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Foundation Building Materials, Inc. (NYSE:FBM)
Q4 2019 Earnings Call
Feb 25, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Greetings, and welcome to Foundation Building Materials' fourth-quarter conference call. [Operator instructions] It is now my pleasure to introduce your host, John Moten, vice president of investor relations for Foundation Building Materials. Please go ahead, sir.

John Moten -- Vice President of Investor Relations

Good morning, and thank you for joining us today for our fourth-quarter 2019 conference call. Joining me today are Ruben Mendoza, our president and CEO; John Gorey, chief financial officer; Pete Welly, our chief operating officer; and Kirby Thompson, senior vice president of sales and marketing. Last night, we issued our fourth-quarter earnings release and slide presentation for today's call, and we have posted these materials on the Investor Relations section of our website at fbmsales.com under Events and Presentations section. Our prepared remarks and answers to your questions this morning, may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.

Forward-looking statements address matters that are subject to risks and uncertainties, which may cause actual results to differ from those discussed today. Example of forward-looking statements include remarks about future expectations, beliefs, estimates, plans and forecasts, as well as other statements that are not historical in nature. Forward-looking statements discussed today relate to our acquisition strategy and integration, our M&A pipeline, our greenfield expansion strategy and performance, our ability to gain leverage in our business and our ability to increase market share and expand into new markets. In addition, forward-looking statements also relate to our 2020 financial guidance, including projected net sales, gross margin, adjusted EBITDA and adjusted EBITDA margin, net debt leverage ratio and adjusted earnings per share.

As a reminder, forward-looking statements represents management's current estimates. We assume no obligation to update any forward-looking statements in the future unless otherwise required by law or the listing rules of the New York Stock Exchange. Listeners are encouraged to review the more detailed discussion including in our financial filings with the Securities and Exchange Commission regarding the various risks, uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by these forward-looking statements. Additionally, during today's call, we will discuss non-GAAP financial measures, which we believe could be useful in evaluating our financial performance.

Other companies may calculate these measures differently, and our presentation of these non-GAAP measures should not be considered in isolation or as a substitute for measures prepared in accordance with generally accepted accounting principles, or GAAP. A discussion of how we calculate these non-GAAP financial measures, which include adjusted EBITDA, adjusted net income, adjusted earnings per share, net debt leverage ratio and free cash flow, as well as a reconciliation of these measures to the most directly comparable GAAP measures can be found in our earnings release, which has been furnished to the SEC and is available on our website. With that, I will turn the call over to Ruben.

Ruben Mendoza -- President and Chief Executive Officer

Thanks, John. Good morning, and thank you for joining us for a review of our full-year and fourth-quarter results, as well as a discussion of the recent developments in our business. On our call today, I will discuss some operational highlights from our full-year and fourth-quarter results, as well as our recent acquisitions and greenfield expansion plans. John Gorey will provide details on the fourth-quarter financial results and financial guidance for 2020, and I will conclude with some summary comments.

As a reminder, the numbers discussed on this call will focus on continuing operations, as we sold our Mechanical Insulation segment in the fourth quarter of 2018. After our prepared remarks, we will open the call for your questions. 2019 was a year of improved net sales and strong profitability, with full year net sales up 5% to $2.2 billion, gross profit of $657 million, up 11%; adjusted EBITDA of $177 million, up 14%; and adjusted earnings per share of $1.11, compared to $0.41 in the prior year. During 2019, steady commercial activity led to full-year net sales gains across our business.

Total company-based business growth was 3%, led by our suspended ceilings and metal framing product lines, which were up 5% and 4%, respectively. Wallboard base business growth was up 1% with higher commercial volumes, offsetting lower residential volumes during the year. Wallboard pricing was up modestly for the full year as we experienced a more stable pricing environment compared to 2018. In 2019, we made great strides improving our long-term profitability with a full-year gross margin of over 30% and adjusted EBITDA margin over 8%.

Our improved profitability in 2019 was a key driver in achieving our stretch goal of reducing our debt leverage ratio to 2.91 times at the end of the year, and we expect a further reduction in our debt leverage ratio by the end of 2020. Now turning to our quarterly results. Total company net sales were $515 million, essentially flat with the prior-year period. Our fourth-quarter net sales were impacted by ongoing softness in the Canadian market and lower residential wallboard volumes compared to the prior-year period.

Similar to our full-year results, our strong underlying profitability highlighted our fourth-quarter results, with gross margins over 31%, as we continue to maintain our disciplined pricing. Now turning to acquisitions. We completed five acquisitions in 2019, which contributed $25 million in net sales. In December 2019, we closed the acquisition of Associated Drywall Suppliers Inc., which increased our residential market presence in Louisville, Kentucky market.

In February 2020, we announced the purchase of two specialty building products branches from Insulation Distributors, which sold suspended ceilings, wallboard and metal framing product lines. This acquisition establishes our footprint in the Baltimore, Maryland and Washington, D.C. markets and enhances our presence in the Mid-Atlantic region. In 2019, we opened four greenfield branches in Bakersville, California and San Antonio, Corpus Christi and Lewisville, Texas.

In 2020, we plan to open another four to six greenfield branch locations, including our newest branch, which just opened in Charleston, South Carolina. As we build our North American presence, we view greenfield branch investments as an excellent opportunity to leverage our national scale, drive organic growth and enhance our long-term profitability. As we enter 2020, we continue to see favorable macro trends, including strong employment, low interest rates and continued building activity. Our company is well-positioned to withstand changes in market conditions with a highly variable cost structure that allows us to scale our cost to revenues in changing economic environments.

In the nonresidential new construction repair and remodel markets, we see continued building activity in tenant improvements, airports, stadiums, data rooms and schools that are supported by our customers' backlogs that extend through the end of the year. In addition, we are seeing increased activity in the new residential construction markets supported by improving housing starts early in the year. In 2020, we plan to capitalize on the favorable residential housing trends, which we expect to be an upside to demand for the year. As we close 2019, I am pleased that we achieved our financial goals for the year, and we look to build upon the success in 2020.

Now I'll turn the call over to John for more details on the fourth quarter of 2019 and our financial guidance for 2020.

John Gorey -- Chief Financial Officer

Thank you, Ruben. I would also like to welcome everyone on today's call. As a reminder, our discussion today excludes the MI segment, which was sold in November 2018, and is reported as discontinued operations in our SEC filings. As Ruben highlighted, our fourth-quarter underlying profitability was strong despite lower net sale trends in the quarter.

For the fourth quarter, we generated net income from continuing operations of $9.6 million, an increase of $7.6 million, compared to the $1.9 million in the prior-year period. Net sales were $514.8 million, a decrease of $1.3 million; and base business net sales were $455.6 million, a decrease of $4.1 million or 90 basis points compared to the prior-year period. Our fourth-quarter adjusted EBITDA was $39 million, with an adjusted EBITDA margin of 7.6%. Now turning to our product line results for the fourth quarter.

Wallboard net sales were $193.5 million, compared to $198 million, a decrease of 2.3% compared to the prior-year period. Wallboard base business net sales declined by 2.9%, with a 2% decline in unit volume and a 90 basis point decline in price. Decline in Wallboard base business net sales is primarily due to slower construction activity in Canada and lower residential volumes compared to the prior-year period. Suspended ceiling net sales were $99.6 million, compared to $91.5 million, up 8.9% compared to the prior-year period.

Base business growth for suspended ceilings was 6.7% primarily driven by higher average selling prices for our ceiling products. Metal framing net sales were $92.1 million, compared to $97.5 million, a decrease of 5.5% compared to the prior-year period. Base business net sales for metal framing decreased by 5.6% primarily due to lower product prices and flat volumes as compared to the tariff-driven price increases in the prior-year period. Complementary and other product net sales were $129.6 million, compared to $129.2 million, up 30 basis points compared to the prior-year period.

Base business net sales for complementary and other products increased 70 basis points compared with the prior-year period. The increase in complementary and other product net sales were primarily due to our ongoing initiatives to expand the range of products we offer our customers, offset by the ongoing weakness in the Canadian market. Gross profit for the fourth quarter was $160.3 million, compared to $155.6 million in the prior-year period, an increase of $4.7 million or 3%. Gross margin for the fourth quarter was 31.1%, compared to 30.1%, up 100 basis points compared to the prior-year period.

The increase in gross margin was primarily driven by the continued development of our pricing and purchasing initiatives. Selling, general and administrative, or SG&A, expenses for the fourth quarter were $124 million, compared to $116.4 million in the prior-year period. SG&A expenses as a percentage of net sales were 24.1%, compared to 22.6% in the prior-year period. The increase in SG&A expenses as a percentage of net sales was primarily due to lower net sales, higher labor costs and our continued investment in company wide initiatives.

Now turning to the balance sheet and cash flow. We finished the fourth quarter with cash of $17.8 million and $286 million available on our ABL credit facility, providing ample liquidity to pursue our growth initiatives. At the end of the fourth quarter, our net debt leverage ratio was 2.91 times, compared to 3.63 times at the end of the prior-year period. For 2020, we expect to generate $60 million to $80 million in free cash flow, which will be primarily used for acquisitions and debt reduction.

Now turning to our full-year 2020 financial guidance, which excludes the impact of acquisitions. We expect full-year 2020 net sales to be between $2.2 billion and $2.3 billion. We expect our full-year gross margin to be between 30% and 31%. For adjusted EBITDA, we expect the full year to be between $180 million and $200 million, with an adjusted EBITDA margin in the range of 8.2% to 8.6%.

For adjusted earnings per share, we expect our full-year earnings to be in a range of $1.15 to $1.45 per share. And finally, we estimate our net debt leverage to be in the range of 2.5 to 2.8 times by the end of 2020. Now I'd like to turn the call over to Ruben for some closing remarks.

Ruben Mendoza -- President and Chief Executive Officer

Thanks, John. Before I begin my closing remarks, I would like to highlight our financial accomplishments in 2019. We achieved net sales of $2.2 billion, up over 5% compared to the prior year. In addition, we significantly improved our profitability with a full-year gross margin of 30.5%, up 160 basis points, and we increased our adjusted EBITDA margin to 8.2%, up 60 basis points over the prior year.

And finally, we reduced our total debt by 10%, achieving a debt leverage ratio of 2.91 times at the end of the year. 2019 was a year of focus and execution, and we met our financial goals with solid sales growth, profit margin expansion, and we reduced our debt leverage to position us well for the future. As we conclude our prepared remarks, let me highlight our strategic priorities for the coming year. First, we plan to continue strengthening our balance sheet by reducing our debt leverage ratio to a range of 2.5 times to 2.8 times by the end of the year.

Second, we will drive organic growth by opening greenfield branches, growing our market share and expanding the range of products we offer our customers. In 2020, we plan to open four to six greenfield branches. Our greenfield branches yield high returns on invested capital that will drive long-term growth and profitability. Third, we will continue to focus on profit margin expansion across our business by leveraging our economies of scale, executing on our cost-out initiatives and by investing in companywide projects that will drive long-term profitability.

And finally, we will continue to make strategic acquisitions. Our industry remains highly fragmented, and we continue to see opportunities to expand our geographic footprint and build our presence in the markets we serve. We believe these actions will drive growth, improve profitability and deliver long-term value to our shareholders. That concludes our remarks, and now we'll be happy to take your questions.

Questions & Answers:


Operator

[Operator instructions] Our first question is from Matthew Bouley with Barclays. Please go ahead.

Christina Chiu -- Barclays -- Analyst

Hi, this is actually Christina Chiu on for Matt this morning. Can you just comment on what's going on with the softness in Canada and with new residential volumes? And do you have any kind of visibility into any improvements or how these markets are performing so far in the first quarter?

Ruben Mendoza -- President and Chief Executive Officer

Yes. Thanks, Christina. This is Ruben Mendoza. Before we answer that question, I'd like to just point out Page 15 in our deck.

I just wanted to reiterate a couple of things here. Since our IPO, which we just celebrated three years on February 10 of this year, our net sales have grown from $1.293 billion to $2.155 billion, a 67% increase. Our gross margin improved 140 basis points from 29.1% to 30.5%. We reduced our gross debt by $249 million from $783 million to $535 million, with a current net debt leverage ratio of 2.9 times.

Reduced our cash interest expense by $29.5 million over last year. Net income increased from a net loss of $28.4 million to net income of $40.2 million and 2019 adjusted EPS of $1.11. We completed 19 acquisitions, and we've invested in 13 greenfield branch locations. I just wanted to make sure I pointed out those accomplishments in the three years since we've been a public company.

As far as the sales and softness in our fourth quarter and in Canada, I'm going to let Pete and Kirby talk. Pete can talk about Canada and Kirby can talk about the sales about it.

Pete Welly -- Chief Operating Officer

Yeah. Thanks, Robin. So thank you for the question. In Canada, last year, we had a couple of significant events that really impacted our business.

First of all, we had significant weather issues in the first quarter of the year. Secondly, we had a trade strike that lasted for two months. It really set the market back. Third, there's been some lending laws that the Canadian government has instituted.

It's really hurt the high-rise construction of apartments and condominiums. So we are fully vested in that part of the business, especially in the Greater Toronto market. So it really was a tough year for us. We've already seen a nice recovery so far this year in all of our products in Ontario.

The British Columbia province really carried the market last year for us, and we continue to see some strength across Canada for 2020.

Kirby Thompson -- Senior Vice President of Sales and Marketing

Yeah, Christina. Thank you. This is Kirby Thompson. In 2020, we plan to capitalize on the improving fundamentals in the residential housing market.

We've added additional resources to build our presence in that market. In addition, we expect the Canadian residential market to improve. Our increased focus on the residential is already paying dividends, and we expect that to show as the year progresses beginning in Q2.

Ruben Mendoza -- President and Chief Executive Officer

And I'd just like to add to that. Our 2020 guidance is the midpoint -- no, our budget is the midpoint of our guidance, and we're on budget for January, in Canada as well, and February, as of last Friday.

Christina Chiu -- Barclays -- Analyst

Got it. OK. Thank you so much for all the color. I guess kind of as a follow up.

In terms of the 2020 growth expectations, what are you baking in, in terms of your assumptions for residential and then on the commercial side as well?

Ruben Mendoza -- President and Chief Executive Officer

Well, it's 2% to 3% is what we forecast in organic growth, and we're opening four to six greenfields, and that's organic growth for us. And then we have some market share gains, and obviously, our complementary product business is a big deal to us. So we're baking all that in.

Christina Chiu -- Barclays -- Analyst

Great. Thank you.

Operator

Our next question is from Trey Grooms with Stephens. Please go ahead.

Noah Merkousko -- Stephens Inc. -- Analyst

Hi, good morning. This is actually Noah Merkousko on for Trey. So the gross margin was pretty impressive, both in the quarter and the year, and your guide sort of implies that 30% is sustainable. But how should we be thinking about the cadence of that through 2020?

John Gorey -- Chief Financial Officer

Yeah. So if you look at our full year run rate from 2019 of 30.5%, we kind of see that going through the full year. You'll see, typically, the first quarter is a little light, and then the second and third are a little stronger, and then the fourth quarter usually is the biggest pickup when we catch up on some of the year-end. But for the full year, it should run around at 30.5%.

And there's a possibility we can gain 10 to 20-basis-points improvement through the year as well.

Ruben Mendoza -- President and Chief Executive Officer

And just to add to that, Noah. We expect a gain in our gross margin percentage of 10 to 20 basis points. But we also expect a little bit more volume in residential, which maybe offset that to where our midpoint, it's the same 30.5%.

Noah Merkousko -- Stephens Inc. -- Analyst

OK. That's helpful. And then as a follow-up, just kind of wanted to get your thoughts on wallboard pricing. Manufacturers' out with an increase and the January PPI data indicated some slight appreciation.

So maybe just kind of share what you're seeing from the manufacturers and now at the distributor level? And then maybe what's baked into your guidance?

Kirby Thompson -- Senior Vice President of Sales and Marketing

Yeah, Noah, this is Kirby Thompson. Thank you. Yeah, the price increases announced in the first quarter is, as you know, historically, those things take a couple of months to actually cement themselves into the market, and we anticipate we're going to see 1% to 2% price appreciation throughout this year.

Noah Merkousko -- Stephens Inc. -- Analyst

All right. That's helpful. Thanks, guys.

Ruben Mendoza -- President and Chief Executive Officer

Thank you.

Operator

Our next question is from Keith Hughes with SunTrust. Please go ahead.

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

Thank you. Your comments on residential that you're trying to take some share there, is that just a function of opening new branches, reaching out more in terms of the sales effort? How do you sort of accomplish that on the market?

Ruben Mendoza -- President and Chief Executive Officer

It's exactly what you said. It's more residential. We've mentioned Associated Drywall, Louisville, Kentucky. That's a residential business for us that.

We plan to get some share gain there, as well as opening new branches. We've doubled our efforts back in the summer of last year as far as our resources calling on residential homebuilders, as well as being at the IBS show and having a presence there. So we've really moved in that direction of gaining more residential share, not just to kind of lower the price thing and get more business.

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

OK. And you've given us a lot of guidance for the year. Just any sort of views, first half, second half, any differences between those two margin revenue, whatever you're willing to give of how the cadence of the year is expected to get.

John Gorey -- Chief Financial Officer

I should talk about the SG&A side. We think the full-year run rate for '19 was 22.6%. We think we can get 10 to 20 basis point improvement, and that'll probably fall mostly in the second half.

Ruben Mendoza -- President and Chief Executive Officer

And on the sales side, first and fourth quarters are 45% to 47% of our sales and 55% to 53% in the second and the third quarters.

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

And you don't see any sort of more back-half-weighted year in terms of units or organic growth coming versus first half.

Ruben Mendoza -- President and Chief Executive Officer

Just like what Kirby talked about in residential. The national homebuilders usually do yearly agreements, and they usually begin the start-up in the second quarter. So we expect our residential volume to increase a bit for us in the second quarter.

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

OK. All right. Thanks for the detail.

Ruben Mendoza -- President and Chief Executive Officer

You bet.

Operator

Our next question is from John Lovallo with Bank of America. Please go ahead.

John Lovallo -- Bank of America Merrill Lynch -- Analyst

Hey, guys, thank you for taking my questions. The first one, U.S. residential construction, you guys called it out as a headwind in the fourth quarter. But activity did seem to accelerate.

So just curious if you think that this was timing related or maybe market share related? Or do you have any comments on the disconnect there?

Kirby Thompson -- Senior Vice President of Sales and Marketing

Yeah. Thank you, John. This is Kirby Thompson. As you know, as Ruben just said, most of the large production builders across the country in many regions, their agreements with suppliers run from six to 12 months.

And as we didn't participate nearly as much in 2019 as we anticipate participating in 2020, those agreements were coming to an end. And as we've stated, we believe we'll see that share pick up beginning in Q2.

Ruben Mendoza -- President and Chief Executive Officer

As well, I'd like to add, John, it's not all national agreements. I mean if you've noticed in the last couple, three quarters, any public manufacturers, their price was down 7% and 8%. Ours is down 90 basis points in the fourth quarter, and it was up throughout the entire year of 2019. I'm talking about our gypsum wallboard price.

So we maintained a disciplined pricing approach to the market. I'm not supposing, I know we could have got more residential volume. But we had some strict goals and we kept to them.

John Moten -- Vice President of Investor Relations

Hey, this is John Moten. I would also add that that also accounts for our profit margin expansion during the year because we focus on our core commercial business.

John Lovallo -- Bank of America Merrill Lynch -- Analyst

OK. That's helpful, guys. And then in terms of the higher labor cost that you guys called out, are there particular regions or even skill sets that you're seeing most of the constrain? Or is it broad-based?

Pete Welly -- Chief Operating Officer

It's pretty broad-based. It was really more of a labor inflation across most of our branches, yes, this is Pete, to compete with manpower for trucks, delivery folks, stockers. There's been a lot of pressure in the market. As you know, there's been a lot of discussion about possible driver shortages, and we haven't seen shortages, but we've seen inflation for pricing to compete for talent.

John Lovallo -- Bank of America Merrill Lynch -- Analyst

Got it. Thanks, guys.

Operator

Our next question is from Trey Morrish with Evercore. Please go ahead.

Trey Morrish -- Evercore ISI -- Analyst

Thanks, guys, for the time. The first thing I wanted to touch on is M&A. It's now excluded from your guidance. And I don't think you're having us willing to take that mean that M&A is less likely going forward.

But just within that context, could you talk about how you view your pipeline and ability and desire to execute M&A?

Ruben Mendoza -- President and Chief Executive Officer

Yeah. Thanks, Trey. We excluded it from our guidance, I think it makes it easier, and we will just add every time we do an acquisition to our guidance. And our pipeline is still robust.

We've got a couple of great business development people working with us and talking to a lot of prospects. We expect around $100 million of annualized revenue acquisition. That's what we expected last year. We were a little bit under.

We decided to take it down. Our multiple for purchasing those five companies last year was a disciplined multiple. We expect a little bit more this year, but we're not baking it into our guidance.

Trey Morrish -- Evercore ISI -- Analyst

Got it. Thanks for that. And then just thinking about the internal initiatives that resulted in gross margin seeing a lift in 2019, but clearly, a headwind on SG&A. How should we think about how much legroom those initiatives still have to go on gross margin? And at what point they will stop being a drag on SG&A?

Pete Welly -- Chief Operating Officer

Well, we think the drag will be slowing down in the second half of 2020. But we expect the improvements to last for the next couple of years. And that's really just improving the initiatives that we're developing with the CRM and the e-commerce, and it's going to take us a couple of years to make that continue to prove our gross margins.

Ruben Mendoza -- President and Chief Executive Officer

In the fourth quarter -- first and second quarters, we have several million dollars in costs in our budget for some of these initiatives with -- as far as -- it's mostly e-commerce for that. And with no revenue in our budget for 2020. But in '21 and '22, we expect to generate a fair amount of revenue gain. And we have a great e-commerce initiative that we expect it will generate a difference in our business, a big difference in our business.

Trey Morrish -- Evercore ISI -- Analyst

Thank you very much, guys. Appreciate it.

Ruben Mendoza -- President and Chief Executive Officer

Thank you.

Operator

Our next question is from Mike Dahl with RBC Capital Markets. Please go ahead.

Mike Dahl -- RBC Capital Markets -- Analyst

Good morning. Thanks for taking my questions. I have two follow-ups around pricing. Going back to the comments around wallboard pricing, expecting to be up 1% to 2%.

I guess since you're pushing heavier into residential, which is more of a half inch mix versus five-eighths. Can you talk about whether that 1% to 2% is a net assumption including mix headwinds or whether that's like-for-like? And how to think about blended, if it is like-for-like?

Ruben Mendoza -- President and Chief Executive Officer

It's a net. Our actual fourth-quarter five-eighths was up in units and price. Our half inch was down. So you got it right on, Mike.

But we consider that 1% to 2% in net.

Mike Dahl -- RBC Capital Markets -- Analyst

OK. Got it. And then expanding beyond wallboard, can you talk about your pricing assumptions going into ceilings and framing. I guess framing, just given the volatility and some of the steel costs.

Just help us think about pricing for those two segments?

Pete Welly -- Chief Operating Officer

Yeah. We believe that the steel pricing has stabilized after the tariff inflation of last year. And then ceilings, as you heard yesterday, I'm sure on Armstrong's call, typical 2% to 3% price increases that we have figured into our budget, and that's been pretty consistent over the years.

Mike Dahl -- RBC Capital Markets -- Analyst

OK, great. Thank you.

Operator

[Operator instructions] Our next question is from Paul Dircks with William Blair. Please go ahead.

Paul Dircks -- William Blair -- Analyst

Hi, good morning, everyone. Just a couple of quick ones for me. I apologize if I missed this earlier. But on the gross margin side, you guys have obviously seen some of the benefits coming in here from the purchasing and pricing initiatives.

Is there any way to quantify how much of that benefit you expect to see in 2020?

Pete Welly -- Chief Operating Officer

We're kind of targeting additional 10- to 20-basis-point improvement for 2020 with those initiatives.

Ruben Mendoza -- President and Chief Executive Officer

Paul, I pointed out a little bit earlier though, the 10 to 20 basis point improvement and some higher residential volume, possibly to offset that. And that's why our midpoint is still 30.5%.

Paul Dircks -- William Blair -- Analyst

Got it. That's helpful. That was the piece and you did it. And then just a couple of quick housekeeping for me.

John, you mentioned free cash flow target for the year, $60 million to $80 million. Is that before the anticipated TRA payment here in the early part of 2020?

John Gorey -- Chief Financial Officer

No. So we've already made that payment in January. So that will be on top.

Paul Dircks -- William Blair -- Analyst

On top. All right, great. Helpful. And then lastly, tax rate.

On a go-forward basis, what rate should we be looking at?

John Gorey -- Chief Financial Officer

Around 28% is what ranges for us going forward.

Paul Dircks -- William Blair -- Analyst

All right. Very good. Thank you, guys.

Ruben Mendoza -- President and Chief Executive Officer

Thank you.

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Ruben Mendoza for any closing remarks.

Ruben Mendoza -- President and Chief Executive Officer

Yeah. Just quickly, I'd like to thank all of the Foundation Building Materials employees and the hard work that they put in and the success that we've been able to generate in the last three years since we went public. Thanks again.

Operator

[Operator signoff]

Duration: 34 minutes

Call participants:

John Moten -- Vice President of Investor Relations

Ruben Mendoza -- President and Chief Executive Officer

John Gorey -- Chief Financial Officer

Christina Chiu -- Barclays -- Analyst

Pete Welly -- Chief Operating Officer

Kirby Thompson -- Senior Vice President of Sales and Marketing

Noah Merkousko -- Stephens Inc. -- Analyst

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

John Lovallo -- Bank of America Merrill Lynch -- Analyst

Trey Morrish -- Evercore ISI -- Analyst

Mike Dahl -- RBC Capital Markets -- Analyst

Paul Dircks -- William Blair -- Analyst

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