends in EBITDA as an indicator of relative operating
performance. EBITDA should not be considered by an investor as an
alternative to net earnings or cash flows as determined in
accordance with IFRS. For a reconciliation of EBITDA to the most
directly comparable measures calculated in accordance with IFRS
refer to “Reconciliation of Net Earnings to Earnings before
Interest, Tax, Depreciation and Amortization (EBITDA) and Adjusted
EBITDA”. |
|
|
(3) |
In the discussion, reference is made to Adjusted EBITDA, which is
EBITDA as defined above, before certain non-recurring or unusual
items. This is not a generally accepted earnings measure under IFRS
and does not have a standardized meaning under IFRS. The measure as
calculated by Doman may not be comparable to similarly-titled
measures reported by other companies. Adjusted EBITDA is presented
as we believe it is a useful indicator of Doman’s ability to meet
debt service and capital expenditure requirements from its regular
business before non-recurring items. Adjusted EBITDA should not be
considered by an investor as an alternative to net earnings or cash
flows as determined in accordance with IFRS. For a reconciliation
from Adjusted EBITDA to the most directly comparable measures
calculated in accordance with IFRS refer to “Reconciliation of Net
Earnings to Earnings before Interest, Tax, Depreciation and
Amortization (EBITDA) and Adjusted EBITDA”. |
|
|
(4) |
On November 4, 2021, the Company announced it was restoring its
dividend to $0.14 per shares effective the dividend paid on January
14, 2022. The Company had previously adjusted its quarterly common
share dividend from $0.14 to $0.12 per share, effective for the
dividend paid on October 15, 2020. Please refer to press releases
dated June 15, 2020 and November 4, 2021 for further information.
Please refer to our Q4 2021 MD&A and our Q4 2021 Financial
Statements for more information. |
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