Page 8 - RosboroAR2018

Engineered Structural Lumber (ESL), a lower-cost glulam product designed for industrial applications such as the rapidly growing factory-built wall panel segment
LETTER TO OUR
OWNERS & LENDERS
2018 was a demanding year for Rosboro. Not only did we have to deal with the largest intra-year price drop in lumber market history and a spectacular 1st quarter of glulam sales that left us struggling for tension lamstock in the 2nd half of the year; but
we also lled the year with a series of projects and initiatives
that are expected to springboard us into a record 2019! We installed two large capital expenditure projects that will change the productivity, pro ciency and elasticity of the company into the future. We have expanded our new marketing and branding strategy with additional personnel resources to drive stronger glulam sales prospectively. Production levels and exibility have signi cantly increased on the operating side of the business. Our ongoing development of a continuous improvement process is paying big dividends both nancially and culturally. Several new products were launched this year including our rst foray into the rim business (the structural member used inside wall framing at the transition between oors) with the X-Rim product line. We also completed our acquisition of custom beam manufacturer Western Structures in early January 2019 to round out our compliment of glulam products. So while we can say that 2018 was an eventful and good year, it really was all about laying the foundation for an exceptional 2019.
RESULTS:
2018 was very pro table for the company despite the many challenges that were presented throughout the year. Net sales were $172.3 million, right on plan and 25% higher than 2017, but margins were squeezed due to record log costs and plummeting lumber prices in the second half of the year. Cash ow (EBITDA) was $22.6 million for the year, $3.9 million less than projected because of the margin constriction.
Our TTM (trailing twelve month) revenue has gone from $104.0 million in January 2015 to $172.3 million in December of 2018 and is projected to reach $213.1 in 2019. The TTM EBITDA
has almost doubled over that same span from $12.1 million to $22.6 million and is forecasted to reach $32.4 million in 2019.
SALES & MARKETS:
At the beginning of the year, most pundits were calling for total housing starts to grow 8% in 2018 to 1.31 million, and once again, growth came in well short of projection with only a 4% improvement over last year, nishing the year at an estimated 1.26 million housing starts. Unlike the slow start in 2017, for us, 2018 started hot right out of the gates led by strong glulam sales in the rst quarter. The stud market continued to be strong in the rst half of the year, culminating in June with our highest ever monthly sales return per thousand. Unfortunately, the stud market followed that up with the largest price drop in history and by the end of the year our sales return had dropped almost 46% from that June high.
8 ANNUAL REPORT 2018