Cornerstone building brands announces fourth-quarter and full-year 2021 results
Cary, n.c.--(business wire)--cornerstone building brands, inc. (nyse: cnr) (the “company”), the largest manufacturer of exterior building products in north america, today reported fourth-quarter 2021 net sales of $1,471.6 million and net income of $38.1 million or twenty-nine cents per diluted share. this compares with net sales of $1,191.4 million and net income of $1.9 million or one cent per diluted share in the same quarter last year. pro forma adjusted ebitda1 for the fourth quarter of 2021 was $184.2 million, 25.3 percent higher than the same quarter last year. the improvement was primarily due to favorable price mix net of inflation of $94 million partially offset by higher sg&a expense and manufacturing costs related to supply chain disruptions and labor constraints. 2021 full year results and highlights net sales for 2021 were $5,583.1 million and net income was $665.9 million or $5.19 per diluted share. this compares with net sales of $4,617.4 million and net loss of $482.8 million or loss per diluted share of $3.84. pro forma net sales1 were $5,483.9 million, a 23.0 percent increase over prior year. the growth was primarily driven by favorable price actions across all segments and strong underlying market demands. pro forma adjusted ebitda1 for 2021 was $688.0 million or 12.5 percent of pro forma net sales1, an improvement of 24.1 percent or ten basis points from the same pro forma period a year ago. the increase was primarily driven by an increase in price mix net of inflation of 37.9 percent and higher volumes of $85.0 million over the same pro forma period last year. additionally, we experienced higher manufacturing costs to serve our customers as a result of supply chain disruptions and labor constraints. increases in sg&a of $69.3 million were primarily the result of the return of near-term costs, such as variable compensation and professional service expenses. “we delivered strong financial results in 2021,” said rose lee, president and chief executive officer. “for the second consecutive year, we realized record pro forma net sales and pro forma adjusted ebitda while navigating challenging supply chain distributions and changing market conditions. in addition to our strong performance, we remained focused on enhancing long-term growth by taking actions to optimize our portfolio. during the year, we divested the insulated metal panels and roll-up door businesses, which immediately unlocked shareholder value and enabled investments that furthered growth in the large, deep windows market and high growth residential metal roofing market.” segment results versus prior year due to the timing of the company’s fiscal calendar, the fourth quarter of 2021 had two, or approximately 3 percent, more ship days than the fourth quarter of 2020. windows segment net sales for the quarter were $618.8 million, an increase of 21.0 percent versus the same period last year. on a pro forma basis, net sales1 for the quarter increased 8.5 percent driven by positive price mix of 12.9 percent partially offset by 4.4 percent lower volume. operating income was $16.8 million, a decrease of $12.3 million or 42.3 percent, from the prior-year quarter. adjusted ebitda1 was $54.4 million or 8.8 percent of net sales, a decrease of 22.5 percent compared to pro forma adjusted ebitda1 from the prior year quarter, primarily due to manufacturing inefficiencies and lower volume associated with market-driven labor shortages and supply chain disruptions. disciplined price actions in response to rising commodity costs and other inflationary impacts resulted in positive price mix net of inflation of $11 million. sg&a costs for the quarter were $5 million higher than pro forma sg&a in fourth-quarter 2020 primarily due to the return of near-term costs, such as variable compensation and professional service expenses. siding segment net sales for the quarter were $327.6 million, an increase of 11.5 percent versus the fourth-quarter 2020. for the quarter, increase in price mix of 17.0 percent was partially offset by lower volume. operating income was $10.8 million, a decrease of $20.2 million or 65.3 percent from the prior year quarter, primarily due to $13.9 million of asset impairment related a discontinued product line. adjusted ebitda1 was $53.9 million or 16.4 percent of net sales, a decrease of 13.2 percent primarily due to lower volume, increased manufacturing costs to serve the customers and return of near-term costs (such as variable compensation and professional service expenses) in sg&a offset by positive price mix net of inflation of 15.4 percent. commercial segment net sales for the quarter were $525.2 million, an increase of 36.0 percent over the prior year quarter, including $21.9 million of sales from the union corrugating company acquisition. pro forma net sales1 increased 79.5 percent, driven by disciplined price actions of approximately 67.0 percent taken to mitigate rising steel costs partially offset by lower volume. operating income was $101.0 million, an increase of $51.0 million from the prior-year quarter. pro forma adjusted ebitda1 was $113.1 million or 21.5 percent of pro forma net sales1, an increase of $71.1 million or 169.6 percent over the same quarter last year, primarily due to positive price mix net of commodity and other inflationary impacts of $73 million. partially offsetting the favorability was lower volumes caused by raw material constraints. included in pro forma adjusted ebitda1 is $2.2 million related to the acquisition of union corrugating company, which closed on december 3, 2021 and furthers our presence in the high-growth residential metal roofing market. balance sheet and liquidity the company's cash flow used in operations during 2021 was $215.9 million, primarily for investments in net working capital to support demand and increased valuations from rising commodity costs and other inflationary impacts. capital expenditures were $114.7 million, with approximately 50 percent invested in innovative product offerings and process automation that are expected to generate profitable growth in the future. the company continued to strengthen the balance sheet and improve its leverage position in 2021. as previously disclosed, during the second quarter, the company fully redeemed its $645 million, 8.00% senior notes due april 2026 using available cash from the balance sheet and net proceeds from its extended and upsized senior term loan facility. the company also refinanced its credit facilities, meaningfully extending its debt maturities and reducing annual interest costs by more than $50 million a year. the company ended the year with approximately $394 million of unrestricted cash on hand and $1,075 million of liquidity. additionally, the net debt leverage ratio1 improved from 4.9x at the end of fiscal year 2020 to 3.7x at the end of fiscal year ended 2021. suspension of guidance and strategic update as previously announced on february 14, 2022, the company is in receipt of a non-binding, best and final proposal from funds affiliated with clayton, dubilier & rice, llc (“cd&r”) to acquire all of the company’s outstanding shares of common stock that cd&r does not already own for $24.65 in cash per share. the company’s board of directors previously formed a special committee of independent directors (the “special committee”) to evaluate and consider any potential or actual proposal from cd&r and any other alternative proposals or other strategic alternatives that may be available to the company. the special committee’s evaluation is ongoing and it expects to make an announcement regarding the outcome of its review upon completion. in light of the proposal and the special committee’s ongoing review, the company will not be hosting a conference call in connection with its fourth quarter financial results and will not provide financial guidance for the first quarter of fiscal year 2022. (1) adjusted and pro forma financial metrics used in this release, including pro forma net sales, adjusted ebitda and pro forma adjusted ebitda are non-gaap measures. see reconciliations of gaap results to adjusted results and pro forma results in the accompanying tables. see "non-gaap financial measures" below. about cornerstone building brands cornerstone building brands is the largest manufacturer of exterior building products for residential and low-rise non-residential buildings in north america. headquartered in cary, n.c., we serve residential and commercial customers across the new construction and repair and remodel markets. our market-leading portfolio of products spans vinyl windows, vinyl siding, stone veneer, metal roofing, metal wall systems and metal accessories. cornerstone building brands’ broad, multichannel distribution platform and expansive national footprint includes approximately 21,700 employees at manufacturing, distribution and office locations throughout north america. corporate stewardship and environmental, social and governance (esg) responsibility are embedded in our culture, and we are committed to contributing positively to the communities where we live, work and play. 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. among the factors that could cause actual results to differ materially include, but are not limited to, those relating to the cd&r offer, including whether any definitive offer will be made, whether the definitive offer will be accepted and approved, whether any agreement will be executed, or whether this or any other transaction will be consummated, 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 severity, duration and spread of the covid-19 pandemic, as well as actions that may be taken by the company or governmental authorities to contain covid-19 or to treat its impact; an impairment of our 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 our sponsor investors, the effect on our common stock price caused by transactions engaged in by our sponsor 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, 2021, to be filed with the sec on the date hereof, 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. cornerstone building brands, inc. consolidated statements of operations (in thousands, except per share data) (unaudited) three months ended year ended december 31, 2021 december 31, 2020 december 31, 2021 december 31, 2020 net sales $ 1,471,579 $ 1,191,369 $ 5,583,137 $ 4,617,369 cost of sales 1,153,457 924,169 4,384,062 3,567,049 gross profit 318,122 267,200 1,199,075 1,050,320 21.6 % 22.4 % 21.5 % 22.7 % selling, general and administrative expenses 171,652 142,625 649,472 579,200 intangible asset amortization 50,810 45,447 189,488 180,994 restructuring and impairment charges, net 18,786 1,956 26,247 34,120 strategic development and acquisition related costs 2,373 5,791 27,875 19,341 gain on divestitures — — (831,252 ) — goodwill impairment — — — 503,171 income (loss) from operations 74,501 71,381 1,137,245 (266,506 ) interest income (6 ) 357 205 1,364 interest expense (43,613 ) (54,872 ) (191,301 ) (213,610 ) foreign exchange gain (loss) (2,682 ) 2,368 (3,749 ) 1,068 loss on extinguishment of debt — — (42,234 ) — other income, net 494 494 1,661 469 income (loss) before income taxes 28,694 19,728 901,827 (477,215 ) provision for income taxes (9,358 ) 17,848 235,968 5,563 (32.6 )% 90.5 % 26.2 % (1.2 )% net income (loss) $ 38,052 $ 1,880 $ 665,859 $ (482,778 ) net income allocated to participating securities (467 ) (25 ) (7,815 ) — net income (loss) applicable to common shares $ 37,585 $ 1,855 $ 658,044 $ (482,778 ) income (loss) per common share: basic $ 0.30 $ 0.01 $ 5.22 $ (3.84 ) diluted $ 0.29 $ 0.01 $ 5.19 $ (3.84 ) weighted average number of common shares outstanding: basic 126,725 125,271 126,058 125,562 diluted 127,645 125,310 126,795 125,562 increase (decrease) in sales 23.5 % (4.3 )% 20.9 % (5.6 )% selling, general and administrative expenses percentage of net sales 11.7 % 12.0 % 11.6 % 12.5 % cornerstone building brands, inc. consolidated balance sheets (in thousands) (unaudited) december 31, 2021 december 31, 2020 assets current assets: cash and cash equivalents $ 394,447 $ 674,255 restricted cash 2,211 6,223 accounts receivable, net 685,316 554,649 inventories, net 748,732 431,937 income taxes receivable 14,514 39,379 investments in debt and equity securities, at market 2,759 2,333 prepaid expenses and other 135,701 77,751 assets held for sale 3,400 4,644 total current assets 1,987,080 1,791,171 property, plant and equipment, net 612,295 631,821 lease right-of-use assets 322,608 264,107 goodwill 1,358,056 1,194,729 intangible assets, net 1,524,635 1,584,604 deferred income taxes 1,839 1,867 other assets, net 20,947 10,191 total assets $ 5,827,460 $ 5,478,490 liabilities and stockholders’ equity current liabilities: current portion of long-term debt $ 26,000 $ 25,600 accounts payable 311,737 211,441 accrued compensation and benefits 101,164 81,548 accrued interest 19,775 25,485 accrued income taxes 3,220 5,060 current portion of lease liabilities 73,150 70,125 other accrued expenses 320,389 247,893 total current liabilities 855,435 667,152 long-term debt 3,010,843 3,563,429 deferred income taxes 252,173 269,792 long-term lease liabilities 251,061 198,875 other long-term liabilities 281,609 337,437 total long-term liabilities 3,795,686 4,369,533 common stock 1,270 1,255 additional paid-in capital 1,279,931 1,257,262 accumulated deficit (98,826 ) (764,685 ) accumulated other comprehensive loss, net (5,612 ) (51,517 ) treasury stock, at cost (424 ) (510 ) total stockholders’ equity 1,176,339 441,805 total liabilities and stockholders’ equity $ 5,827,460 $ 5,478,490 cornerstone building brands, inc. consolidated statements of cash flows (in thousands) (unaudited) three months ended year ended december 31, 2021 december 31, 2020 december 31, 2021 december 31, 2020 cash flows from operating activities: net income (loss) $ 38,052 $ 1,880 $ 665,859 $ (482,778 ) adjustments to reconcile net income (loss) to net cash from operating activities: depreciation and amortization 75,945 72,189 292,901 284,602 non-cash interest expense 8,865 2,641 28,722 9,589 share-based compensation expense 12,057 4,488 29,003 17,056 loss on extinguishment of debt — — 42,234 — goodwill impairment — — — 503,171 asset impairment 18,119 1,415 22,210 4,905 gain on divestitures — — (831,252 ) — loss on asset sales, net — (1,962 ) — (1,252 ) provision for credit losses 1,315 1,628 3,604 5,390 deferred income taxes (36,069 ) 22,733 (59,510 ) (4,319 ) changes in operating assets and liabilities, net of effect of acquisitions and divestitures: accounts receivable (18,642 ) 22,333 (156,066 ) (61,976 ) inventories (70,174 ) (23,053 ) (311,242 ) 7,927 income taxes (2,903 ) (2,740 ) 24,865 14,146 prepaid expenses and other (15,413 ) (2,831 ) (56,768 ) 3,415 accounts payable (28,142 ) (18,006 ) 72,260 4,663 accrued expenses 5,390 (4,644 ) 36,944 8,276 other, net (20,647 ) (4,530 ) (19,651 ) (4,398 ) net cash provided by (used in) operating activities (32,247 ) 71,541 (215,887 ) 308,417 cash flows from investing activities: acquisitions, net of cash acquired (197,240 ) — (528,250 ) (41,841 ) capital expenditures (39,532 ) (19,316 ) (114,715 ) (81,851 ) proceeds from divestitures, net of cash divested — — 1,187,307 — proceeds from sale of property, plant and equipment 509 2,031 5,124 3,569 net cash provided by (used in) investing activities (236,263 ) (17,285 ) 549,466 (120,123 ) cash flows from financing activities: proceeds from abl facility — — 190,000 345,000 payments on abl facility — — (190,000 ) (415,000 ) proceeds from cash flow revolver — — — 115,000 payments on cash flow revolver — — — (115,000 ) proceeds from term loan — — 108,438 — payments on term loan (6,500 ) (6,405 ) (25,905 ) (25,620 ) proceeds from senior notes — — — 500,000 payments on senior notes — — (670,800 ) — payments of financing costs — 174 (13,187 ) (6,731 ) purchases of treasury stock — — — (6,428 ) payments on derivative financing obligations (3,246 ) — (9,377 ) — other (5,118 ) (1,088 ) (6,418 ) (1,566 ) net cash provided by (used in) financing activities (14,864 ) (7,319 ) (617,249 ) 389,655 effect of exchange rate changes on cash and cash equivalents 634 (285 ) (150 ) 222 net increase (decrease) in cash, cash equivalents and restricted cash (282,740 ) 46,652 (283,820 ) 578,171 cash, cash equivalents and restricted cash at beginning of period 679,398 633,826 680,478 102,307 cash, cash equivalents and restricted cash at end of period $ 396,658 $ 680,478 $ 396,658 $ 680,478 supplemental disclosure of cash flow information interest paid, net of amounts capitalized $ 29,305 $ 58,445 $ 178,330 $ 196,770 taxes paid (refunded), net $ 34,664 $ (1,435 ) $ 267,399 $ (3,316 ) 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 year ended december 31, 2021 december 31, 2020 december 31, 2021 december 31, 2020 net income (loss) per diluted common share, gaap basis $ 0.29 $ 0.01 $ 5.19 $ (3.84 ) restructuring and impairment charges, net 0.15 0.02 0.21 0.27 strategic development and acquisition related costs 0.02 0.05 0.22 0.15 gain on divestitures — — (6.56 ) — non cash loss (gain) on foreign currency transactions 0.02 (0.02 ) 0.03 (0.01 ) goodwill impairment — — — 4.01 intangible asset amortization(1) 0.40 0.36 1.49 1.44 customer inventory buybacks — — — 0.01 covid-19(2) — 0.01 — 0.10 other, net(3) — — 0.43 0.01 tax effect of applicable non-gaap adjustments(4) (0.15 ) (0.11 ) 1.09 (1.56 ) adjusted net income (loss) per diluted common share(5) $ 0.73 $ 0.33 $ 2.10 $ 0.58 three months ended year ended december 31, 2021 december 31, 2020 december 31, 2021 december 31, 2020 net income (loss) applicable to common shares, gaap basis $ 37,585 $ 1,855 $ 658,044 $ (482,778 ) restructuring and impairment charges, net 18,786 1,956 26,247 34,120 strategic development and acquisition related costs 2,373 5,791 27,875 19,341 gain on divestitures — — (831,252 ) — non cash loss (gain) on foreign currency transactions 2,682 (2,368 ) 3,749 (1,068 ) goodwill impairment — — — 503,171 intangible asset amortization(1) 50,810 45,447 189,488 180,994 customer inventory buybacks — 188 — 641 covid-19(2) 2 1,874 (391 ) 12,508 other, net(3) 90 (214 ) 54,945 1,245 tax effect of applicable non-gaap adjustments(4) (19,433 ) (13,695 ) 137,628 (195,288 ) adjusted net income (loss) applicable to common shares(5) $ 92,895 $ 40,834 $ 266,333 $ 72,886 (1) effective july 3, 2021, we revised the definition of adjusted net income to exclude intangible amortization expense. (2) costs included within the covid-19 line item 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. (3) costs with the other, net line item for the year ended december 31, 2021 primarily included $11.6 million of non-capitalizable debt issuance costs and $42.2 million of loss on extinguishment of debt. (4) 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. (5) 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 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. 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 year ended december 31, 2021 december 31, 2020 december 31, 2019 december 31, 2021 december 31, 2020 december 31, 2019 net sales $ 1,471,579 $ 1,191,369 $ 1,244,415 $ 5,583,137 $ 4,617,369 $ 4,889,747 impact of acquisitions and divestitures(1) — (34,843 ) (54,115 ) (99,206 ) (160,264 ) (196,319 ) pro forma net sales $ 1,471,579 $ 1,156,526 $ 1,190,300 $ 5,483,931 $ 4,457,105 $ 4,693,428 gross profit $ 318,122 $ 267,200 $ 288,036 $ 1,199,075 $ 1,050,320 $ 1,088,419 21.6 % 22.4 % 23.1 % 21.5 % 22.7 % 22.3 % operating income (loss), gaap $ 74,501 $ 71,381 $ 65,610 $ 1,137,245 $ (266,506 ) $ 214,736 restructuring and impairment charges, net 18,786 1,956 2,538 26,247 34,277 18,060 strategic development and acquisition related costs 2,373 5,791 13,517 27,875 19,341 50,185 gain on divestitures — — — (831,252 ) — — non-cash charge of purchase price allocated to inventories — — — — — 16,249 goodwill impairment — — — — 503,171 — customer inventory buybacks — 188 — — 641 576 covid-19 2 1,874 — (391 ) 12,508 — other, net 94 (214 ) 946 12,711 1,245 4,726 adjusted operating income 95,756 80,976 82,611 372,435 304,677 304,532 other income (loss), net 429 494 518 1,596 469 1,183 depreciation and amortization 75,945 72,189 72,279 292,901 284,602 263,764 share-based compensation expense 12,057 4,488 3,465 29,003 17,056 14,078 adjusted ebitda $ 184,187 $ 158,147 $ 158,873 $ 695,935 $ 606,804 $ 583,557 impact of acquisitions and divestitures(1) — (11,132 ) (16,108 ) (7,953 ) (52,223 ) (60,789 ) pro forma adjusted ebitda $ 184,187 $ 147,015 $ 142,765 $ 687,982 $ 554,581 $ 522,768 adjusted ebitda as a % of net sales 12.5 % 13.3 % 12.8 % 12.5 % 13.1 % 11.9 % pro forma adjusted ebitda as a % of pro forma net sales 12.5 % 12.7 % 12.0 % 12.5 % 12.4 % 11.1 % (1) reflects the acquisition impact of the net sales and adjusted ebitda of environmental stoneworks through february 19, 2019, kleary masonry, inc. through march 1, 2020, prime windows llc through april 29, 2021 and cascade windows inc. through august 19, 2021; and reflects the impact of the divestitures of the imp and dbci businesses through the divestiture dates of august 9, 2021 and august 18, 2021, respectively. cornerstone building brands, inc. non-gaap financial measures and reconciliations (in thousands) (unaudited) windows three months ended year ended december 31, 2021 december 31, 2020 december 31, 2021 december 31, 2020 net sales $ 618,784 $ 511,586 $ 2,322,277 $ 1,889,625 impact of acquisitions(1) — 58,689 132,141 206,639 pro forma net sales $ 618,784 $ 570,275 $ 2,454,418 $ 2,096,264 gross profit $ 90,656 $ 90,367 $ 371,854 $ 347,856 14.7 % 17.7 % 16.0 % 18.4 % operating income (loss), gaap $ 16,824 $ 29,148 $ 100,725 $ (223,646 ) restructuring and impairment charges, net 39 310 1,252 7,499 strategic development and acquisition related costs 831 — 2,976 16 goodwill impairment — — — 320,990 covid-19 — 921 — 6,844 other, net — 349 — 601 adjusted operating income 17,694 30,728 104,953 112,304 other income (expense), net (52 ) 8 (88 ) (107 ) depreciation and amortization 36,778 30,840 134,626 121,519 adjusted ebitda 54,420 61,576 239,491 233,716 impact of acquisitions(1) — 8,644 15,314 25,740 pro forma adjusted ebitda $ 54,420 $ 70,220 $ 254,805 $ 259,456 adjusted ebitda as a % of net sales 8.8 % 12.0 % 10.3 % 12.4 % pro forma adjusted ebitda as a % of pro forma net sales 8.8 % 12.3 % 10.4 % 12.4 % (1) reflects the impact of the net sales and adjusted ebitda of prime windows llc through april 29, 2021 and cascade windows inc. through august 19, 2021. cornerstone building brands, inc. non-gaap financial measures and reconciliations (in thousands) (unaudited) siding three months ended year ended december 31, 2021 december 31, 2020 december 31, 2021 december 31, 2020 net sales $ 327,632 $ 293,756 $ 1,364,080 $ 1,141,946 impact of acquisition(1) — — — 8,358 pro forma net sales $ 327,632 $ 293,756 $ 1,364,080 $ 1,150,304 gross profit $ 75,563 $ 78,405 $ 346,360 $ 308,466 23.1 % 26.7 % 25.4 % 27.0 % operating income (loss), gaap $ 10,753 $ 30,986 $ 137,772 $ (61,930 ) restructuring and impairment charges, net 13,939 65 14,226 2,966 strategic development and acquisition related costs (80 ) 2,043 (2,974 ) 10,158 goodwill impairment — — — 176,774 customer inventory buybacks — 188 — 641 covid-19 2 14 28 81 other, net — 138 30 (1,213 ) adjusted operating income 24,614 33,434 149,082 127,477 other income (expense), net 49 (22 ) (71 ) (32 ) depreciation and amortization 29,219 28,669 116,660 113,737 adjusted ebitda 53,882 62,081 265,671 241,182 impact of acquisition(1) — — — 1,869 pro forma adjusted ebitda $ 53,882 $ 62,081 $ 265,671 $ 243,051 adjusted ebitda as a % of net sales 16.4 % 21.1 % 19.5 % 21.1 % pro forma adjusted ebitda as a % of pro forma net sales 16.4 % 21.1 % 19.5 % 21.1 % (1) reflects the impact of the net sales and adjusted ebitda of kleary masonry, inc. through march 1, 2020. cornerstone building brands, inc. non-gaap financial measures and reconciliations (in thousands) (unaudited) commercial three months ended year ended december 31, 2021 december 31, 2020 december 31, 2021 december 31, 2020 net sales $ 525,163 $ 386,027 $ 1,896,780 $ 1,585,798 impact of divestitures(1) — (93,532 ) (231,347 ) (375,261 ) pro forma net sales $ 525,163 $ 292,495 $ 1,665,433 $ 1,210,537 gross profit $ 151,903 $ 98,428 $ 480,861 $ 393,998 28.9 % 25.5 % 25.4 % 24.8 % operating income, gaap $ 100,962 $ 49,944 $ 1,104,335 $ 159,586 restructuring and impairment charges, net 4,412 (157 ) 10,131 20,270 strategic development and acquisition related costs 8 — 3,103 (262 ) gain on divestitures — — (831,252 ) — goodwill impairment — — — 5,407 covid-19 — 60 (774 ) 2,645 other, net 90 76 362 1,021 adjusted operating income 105,472 49,923 285,905 188,667 other income (expense), net 320 243 1,346 680 depreciation and amortization 7,267 11,549 36,282 45,213 adjusted ebitda 113,059 61,715 323,533 234,560 impact of divestitures(1) — (19,776 ) (23,267 ) (79,832 ) pro forma adjusted ebitda $ 113,059 $ 41,939 $ 300,266 $ 154,728 adjusted ebitda as a % of net sales 21.5 % 16.0 % 17.1 % 14.8 % pro forma adjusted ebitda as a % of pro forma net sales 21.5 % 14.3 % 18.0 % 12.8 % (1) reflects the net adjustments of imp and dbci through the divestiture dates of august 9, 2021 and august 18, 2021, respectively. cornerstone building brands, inc. non-gaap financial measures and reconciliations (in thousands) (unaudited) year ended december 31, 2021 december 31, 2020 net cash provided by (used in) operating activities $ (215,887 ) $ 308,417 less: capital expenditures (114,715 ) (81,851 ) free cash flow $ (330,602 ) $ 226,566
