·

Net sales Increased 6.9% to $432 Million; Installation segment sales up 8.6%, Distribution segment sales up 2.1%

·

$26.8 million operating profit

·

$27.4 million on an Adjusted Basis, up 42%

·

$0.41 diluted earnings per share 

·

$0.43 on an adjusted basis, up 59%

·

Net sales increased 6.9% to $431.6 million.

·

Gross margin was up 140 basis points year-over-year and 100 basis points sequentially. 

·

Selling, general, and administrative (“SG&A”) expenses as a percentage of sales were 16.4%, a 200 basis point improvement. 

·

Operating profit was $26.8 million compared to $11.5 million.  On an adjusted basis, operating profit was $27.4 million compared to $19.3 million, a 41.9% improvement.

·

Operating margins improved 340 basis points to 6.2%.  On an adjusted basis, operating margins were 6.4%, up 140 basis points.

·

Income from continuing operations was $15.6 million, or $0.41 per diluted share, compared to $6.6 million or $0.18 per diluted share.  On an adjusted basis, income from continuing operations was $16.2 million, or $0.43 per diluted share compared to $10.3 million or $0.27 per diluted share. 

·

At quarter end, the Company had cash and cash equivalents of $102.1 million and availability under its revolving credit facility of $69.9 million for total liquidity of $172.0 million. 

·

TruTeamSM (Installation)

o

Net sales increased 8.6% driven by growth in both residential and commercial lines of business as well as improved selling prices.

o

Adjusted operating margin was 7.9%, a 280 basis point improvement

·

Service Partners® (Distribution)

o

Net sales rose 2.1%, driven by higher sales volume which was partially offset by a decrease in selling prices.

o

Adjusted operating margin was 8.2%, a 50 basis point improvement. 

Three Months Ended June 30, 

Six Months Ended June 30, 

2016

2015

2016

2015

Net sales

$

$

$

$

Cost of sales

Gross profit

Selling, general, and administrative expense

Operating profit

Other income (expense), net:

Interest expense

Other, net

Other expense, net

Income from continuing operations before income taxes

Income tax expense from continuing operations

Income from continuing operations

Loss from discontinued operations, net

 —

 —

Net income

$

$

$

$

Income (loss) per common share:

Basic:

Income from continuing operations

$

$

$

$

Loss from discontinued operations, net

 —

 —

Net income

$

$

$

$

Diluted:

Income from continuing operations

$

$

$

$

Loss from discontinued operations, net

 —

 —

Net income

$

$

$

$

As of

June 30, 

December 31, 

2016

2015

ASSETS

Current assets:

Cash and cash equivalents

$

$

Receivables, net of an allowance for doubtful accounts of $3,481 and $3,399 at June 30, 2016 and December 31, 2015, respectively

Inventories, net

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Goodwill

Other intangible assets, net

Deferred tax assets, net

Other assets

Total assets

$

$

LIABILITIES

Current liabilities:

Accounts payable

$

$

Current portion of long-term debt

Accrued liabilities

Total current liabilities

Long-term debt

Deferred tax liabilities, net

Long-term portion of insurance reserves

Other liabilities

Total liabilities

EQUITY

Total liabilities and equity

$

$

As of June 30, 

2016

2015

Other Financial Data

Working Capital Days

Receivable days

Inventory days

Accounts payable days

Working capital

$

$

Working capital as a percent of sales (LTM)

%

%

Six Months Ended June 30, 

2016

2015

Net Cash From (For) Operating Activities:

Net income

$

$

Adjustments to reconcile net income to net cash from (for) operating activities:

Depreciation and amortization

Share-based compensation

Loss on sale or abandonment of property and equipment

Provision for bad debt expense

Loss from inventory obsolescence

Deferred income taxes, net

Changes in certain assets and liabilities:

Receivables, net

Inventories, net

Prepaid expenses and other current assets

Accounts payable

Long-term portion of insurance reserves

Accrued liabilities

Other, net

Net cash from (for) operating activities

Cash Flows From (For) Investing Activities:

Purchases of property and equipment

Proceeds from sale of property and equipment

Other, net

Net cash for investing activities

Cash Flows From (For) Financing Activities:

Net transfer from Former Parent

 —

Cash distribution paid to Former Parent

 —

Proceeds from issuance of long-term debt

 —

Repayment of long-term debt

 —

Payment of debt issuance costs

 —

Taxes withheld and paid on employees' equity awards

 —

Repurchase of shares of common stock

 —

Net cash (for) from financing activities

Cash and Cash Equivalents

(Decrease) increase for the period

Beginning of year

End of period

$

$

Supplemental disclosure of noncash investing activities:

Accruals for property and equipment

$

$

 —

Three Months Ended June 30, 

Six Months Ended June 30, 

2016

2015

Change

2016

2015

Change

Installation

Sales

$

$

%

$

$

%

Operating profit, as reported

$

$

$

$

Operating margin, as reported

%

%

%

%

Rationalization charges†

Legal adjustments, net

 —

 —

Fixed asset disposal (truck mounted devices)

 —

 —

Operating profit, as adjusted

$

$

$

$

Operating margin, as adjusted

%

%

%

%

Distribution

Sales

$

$

%

$

$

%

Operating profit, as reported

$

$

$

$

Operating margin, as reported

%

%

%

%

Rationalization charges

 —

Operating profit, as adjusted

$

$

$

$

Operating margin, as adjusted

%

%

%

%

Total

Sales before eliminations

$

$

$

$

Intercompany eliminations

Net sales after eliminations

$

$

%

$

$

%

Operating profit, as reported - segment

$

$

$

$

General corporate expense, net

Intercompany eliminations and other adjustments

Operating profit, as reported

$

$

$

$

Operating margin, as reported

%

%

%

%

Rationalization charges†‡

Legal adjustments, net

 —

 —

Fixed asset disposal (truck mounted devices)

 —

 —

Masco general corporate expense, net

 —

 —

Masco direct corporate expense

 —

 —

Expected standalone corporate expense

 —

 —

Operating profit, as adjusted

$

$

$

$

Operating margin, as adjusted

%

%

%

%

Share-based compensation

Depreciation and amortization

EBITDA, as adjusted

$

$

$

$

Sales change period over period

EBITDA, as adjusted change period over period

EBITDA, as adjusted as percentage of sales change

%

%

† 2015 Rationalization charges included spin-off charges.

‡ 2016 Rationalization charges include corporate level adjustments as well as segment operating adjustments.

Three Months Ended June 30, 

Six Months Ended  June 30, 

2016

2015

2016

2015

Gross Profit and Operating Profit Reconciliations

Net sales

$

$

$

$

Gross profit, as reported

$

$

$

$

Gross profit, as adjusted

$

$

$

$

Gross margin, as reported

%

%

%

%

Gross margin, as adjusted

%

%

%

%

Operating profit, as reported

$

$

$

$

Rationalization charges†

Legal adjustments, net

 —

 —

Fixed asset disposal (truck mounted device)

 —

 —

Masco general corporate expense, net

 —

 —

Masco direct corporate expense

 —

 —

Expected standalone corporate expense

 —

 —

Operating profit, as adjusted

$

$

$

$

Operating margin, as reported

%

%

%

%

Operating margin, as adjusted

%

%

%

%

Income Per Common Share Reconciliation

Income from continuing operations before income taxes, as reported

$

$

$

$

Rationalization charges†

Legal adjustments, net

 —

 —

Fixed asset disposal (truck mounted device)

 —

 —

Masco general corporate expense, net

 —

 —

Masco direct corporate expense

 —

 —

Expected standalone corporate expense

 —

 —

Income from continuing operations before income taxes, as adjusted

Tax rate at 38% and 36% for 2016 and 2015, respectively

Income from continuing operations, as adjusted

$

$

$

$

Income per common share, as adjusted

$

$

$

$

Average diluted common shares outstanding

† 2015 Rationalization charges included spin-off charges.