Cornerstone Building Brands Announces Fourth-Quarter and Full-Year 2021 Results

• Posted fourth-quarter and full-year net sales growth of 23.5% and 20.9% over the prior year, respectively
• Generated full-year earnings of $5.19 per diluted common share; $2.10 adjusted earnings per diluted common share
• Reported net debt leverage of 3.7x, 1.2x lower than the prior year
• Completed acquisition of Union Corrugating Company; expands metal roof offering to the residential market

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.

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.

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.