Foundation Building Materials : Third Quarter 2020 Earnings Presentation

FBM 3Q20 Earnings Presentation

November 2, 2020

Disclosures

Forward-Looking Statements

This presentation contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words such as "believe," "anticipate," "expect," "estimate," "intend," "project," "plan," or words or phrases with similar meaning. Forward-looking statements contained in this presentation relate to,

among other things, the Company's projected financial performance and operating results, including projected net sales, gross margin, selling, general and administrative ("SG&A") expenses, capital expenditures, adjusted EBITDA, net debt leverage ratio, free cash flow, adjusted EBITDA margin and adjusted earnings per share ("EPS"), as well as statements regarding the Company's progress towards its strategic objectives, including the performance of current greenfield branches, the opening of additional greenfield branches, the Company's acquisition pipeline, and the successful integration and performance of the Company's acquisitions. Forward-looking statements also relate to the expected impacts of, and response to, the COVID-19 pandemic. 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 the management's current expectations, forecasts and assumptions that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of the Company's control, that may cause the Company's business, strategy or actual results to differ materially from those expressed or implied by the forward-looking statements. The Company does not intend, and undertakes no obligation, to update any forward-looking statements, whether as a result of new information, future events 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 Reports 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 or implied by any forward-looking statement.

Non-GAAP Financial Measures

In addition to presenting financial results prepared in accordance with generally accepted accounting principles ("GAAP"), this presentation contains certain non-GAAP financial measures, including adjusted net income, adjusted EPS, adjusted EBITDA, adjusted EBITDA margin and net debt leverage ratio, which are provided as supplemental measures of financial performance. These non-GAAP financial measures are presented because they are important metrics used by management as one of the means by which it assesses financial performance. One or more of these measures may also be used by analysts, investors and other interested parties to evaluate companies in the Company's industry. These non-GAAP financial measures, when used in conjunction with the most directly comparable GAAP financial measures, provide investors with an additional financial analytical framework that may be useful in assessing the Company's financial condition and results of operations. These non-GAAP financial measures have certain limitations, which are discussed in greater detail in the Company's filings with the Securities and Exchange Commission and its earnings releases and should not be considered as an alternative to measures of financial performance prepared in accordance with GAAP. Other companies, including other companies in the Company's industry, may not use such measures or may calculate one or more of the measures differently than the Company does, thereby limiting their usefulness as a comparative measure. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is set forth in the Appendix to this presentation.

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Q3 2020 Highlights

	▪ Total net sales of $521.3M, a decrease of 7.7% YoY
	▪ Total base business net sales decrease of 9.6%
Q3 Results		➢ Wallboard base business decrease of 6.1% YoY; 4.3% decline in unit volume, 1.8% decline in price/mix
	➢	Suspended ceilings base business decrease of 19.9% YoY
		➢ Metal framing base business decrease of 9.2% YoY
		➢ Complementary and other products base business decrease of 6.5% YoY
Profit	▪ Gross profit of $154.4M, down 10.1% YoY
▪ Gross margin of 29.6% compared to 30.4% YoY
Margins	▪ Net income from continuing operations of $11.8M compared to $12.7M YoY
▪ EPS of $0.27 from continuing operations compared to $0.30 YoY; adjusted EPS1 of $0.31 compared to $0.33 YoY
	▪ Adjusted EBITDA1 of $41.7M, down from $50.0M YoY; adjusted EBITDA margin1 of 8.0% compared to 8.9% YoY
Taking Action	▪ Practicing safety protocols based on recommendations of federal, state, and local authorities
During the COVID-	▪▪	Deferring or limiting non-essential operating expenses
19 Pandemic		Restoring salaries and benefits for employees
▪	Re-hiring furloughed employees
Liquidity and	▪ Paid down $31M on our ABL Credit Facility in the third quarter with approximately $356.1M2 of available borrowing capacity
▪ Net debt leverage ratio1,3 of 2.67x at the end of the third quarter
Capital Resources	▪ Net debt balance is at its lowest level since IPO
▪ Finished the third quarter with $19M of cash on the balance sheet
	▪ Next scheduled debt maturity in 2023

1 Adjusted EBITDA, adjusted EBITDA margin, adjusted EPS, and net debt leverage ratio are non-GAAP financial measures. Adjusted EBITDA margin represents adjusted EBITDA divided by net	3
sales. For a reconciliation of net income to adjusted EBITDA and net income to adjusted net income, please refer to the Appendix.
2 As of September 30, 2020.

3 For a calculation of net debt leverage ratio as of September 30, 2020, see Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, in the Company's Quarterly Report on Form 10-Q for the three months ended September 30, 2020.

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Long-Term Strategic Priorities

Strengthen Balance Sheet

▪	Reduce net debt leverage		▪ Disciplined capital spending
▪	Drive working capital efficiency

Drive Organic Growth

	▪	Greenfield expansion opportunities in		▪ Optimize the pricing of the products we sell
		underserved markets		to our customers
	▪ Expand the products we offer our customers		▪ Grow market share
Expand Profit Margins
	▪	Drive procurement savings		▪ Execute our cost-out initiatives
	▪ Leverage our economies of scale		▪ Grow wallboard net sales

Platform Expansion

• Grow asset base through strategic acquisitions
• Scalable infrastructure facilitates efficient integration of acquisitions

• Grow complementary and other products net sales
• Launch the E-Commerce platform

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