Forterra Announces Its Fourth Quarter and Full Year 2016 Results

Full Year 2016 Results
Net sales for the year increased to $1,364.0 million. The impact of acquisitions contributed $698.0 million to net sales. Drainage Pipe & Products net sales increased to $728.9 million due to $222.1 million of net sales from acquisitions. Water Pipe & Products net sales increased to $632.6 million due to net sales from our acquisitions of $475.9 million.

Drainage Pipe & Products gross profit increased to $162.4 million increasing gross profit margin to 22.3%. Water Pipe & Products gross profit increased to $120.6 million, increasing gross profit margin to 19.1%.

Reported net loss for the year decreased to $7.6 million. The decline in net loss was primarily attributed to higher income from operations. Adjusted net income¹ increased to $47.1 million, again mainly attributable to higher net sales.

Adjusted EBITDA¹ for the year increased to $218.0 million. The increase in adjusted EBITDA¹ was attributable to higher net sales, expanded gross margins, and improved leverage on selling, general & administrative expenses. Gross margin improved to 20.6% as a result of cost saving initiatives and the ongoing realization of synergies from acquisitions. Adjusted EBITDA margin¹ improved to 16.0%.

Drainage Pipe & Products EBITDA² and adjusted EBITDA¹ increased to $138.3 million and to $158.7 million, respectively. Water Pipe & Products EBITDA² and adjusted EBITDA¹ increased to $98.6 million and $114.0 million, respectively.

¹ Adjusted net income, adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures.  See the financial schedules at the end of this press release for how we define these measures, a discussion of why we believe they are useful and reconciliation thereof to the most directly comparable GAAP financial measures.

² 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.

Recent Developments
On February 3, 2017, the Company acquired the business of Royal Enterprises America, which manufactures concrete drainage pipe, precast concrete products, stormwater treatment products and erosion control products serving the greater Minneapolis market. The aggregate purchase price was $35.5 million, subject to customary working capital adjustments.

Balance Sheet and Liquidity
At December 31, 2016, the Company had cash of $40.0 million and borrowings under its credit agreements of $1,146.4 million. Availability under the Company's asset based revolving credit facility as of December 31, 2016 was $189.4 million.

Conference Call and Webcast Information
Forterra will host a conference call to review fourth quarter and full-year 2016 results on March 30, 2017 at 10:00 a.m. Eastern Time (9:00 a.m. Central). The dial-in number for the call is 574-990-1396 or toll free 844-498-0572. The participant passcode is 73275400. Please dial in at least five minutes prior to the call to register. The call may also be accessed via a webcast 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 after the call for 30 days under the Investor section of the Company's website.

Information Regarding 2017 Annual Meeting of Stockholders
The Company will hold its annual meeting of stockholders on June 19, 2017 at its offices located at 511 E. John Carpenter Freeway, Suite 600, Irving, Texas at 10:00 a.m. Central time.

Stockholders of record as of the close of business on April 20, 2017 are entitled to notice of, and to vote at, the annual meeting either in person or by proxy. Information about the meeting and the various matters on which stockholders will vote will be included in the Company's definitive proxy materials to be filed with the Securities and Exchange Commission.

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, and drainage. 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, for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.

Additional Statistics (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 net income, adjusted EBITDA and adjusted EBITDA margin. Adjusted net income, 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 net income as net income (loss) after adjusting for impairment and restructuring charges, (gains)/losses on the sale of property, plant and equipment and certain other income and expenses, such as transaction costs, carve-out costs related to our separation from HeidelbergCement and costs associated with disposed sites and including normalized income tax expense for the adjustments to net income (loss). We calculate adjusted EBITDA as net income (loss) before interest expense, income tax benefit (expense), depreciation and amortization and before impairment and restructuring charges, (gains)/losses on the sale of property, plant and equipment and certain other income and expenses, such as transaction costs, carve-out costs related to our separation from HeidelbergCement and costs associated with disposed sites. Adjusted EBITDA margin represents adjusted EBITDA as a percentage of net sales.

Adjusted net income, 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 net income, 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  net  income, 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 net income, 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 net income, adjusted EBITDA and adjusted EBITDA margin have certain limitations. Adjusted net income and adjusted EBITDA should not be considered as alternatives to consolidated net income, and in the case of our segment results, adjusted EBITDA should not be considered an alternative to EBITDA, which the CODM 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 net income, 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 tax 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 net income, 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 net income, 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 net income, adjusted EBITDA and adjusted EBITDA margin as supplemental financial metrics and in conjunction with results prepared in accordance with GAAP.

¹  (Gain) loss on sale of property, plant and equipment, primarily related to the disposition of manufacturing facilities.
²  Impairment of intangible assets and the following charges related to plant closures: (I) impairment charges in respect of abandoned fixed assets that had remaining book value and (ii) restructuring charges in respect of severance and lease and other contract termination costs.
³  Legal, valuation, accounting, advisory and other costs related to business combinations.
⁴  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.
⁵  Results of operations of our disposed roof tile business and other disposed sites for the periods presented, net of specific items for which adjustments are separately made elsewhere in the calculation of adjusted net income (loss) presented herein.
⁶  Incremental interest costs incurred to exit the Junior Term Loan, inclusive of a prepayment penalty and the write-off of deferred debt issuance costs and issue discounts upon extinguishment.
⁷  Other (gains) losses, such as gain on insurance proceeds related to the destruction of property.
⁸  Assumes a normalized tax rate of 37% applied to the adjustments to net income.

¹  (Gain) loss on sale of property, plant and equipment, primarily related to the disposition of manufacturing facilities.
²  Impairment of intangible assets and the following charges related to plant closures: (i) impairment charges in respect of abandoned fixed assets that had remaining book value and (ii) restructuring charges in respect of severance and lease and other contract termination costs.
³  Legal, valuation, accounting, advisory and other costs related to business combinations.
⁴  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.
⁵  Results of operations of our disposed roof tile business and other disposed sites for the periods presented, net of specific items for which adjustments are separately made elsewhere in the calculation of adjusted EBITDA presented herein.
⁶  Other (gains) losses, such as gain on insurance proceeds related to the destruction of property.

¹  (Gain) loss on sale of property, plant and equipment, primarily related to the disposition of manufacturing facilities.
²  Impairment of intangible assets and the following charges related to plant closures: (i) impairment charges in respect of abandoned fixed assets that had remaining book value and (ii) restructuring charges in respect of severance and lease and other contract termination costs.
³  Legal, valuation, accounting, advisory and other costs related to business combinations.
⁴  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.
⁵  Results of operations of our disposed roof tile business and other disposed sites for the periods presented, net of specific items for which adjustments are separately made elsewhere in the calculation of adjusted EBITDA presented herein.
⁶  Other (gains) losses, such as gain on insurance proceeds related to the destruction of property.

Company Contact 
Information:

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