Cornerstone building brands announces second-quarter 2020 results
Cary, n.c.--(business wire)--cornerstone building brands, inc. (nyse: cnr) (the “company”), a leading provider of exterior building products, today reported second-quarter 2020 net sales of $1,084.9 million and net income of $26.5 million or 21 cents per diluted share. this compares with net sales of $1,295.5 million and net income of $17.3 million or 14 cents per diluted share in the same quarter last year. adjusted for the march 2020 acquisition of kleary masonry, inc. first-half 2020 pro forma net sales1 were $2,207.1 million, down 7.9 percent compared with pro forma net sales1 for first-half 2019. the decrease was driven by lower volumes as a result of the covid-19 pandemic. adjusted ebitda1 for the second quarter of 2020 was $159.1 million or 14.7 percent of net sales, an improvement of 130 basis points from the same pro forma period a year ago. the improvement was due to effective near-term expense management and structural cost reductions partially offset by the impacts from lower demand as a result of the covid-19 pandemic. for the first-half 2020, pro forma adjusted ebitda1 was $257.2 million or 11.7 percent of pro forma net sales1, an improvement of 4 percent or 140 basis points from the same pro forma period a year ago. "i am proud of the cornerstone building brands team, which is made up of people from many backgrounds, each unique, and valued as part of our organization. as a result of their efforts, we continue to foster a safe work environment while delivering quality products to our customers every day,” said james s. metcalf, chairman and chief executive officer. “our culture of continuous improvement delivered the fifth consecutive quarter of adjusted ebitda margin expansion in all segments. we generated positive cash flow and structurally reduced our operating cost structure during this unprecedented market environment,” metcalf continued. “at the same time, we're also pushing forward with our growth strategy that is centered around our differentiated and profitable products and services, securing our leadership position in exterior building products. while it remains unclear how long this pandemic and the related economic challenges will last, i believe in the resiliency of cornerstone building brands and i remain confident that the actions we are taking will make us a stronger company,” metcalf concluded. segment results versus prior year following are the company’s results by segment for the second quarter of 2020 and year to date. all segments delivered consecutive margin expansion over the prior year as a result of the quick and effective management of near-term expenses and acceleration of the company's strategy to permanently improve its highly variable cost structure, despite the challenges in end-markets due to the covid-19 pandemic. windows segment net sales for the quarter were $428.3 million, a decrease of 15.8 percent, and operating income was $23.1 million, a decrease of 27.6 percent. adjusted ebitda1 was $60.6 million or 14.2 percent of net sales, an improvement of 140 basis points. on a year-to-date basis, adjusted ebitda margin1 improved 210 basis points, while net sales were 5.8 percent lower. siding segment net sales for the quarter were $285.2 million, a decrease of 10.4 percent, and operating income was $30.6 million, an increase of 18.1 percent. adjusted ebitda1 was $63.3 million or 22.2 percent of net sales, an improvement of 170 basis points. on a year-to-date basis, adjusted ebitda margin1 improved 220 basis points, while net sales were 4.6 percent lower. commercial segment net sales for the quarter were $371.4 million, a decrease of 22.7 percent, and operating income was $36.7 million, a decrease of 37.7 percent. adjusted ebitda1 was $56.5 million or 15.2 percent of net sales, an improvement of 10 basis points. on a year-to-date basis, adjusted ebitda1 margin improved 30 basis points, while net sales were 12.1 percent lower. covid-19 response and update the health and safety of our employees, customers, and communities are our number one priority. we remain flexible and adjust our cost structure as we navigate the uncertainties created by the pandemic. across all businesses, our teams are in constant communication with customers, along with suppliers and government officials, to maintain business continuity without disruption. the company operates as an “essential” business, delivering quality products to our customers. we believe cornerstone building brands’ broad and diverse product mix, extensive operating footprint, and resilient business model positions us well to continue to navigate the uncertainty in the current environment and emerge stronger than before. balance sheet and liquidity in the second quarter of 2020, the company generated strong cash flow from operations of $69.1 million compared with $18.8 million for the same period last year, a cash generation improvement of $50.3 million. capital expenditures were $20.0 million, as the company remains committed to investing in innovative product offerings and process automation that are expected to generate profitable growth in the future. during the second quarter, we commissioned an automated glass line at the toledo, ohio window’s facility, that doubled operating capacity and improved productivity by 50 percent. free cash flow was $49.1 million during the second quarter of 2020 compared with free cash flow usage of $11.2 million during the second quarter of 2019. the improvement was driven by net cash tax benefits from the cares act and other covid-19 related government stimulus programs as well as effective working capital management. the company ended the quarter with approximately $483.5 million of unrestricted cash on hand and $145.8 million of excess availability on its asset-based revolving credit facility. additionally, the net debt leverage ratio1 improved to 5.3x at the end of the second quarter of 2020 compared with 6.1x for the same period last year. we believe our liquidity is sufficient to weather the economic uncertainty related to the ongoing impact of the covid-19 pandemic while providing the company flexibility needed to continue executing our growth strategy. outlook third-quarter 2020 guidance expect net sales to be between $1,160 million and $1,240 million positive residential end-market momentum backlog at historic levels in windows and siding segments stable non-residential end-markets positive residential end-market momentum backlog at historic levels in windows and siding segments stable non-residential end-markets anticipate gross profit to be between $275 million and $300 million. expect adjusted ebitda2 to be between $170 million and $195 million lower cost structure from run rate of achieved and continued execution of cost savings lower cost structure from run rate of achieved and continued execution of cost savings additional fiscal year 2020 guidance 2020 capital spending is projected to be approximately $85 million. cash interest expense is expected to be approximately $200 million. cash tax benefit of approximately $10 million. benefits from targeted primary working capital improvements are expected to generate approximately $50 million of cash. cash restructuring costs are expected to be approximately $35 million to achieve between $80 and $100 million of structural savings. (1) adjusted financial metrics used in this release are non-gaap measures and refer to the results for 2020 and 2019. pro forma financial metrics used in this release for results in 2020 and 2019 are also non-gaap measures and adjust for other items affecting comparability. see reconciliations of gaap results to adjusted results and pro forma results in the accompanying tables. (2) adjusted ebitda is a non-gaap financial measure. a reconciliation of the forecasted range for the third quarter of 2020 is not included in this release. see "non-gaap financial measures" below. conference call information the company will host a conference call at 9:00 a.m. edt on wednesday, august 12 to discuss its financial performance with investors and securities analysts. the financial results and supplemental information will be available online at investors.cornerstonebuildingbrands.com. to register, please use this link http://www.directeventreg.com/registration/event/8147407. after registering, an email confirmation will be sent providing dial-in details and a unique code for entry. registration is open throughout the live call, however, to ensure you are connected for the entirety, please register a day in advance or at least 10 minutes before the start of the call. additional call participation options are as follows: by webcast: cornerstone building brands 2q20 earnings call date: wednesday, august 12, 2020 time: 9:00 a.m. eastern daylight time access link: visit the events & presentations section of the investors page at investors.cornerstonebuildingbrands.com or access directly at https://event.on24.com/wcc/r/2403452/dff10e9ea779d4793b94879dcaa90d0e replay dial-in will be available through august 26, 2020 dial-in number: 855-859-2056 replay code: 8147407 about cornerstone building brands cornerstone building brands is a leading manufacturer of exterior building products in north america. headquartered in cary, north carolina, the company serves residential and commercial customers across new construction and the repair & remodel markets. as the #1 manufacturer of windows, vinyl siding, insulated metal panels, metal roofing and wall systems and metal accessories, cornerstone building brands combines a comprehensive portfolio of products with an expansive national footprint that includes approximately 20,000 employees at manufacturing, distribution and office locations throughout north america. for more information, visit us at www.cornerstonebuildingbrands.com. forward-looking statements this press release contains forward-looking statements within the meaning of the private securities litigation reform act of 1995. words such as “believe,” “anticipate," “guidance,” “plan,” “potential,” “expect,” “should,” “will,” “forecast,” “target” and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the private securities litigation reform act of 1995. these forward-looking statements reflect our current expectations, assumptions and/or beliefs concerning future events. as a result, these forward-looking statements rely on a number of assumptions, forecasts, and estimates and, therefore, these forward-looking statements are subject to a number of risks and uncertainties that may cause the company's actual performance to differ materially from that projected in such statements. such forward-looking statements may include, but are not limited to, statements concerning our market commentary and expectations for residential and non-residential end markets and our financial outlook and guidance, including our third quarter 2020 forecasted net sales, gross profit and adjusted ebitda, and our fiscal year 2020 forecasted capital spending, cash interest expense, cash tax expense, benefits from primary working capital, cash restructuring costs and other consolidated financial performance guidance. among the factors that could cause actual results to differ materially include, but are not limited to, industry cyclicality and seasonality and adverse weather conditions; challenging economic conditions affecting the nonresidential construction industry; downturns in the residential new construction and repair and remodeling end markets, or the economy or the availability of consumer credit; volatility in the united states (“u.s.”) economy and abroad, generally, and in the credit markets; the outbreak of a health epidemic or pandemic, including the coronavirus disease 2019 (“covid-19”) pandemic; precautions taken due to the recent covid-19 pandemic that could harm our business; impairment of goodwill and/or intangible assets; our ability to successfully develop new products or improve existing products; the effects of manufacturing or assembly realignments; seasonality of the business and other external factors beyond our control; commodity price volatility and/or limited availability of raw materials, including steel, pvc resin, glass and aluminum; our ability to identify and develop relationships with a sufficient number of qualified suppliers and to avoid a significant interruption in our supply chains; retention and replacement of key personnel; enforcement and obsolescence of our intellectual property rights; costs related to compliance with, violations of or liabilities under environmental, health and safety laws; changes in building codes and standards; competitive activity and pricing pressure in our industry; our ability to make strategic acquisitions accretive to earnings; our ability to carry out our restructuring plans and to fully realize the expected cost savings; global climate change, including legal, regulatory or market responses thereto; breaches of our information system security measures; damage to our computer infrastructure and software systems; necessary maintenance or replacements to our enterprise resource planning technologies; potential personal injury, property damage or product liability claims or other types of litigation; compliance with certain laws related to our international business operations; increases in labor costs, potential labor disputes, union organizing activity and work stoppages at our facilities or the facilities of our suppliers; significant changes in factors and assumptions used to measure certain of our defined benefit plan obligations and the effect of actual investment returns on pension assets; the cost and difficulty associated with integrating and combining acquired businesses; volatility of the company’s stock price; substantial governance and other rights held by the investors; the effect on our common stock price caused by transactions engaged in by the investors, our directors or executives; our substantial indebtedness and our ability to incur substantially more indebtedness; limitations that our debt agreements place on our ability to engage in certain business and financial transactions; our ability to obtain financing on acceptable terms; downgrades of our credit ratings; and the effect of increased interest rates on our ability to service our debt. see also the “risk factors” in the company’s annual report on form 10-k for the fiscal year ended december 31, 2019, quarterly report on form 10-q for the quarterly period ended april 4, 2020 and other risks described in documents subsequently filed by the company from time to time with the sec, which identify other important factors, though not necessarily all such factors, that could cause future outcomes to differ materially from those set forth in the forward-looking statements. the company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements, whether as a result of new information, future events, or otherwise. non-gaap financial measures this press release includes certain “non-gaap financial measures” as defined under the securities exchange act of 1934 and in accordance with regulation g. management believes the use of such non-gaap financial measures assists investors in understanding the ongoing operating performance of the company by presenting the financial results between periods on a more comparable basis. such non-gaap financial measures should not be construed as an alternative to reported results determined in accordance with u.s. gaap. we have included reconciliations of these non-gaap financial measures to the most directly comparable financial measures calculated and provided in accordance with u.s. gaap at the end of this release. a reconciliation of the forecasted range for adjusted ebitda for the third quarter of 2020 is not included in this presentation due to the number of variables in the projected range and because we are currently unable to quantify accurately certain amounts that would be required to be included in the gaap measure or the individual adjustments for such reconciliation. in addition, we believe such reconciliation would imply a degree of precision that would be confusing or misleading to investors. cornerstone building brands, inc. consolidated statements of operations (in thousands, except per share data) (unaudited) three months ended six months ended july 4, 2020 june 29, 2019 july 4, 2020 june 29, 2019 net sales $ 1,084,936 $ 1,295,457 $ 2,198,747 $ 2,360,289 cost of sales 830,205 990,794 1,713,129 1,869,709 gross profit 254,731 304,663 485,618 490,580 23.5 % 23.5 % 22.1 % 20.8 % selling, general and administrative expenses 134,371 158,028 299,325 312,334 intangible asset amortization 45,240 46,511 90,101 87,974 restructuring and impairment charges, net 15,411 7,107 29,246 10,538 strategic development and acquisition related costs 784 12,086 5,641 26,168 goodwill impairment — — 503,171 — income (loss) from operations 58,925 80,931 (441,866 ) 53,566 interest income 341 121 679 336 interest expense (52,384 ) (58,299 ) (107,219 ) (116,585 ) foreign exchange gain (loss) 2,025 523 (2,112 ) 1,700 other income (expense), net 660 (397 ) (2 ) (52 ) income (loss) before income taxes 9,567 22,879 (550,520 ) (61,035 ) provision (benefit) for income taxes (17,332 ) 5,346 (35,346 ) (18,551 ) (181.2 ) % 23.4 % 6.4 % 30.4 % net income (loss) 26,899 17,533 (515,174 ) (42,484 ) net income allocated to participating securities (442 ) (270 ) — — net income (loss) applicable to common shares $ 26,457 $ 17,263 $ (515,174 ) $ (42,484 ) income (loss) per common share: basic $ 0.21 $ 0.14 $ (4.09 ) $ (0.34 ) diluted $ 0.21 $ 0.14 $ (4.09 ) $ (0.34 ) weighted average number of common shares outstanding: basic 125,754 125,516 125,927 125,510 diluted 125,755 125,516 125,927 125,510 increase (decrease) in sales (16.3 ) % 183.4 % (6.8 ) % 168.7 % selling, general and administrative expenses percentage of net sales 12.4 % 12.2 % 13.6 % 13.2 % cornerstone building brands, inc. consolidated balance sheets (in thousands) (unaudited) july 4, 2020 december 31, 2019 assets current assets: cash and cash equivalents $ 483,497 $ 98,386 restricted cash 6,223 3,921 accounts receivable, net 522,612 491,740 inventories, net 402,994 439,194 income taxes receivable 36,741 48,466 investments in debt and equity securities, at market 3,531 3,776 prepaid expenses and other 67,933 78,516 assets held for sale 2,646 1,750 total current assets 1,526,177 1,165,749 property, plant and equipment, net 644,284 652,841 lease right-of-use assets 300,849 316,155 goodwill 1,187,788 1,669,594 intangible assets, net 1,665,591 1,740,700 deferred income taxes 1,272 7,510 other assets, net 11,884 11,797 total assets $ 5,337,845 $ 5,564,346 liabilities and stockholders’ equity current liabilities: current portion of long-term debt $ 25,600 $ 25,600 accounts payable 198,936 205,629 accrued compensation and benefits 54,590 92,130 accrued interest 20,126 19,070 accrued income taxes 501 — current portion of lease liabilities 71,294 72,428 other accrued expenses 222,425 233,687 total current liabilities 593,472 648,544 long-term debt 3,578,341 3,156,924 deferred income taxes 221,078 291,987 long-term lease liabilities 226,371 243,780 other long-term liabilities 340,371 287,793 total long-term liabilities 4,366,161 3,980,484 common stock 1,252 1,261 additional paid-in capital 1,249,852 1,248,787 accumulated deficit (797,081 ) (281,229 ) accumulated other comprehensive loss, net (75,300 ) (32,398 ) treasury stock, at cost (511 ) (1,103 ) total stockholders’ equity 378,212 935,318 total liabilities and stockholders’ equity $ 5,337,845 $ 5,564,346 cornerstone building brands, inc. consolidated statements of cash flows (in thousands) (unaudited) six months ended july 4, 2020 june 29, 2019 cash flows from operating activities: net loss $ (515,174 ) $ (42,484 ) adjustments to reconcile net loss to net cash provided by (used in) operating activities: depreciation and amortization 140,480 127,476 non-cash interest expense 4,593 3,954 share-based compensation expense 8,543 7,479 non-cash fair value premium on purchased inventory — 16,249 goodwill impairment 503,171 — asset impairment 3,490 — loss (gain) on asset sales, net 169 (277 ) provision for doubtful accounts 252 (205 ) deferred income taxes (48,190 ) (48,515 ) changes in operating assets and liabilities, net of effect of acquisitions: accounts receivable (24,844 ) (133,820 ) inventories 36,872 29,430 income taxes 12,226 2,245 prepaid expenses and other 9,782 (706 ) accounts payable (7,818 ) 15,079 accrued expenses (53,834 ) (2,952 ) other, net (2,756 ) (2,867 ) net cash provided by (used in) operating activities 66,962 (29,914 ) cash flows from investing activities: acquisitions, net of cash acquired (41,841 ) (179,184 ) capital expenditures (47,609 ) (57,220 ) proceeds from sale of property, plant and equipment 114 873 net cash used in investing activities (89,336 ) (235,531 ) cash flows from financing activities: proceeds from abl facility 345,000 270,000 payments on abl facility (30,000 ) (50,000 ) proceeds from cash flow revolver 115,000 — payments on term loan (12,810 ) (12,810 ) payments related to tax withholding for share-based compensation (467 ) (167 ) purchases of treasury stock (6,428 ) — net cash provided by financing activities 410,295 207,023 effect of exchange rate changes on cash and cash equivalents (508 ) 2,300 net increase (decrease) in cash, cash equivalents and restricted cash 387,413 (56,122 ) cash, cash equivalents and restricted cash at beginning of period 102,307 147,607 cash, cash equivalents and restricted cash at end of period $ 489,720 $ 91,485 cornerstone building brands, inc. non-gaap financial measures and reconciliations adjusted net income (loss) per diluted common share and net income (loss) comparison (in thousands, except per share data) (unaudited) three months ended six months ended july 4, 2020 june 29, 2019 july 4, 2020 june 29, 2019 net income (loss) per diluted common share, gaap basis $ 0.21 $ 0.14 $ (4.09 ) $ (0.34 ) restructuring and impairment charges, net 0.12 0.06 0.23 0.08 strategic development and acquisition related costs 0.01 0.10 0.04 0.21 non cash loss (gain) on foreign currency transactions (0.02 ) — 0.02 (0.01 ) non cash charge of purchase price allocated to inventories — — — 0.13 goodwill impairment — — 4.00 — customer inventory buybacks — — — — covid-19(3) 0.05 — 0.06 — other, net — 0.01 0.01 0.02 tax effect of applicable non-gaap adjustments(1) (0.04 ) (0.04 ) (1.14 ) (0.11 ) adjusted net income (loss) per diluted common share(2) $ 0.34 $ 0.26 $ (0.86 ) $ (0.02 ) three months ended six months ended july 4, 2020 june 29, 2019 july 4, 2020 june 29, 2019 net income (loss) applicable to common shares, gaap basis $ 26,457 $ 17,263 $ (515,174 ) $ (42,484 ) restructuring and impairment charges, net 15,411 7,107 29,403 10,538 strategic development and acquisition related costs 784 12,086 5,641 26,168 non cash loss (gain) on foreign currency transactions (2,025 ) (523 ) 2,112 (1,700 ) non cash charge of purchase price allocated to inventories — — — 16,249 goodwill impairment — — 503,171 — customer inventory buybacks 193 175 313 417 covid-19(3) 6,805 — 8,035 — other, net 474 1,357 1,612 2,081 tax effect of applicable non-gaap adjustments(1) (5,627 ) (5,396 ) (143,075 ) (14,357 ) adjusted net income (loss) applicable to common shares(2) $ 42,914 $ 32,069 $ (107,962 ) $ (3,088 ) (1) the company calculated the tax effect of non-gaap adjustments by applying the applicable federal and state statutory tax rate for the period to each applicable non-gaap item. (2) the company discloses a tabular comparison of adjusted net income (loss) per diluted common share and adjusted net income (loss) applicable to common shares, which are non-gaap measures, because they are referred to in the text of our press releases and are instrumental in comparing the results from period to period. adjusted net income (loss) per diluted common share and adjusted net income (loss) applicable to common shares should not be considered in isolation or as a substitute for net income (loss) per diluted common share and net income (loss) applicable to common shares as reported on the face of our consolidated statements of operations. (3) costs included within the covid-19 line item for the three and six months ended july 4, 2020 include incremental labor costs due to quarantine related absenteeism, incremental facility cleaning costs, pandemic related supplies and personal protective equipment for employees, among other costs. certain amounts in this release have been subject to rounding adjustments. accordingly, amounts shown as totals may not be the arithmetic aggregation of the individual amounts that comprise or precede them. cornerstone building brands, inc. non-gaap financial measures and reconciliations (in thousands) (unaudited) consolidated three months ended six months ended july 4, 2020 june 29, 2019 july 4, 2020 june 29, 2019 operating income (loss), gaap $ 58,925 $ 80,931 $ (441,866 ) $ 53,566 restructuring and impairment charges, net 15,411 7,107 29,403 10,538 strategic development and acquisition related costs 784 12,086 5,641 26,168 non cash charge of purchase price allocated to inventories — — — 16,249 goodwill impairment — — 503,171 — customer inventory buybacks 193 175 313 417 covid-19 6,805 — 8,035 — other, net 474 1,357 1,612 2,081 adjusted operating income 82,592 101,656 106,309 109,019 other income (expense), net 660 (397 ) (2 ) (52 ) depreciation and amortization 70,711 67,529 140,480 127,476 share-based compensation expense 5,156 3,474 8,543 7,479 adjusted ebitda 159,119 172,262 255,330 243,922 impact of environmental stoneworks and kleary acquisitions(1) — 2,676 1,869 3,157 pro forma adjusted ebitda $ 159,119 $ 174,938 $ 257,199 $ 247,079 (1) reflects the adjusted ebitda of environmental stoneworks for the period january 1, 2019 to the acquisition date of february 20, 2019 and kleary masonry, inc. for the periods january 1, 2019 to june 29, 2019 and january 1, 2020 to march 1, 2020. windows three months ended six months ended july 4, 2020 june 29, 2019 july 4, 2020 june 29, 2019 net sales $ 428,275 $ 508,647 $ 876,725 $ 930,241 operating income (loss), gaap $ 23,101 $ 31,912 $ (290,089 ) $ 27,593 restructuring and impairment charges, net 4,184 900 5,650 1,021 strategic development and acquisition related costs — 8,052 16 12,061 goodwill impairment — — 320,990 — covid-19 3,964 — 4,892 — other, net (785 ) (424 ) — (40 ) adjusted operating income 30,464 40,440 41,459 40,635 other income (expense), net — (411 ) — (738 ) depreciation and amortization 30,182 24,848 60,035 48,825 adjusted ebitda $ 60,646 $ 64,877 $ 101,494 $ 88,722 adjusted ebitda as a % of net sales 14.2 % 12.8 % 11.6 % 9.5 % cornerstone building brands, inc. non-gaap financial measures and reconciliations (in thousands) (unaudited) siding three months ended six months ended july 4, 2020 june 29, 2019 july 4, 2020 june 29, 2019 net sales $ 285,249 $ 306,525 $ 526,292 $ 524,802 pro forma net sales 285,249 318,255 534,650 560,441 operating income (loss), gaap $ 30,638 $ 25,937 $ (138,229 ) $ 14,283 restructuring and impairment charges, net 2,524 5,544 3,615 5,631 strategic development and acquisition related costs 955 — 976 — non cash charge of purchase price allocated to inventories — — — 16,249 goodwill impairment — — 176,774 — customer inventory buybacks 193 175 313 417 covid-19 43 — 43 — other, net 412 1,202 — 1,435 adjusted operating income 34,765 32,858 43,492 38,015 other income (expense), net (6 ) (750 ) (6 ) (1,016 ) depreciation and amortization 28,514 30,415 56,521 54,765 adjusted ebitda 63,273 62,523 100,007 91,764 impact of environmental stoneworks and kleary acquisitions(1) — 2,676 1,869 3,157 pro forma adjusted ebitda $ 63,273 $ 65,199 $ 101,876 $ 94,921 pro forma adjusted ebitda as a % of pro forma net sales 22.2 % 20.5 % 19.1 % 16.9 % (1) reflects the adjusted ebitda of environmental stoneworks for the period january 1, 2019 to the acquisition date of february 20, 2019 and kleary masonry, inc. for the periods january 1, 2019 to june 29, 2019 and january 1, 2020 to march 1, 2020. commercial three months ended six months ended july 4, 2020 june 29, 2019 july 4, 2020 june 29, 2019 net sales $ 371,412 $ 480,285 $ 795,730 $ 905,246 operating income, gaap $ 36,664 $ 58,809 $ 53,505 $ 83,119 restructuring and impairment charges, net 7,364 132 19,069 1,165 strategic development and acquisition related costs (149 ) 733 (254 ) 6,255 goodwill impairment — — 5,407 — covid-19 1,220 — 1,522 — other, net 289 1,082 1,100 1,082 adjusted operating income 45,388 60,756 80,349 91,621 other income (expense), net 123 213 237 708 depreciation and amortization 11,020 11,399 21,921 22,174 adjusted ebitda $ 56,531 $ 72,368 $ 102,507 $ 114,503 net sales as a % of adjusted ebitda 15.2 % 15.1 % 12.9 % 12.6 % cornerstone building brands, inc. business segments (in thousands) (unaudited) three months ended july 4, 2020 june 29, 2019 % of net sales % of net sales % change net sales windows $ 428,275 39.5 % $ 508,647 39.2 % (15.8 ) % siding 285,249 26.3 % 306,525 23.7 % (6.9 ) % commercial 371,412 34.2 % 480,285 37.1 % (22.7 ) % total net sales $ 1,084,936 100.0 % $ 1,295,457 100.0 % (16.3 ) % gross profit windows $ 84,363 19.7 % $ 98,187 19.3 % (14.1 ) % siding 78,137 27.4 % 85,042 27.7 % (8.1 ) % commercial 92,231 24.8 % 121,434 25.3 % (24.0 ) % total gross profit $ 254,731 23.5 % $ 304,663 23.5 % (16.4 ) % operating income (loss) windows $ 23,101 5.4 % $ 31,912 6.3 % (27.6 ) % siding 30,638 10.7 % 25,937 8.5 % 18.1 % commercial 36,664 9.9 % 58,809 12.2 % (37.7 ) % corporate (31,478 ) — (35,727 ) — % (11.9 ) % total operating income $ 58,925 5.4 % $ 80,931 6.2 % (27.2 ) % six months ended july 4, 2020 june 29, 2019 % of net sales % of net sales % change net sales windows $ 876,725 39.9 % $ 930,241 39.4 % (5.8 ) % siding 526,292 23.9 % 524,802 22.2 % 0.3 % commercial 795,730 36.2 % 905,246 38.4 % (12.1 ) % total net sales $ 2,198,747 100.0 % $ 2,360,289 100.0 % (6.8 ) % gross profit windows $ 158,364 18.1 % $ 160,527 17.3 % (1.3 ) % siding 137,179 26.1 % 118,218 22.5 % 16.0 % commercial 190,075 23.9 % 211,835 23.4 % (10.3 ) % total gross profit $ 485,618 22.1 % $ 490,580 20.8 % (1.0 ) % operating income (loss) windows $ (290,089 ) (33.1 ) % $ 27,593 3.0 % (1,151.3 ) % siding (138,229 ) (26.3 ) % 14,283 2.7 % (1,067.8 ) % commercial 53,505 6.7 % 83,119 9.2 % (35.6 ) % corporate (67,053 ) — (71,429 ) — % (6.1 ) % total operating income (loss) $ (441,866 ) (20.1 ) % $ 53,566 2.3 % (924.9 ) % cornerstone building brands, inc. non-gaap financial measures and reconciliations reconciliation of pro forma segment information (in thousands) (unaudited) reported acquisitions (1) pro forma three months ended june 29, 2019 net sales windows $ 508,647 $ — $ 508,647 siding 306,525 11,730 318,255 commercial 480,285 — 480,285 total net sales $ 1,295,457 $ 11,730 $ 1,307,187 gross profit % of net sales windows $ 98,187 $ — $ 98,187 19.3 % siding 85,042 3,569 88,611 27.8 % commercial 121,434 — 121,434 25.3 % total gross profit $ 304,663 $ 3,569 $ 308,232 23.6 % reported acquisitions pro forma three months ended july 4, 2020 net sales windows $ 428,275 $ — $ 428,275 siding 285,249 — 285,249 commercial 371,412 — 371,412 total net sales $ 1,084,936 $ — $ 1,084,936 gross profit % of net sales windows $ 84,363 $ — $ 84,363 19.7 % siding 78,137 — 78,137 27.4 % commercial 92,231 — 92,231 24.8 % total gross profit $ 254,731 $ — $ 254,731 23.5 % (1) acquisitions reflect the estimated impact for kleary masonry, inc. cornerstone building brands, inc. non-gaap financial measures and reconciliations reconciliation of pro forma segment information (in thousands) (unaudited) reported acquisitions (1)(2) pro forma six months ended june 29, 2019 net sales windows $ 930,241 $ — $ 930,241 siding 524,802 35,639 560,441 commercial 905,246 — 905,246 total net sales $ 2,360,289 $ 35,639 $ 2,395,928 gross profit % of net sales windows $ 160,527 $ — $ 160,527 17.3 % siding 118,218 24,439 142,657 25.5 % commercial 211,835 — 211,835 23.4 % total gross profit $ 490,580 $ 24,439 $ 515,019 21.5 % reported acquisitions (1) pro forma six months ended july 04, 2020 net sales windows $ 876,725 $ — $ 876,725 siding 526,292 8,358 534,650 commercial 795,730 — 795,730 total net sales $ 2,198,747 $ 8,358 $ 2,207,105 gross profit % of net sales windows $ 158,364 $ — $ 158,364 18.1 % siding 137,179 2,300 139,479 26.1 % commercial 190,075 — 190,075 23.9 % total gross profit $ 485,618 $ 2,300 $ 487,918 22.1 % (1) acquisitions reflect the estimated impact for environmental stoneworks and kleary masonry, inc. (2) gross margin adjustment for the non-cash inventory fair value step-up of $16.2 million associated with the ply gem merger and environmental stoneworks acquisition.
