Changes affecting Cornerstone Building Products

Goals

Identify expected or in-progress changes or challenges for Cornerstone Building Products. This may include CEO agenda items, company challenges, senior leadership movements, strategic initiatives, specific operational challenges, manufacturing footprint expansions or contractions, recent investments, merger and acquisition activity, financial performance red flags, competition, market conditions, the company's market position, macro-economic trend, technological changes, or supply chain-related issues.

Early Findings

General Challenges

  • In a 2018 update, Cornerstone Building Brands (CBB) note the following conditions as factors that could affect its financial performance: industry cyclicality and seasonality and adverse weather conditions; challenging economic conditions affecting the nonresidential construction industry; volatility in the U.S. economy and abroad, generally, and in the credit markets; and many more.
  • In its 2018 annual report, the company noted that one of the primary challenges it faces is that in wake of the 2008 recession, the US economy is still in a period of low nonresidential construction activity.
  • The 2018 annual report also noted the company's dependence on steel and the volatility of steel prices. CBB counters this problem by having a diversity of suppliers, but production cutbacks from their suppliers still create challenges in its ability to meet delivery schedules.
  • CBB depends heavily on its ability to enforce intellectual property rights, so any threat to its intellectual property rights would significantly impact its competitive position.

Changes in Senior Leadership

  • In June 2019, the company named Jeffrey S. Lee as Executive Vice President and Chief Financial Officer after the previous CFO retired.

Financial Performance Red Flags

  • After the company's 2019 third-quarter earnings report was released, the company's stock fell 11.8%.
  • The earnings report showed that the company took on more than $3 billion in debt and earnings per share fell from $0.51 to $0.30.

Mergers and Acquisitions

  • Cornerstone Building Brands was created from the merger between NCI Building Systems and Ply Gem, which was first announced in July 2018.
  • In February 2019, the company acquired Environmental Materials, LLC for approximately $187 million.

Industry Insights

  • Top manufacturers in the global building materials market include Hepworth, National Plastic Industry, Hira Industries, and Florance Plastic Industries.
  • Constructing spending decreased by 2.3% between May 2018 and May 2019.

Proposed next steps:

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Our initial hour of research revealed a wealth of information about Cornerstone Building Brands. We recommend continuing our research by creating X requests. One would identify 3-4 strategic initiatives, a second would identify 3-4 operational challenges, a third would identify 3-4 changing market conditions, and a fourth would identify changes in senior leadership and recent financial performance red flags. For each change identified, we would explain the change, explain what caused it, and determine how it is expected to positively or negatively impact the company, If desired, we could then move on to review manufacturing footprint expansions or contractions, recent investments, merger and acquisition activity, competition, the company's market position, macro-economic trend, technological changes, and supply chain-related issues.
Alternatively, we could a more general overview of the changes affecting Cornerstone Building Brands by dedicating one request to identifying the top 3-4 internal changes affecting the company and another request to identifying the top 3-4 external changes affecting the company. For each change, we would explain what the change is, what caused it, what the anticipated effect on the company is, and why it is a major concern.
Other: You tell us how to proceed.