QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Title of each class | Trading symbol | Name of each exchange on which registered |
☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||
Emerging growth company | ||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. ☐ |
Page No. | |
Three months ended | ||||||||||
(in thousands, except per share data) | Note | December 27, 2019 | December 28, 2018 | |||||||
Net sales | $ | $ | ||||||||
Cost of sales | ||||||||||
Gross profit | ||||||||||
Selling, general and administrative | ||||||||||
Intangible asset amortization | 13 | |||||||||
Operating income | ||||||||||
Interest expense, net | ||||||||||
Other income, net | 7 | ( | ) | ( | ) | |||||
Income before income taxes | ||||||||||
Income tax expense | 8 | |||||||||
Net income | $ | $ | ||||||||
Net income per share | ||||||||||
Basic | 9 | $ | $ | |||||||
Diluted | 9 | $ | $ | |||||||
Three months ended | ||||||||||
(in thousands) | Note | December 27, 2019 | December 28, 2018 | |||||||
Net income | $ | $ | ||||||||
Other comprehensive (loss) income , net of tax: | ||||||||||
Change in foreign currency translation adjustment | ( | ) | ||||||||
Change in unrecognized loss related to pension benefit plans | 5 | |||||||||
Total other comprehensive income (loss) | 10 | ( | ) | |||||||
Comprehensive income | $ | $ |
(in thousands, except share and per share data) | Note | December 27, 2019 | September 30, 2019 | |||||||
Assets | ||||||||||
Current Assets: | ||||||||||
Cash and cash equivalents | $ | $ | ||||||||
Accounts receivable, less allowance for doubtful accounts of $2,992 and $2,608, respectively | ||||||||||
Inventories, net | 11 | |||||||||
Prepaid expenses and other current assets | ||||||||||
Total current assets | ||||||||||
Property, plant and equipment, net | 12 | |||||||||
Intangible assets, net | 13 | |||||||||
Goodwill | 13 | |||||||||
Right-of-use assets, net | 2 | — | ||||||||
Deferred tax assets | 8 | |||||||||
Other long-term assets | ||||||||||
Total Assets | $ | $ | ||||||||
Liabilities and Equity | ||||||||||
Current Liabilities: | ||||||||||
Accounts payable | ||||||||||
Income tax payable | ||||||||||
Accrued compensation and employee benefits | ||||||||||
Customer liabilities | ||||||||||
Lease obligations | 2 | — | ||||||||
Other current liabilities | ||||||||||
Total current liabilities | ||||||||||
Long-term debt | 14 | |||||||||
Long-term lease obligations | 2 | — | ||||||||
Deferred tax liabilities | 8 | |||||||||
Other long-term tax liabilities | ||||||||||
Pension liabilities | ||||||||||
Other long-term liabilities | ||||||||||
Total Liabilities | ||||||||||
Equity: | ||||||||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 47,478,557 and 46,955,163 shares issued and outstanding, respectively | ||||||||||
Treasury stock, held at cost, 260,900 and 260,900 shares, respectively | ( | ) | ( | ) | ||||||
Additional paid-in capital | ||||||||||
Accumulated deficit | ( | ) | ( | ) | ||||||
Accumulated other comprehensive loss | 10 | ( | ) | ( | ) | |||||
Total Equity | ||||||||||
Total Liabilities and Equity | $ | $ |
Three months ended | ||||||||||
(in thousands) | Note | December 27, 2019 | December 28, 2018 | |||||||
Operating activities: | ||||||||||
Net income | $ | $ | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | ||||||||||
Deferred income taxes | 8 | ( | ) | |||||||
Stock-based compensation | ||||||||||
Amortization of right-of-use assets | — | |||||||||
Other adjustments to net income | ||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions | ||||||||||
Accounts receivable | ||||||||||
Inventories | ( | ) | ||||||||
Accounts payable | ( | ) | ( | ) | ||||||
Other, net | ( | ) | ( | ) | ||||||
Net cash provided by operating activities | ||||||||||
Investing activities: | ||||||||||
Capital expenditures | ( | ) | ( | ) | ||||||
Acquisition of businesses, net of cash acquired | 4 | ( | ) | |||||||
Other, net | ( | ) | ||||||||
Net cash (used in) provided by investing activities | ( | ) | ( | ) | ||||||
Financing activities: | ||||||||||
Issuance of common stock | ( | ) | ( | ) | ||||||
Repurchase of common stock | ( | ) | ||||||||
Other, net | ( | ) | ( | ) | ||||||
Net cash used for financing activities | ( | ) | ( | ) | ||||||
Effects of foreign exchange rate changes on cash and cash equivalents | ( | ) | ||||||||
Increase (decrease) in cash and cash equivalents | ( | ) | ||||||||
Cash and cash equivalents at beginning of period | ||||||||||
Cash and cash equivalents at end of period | $ | $ | ||||||||
Supplementary Cash Flow information | ||||||||||
Capital expenditures, not yet paid | $ | $ |
Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Equity | ||||||||||||||||||||
(in thousands) | Shares | Amount | Amount | ||||||||||||||||||||||
Balance as of September 30, 2019 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | ||||||||||||||||||||
ASU 2016-02 modified retrospective adoption | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||
Issuance of common stock | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Balance as of December 27, 2019 | ( | ) | ( | ) | ( | ) |
Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Equity | |||||||||||||||||||||
(in thousands) | Shares | Amount | Amount | |||||||||||||||||||||||
Balance as of September 30, 2018 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||
Issuance of common stock | — | ( | ) | — | — | ( | ) | |||||||||||||||||||
Repurchase of common stock | ( | ) | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||
Balance as of December 28, 2018 | ( | ) | ( | ) | ( | ) |
ASU | Description of ASU | Impact to Atkore | Note | Adoption Date | ||||
2016-02 Leases (Topic 842) | The Accounting Standards Update ("ASU") requires companies to use a "right of use" lease model that assumes that each lease creates an asset (the lessee's right to use the leased asset) and a liability (the future rent payment obligations), which should be reflected on a lessee's balance sheet to fairly represent the lease transaction and the lessee's related financial obligations with terms of more than 12 months. | The Company adopted the guidance in the first quarter of 2020 using the modified retrospective method. See Note 2, "Leases" for further detail. | 2 | 2020 |
ASU | Description of ASU | Impact to Atkore | Effective Date | |||
2016-13 Financial Instruments - Credit Losses (Topic 326) | The ASU adds to U.S. GAAP an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. | Under evaluation. | 2021 | |||
2018-14 Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans | The ASU amends Accounting Standards Codification ("ASC") 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. | Under evaluation. | 2021 |
(in thousands) | December 27, 2019 | |||
Assets | ||||
Operating lease assets | $ | |||
Finance lease assets | ||||
Total right-of-use assets, gross | $ | |||
Less: accumulated depreciation and amortization | ( | ) | ||
Right-of-use assets, net | $ | |||
Liabilities | ||||
Current liabilities: | ||||
Current portion of operating lease liabilities | $ | |||
Current portion of finance lease liabilities | ||||
Lease obligations | $ | |||
Noncurrent liabilities: | ||||
Operating lease liabilities | $ | |||
Finance lease liabilities | ||||
Long-term lease obligations | $ | |||
Total lease obligations | $ |
(in thousands) | Three months ended December 27, 2019 | |||
Condensed Consolidated Statement of Operations Classification | Total | |||
Amortization of right-of-use assets | $ | |||
Interest on lease liabilities | ||||
Variable lease costs | ||||
Short term lease costs | ||||
Total lease costs | $ |
(in thousands) | Financing Leases | Operating Leases | ||||||
2020 | $ | $ | ||||||
2021 | ||||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
2025 and after | ||||||||
Total lease payments | $ | $ | ||||||
Less: Interest | ( | ) | ( | ) | ||||
Present value of lease liabilities | $ | $ |
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
2025 and thereafter | ||||
Total | $ |
December 27, 2019 | |||
Weighted-average remaining lease term (years) | |||
Operating leases | |||
Finance leases | |||
Weighted-average discount rate | |||
Operating leases | % | ||
Finance leases | % |
(in thousands) | Three months ended December 27, 2019 | ||
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows from operating leases | |||
Operating cash flows from finance leases | |||
Financing cash flows from finance leases |
(in thousands) | Vergokan | Other | Total | |||||||||
Fair value of consideration transferred: | ||||||||||||
Cash consideration | $ | $ | $ | |||||||||
Other liability consideration | $ | |||||||||||
Total consideration transferred | ||||||||||||
Fair value of assets acquired and liabilities assumed: | ||||||||||||
Cash | ||||||||||||
Accounts receivable | ||||||||||||
Inventories | ||||||||||||
Intangible assets | ||||||||||||
Fixed assets | ||||||||||||
Accounts payable | ( | ) | ( | ) | ( | ) | ||||||
Gain on purchase of business | ( | ) | ( | ) | ||||||||
Other | ( | ) | ( | ) | ||||||||
Net assets acquired | ||||||||||||
Excess purchase price attributed to goodwill acquired | $ | $ | $ |
Vergokan | Other | |||||||||||
($ in thousands) | Fair Value | Weighted Average Useful Life (Years) | Fair Value | Weighted Average Useful Life (Years) | ||||||||
Customer relationships | $ | $ | ||||||||||
Other | ||||||||||||
Total intangible assets | $ | $ |
Three months ended | ||||||||||
(in thousands) | Note | December 27, 2019 | December 28, 2018 | |||||||
Interest cost | $ | $ | ||||||||
Expected return on plan assets | ( | ) | ( | ) | ||||||
Amortization of actuarial loss | ||||||||||
Net periodic benefit credit | 7 | $ | ( | ) | $ | ( | ) |
Electrical Raceway | MP&S | ||||||||||||||||||
(in thousands) | Severance (a) | Other (a) | Severance | Other | Total | ||||||||||||||
Balance as of September 30, 2018 | $ | $ | $ | $ | $ | ||||||||||||||
Charges | |||||||||||||||||||
Utilization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Balance as of September 30, 2019 | |||||||||||||||||||
Charges | |||||||||||||||||||
Utilization | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Exchange rate effects | |||||||||||||||||||
Balance as of December 27, 2019 | $ | $ | $ | $ | $ |
Three months ended | ||||||||
(in thousands) | December 27, 2019 | December 28, 2018 | ||||||
Total restructuring charges, net | $ | $ |
Three months ended | ||||||||
(in thousands) | December 27, 2019 | December 28, 2018 | ||||||
Undesignated foreign currency derivative instruments | ( | ) | ||||||
Foreign exchange (gain) loss on intercompany loans | ( | ) | ||||||
Pension-related benefits | ( | ) | ( | ) | ||||
Other income, net | $ | ( | ) | $ | ( | ) |
Three months ended | |||||||||
(in thousands, except per share data) | December 27, 2019 | December 28, 2018 | |||||||
Numerator: | |||||||||
Net income | $ | $ | |||||||
Less: Undistributed earnings allocated to participating securities | |||||||||
Net income available to common shareholders | $ | $ | |||||||
Denominator: | |||||||||
Basic weighted average common shares outstanding | |||||||||
Effect of dilutive securities: Non-participating employee stock options (1) | |||||||||
Diluted weighted average common shares outstanding | |||||||||
Basic earnings per share | $ | $ | |||||||
Diluted earnings per share | $ | $ | |||||||
(1) Stock options to purchase approximately 0.1 million and 0.6 million shares of common stock were outstanding during the three months ended December 27, 2019 and December 28, 2018, respectively, but were not included in the calculation of diluted earnings per share as the impact of these options would have been anti-dilutive. |
(in thousands) | Defined benefit pension items | Currency translation adjustments | Total | |||||||||
Balance as of September 30, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive loss before reclassifications | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | ||||||||||||
Net current period other comprehensive income | ||||||||||||
Balance as of December 27, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
(in thousands) | Defined benefit pension items | Currency translation adjustments | Total | |||||||||
Balance as of September 30, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive loss before reclassifications | ( | ) | ( | ) | ||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | ||||||||||||
Net current period other comprehensive income (loss) | ( | ) | ( | ) | ||||||||
Balance as of December 28, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(in thousands) | December 27, 2019 | September 30, 2019 | |||||
Purchased materials and manufactured parts, net | $ | $ | |||||
Work in process, net | |||||||
Finished goods, net | |||||||
Inventories, net | $ | $ |
(in thousands) | December 27, 2019 | September 30, 2019 | |||||
Land | $ | $ | |||||
Buildings and related improvements | |||||||
Machinery and equipment | |||||||
Leasehold improvements | |||||||
Software | |||||||
Construction in progress | |||||||
Property, plant and equipment | |||||||
Accumulated depreciation | ( | ) | ( | ) | |||
Property, plant and equipment, net | $ | $ |
(in thousands) | Electrical Raceway | Mechanical Products & Solutions | Total | ||||||||
Balance as of October 1, 2019 | $ | $ | $ | ||||||||
Exchange rate effects | |||||||||||
Balance as of December 27, 2019 | $ | $ | $ |
December 27, 2019 | September 30, 2019 | ||||||||||||||||||||||||
($ in thousands) | Weighted Average Useful Life (Years) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||||||||||
Customer relationships | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||
Other | ( | ) | ( | ) | |||||||||||||||||||||
Total | ( | ) | ( | ) | |||||||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||||
Trade names | — | — | |||||||||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
(in thousands) | ||||
Remaining 2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
2025 | ||||
Thereafter |
(in thousands) | December 27, 2019 | September 30, 2019 | |||||
First Lien Term Loan Facility due December 22, 2023 | $ | $ | |||||
Deferred financing costs | ( | ) | ( | ) | |||
Other | |||||||
Total debt | $ | $ | |||||
Less: Current portion | |||||||
Long-term debt | $ | $ |
December 27, 2019 | September 30, 2019 | |||||||||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Cash equivalents | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Forward currency contracts |
December 27, 2019 | September 30, 2019 | |||||||||||||||
(in thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
First Lien Term Loan Facility due December 22, 2023 | $ | $ | $ | $ |
Three months ended | |||||||||||||||||||||||
December 27, 2019 | December 28, 2018 | ||||||||||||||||||||||
(in thousands) | External Net Sales | Intersegment Sales | Adjusted EBITDA | External Net Sales | Intersegment Sales | Adjusted EBITDA | |||||||||||||||||
Electrical Raceway | $ | $ | $ | $ | $ | $ | |||||||||||||||||
MP&S | |||||||||||||||||||||||
Eliminations | — | ( | ) | — | ( | ) | |||||||||||||||||
Consolidated operations | $ | $ | — | $ | $ | — |
Three months ended | |||||||||
(in thousands) | December 27, 2019 | December 28, 2018 | |||||||
Operating segment Adjusted EBITDA | |||||||||
Electrical Raceway | $ | $ | |||||||
MP&S | |||||||||
Total | |||||||||
Unallocated expenses (a) | ( | ) | ( | ) | |||||
Depreciation and amortization | ( | ) | ( | ) | |||||
Interest expense, net | ( | ) | ( | ) | |||||
Restructuring charges | ( | ) | ( | ) | |||||
Stock-based compensation | ( | ) | ( | ) | |||||
Transaction costs | ( | ) | ( | ) | |||||
Other (b) | ( | ) | ( | ) | |||||
Income before income taxes | $ | $ |
Three months ended | ||||||||
(in thousands) | December 27, 2019 | December 28, 2018 | ||||||
United States | $ | $ | ||||||
Other Americas | ||||||||
Europe | ||||||||
Asia-Pacific | ||||||||
Total | $ | $ |
Three months ended | ||||||||
(in thousands) | December 27, 2019 | December 28, 2018 | ||||||
Metal Electrical Conduit and Fittings | $ | |||||||
Armored Cable and Fittings | ||||||||
PVC Electrical Conduit and Fittings | ||||||||
Cable Tray and Cable Ladders | ||||||||
Other raceway products | ||||||||
Electrical Raceway | ||||||||
Mechanical Pipe | ||||||||
Other MP&S products | ||||||||
MP&S | ||||||||
Net sales | $ | $ |
Three months ended | ||||||||||||||
($ in thousands) | December 27, 2019 | December 28, 2018 | Change | % Change | ||||||||||
Net sales | $ | 447,448 | $ | 452,028 | $ | (4,580 | ) | (1.0 | )% | |||||
Cost of sales | 330,604 | 341,772 | (11,168 | ) | (3.3 | )% | ||||||||
Gross profit | 116,844 | 110,256 | 6,588 | 6.0 | % | |||||||||
Selling, general and administrative | 56,215 | 56,379 | (164 | ) | (0.3 | )% | ||||||||
Intangible asset amortization | 8,113 | 8,214 | (101 | ) | (1.2 | )% | ||||||||
Operating income | 52,516 | 45,663 | 6,853 | 15.0 | % | |||||||||
Interest expense, net | 10,620 | 12,160 | (1,540 | ) | (12.7 | )% | ||||||||
Other income, net | (234 | ) | (1,600 | ) | 1,366 | (85.4 | )% | |||||||
Income before income taxes | 42,130 | 35,103 | 7,027 | 20.0 | % | |||||||||
Income tax expense | 7,340 | 8,154 | (814 | ) | (10.0 | )% | ||||||||
Net income | $ | 34,790 | $ | 26,949 | $ | 7,841 | 29.1 | % |
% Change | |||
Volume | 3.1 | % | |
Average selling prices | (6.6 | )% | |
Foreign exchange | (0.1 | )% | |
Acquisitions | 2.7 | % | |
Other | (0.1 | )% | |
Net sales | (1.0 | )% |
% Change | |||
Volume | 3.3 | % | |
Average input costs | (11.4 | )% | |
Foreign exchange | (0.2 | )% | |
Acquisitions | 2.9 | % | |
Other | 2.1 | % | |
Cost of sales | (3.3 | )% |
Three months ended | |||||||||||||||
($ in thousands) | December 27, 2019 | December 28, 2018 | Change | % Change | |||||||||||
Net sales | $ | 341,376 | $ | 343,406 | $ | (2,030 | ) | (0.6 | )% | ||||||
Adjusted EBITDA | $ | 70,193 | $ | 68,489 | $ | 1,704 | 2.5 | % | |||||||
Adjusted EBITDA Margin | 20.6 | % | 19.9 | % |
% Change | |||
Volume | 2.0 | % | |
Average selling prices | (5.6 | )% | |
Foreign exchange | (0.2 | )% | |
Acquisitions | 3.6 | % | |
Other | (0.4 | )% | |
Net sales | (0.6 | )% |
Three months ended | |||||||||||||||
($ in thousands) | December 27, 2019 | December 28, 2018 | Change | % Change | |||||||||||
Net sales | $ | 106,660 | $ | 108,813 | $ | (2,153 | ) | (2.0 | )% | ||||||
Adjusted EBITDA | $ | 16,654 | $ | 10,887 | $ | 5,767 | 53.0 | % | |||||||
Adjusted EBITDA Margin | 15.6 | % | 10.0 | % |
% Change | |||
Volume | 6.8 | % | |
Average selling prices | (10.0 | )% | |
Other | 1.2 | % | |
Net sales | (2.0 | )% |
Three months ended | |||||||
(in thousands) | December 27, 2019 | December 28, 2018 | |||||
Cash flows provided by (used in): | |||||||
Operating activities | $ | 52,173 | $ | 40,277 | |||
Investing activities | (9,794 | ) | (64,925 | ) | |||
Financing activities | (3,041 | ) | (25,176 | ) |
• | declines in, and uncertainty regarding, the general business and economic conditions in the United States and international markets in which we operate; |
• | weakness or another downturn in the United States non-residential construction industry; |
• | changes in prices of raw materials; |
• | pricing pressure, reduced profitability, or loss of market share due to intense competition; |
• | availability and cost of third-party freight carriers and energy; |
• | high levels of imports of products similar to those manufactured by us; |
• | changes in federal, state, local and international governmental regulations and trade policies; |
• | changes in foreign laws and legal systems, including as a result of Brexit; |
• | recent and future changes to tax legislation |
• | adverse weather conditions; |
• | failure to generate sufficient cash flow from operations or to raise sufficient funds in the capital markets to satisfy existing obligations and support the development of our business; |
• | increased costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws; |
• | reduced spending by, deterioration in the financial condition of, or other adverse developments with respect to, one or more of our top customers; |
• | increases in our working capital needs, which are substantial and fluctuate based on economic activity and the market prices for our main raw materials, including as a result of failure to collect, or delays in the collection of, cash from the sale of manufactured products; |
• | work stoppage or other interruptions of production at our facilities as a result of disputes under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress, or for other reasons; |
• | challenges attracting and retaining key personnel or high-quality employees; |
• | changes in our financial obligations relating to pension plans that we maintain in the United States; |
• | reduced production or distribution capacity due to interruptions in the operations of our facilities or those of our key suppliers; |
• | loss of a substantial number of our third-party agents or distributors or a dramatic deviation from the amount of sales they generate; |
• | security threats, attacks, or other disruptions to our information systems, or failure to comply with complex network security, data privacy and other legal obligations or the failure to protect sensitive information; |
• | possible impairment of goodwill or other long-lived assets as a result of future triggering events, such as declines in our cash flow projections or customer demand; |
• | safety and labor risks associated with the manufacture and in the testing of our products; |
• | product liability, construction defect and warranty claims and litigation relating to our various products, as well as government inquiries and investigations, and consumer, employment, tort and other legal proceedings; |
• | our ability to protect our intellectual property and other material proprietary rights; |
• | risks inherent in doing business internationally; |
• | our inability to introduce new products effectively or implement our innovation strategies; |
• | the inability of our customers to pay off the credit lines extended to them by us in a timely manner and the negative impact on customer relations resulting from our collections efforts with respect to non-paying or slow-paying customers; |
• | our inability to continue importing raw materials, component parts and/or finished goods; |
• | the incurrence of liabilities and the issuance of additional debt or equity in connection with acquisitions, joint ventures or divestitures and the failure of indemnification provisions in our acquisition agreements to fully protect us from unexpected liabilities; |
• | failure to manage acquisitions successfully, including identifying, evaluating, and valuing acquisition targets and integrating acquired companies, businesses or assets; |
• | the incurrence of liabilities in connection with violations of the FCPA and similar foreign anti-corruption laws; |
• | the incurrence of additional expenses, increase in complexity of our supply chain and potential damage to our reputation with customers resulting from regulations related to "conflict minerals"; |
• | disruptions or impediments to the receipt of sufficient raw materials resulting from various anti-terrorism security measures; |
• | restrictions contained in our debt agreements; |
• | failure to generate cash sufficient to pay the principal of, interest on, or other amounts due on our debt; and |
• | other risks and factors described in this report and from time to time in documents that we file with the SEC. |
31.1# | ||||
31.2# | ||||
32.1# | ||||
32.2# | ||||
101.INS# | XBRL Instance Document (formatted as inline XBRL) | |||
101.SCH# | XBRL Taxonomy Schema Linkbase Document (formatted as inline XBRL | |||
101.CAL# | ||||
101.DEF# | ||||
101.LAB# | ||||
101.PRE# | ||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||
# | Filed herewith |
ATKORE INTERNATIONAL GROUP INC. | |||
(Registrant) | |||
Date: | February 4, 2020 | By: | /s/ David P. Johnson |
Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
Dated: | February 4, 2020 | /s/ William E. Waltz | |
William E. Waltz | |||
President and Chief Executive Officer (Principal Executive Officer) |
Dated: | February 4, 2020 | /s/ David P. Johnson | |
David P. Johnson | |||
Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
Dated: | February 4, 2020 | /s/ William E. Waltz | |
William E. Waltz | |||
President and Chief Executive Officer (Principal Executive Officer) | |||
Dated: | February 4, 2020 | /s/ David P. Johnson | |
David P. Johnson | |||
Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |||
Fair Value Measurements |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 27, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 15. FAIR VALUE MEASUREMENTS Certain assets and liabilities are required to be recorded at fair value on a recurring basis. The Company uses forward currency contracts to hedge the effects of foreign exchange relating to certain of the Company’s intercompany balances denominated in a foreign currency. These derivative instruments are not formally designated as hedges by the Company and the terms of these instruments range at inception from six months to five years. Short-term forward currency contracts are recorded in either other current assets or other current liabilities and long-term forward currency contracts are recorded in either other long-term assets or other long-term liabilities in the condensed consolidated balance sheet. The fair value gains and losses are included in other income, net within the condensed consolidated statements of operations. See Note 7, ''Other Income, net'' for further detail. The total notional amounts of undesignated forward currency contracts were £45.0 million and £45.0 million as of December 27, 2019 and September 30, 2019, respectively. Cash flows associated with derivative financial instruments are recognized in the operating section of the condensed consolidated statements of cash flows. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The following table presents the Company's assets and liabilities measured at fair value:
The Company's remaining financial instruments consist primarily of cash, accounts receivable and accounts payable whose carrying value approximate their fair value due to their short-term nature. The estimated fair value of financial instruments not carried at fair value in the condensed consolidated balance sheets were as follows:
In determining the approximate fair value of its long-term debt, the Company used the trading values among financial institutions, and these values fall within Level 2 of the fair value hierarchy. The carrying value of the ABL Credit Facility approximates fair value due to it being a market-linked variable rate debt.
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Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 27, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation — The accompanying unaudited condensed consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These unaudited condensed consolidated financial statements have been prepared in accordance with the Company's accounting policies and on the same basis as those financial statements included in the Company's latest Annual Report on Form 10-K for the year ended September 30, 2019 filed with the U.S. Securities and Exchange Commission (the "SEC") on November 22, 2019, and should be read in conjunction with those consolidated financial statements and the notes thereto. Certain information and disclosures normally included in the Company's annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The unaudited condensed consolidated financial statements include the assets and liabilities used in operating the Company's business. All intercompany balances and transactions have been eliminated in consolidation. The results of companies acquired or disposed of are included in the unaudited condensed consolidated financial statements from the effective date of acquisition or up to the date of disposal. These statements include all adjustments (consisting of normal recurring adjustments) that the Company considered necessary to present a fair statement of its results of operations, financial position and cash flows. The results reported in these unaudited condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year.
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Fiscal Periods | Fiscal Periods — The Company has a fiscal year that ends on September 30. It is the Company's practice to establish quarterly closings using a 4-5-4 calendar. The Company's fiscal quarters end on the last Friday in December, March and June.
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Use of Estimates | Use of Estimates — The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclose contingent assets and liabilities at the date of the condensed consolidated financial statements and report the associated amounts of revenues and expenses. Actual results could differ materially from these estimates.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements A summary of recently adopted accounting guidance is as follows. Adoption dates are on the first day of the fiscal year indicated below, unless otherwise specified.
A summary of accounting guidance not yet adopted is as follows. Effective dates are on the first day of the fiscal year indicated below, unless otherwise specified.
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Leases | The Company elected the package of practical expedients permitted under the transition guidance within Topic 842, which allowed us to carry forward prior conclusions about lease identification, classification and initial direct costs for leases entered into prior to adoption of Topic 842. Additionally, for leases with a term of 12 months or less, the Company elected the short-term lease exemption, which allowed us to not recognize right-of-use assets ("ROU") or lease liabilities for qualifying leases existing at transition and new leases we may enter into in the future. Leases with an initial term of 12 months or less are classified as short-term leases and are not recorded on the condensed consolidated balance sheets. The lease expense for short-term leases is recognized on a straight-line basis over the lease term. The Company engages in leasing transactions to meet the needs of the business. The Company leases certain warehouses and distribution centers, office space, forklifts, vehicles and other machinery and equipment. The determination to lease, rather than purchase, an asset is primarily contingent upon capital requirements, duration of the forecasted business investment, and asset availability. The Company determines if an arrangement is a lease at inception and all arrangements deemed to be leases are subject to an assessment to determine the classification between finance and operating leases. The Company's significant assumptions and judgments in determining whether a contract is or contains a lease include establishing whether the supplier has the ability to use other assets to fulfill its service or whether the terms of the agreement enable the Company to control the use of a dedicated property, plant and equipment asset during the contract term. In the majority of the Company's contracts where it must identify whether a lease is present, it is readily determinable that the Company controls the use of the assets and obtains substantially all of the economic benefit during the term of the contract. In those contracts where identification is not readily determinable, the Company has determined that the supplier has either the ability to use another asset to provide the service or the terms of the contract give the supplier the rights to operate the asset at its discretion during the term of the contract, in which case the arrangement would not constitute a lease. Right-of-use assets and lease obligations are recognized based on the present value of the future minimum lease payments over the lease term as of the commencement date. The Company’s lease agreements have terms that include both lease and non-lease components. Lease component fees are included in the present value of future minimum lease payments. Conversely, non-lease components are not subject to capitalization and are expensed as incurred. Per Topic 842, the contractual interest rate is used to calculate the present value of the future minimum lease payments. However, the majority of the Company’s leases do not provide an implicit rate. Therefore, the Company's significant assumption and judgments in determining the discount rate include determining the incremental borrowing rate. The Company’s incremental borrowing rates are based on the term of the lease, the economic environment of the lease and the effect of collateralization. The valuation of the ROU asset also includes lease payments made in advance of the lease commencement date and initial direct costs incurred to secure the lease and is reduced for lease incentives. The lease terms include options to extend or terminate the lease when it is reasonably certain the Company will exercise the options. |
Leases - Cash Flow Information (Details) $ in Thousands |
3 Months Ended |
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Dec. 27, 2019
USD ($)
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Cash paid for amounts included in the measurement of lease liabilities | |
Operating cash flows from operating leases | $ 3,216 |
Operating cash flows from finance leases | 4 |
Financing cash flows from finance leases | $ 128 |
Leases - Lease Cost (Details) $ in Thousands |
3 Months Ended |
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Dec. 27, 2019
USD ($)
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Leases [Abstract] | |
Amortization of right-of-use assets | $ 3,627 |
Interest on lease liabilities | 8 |
Variable lease costs | 39 |
Short term lease costs | 240 |
Total lease costs | $ 3,914 |
Inventories, Net - Schedule of Inventory (Details) - USD ($) $ in Thousands |
Dec. 27, 2019 |
Sep. 30, 2019 |
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Inventory Disclosure [Abstract] | ||
Purchased materials and manufactured parts, net | $ 53,141 | $ 52,742 |
Work in process, net | 24,678 | 21,424 |
Finished goods, net | 164,871 | 151,924 |
Inventories, net | $ 242,690 | $ 226,090 |
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
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Dec. 27, 2019 |
Dec. 28, 2018 |
Oct. 01, 2019 |
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Goodwill [Line Items] | |||
Intangible asset amortization | $ 8,113 | $ 8,214 | |
Electrical Raceway | |||
Goodwill [Line Items] | |||
Accumulated impairment loss | 3,924 | $ 3,924 | |
MP&S | |||
Goodwill [Line Items] | |||
Accumulated impairment loss | $ 43,000 | $ 43,000 |
Debt - ABL Credit Facility - Narrative (Details) - Atkore International - Line of credit - ABL Credit Facility - USD ($) |
Dec. 27, 2019 |
Sep. 30, 2019 |
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Debt Instrument [Line Items] | ||
Aggregate commitments | $ 325,000,000 | |
Credit availability | $ 282,628,000 | $ 301,882,000 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
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Dec. 27, 2019 |
Dec. 28, 2018 |
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Numerator: | ||
Net income | $ 34,790 | $ 26,949 |
Less: Undistributed earnings allocated to participating securities | 857 | 653 |
Net income available to common shareholders | $ 33,933 | $ 26,296 |
Denominator: | ||
Weighted-average shares outstanding - Basic (in shares) | 47,126 | 46,995 |
Effect of dilutive securities: Non-participating employee stock options (in shares) | 873 | 1,288 |
Weighted-average shares outstanding - diluted (in shares) | 47,999 | 48,283 |
Basic earnings per share (in dollars per share) | $ 0.72 | $ 0.56 |
Diluted earnings per share (in dollars per share) | $ 0.71 | $ 0.54 |
Basis of Presentation and Summary of Significant Accounting Policies |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 27, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Summary of Significant Accounting Policies | 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Organization and Ownership Structure — Atkore International Group Inc. (the "Company", "Atkore" or "AIG") is a leading manufacturer of Electrical Raceway products primarily for the non-residential construction and renovation markets and Mechanical Products & Solutions ("MP&S") for the construction and industrial markets. Electrical Raceway products form the critical infrastructure that enables the deployment, isolation and protection of a structure's electrical circuitry from the original power source to the final outlet. MP&S frame, support and secure component parts in a broad range of structures, equipment and systems in electrical, industrial and construction applications. Atkore was incorporated in the State of Delaware on November 4, 2010. Atkore is the sole stockholder of Atkore International Holdings Inc. ("AIH"), which in turn is the sole stockholder of Atkore International, Inc. ("AII"). Basis of Presentation — The accompanying unaudited condensed consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These unaudited condensed consolidated financial statements have been prepared in accordance with the Company's accounting policies and on the same basis as those financial statements included in the Company's latest Annual Report on Form 10-K for the year ended September 30, 2019 filed with the U.S. Securities and Exchange Commission (the "SEC") on November 22, 2019, and should be read in conjunction with those consolidated financial statements and the notes thereto. Certain information and disclosures normally included in the Company's annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The unaudited condensed consolidated financial statements include the assets and liabilities used in operating the Company's business. All intercompany balances and transactions have been eliminated in consolidation. The results of companies acquired or disposed of are included in the unaudited condensed consolidated financial statements from the effective date of acquisition or up to the date of disposal. These statements include all adjustments (consisting of normal recurring adjustments) that the Company considered necessary to present a fair statement of its results of operations, financial position and cash flows. The results reported in these unaudited condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Fiscal Periods — The Company has a fiscal year that ends on September 30. It is the Company's practice to establish quarterly closings using a 4-5-4 calendar. The Company's fiscal quarters end on the last Friday in December, March and June. Use of Estimates — The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclose contingent assets and liabilities at the date of the condensed consolidated financial statements and report the associated amounts of revenues and expenses. Actual results could differ materially from these estimates. Recent Accounting Pronouncements A summary of recently adopted accounting guidance is as follows. Adoption dates are on the first day of the fiscal year indicated below, unless otherwise specified.
A summary of accounting guidance not yet adopted is as follows. Effective dates are on the first day of the fiscal year indicated below, unless otherwise specified.
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Segment Information - Shared Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Dec. 27, 2019 |
Dec. 28, 2018 |
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Segment Reporting Information [Line Items] | ||
Net sales | $ 447,448 | $ 452,028 |
Operating segment Adjusted EBITDA | 86,847 | 79,376 |
Electrical Raceway | ||
Segment Reporting Information [Line Items] | ||
Net sales | 340,788 | 343,215 |
MP&S | ||
Segment Reporting Information [Line Items] | ||
Net sales | 106,660 | 108,813 |
Intersegment Sales | ||
Segment Reporting Information [Line Items] | ||
Net sales | (588) | (191) |
Intersegment Sales | Electrical Raceway | ||
Segment Reporting Information [Line Items] | ||
Net sales | 588 | 191 |
Intersegment Sales | MP&S | ||
Segment Reporting Information [Line Items] | ||
Net sales | 0 | 0 |
Operating Segments | Electrical Raceway | ||
Segment Reporting Information [Line Items] | ||
Operating segment Adjusted EBITDA | 70,193 | 68,489 |
Operating Segments | MP&S | ||
Segment Reporting Information [Line Items] | ||
Operating segment Adjusted EBITDA | $ 16,654 | $ 10,887 |
Fair Value Measurements - Estimated Fair Value (Details) - Secured Debt - First Lien Term Loan Facility due December 22, 2023 - USD ($) $ in Thousands |
Dec. 27, 2019 |
Sep. 30, 2019 |
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Value | $ 852,120 | $ 852,120 |
Fair Value | $ 854,677 | $ 853,543 |
Revenue from Contracts with Customers |
3 Months Ended |
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Dec. 27, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | 3. REVENUE FROM CONTRACTS WITH CUSTOMERS The Company’s revenue arrangements primarily consist of a single performance obligation to transfer promised goods which is satisfied at a point in time when title, risks and rewards of ownership, and subsequently control have transferred to the customer. This generally occurs when the product is shipped to the customer, with an immaterial amount of transactions in which control transfers upon delivery. The Company primarily offers assurance-type standard warranties that do not represent separate performance obligations. The Company has certain arrangements that require it to estimate at the time of sale the amounts of variable consideration that should not be recorded as revenue as certain amounts are not expected to be collected from customers, as well as an estimate of the value of products to be returned. The Company principally relies on historical experience, specific customer agreements, and anticipated future trends to estimate these amounts at the time of sale and to reduce the transaction price. These arrangements include sales discounts and allowances, volume rebates, and returned goods. The Company records amounts billed to customers for reimbursement of shipping and handling costs within revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of goods sold. Sales taxes and other usage-based taxes are excluded from revenue. The Company does not evaluate whether the selling price includes a financing interest component for contracts that are less than a year. The Company also expenses costs incurred to obtain a contract, primarily sales commissions, as all obligations will be settled in less than one year. The Company typically receives payment 30 to 60 days from the point it has satisfied the related performance obligation. See Note 18, ''Segment Information'' for revenue disaggregated by geography and product categories.
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Other Income, Net |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 27, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income, Net | 7. OTHER INCOME, NET Other income, net consisted of the following:
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Inventories, Net |
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Dec. 27, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories, Net | 11. INVENTORIES, NET A majority of the Company's inventories are recorded at the lower of cost (primarily last in, first out, or "LIFO") or market. Approximately 72% and 72% of the Company's inventories were valued at the lower of LIFO cost or market at December 27, 2019 and September 30, 2019, respectively. Interim LIFO determinations, including those at December 27, 2019, are based on management's estimates of future inventory levels and costs for the remainder of the current fiscal year.
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Changes in the carrying amount of goodwill are as follows:
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Schedule of Finite-Lived Intangible Assets | The following table provides the gross carrying value, accumulated amortization and net carrying value for each major class of intangible assets:
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Schedule of Indefinite-Lived Intangible Assets | The following table provides the gross carrying value, accumulated amortization and net carrying value for each major class of intangible assets:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Expected amortization expense for intangible assets for the remainder of fiscal 2020 and over the next five years and thereafter is as follows:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Net Income Per Share | The following table sets forth the computation of basic and diluted earnings per share:
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Restructuring Charges - As a Component of Selling, General and Administrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Dec. 27, 2019 |
Dec. 28, 2018 |
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Restructuring and Related Activities [Abstract] | ||
Total restructuring charges, net | $ 220 | $ 1,387 |
Earnings Per Share - Antidilutive Securities (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Dec. 27, 2019 |
Dec. 28, 2018 |
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Common Stock | Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from calculation of diluted earnings per share (in shares) | 0.1 | 0.6 |
Segment Information - Narrative (Details) |
3 Months Ended |
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Dec. 27, 2019
segment
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Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Dec. 27, 2019 |
Sep. 30, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 2,992 | $ 2,608 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (shares) | 47,478,557 | 46,955,163 |
Common stock, shares outstanding (shares) | 47,478,557 | 46,955,163 |
Treasury stock (shares) | 260,900 | 260,900 |
Fair Value Measurements - Assets and Liabilities Measures On a Gross Basis (Details) - Fair Value, Measurements, Recurring $ in Thousands, £ in Millions |
Dec. 27, 2019
USD ($)
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Dec. 27, 2019
GBP (£)
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Sep. 30, 2019
USD ($)
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Sep. 30, 2019
GBP (£)
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Assets | ||||
Forward currency contracts | £ | £ 45.0 | £ 45.0 | ||
Level 1 | ||||
Assets | ||||
Cash equivalents | $ 111,422 | $ 72,132 | ||
Forward currency contracts | 0 | 0 | ||
Level 2 | ||||
Assets | ||||
Cash equivalents | 0 | 0 | ||
Forward currency contracts | 297 | 3,420 | ||
Level 3 | ||||
Assets | ||||
Cash equivalents | 0 | 0 | ||
Forward currency contracts | $ 0 | $ 0 |
Leases (Notes) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | 2. LEASES On October 1, 2019, we adopted ASC Topic 842 using the modified retrospective transition method. Topic 842 requires the recognition of lease assets and liabilities for operating leases, in addition to the finance lease assets and liabilities previously recorded on our condensed consolidated balance sheets. Beginning on October 1, 2019, our condensed consolidated financial statements are presented in accordance with the revised policies, while prior period amounts are not adjusted and continue to be reported in accordance with our historical policies. The modified retrospective transition method required the cumulative effect, if any, of initially applying the guidance to be recognized as an adjustment to our accumulated deficit as of our adoption date. As a result of adopting Topic 842, we recognized additional operating lease assets and liabilities of $45,519 and $46,941 as of October 1, 2019. The discount rate primarily used to calculate that adjustment was the Company's incremental borrowing rate as of the adoption date, October 1, 2019, as a rate implicit in most contracts was not readily determinable. The Company recorded a cumulative effect adjustment of $1,053 to accumulated deficit, net of tax, as a result of the adoption. The Company elected the package of practical expedients permitted under the transition guidance within Topic 842, which allowed us to carry forward prior conclusions about lease identification, classification and initial direct costs for leases entered into prior to adoption of Topic 842. Additionally, for leases with a term of 12 months or less, the Company elected the short-term lease exemption, which allowed us to not recognize right-of-use assets ("ROU") or lease liabilities for qualifying leases existing at transition and new leases we may enter into in the future. Leases with an initial term of 12 months or less are classified as short-term leases and are not recorded on the condensed consolidated balance sheets. The lease expense for short-term leases is recognized on a straight-line basis over the lease term. The Company engages in leasing transactions to meet the needs of the business. The Company leases certain warehouses and distribution centers, office space, forklifts, vehicles and other machinery and equipment. The determination to lease, rather than purchase, an asset is primarily contingent upon capital requirements, duration of the forecasted business investment, and asset availability. The Company determines if an arrangement is a lease at inception and all arrangements deemed to be leases are subject to an assessment to determine the classification between finance and operating leases. The Company's significant assumptions and judgments in determining whether a contract is or contains a lease include establishing whether the supplier has the ability to use other assets to fulfill its service or whether the terms of the agreement enable the Company to control the use of a dedicated property, plant and equipment asset during the contract term. In the majority of the Company's contracts where it must identify whether a lease is present, it is readily determinable that the Company controls the use of the assets and obtains substantially all of the economic benefit during the term of the contract. In those contracts where identification is not readily determinable, the Company has determined that the supplier has either the ability to use another asset to provide the service or the terms of the contract give the supplier the rights to operate the asset at its discretion during the term of the contract, in which case the arrangement would not constitute a lease. Right-of-use assets and lease obligations are recognized based on the present value of the future minimum lease payments over the lease term as of the commencement date. The Company’s lease agreements have terms that include both lease and non-lease components. Lease component fees are included in the present value of future minimum lease payments. Conversely, non-lease components are not subject to capitalization and are expensed as incurred. Per Topic 842, the contractual interest rate is used to calculate the present value of the future minimum lease payments. However, the majority of the Company’s leases do not provide an implicit rate. Therefore, the Company's significant assumption and judgments in determining the discount rate include determining the incremental borrowing rate. The Company’s incremental borrowing rates are based on the term of the lease, the economic environment of the lease and the effect of collateralization. The valuation of the ROU asset also includes lease payments made in advance of the lease commencement date and initial direct costs incurred to secure the lease and is reduced for lease incentives. The lease terms include options to extend or terminate the lease when it is reasonably certain the Company will exercise the options. The Company has certain leasing agreements, related to leased vehicles available to our sales personnel, that contain guaranteed residual value terms, which are not expected to be triggered. The Company’s leasing portfolio does not contain any material restrictive covenants. Leases
Lease Cost The following table summarizes lease costs by type of cost for the three months ended December 27, 2019. In the condensed consolidated statements of operations, cost of sales and selling, general and administrative expenses included lease costs of $2,755 and $1,159, respectively.
Maturity of Lease Liabilities The Company's maturity analysis of its lease liabilities as of December 27, 2019 is as follows:
The following represents the Company's future minimum rental payments at September 30, 2019 for agreements classified as operating leases under ASC 840 with non-cancelable terms in excess of one year:
Lease Term and Discount Rate
Other Information
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Leases | 2. LEASES On October 1, 2019, we adopted ASC Topic 842 using the modified retrospective transition method. Topic 842 requires the recognition of lease assets and liabilities for operating leases, in addition to the finance lease assets and liabilities previously recorded on our condensed consolidated balance sheets. Beginning on October 1, 2019, our condensed consolidated financial statements are presented in accordance with the revised policies, while prior period amounts are not adjusted and continue to be reported in accordance with our historical policies. The modified retrospective transition method required the cumulative effect, if any, of initially applying the guidance to be recognized as an adjustment to our accumulated deficit as of our adoption date. As a result of adopting Topic 842, we recognized additional operating lease assets and liabilities of $45,519 and $46,941 as of October 1, 2019. The discount rate primarily used to calculate that adjustment was the Company's incremental borrowing rate as of the adoption date, October 1, 2019, as a rate implicit in most contracts was not readily determinable. The Company recorded a cumulative effect adjustment of $1,053 to accumulated deficit, net of tax, as a result of the adoption. The Company elected the package of practical expedients permitted under the transition guidance within Topic 842, which allowed us to carry forward prior conclusions about lease identification, classification and initial direct costs for leases entered into prior to adoption of Topic 842. Additionally, for leases with a term of 12 months or less, the Company elected the short-term lease exemption, which allowed us to not recognize right-of-use assets ("ROU") or lease liabilities for qualifying leases existing at transition and new leases we may enter into in the future. Leases with an initial term of 12 months or less are classified as short-term leases and are not recorded on the condensed consolidated balance sheets. The lease expense for short-term leases is recognized on a straight-line basis over the lease term. The Company engages in leasing transactions to meet the needs of the business. The Company leases certain warehouses and distribution centers, office space, forklifts, vehicles and other machinery and equipment. The determination to lease, rather than purchase, an asset is primarily contingent upon capital requirements, duration of the forecasted business investment, and asset availability. The Company determines if an arrangement is a lease at inception and all arrangements deemed to be leases are subject to an assessment to determine the classification between finance and operating leases. The Company's significant assumptions and judgments in determining whether a contract is or contains a lease include establishing whether the supplier has the ability to use other assets to fulfill its service or whether the terms of the agreement enable the Company to control the use of a dedicated property, plant and equipment asset during the contract term. In the majority of the Company's contracts where it must identify whether a lease is present, it is readily determinable that the Company controls the use of the assets and obtains substantially all of the economic benefit during the term of the contract. In those contracts where identification is not readily determinable, the Company has determined that the supplier has either the ability to use another asset to provide the service or the terms of the contract give the supplier the rights to operate the asset at its discretion during the term of the contract, in which case the arrangement would not constitute a lease. Right-of-use assets and lease obligations are recognized based on the present value of the future minimum lease payments over the lease term as of the commencement date. The Company’s lease agreements have terms that include both lease and non-lease components. Lease component fees are included in the present value of future minimum lease payments. Conversely, non-lease components are not subject to capitalization and are expensed as incurred. Per Topic 842, the contractual interest rate is used to calculate the present value of the future minimum lease payments. However, the majority of the Company’s leases do not provide an implicit rate. Therefore, the Company's significant assumption and judgments in determining the discount rate include determining the incremental borrowing rate. The Company’s incremental borrowing rates are based on the term of the lease, the economic environment of the lease and the effect of collateralization. The valuation of the ROU asset also includes lease payments made in advance of the lease commencement date and initial direct costs incurred to secure the lease and is reduced for lease incentives. The lease terms include options to extend or terminate the lease when it is reasonably certain the Company will exercise the options. The Company has certain leasing agreements, related to leased vehicles available to our sales personnel, that contain guaranteed residual value terms, which are not expected to be triggered. The Company’s leasing portfolio does not contain any material restrictive covenants. Leases
Lease Cost The following table summarizes lease costs by type of cost for the three months ended December 27, 2019. In the condensed consolidated statements of operations, cost of sales and selling, general and administrative expenses included lease costs of $2,755 and $1,159, respectively.
Maturity of Lease Liabilities The Company's maturity analysis of its lease liabilities as of December 27, 2019 is as follows:
The following represents the Company's future minimum rental payments at September 30, 2019 for agreements classified as operating leases under ASC 840 with non-cancelable terms in excess of one year:
Lease Term and Discount Rate
Other Information
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Property, Plant and Equipment |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 27, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | 12. PROPERTY, PLANT AND EQUIPMENT As of December 27, 2019, and September 30, 2019, property, plant and equipment at cost and accumulated depreciation were as follows:
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