Foundation Building Materials Provides Business and Financial Update Regarding COVID-19

Foundation Building Materials, Inc. (“FBM” or the “Company”), one of the largest specialty building products distributors of wallboard, suspended ceiling systems and metal framing in North America, announced an operational update on its business and the Company’s response to the coronavirus (“COVID-19”) disruption. In addition, the Company is providing a preliminary range of net sales, cash on hand and availability on the Company’s revolving credit facility for the quarter ended March 31, 2020. The Company is also withdrawing its full year 2020 financial guidance issued on February 24, 2020.

“Our thoughts and prayers are with those affected by the virus and we are especially thankful to all healthcare workers for their critical efforts to support patients during this challenging time,” said Ruben Mendoza, President and Chief Executive Officer. “While our anticipated first quarter net sales reflect the resiliency of our operations and the ability of our team to navigate well during a volatile quarter, we have implemented a number of cost-saving initiatives and have reduced non-essential discretionary spending in response to the uncertainty caused by the COVID-19 disruption. Given the strength of our financial position and the underlying fundamentals of our business, we believe our company is well-positioned to navigate the challenging macroeconomic environment.”

Safeguarding Employees, Customers and Communities

The health and safety of the Company’s employees and customers is of paramount importance as the Company seeks to fulfill its responsibility as part of an “Essential Critical Infrastructure Sector.” The Company continues to operate the vast majority of its branches throughout the United States and Canada utilizing safety precautions based on recommendations from federal, state and local authorities. However, due to certain COVID-19 related restrictions, the Company has currently reduced branch operations, mainly in Pennsylvania, Michigan, certain areas of Northern California and the state of Washington.

The COVID-19 disruption is impacting the communities in which the Company operates. In response, the Company is taking steps to support its communities through donations of thousands of N95 masks to local hospitals.

Preliminary First Quarter 2020 Net Sales Range

The Company experienced solid end market activity levels through most of the first quarter. The Company expects first quarter 2020 net sales to be in the range of $520 million to $525 million.

Withdrawing Full Year 2020 Guidance

Considering the rapidly evolving COVID-19 disruption and uncertain macroeconomic environment, the Company is withdrawing its full year 2020 guidance issued on February 24, 2020. The Company anticipates its future financial performance will be adversely impacted due to the effects of the COVID-19 disruption, but the magnitude and timing of this impact is too dependent on external factors to reliably provide guidance at this time. The Company plans to provide an update on the business during its first quarter 2020 earnings call on May 12, 2020.

Liquidity and Capital Resources

FBM entered the COVID-19 disruption with a solid balance sheet. Since then, the Company has taken proactive steps to further enhance its financial flexibility, liquidity and cash flow to put the Company in a strong position to return to normal operations when conditions allow, including:

– drawing down an additional $120 million of cash under its revolving credit facility;

– delaying or reducing capital expenditures that are not anticipated to impact near-term business;

– deferring or limiting non-essential operating expenses;

– reducing salaries for exempt employees, led by voluntary salary reductions by certain members of its senior management team, including a 50% salary reduction for its Chief Executive Officer;

– reducing independent board member compensation, led by voluntary annual cash retainer reductions of 50%;

– optimizing all areas of working capital;

– restricting hiring, deferring wage increases and reducing other costs to protect existing jobs;

– furloughing team members associated with temporary branch closures; and

– temporarily suspending acquisition-related activity.

As a result of the additional draw down under its revolving credit facility, as of March 31, 2020, the Company had cash on hand of approximately $141 million and approximately $140 million of remaining borrowing capacity under its revolving credit facility. In addition, the Company is in the process of assessing the various options that may be available to obtain relief under applicable federal assistance programs.

About Foundation Building Materials

Foundation Building Materials is a specialty building products distributor of wallboard, suspended ceiling systems, and metal framing throughout North America. Based in Santa Ana, California, the Company operates more than 175 branches across the United States and Canada. Learn more at www.fbmsales.com or follow us on LinkedIn, Twitter, Instagram, or Facebook.

Contact:

John Moten – Investor Relations – investors@fbmsales.com – (657) 355-4449

Source: Foundation Building Materials, Inc.