Forterra Announces Third Quarter 2019 Results


Third Quarter 2019 Highlights

  • Net sales increased by 7% to $464.5 million as compared to $434.5 million in the prior year quarter
  • Consolidated gross profit margin increased by over 400 basis points
  • Net income of $22.4 million and Adjusted EBITDA1 of $80.0 million exceeded prior year quarter by $16.9 million and $18.4 million, respectively
  • Repaid the $39 million outstanding borrowings under revolving credit facility; in addition, voluntarily repurchased $16.5 million of term loan

IRVING, Texas, Nov. 04, 2019 (GLOBE NEWSWIRE) -- Forterra, Inc. (“Forterra” or “the Company”) (NASDAQ: FRTA), a leading manufacturer of water and drainage infrastructure pipe and products in the United States and Eastern Canada, today announced results for the quarter ended September 30, 2019.

1 A reconciliation of non-GAAP financial measures, including EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin, to comparable GAAP financial measures is provided in the reconciliation of Non-GAAP measures section of this press release.

Third Quarter 2019 Consolidated Results
In the third quarter of 2019, consolidated net sales increased by 7% over the prior year quarter to $464.5 million, and consolidated gross profit increased by 32% over the prior year quarter to $102.2 million. These increases were achieved primarily by higher average selling prices in both the Drainage Pipe & Products (“Drainage”) and the Water Pipe & Products (“Water”) segments. As a result, gross profit margins for Drainage and Water segments improved by 290 and 480 basis points, respectively, over the prior year quarter.  Net income for the quarter was $22.4 million, or $0.35 per share, compared to net income of $5.5 million, or $0.09 per share, in the prior year quarter.  Adjusted EBITDA for the third quarter increased by 30% to $80.0 million, compared to $61.6 million in the prior year quarter.

Forterra CEO Karl Watson, Jr. commented, “Our third quarter results demonstrate continued progress in three key levers to advancing our business:  improving plant level production efficiencies, strategic and tactical pricing discipline, and working capital optimization. While still in the early stages of delivering a full and fair return for the products we produce and the capital we deploy, we are glad to see our efforts begin to yield positive results to the bottom line.  Given this success, we are narrowing our guidance and now expect full year 2019 net loss in the range of $35 million to $8 million versus our previous view of $38 million to $16 million; and full year 2019 Adjusted EBITDA in the range of $180 to $200 million versus our previous view of $170 to $200 million."

Business Segment Results
Drainage Pipe & Products (“Drainage”) - Third Quarter 2019 Results
Drainage net sales increased by 16% to $280.7 million, compared to $243.0 million in the prior year quarter.  The increase in net sales was driven by both higher average selling prices and higher shipment volumes primarily driven by more favorable weather conditions compared to last year.  Drainage backlogs at the end of the third quarter remained strong.

Drainage gross profit and gross profit margin were $74.3 million and 26.5%, compared to $57.4 million and 23.6%, respectively, in the prior year quarter.  Drainage EBITDA, Adjusted EBITDA and Adjusted EBITDA margin were $67.4 million, $69.6 million and 24.8%, respectively, compared to $53.3 million, $55.6 million and 22.9%, respectively, in the prior year quarter.  The higher gross profit and gross profit margin primarily reflect the benefit of higher average selling prices and shipment volumes while our cost of goods sold remained relatively flat.  The higher EBITDA, Adjusted EBITDA and Adjusted EBITDA margin reflect the same dynamics, with further support of higher EBITDA from our joint venture, partially offset by higher general and administrative expenses primarily related to increased reserves for certain legal disputes, claims, and credit losses that arose in the ordinary course of our business.

Water Pipe & Products (“Water”) - Third Quarter 2019 Results
Water net sales decreased by 4% to $183.8 million, compared to $191.5 million in the prior year quarter.  The decrease in net sales was driven by a decline in shipment volumes, partially offset by higher average selling prices.  As we expected, our current quarter shipment volumes were lower when compared to the third quarter of 2018 as our customers built inventory levels during the second half of last year.  Over the past year we have worked closely with our customers to ensure we are able to efficiently service their needs, and now see bookings beginning to grow.

Despite the decline in net sales, Water gross profit and gross profit margin in the third quarter increased to $27.9 million and 15.2%, respectively, compared to $20.0 million and 10.4%, respectively, in the prior year quarter.  Water EBITDA, Adjusted EBITDA and Adjusted EBITDA margin in the third quarter increased to $25.6 million, $25.8 million and 14.0%, respectively, compared to $17.8 million, $19.0 million and 9.9%, respectively, in the prior year quarter.  The improvements in gross profit, gross profit margin, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin were driven by higher average selling prices, lower raw material costs, and manufacturing efficiencies, partially offset by lower shipment volumes.

Corporate and Other (“Corporate”) - Third Quarter 2019 Results
Corporate EBITDA and Adjusted EBITDA loss were $17.1 million and $15.4 million, respectively, in the third quarter of 2019 compared to $14.9 million and $13.1 million, respectively, in the prior year quarter.  The increase in both Corporate EBITDA and Adjusted EBITDA loss reflects our investment in information technology systems and business processes.  We expect Corporate Adjusted EBITDA loss for the full year 2019 to be in line with our internal plan.

Balance Sheet and Liquidity
As of September 30, 2019, we had cash of $43.9 million, outstanding debt on our senior term loan of $1.2 billion and no outstanding borrowings under our $300 million asset-based revolving credit facility.  During the third quarter, in addition to repaying the $39 million outstanding borrowings under our revolving credit facility, we voluntarily repurchased $16.5 million of our senior term loan before its maturity.  We expect to make additional voluntary repurchases during the fourth quarter to achieve the previously announced $30 to $85 million senior term loan pay down for the year.

Full Year Financial Outlook
Based on current trends and expectations, management has revised its full-year 2019 guidance as reflected below:

 Previous Guidance
 Revised Guidance
 
($ in millions) Low  High  Low  High 
Net Loss$(38)$(16)$(35)$(8)
Adjusted EBITDA$170 $200 $180 $200 
             

Supporting this revised guidance are our positive pricing trends in both the Drainage and Water segments and our expectation of continued strength in market demand.  We remain focused on executing commercial and operational initiatives geared toward improving operating margins and cash flow while controlling overhead costs.

Drainage - Key Financial Statistics:

($ in millions)Q3 2019 Q3 2018
    
Net Sales$280.7  $243.0 
Gross Profit74.3  57.4 
EBITDA67.4  53.3 
Adjusted EBITDA69.6  55.6 
Gross Profit Margin26.5% 23.6%
Adjusted EBITDA Margin24.8% 22.9%
      

Water - Key Financial Statistics:

($ in millions)Q3 2019 Q3 2018
    
Net Sales$183.8  $191.5 
Gross Profit27.9  20.0 
EBITDA25.6  17.8 
Adjusted EBITDA25.8  19.0 
Gross Profit Margin15.2% 10.4%
Adjusted EBITDA Margin14.0% 9.9%
      

Conference Call and Webcast Information

Forterra will host a conference call to review its third quarter 2019 results on November 5, 2019 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). The dial-in number for the call is 574-990-1396 or toll free 844-498-0572. The participant passcode is 3959906. Please dial in at least five minutes prior to the call to register. The call may also be accessed via a webcast which is available on the Investors section of the Company’s website at http://forterrabp.com.  A replay of the conference call and archive of the webcast will be available for 30 days under the Investor section of the Company's website.

About Forterra

Forterra is a leading manufacturer of water and drainage pipe and products in the U.S. and Eastern Canada for a variety of water-related infrastructure applications, including water transmission, distribution, drainage and stormwater systems. Based in Irving, Texas, Forterra’s product breadth and significant scale help make it a one-stop shop for water related pipe and products, and a preferred supplier to a wide variety of customers, including contractors, distributors and municipalities. For more information on Forterra, visit http://forterrabp.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by the use of words such as "anticipate", "believe", "expect", "estimate", "plan", "outlook", and "project" and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on historical information available at the time the statements are made and are based on management's reasonable belief or expectations with respect to future events, and are subject to risks and uncertainties, many of which are beyond the Company's control, that could cause actual performance or results to differ materially from the belief or expectations expressed in or suggested by the forward-looking statements. Forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to update any forward-looking statement to reflect future events, developments or otherwise, except as may be required by applicable law. Investors are referred to the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.

Condensed Consolidated Statements of Operations
(in thousands, except per share data)

 Three months ended Nine months ended
 September 30, September 30,
 20192018 20192018
 (unaudited) (unaudited)
Net sales$464,526 $434,510  $1,166,603 $1,140,557 
Cost of goods sold362,362 357,374  936,820 953,743 
Gross profit102,164 77,136  229,783 186,814 
Selling, general & administrative expenses(55,234)(48,492) (165,265)(151,617)
Impairment and exit charges(510)(2,170) (1,323)(3,891)
Other operating income, net815 1,538  1,018 6,864 
 (54,929)(49,124) (165,570)(148,644)
Income from operations47,235 28,012  64,213 38,170 
      
Other income (expense)     
Interest expense(23,272)(21,940) (73,720)(52,993)
Gain on extinguishment of debt374   374  
Earnings from equity method investee3,990 2,224  8,959 7,745 
Other income, net    6,016 
Income (loss) before income taxes28,327 8,296  (174)(1,062)
Income tax (expense) benefit(5,897)(2,793) 519 (6,351)
Net income (loss)$22,430 $5,503  $345 $(7,413)
      
Earnings (loss) per share:     
Basic$0.35 $0.09  $0.01 $(0.12)
Diluted$0.34 $0.09  $0.01 $(0.12)
      
Weighted average common shares outstanding:     
Basic64,210 63,919  64,119 63,883 
Diluted64,998 64,269  64,528 63,883 
          

Condensed Consolidated Balance Sheets
(in thousands)

 September 30,
 2019
 December 31,
 2018
ASSETS(unaudited)  
Current assets   
Cash and cash equivalents$43,852  $35,793 
Receivables, net286,345  198,468 
Inventories256,645  285,030 
Other current assets19,603  24,798 
Total current assets606,445  544,089 
Non-current assets   
Property, plant and equipment, net477,273  492,167 
Operating lease right-of-use assets62,252   
Goodwill508,588  508,193 
Intangible assets, net154,558  183,789 
Investment in equity method investee53,065  50,607 
Other long-term assets3,965  14,407 
Total assets$1,866,146  $1,793,252 
    
LIABILITIES AND EQUITY   
Current liabilities   
Trade payables$138,247  $114,708 
Accrued liabilities85,422  70,236 
Deferred revenue9,221  9,138 
Current portion of long-term debt12,510  12,510 
Current portion of tax receivable agreement15,457  15,457 
Total current liabilities260,857  222,049 
Non-current liabilities   
Long term debt1,156,023  1,176,095 
Long-term finance lease liabilities136,556  134,948 
Long-term operating lease liabilities55,669   
Deferred tax liabilities37,324  46,615 
Deferred gain on sale-leaseback  9,338 
Other long-term liabilities22,395  22,667 
Long-term tax receivable agreement73,318  73,318 
Total liabilities1,742,142  1,685,030 
Equity   
Common stock, $0.001 par value, 190,000 shares authorized; 64,540 and 64,206 shares issued and outstanding18  18 
Additional paid-in-capital240,920  234,931 
Accumulated other comprehensive loss(8,249) (10,740)
Retained deficit(108,685) (115,987)
Total shareholders' equity124,004  108,222 
Total liabilities and shareholders' equity$1,866,146  $1,793,252 
        

Condensed Consolidated Statements of Cash Flows
(in thousands)

 Nine months ended
 September 30,
 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES(unaudited)
Net income (loss)$345  $(7,413)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation & amortization expense72,954  79,373 
(Gain) / loss on business divestiture  (6,016)
(Gain) / loss on disposal of property, plant and equipment1,551  (2,447)
Gain on extinguishment of debt(374)  
Amortization of debt discount and issuance costs6,022  6,099 
Stock-based compensation expense4,833  4,588 
Impairment charges  936 
Earnings from equity method investee(8,959) (7,745)
Distributions from equity method investee6,500  8,875 
Unrealized loss / (gain) on derivative instruments, net5,892  (4,291)
Unrealized foreign currency loss / (gain), net35  (358)
Provision (recoveries) for doubtful accounts511  (1,905)
Deferred taxes(11,672) (24,787)
Deferred rent  1,022 
Other non-cash items(188) 77 
Change in assets and liabilities:   
Receivables, net(88,138) (83,720)
Inventories29,109  (25,019)
Other current assets1,296  6,910 
Accounts payable and accrued liabilities37,259  25,042 
Other assets & liabilities8,746  2,184 
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES65,722  (28,595)
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Purchase of property, plant and equipment, and intangible assets(44,321) (31,474)
Proceeds from business divestiture  618 
Proceeds from sale of fixed assets10,580  4,874 
Settlement of net investment hedges  (4,990)
Business combinations, net of cash acquired  (4,500)
NET CASH USED IN INVESTING ACTIVITIES(33,741) (35,472)
    
CASH FLOWS FROM FINANCING ACTIVITIES   
Payments on term loans(25,110) (9,383)
Proceeds from revolver54,000   
Payments on revolver(54,000)  
Proceeds from issuance of common stock1,282   
Other financing activities(552) (385)
NET CASH USED IN FINANCING ACTIVITIES(24,380) (9,768)
Effect of exchange rate changes on cash458  (351)
Net change in cash and cash equivalents8,059  (74,186)
Cash and cash equivalents, beginning of period35,793  104,534 
Cash and cash equivalents, end of period$43,852  $30,348 
    
SUPPLEMENTAL DISCLOSURES:
Cash interest paid$59,138  $50,217 
Income taxes paid5,054  21,508 
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING DISCLOSURES:
Assets and liabilities acquired in non-cash exchange  18,140 
Fair value changes of derivatives recorded in OCI, net of tax  970 
Capital lease obligation resulting from the sale-leaseback exchange transaction  (148,962)
      

Non-GAAP Measures
(unaudited)

Reconciliation of Non-GAAP Measures

In addition to our results calculated under generally accepted accounting principles in the United States ("GAAP"), in this earnings release we also present Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures and have been presented in this earnings release as supplemental measures of financial performance that are not required by, or presented in accordance with GAAP. We calculate Adjusted EBITDA as the sum of net income (loss), before interest expense (including (gains) losses from extinguishment of debt), depreciation and amortization, income tax benefit (expense) and before (gains) losses on the sale of property, plant and equipment, impairment and exit charges and certain other non-recurring income and expenses, such as transaction costs, inventory step-up impacting margin, non-cash compensation expense and pro-rate share of Adjusted EBITDA from equity method investee, minus earnings from equity method investee.  Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of net sales.

Adjusted EBITDA and Adjusted EBITDA margin are presented in this earnings release because they are important metrics used by management as one of the means by which it assesses our financial performance. Adjusted EBITDA and Adjusted EBITDA margin are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We use Adjusted EBITDA and Adjusted EBITDA margin as supplements to GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, to allocate resources and to compare our performance relative to our peers.  Adjusted EBITDA and Adjusted EBITDA margin are also important measures for assessing our operating results and evaluating each operating segment’s performance on a consistent basis, by excluding the impacts of depreciation, amortization, income tax expense, interest expense and other items not indicative of ongoing operating performance. Additionally, these measures, when used in conjunction with related GAAP financial measures, provide investors with additional financial analytical framework which management uses, in addition to historical operating results, as the basis for financial, operational and planning decisions and present measurements that third parties have indicated are useful in assessing the Company and its results of operations.

Adjusted EBITDA and Adjusted EBITDA margin have certain limitations. Adjusted EBITDA should not be considered as an alternative to consolidated net income (loss), and in the case of our segment results, Adjusted EBITDA should not be considered an alternative to EBITDA, which the chief operating decision maker reviews for purposes of evaluating segment profit, or in the case of any of the non-GAAP measures, as a substitute for any other measure of financial performance calculated in accordance with GAAP.  Similarly, Adjusted EBITDA margin should not be considered as an alternative to gross margin or any other margin calculated in accordance with GAAP.  These measures also should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items for which these non-GAAP measures make adjustments. Additionally, Adjusted EBITDA and Adjusted EBITDA margin are not intended to be liquidity measures because of certain limitations such as: (i) they do not reflect our cash outlays for capital expenditures or future contractual commitments; (ii) they do not reflect changes in, or cash requirements for, working capital; (iii) they do not reflect interest expense, or the cash requirements necessary to service interest, or principal payments, on indebtedness; (iv) they do not reflect income tax expense or the cash necessary to pay income taxes; and (v) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these non-GAAP measures do not reflect cash requirements for such replacements.

Other companies, including other companies in our industry, may not use such measures or may calculate one or more of the measures differently than as presented in this earnings release, limiting their usefulness as a comparative measure. In evaluating Adjusted EBITDA and Adjusted EBITDA margin, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments made in the calculations below and the presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed to mean that our future results will be unaffected by such adjustments. Management compensates for these limitations by using Adjusted EBITDA and Adjusted EBITDA margin as supplemental financial metrics and in conjunction with results prepared in accordance with GAAP.

Reconciliation of net income (loss) to Adjusted EBITDA
(in thousands)

 Three months ended September 30, Nine months ended September 30,
 2019 2018 2019 2018
 (unaudited) (unaudited)
Net income (loss)$22,430  $5,503  $345  $(7,413)
Interest expense23,272  21,940  73,720  52,993 
Depreciation and amortization24,172  25,922  72,954  79,370 
Income tax (benefit) expense5,897  2,793  (519) 6,351 
EBITDA175,771  56,158  146,500  131,301 
(Gain) loss on sale of property, plant & equipment, net518  124  1,551  (2,447)
Gain on extinguishment of debt(374)   (374)  
Impairment and exit charges2510  2,170  1,323  3,891 
Transaction costs3734  675  2,008  2,243 
Inventory step-up impacting margin4    278  464 
Non-cash compensation52,172  1,450  4,833  4,588 
Other6(300)   3,328  (6,688)
Earnings from equity method investee7(3,990) (2,224) (8,959) (7,745)
Pro-rata share of Adjusted EBITDA from equity method investee84,966  3,221  11,898  10,198 
Adjusted EBITDA$80,007  $61,574  $162,386  $135,805 
Adjusted EBITDA margin17.2% 14.2% 13.9% 11.9%
Gross profit102,164  77,136  $229,783  $186,814 
Gross profit margin22.0% 17.8% 19.7% 16.4%
            

For purposes of evaluating segment profit, the Company's chief operating decision maker reviews EBITDA as a basis for making the decisions to allocate resources and assess performance.
Impairment or abandonment of long-lived assets and other exit charges.
Legal, valuation, accounting, advisory and other costs related to business combinations and other transactions.
Effect of the purchase accounting step-up in the value of inventory to fair value recognized in cost of goods sold as a result of business combinations.
Non-cash equity compensation expense.
Other includes one-time charges such as executive severance costs and (gains) losses from divestiture transactions.
Net income from Forterra's 50% ownership in the Concrete Pipe & Precast LLC ("CP&P") joint venture accounted for under the equity method of accounting.
Adjusted EBITDA from Forterra's 50% ownership in the CP&P joint venture. Calculated as CP&P net income adjusted primarily to add back Forterra's pro-rata portion of CP&P's depreciation and amortization and interest expense.

Reconciliation of segment EBITDA to segment Adjusted EBITDA
(in thousands)

Three months ended September 30, 2019Drainage Pipe & Products Water Pipe & Products Corporate and Other Total
EBITDA1$67,361  $25,557  $(17,147) $75,771 
(Gain) loss on sale of property, plant & equipment, net463  53  2  518 
Gain on extinguishment of debt    (374) (374)
Impairment and exit charges2  510    510 
Transaction costs3    734  734 
Inventory step-up impacting margin4       
Non-cash compensation5387  98  1,687  2,172 
Other6401  (401) (300) (300)
Earnings from equity method investee7(3,990)     (3,990)
Pro-rata share of Adjusted EBITDA from equity method investee 84,966      4,966 
Adjusted EBITDA$69,588  $25,817  $(15,398) $80,007 
Adjusted EBITDA margin24.8% 14.0%  NM  17.2%
        
Net sales$280,678  $183,848  $  $464,526 
Gross Profit74,269  27,864  31  102,164 


Three months ended September 30, 2018Drainage Pipe & Products Water Pipe & Products Corporate and Other Total
EBITDA1$53,271  $17,818  $(14,931) $56,158 
(Gain) loss on sale of property, plant & equipment, net(14) 138    124 
Impairment and exit charges2571  1,599    2,170 
Transaction costs3    675  675 
Non-cash compensation5410  (157) 1,197  1,450 
Other6401  (401)    
Earnings from equity method investee7(2,224)     (2,224)
Pro-rata share of Adjusted EBITDA from equity method investee 83,221      3,221 
Adjusted EBITDA$55,636  $18,997  $(13,059) $61,574 
Adjusted EBITDA margin22.9% 9.9%  NM  14.2%
        
Net sales$242,997  $191,513  $  $434,510 
Gross Profit57,441  19,972  (277) 77,136 


Nine months ended September 30, 2019Drainage Pipe & Products Water Pipe & Products Corporate and Other Total
EBITDA1$141,424  $59,271  $(54,195) $146,500 
(Gain) loss on sale of property, plant & equipment, net1,238  311  2  1,551 
Gain on extinguishment of debt    (374) (374)
Impairment and exit charges2102  1,221    1,323 
Transaction costs3    2,008  2,008 
Inventory step-up impacting margin4278      278 
Non-cash compensation51,279  343  3,211  4,833 
Other61,203  (1,203) 3,328  3,328 
Earnings from equity method investee7(8,959)     (8,959)
Pro-rata share of Adjusted EBITDA from equity method investee 811,898      11,898 
Adjusted EBITDA$148,463  $59,943  $(46,020) $162,386 
Adjusted EBITDA margin21.6% 12.5%  NM  13.9%
        
Net sales$686,092  $480,511  $  $1,166,603 
Gross Profit163,419  66,746  (382) 229,783 


Nine months ended September 30, 2018Drainage Pipe & Products Water Pipe & Products Corporate and Other Total
EBITDA1$122,841  $48,923  $(40,463) $131,301 
(Gain) loss on sale of property, plant & equipment, net(3,419) 972    (2,447)
Impairment and exit charges21,733  2,166  (8) 3,891 
Transaction costs3    2,243  2,243 
Inventory step-up impacting margin4464      464 
Non-cash compensation51,285  206  3,097  4,588 
Other6519  (1,270) (5,937) (6,688)
Earnings from equity method investee7(7,745)     (7,745)
Pro-rata share of Adjusted EBITDA from equity method investee 810,198      10,198 
Adjusted EBITDA$125,876  $50,997  $(41,068) $135,805 
Adjusted EBITDA margin20.3% 9.8%  NM  11.9%
        
Net sales$621,523  $519,031  $3  $1,140,557 
Gross Profit133,708  53,640  (534) 186,814 
            

NM Not meaningful
For purposes of evaluating segment profit, the Company's chief operating decision maker reviews EBITDA as a basis for making the decisions to allocate resources and assess performance.
Impairment or abandonment of long-lived assets and other exit charges.
Legal, valuation, accounting, advisory and other costs related to business combinations and other transactions.
Effect of the purchase accounting step-up in the value of inventory to fair value recognized in cost of goods sold as a result of business combinations.
Non-cash equity compensation expense.
Other includes one-time charges such as executive severance costs and (gains) losses from divestiture transactions.
Net income from Forterra's 50% ownership in the CP&P joint venture accounted for under the equity method of accounting.
Adjusted EBITDA from Forterra's 50% ownership in the CP&P joint venture. Calculated as CP&P net income adjusted primarily to add back Forterra's pro-rata portion of CP&P's depreciation and amortization and interest expense.

Reconciliation of net loss to Adjusted EBITDA guidance for full year 2019
(in millions)

 Full Year 2019 Guidance
 Low High
Net loss$(35) $(8)
Interest expense97  97 
Income tax expense (benefit)2  (5)
Depreciation and amortization97  97 
Non-cash equity compensation7  7 
Other adjustments12  12 
Adjusted EBITDA$180  $200 
        

Source: Forterra, Inc.

Company Contact Information:

Charlie Brown
Executive Vice President and Chief Financial Officer
469-299-9113
IR@forterrabp.com