Cornerstone (CNR) Acquires Kleary, Fortifies Siding Business
Zacks Investment Research | Mar 04, 2020 08:26PM ET
Cornerstone Building Brands, Inc. (NYSE:CNR) recently acquired a Northern California based installer of manufactured stone veneer, Kleary Masonry, Inc. Although the terms of the transaction have been kept under wraps, the company stated that the buyout was funded with cash and through borrowings under its existing credit facilities.
Buyout Synergies
Headquartered in Sacramento, Kleary provides high quality workmanship in the Sacramento and Bay area for over three generations. Kleary’s addition is expected to enhance Cornerstone’s leading turnkey stone veneer offering and strengthen its position in the fastest-growing segment of the residential cladding market.
Cornerstone expects that this acquisition will boost its overall pro forma Adjusted EBITDA and improve net debt to LTM pro forma Adjusted EBITDA ratio. Kleary generated sales of more than $40 million for the year ending Dec 31, 2019. Notably, Kleary will be included in Cornerstone’s Siding business segment.
Recently, Cornerstone reported better-than-expected fourth-quarter 2019 results. The company reported adjusted earnings of 11 cents per share against the Zacks Consensus Estimate of a loss of 5 cents. Bottom line, however, was down from 55 cents per share reported in the prior-year period.
Net sales rose 116.9% year over year to $1,244.4 million in the quarter. On a pro-forma basis, net sales declined 1.8% from year-ago figure due to softening market demand in the Commercial segment, partially offset by strength of the Windows segment. Pro-forma adjusted EBITDA rose 23.6% year over year. Pro-forma adjusted EBITDA margin also improved 270 bps in the quarter. The company achieved $110 million in annual savings through merger synergies and cost-savings initiatives in 2019.
The company had impressive liquidity position of $639 million at the end of the fourth quarter of 2019 and it intends to provide capital for growth and innovation.
Shares of Cornerstone have gained 10.9% post fourth-quarter results. Over the past six months, Cornerstone shares have jumped 77.9%, against the Zacks Investment Research
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