Delaware (State or other jurisdiction of incorporation or organization) | 93-1273278 (I.R.S. Employer Identification No.) |
Large accelerated filer | x | Accelerated filer | o | |||
Non-accelerated filer | o | Smaller reporting company | o | |||
Emerging growth company | o |
Page No. | ||
Part I - Financial Information | ||
Item 1. | Unaudited Financial Statements | |
Consolidated Statements of Operations | ||
Consolidated Statements of Comprehensive Income (Loss) | ||
Consolidated Balance Sheets | ||
Consolidated Statements of Equity | ||
Consolidated Statements of Cash Flows | ||
Notes to Consolidated Financial Statements | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | |
Item 4. | Controls and Procedures | |
Part II - Other Information | ||
Item 1. | Legal Proceedings | |
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 5. | Other Information | |
Item 6. | Exhibits | |
Signature |
2016 Dividend | Means (i) the borrowing of an additional $375 million under our Term Loan Facility and (ii) the application of approximately $35 million in cash and borrowings under our ABL Facility for the purpose of making payments of approximately $400 million to holders of our outstanding common stock, Series A Convertible Preferred Stock, Class B-1 Common Stock, options, and Restricted Stock Units, or “RSUs” |
A&L | A&L Windows Pty. Ltd. |
ABL Facility | Our $300 million asset-based loan revolving credit facility, dated as of October 15, 2014 and as amended from time to time, with JWI (as hereinafter defined) and JELD-WEN of Canada, Ltd., as borrowers, the guarantors party thereto, a syndicate of lenders, and Wells Fargo Bank, N.A., as administrative agent |
ABS | American Building Supply, Inc. |
Adjusted EBITDA | A supplemental non-GAAP financial measure of operating performance not based on any standardized methodology prescribed by GAAP that we define as net income (loss), as adjusted for the following items: income (loss) from discontinued operations, net of tax; gain (loss) on sale of discontinued operations, net of tax; equity earnings (loss) of non-consolidated entities; income tax benefit (expense); depreciation and amortization; interest expense, net; impairment and restructuring charges; gain (loss) on sale of property and equipment; share-based compensation expense; non-cash foreign exchange transaction/translation income (loss); other non-cash items; other items; and costs related to debt restructuring, debt refinancing, and the Onex Investment |
ASC | Accounting Standards Codification |
ASU | Accounting Standards Update |
AUD | Australian Dollar |
Australia Senior Secured Credit Facility | Our senior secured credit facility, dated as of October 6, 2015 and as amended from time to time, with certain of our Australian subsidiaries, as borrowers, and Australia and New Zealand Banking Group Limited, as lender |
BBSY | Bank Bill Swap Bid Rate |
Breezway | Breezway Australia Pty. Ltd. |
Bylaws | Amended and Restated Bylaws of JELD-WEN Holding, Inc. |
CAP | Cleanup Action Plan |
Charter | Restated Certificate of Incorporation of JELD-WEN Holding, Inc. |
Class B-1 Common Stock | Shares of our Class B-1 common stock, par value $0.01 per share, all of which were converted into shares of our Common Stock on February 1, 2017 |
CMI | CraftMaster Manufacturing, Inc. |
COA | Consent Order and Agreement |
CODM | Chief Operating Decision Maker |
Common Stock | The 900,000,000 shares of common stock, par value $0.01 per share, authorized under our Charter |
Corporate Credit Facilities | Collectively, our ABL Facility and our Term Loan Facility |
Credit Facilities | Collectively, our Corporate Credit Facilities, our Australia Senior Secured Credit Facility, and our Euro Revolving Facility as well as other acquired term loans and revolving credit facilities |
D&K | D&K Home Security Pty. Ltd. |
DKK | Danish Krone |
Domoferm | The Domoferm Group of companies |
Dooria | Dooria AS |
EPA | The U.S. Environmental Protection Agency |
ERP | Enterprise Resource Planning |
ESOP | JELD-WEN, Inc. Employee Stock Ownership and Retirement Plan |
Euro Revolving Facility | Our €39 million revolving credit facility, dated as of January 30, 2015 and as amended from time to time, with JELD-WEN ApS, as borrower, Danske Bank A/S and Nordea Bank Danmark A/S as lenders |
Exchange Act | Securities Exchange Act of 1934, as amended |
FASB | Financial Accounting Standards Board |
10-K | Annual Report on Form 10-K for the fiscal year ended December 31, 2017 |
GAAP | Generally Accepted Accounting Principles in the United States |
GILTI | Global Intangible Low Taxed Income |
IBOR | Interbank Offered Rate |
IPO | The initial public offering of our shares, as further described in this report on Form 10-Q |
JELD-WEN | JELD-WEN Holding, Inc., together with its consolidated subsidiaries where the context requires |
JEM | JELD-WEN Excellence Model |
JWA | JELD-WEN of Australia Pty. Ltd. |
JWH | JELD-WEN Holding, Inc., a Delaware corporation |
JWI | JELD-WEN, Inc., a Delaware corporation |
Kolder | Kolder Group |
LIBOR | London Interbank Offered Rate |
Mattiovi | Mattiovi Oy |
MMI Door | Milliken Millwork, Inc. |
MD&A | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
NRD | Natural Resource Damage Trustee Council |
NYSE | New York Stock Exchange |
Onex | Onex Partners III LP and certain affiliates |
PaDEP | Pennsylvania Department of Environmental Protection |
Preferred Stock | 90,000,000 shares of Preferred Stock, par value $0.01 per share, authorized under our Charter |
PSU | Performance stock unit |
R&R | Repair and remodel |
RSU | Restricted stock unit |
Sarbanes-Oxley | Sarbanes-Oxley Act of 2002, as amended |
SEC | Securities and Exchange Commission |
Securities Act | Securities Act of 1933, as amended |
Senior Notes | $800.0 million of unsecured notes issued in December 2017 in a private placement in two tranches: $400.0 million bearing interest at 4.625% and maturing in December 2025 and $400.0 million bearing interest at 4.875% and maturing in December 2027 |
Series A Convertible Preferred Stock | Our Series A-1 Convertible Preferred Stock, par value $0.01 per share, Series A-2 Convertible Preferred Stock, par value $0.01 per share, Series A-3 Convertible Preferred Stock, par value $0.01 per share, and Series A-4 Convertible Preferred Stock, par value $0.01 per share, all of which were converted into shares of our common stock on February 1, 2017 |
SG&A | Selling, general, and administrative expenses |
Tax Act | Tax Cuts and Jobs Act |
Term Loan Facility | Our term loan facility, dated as of October 15, 2014, as amended from time to time with JWI, as borrower, the guarantors party thereto, a syndicate of lenders, and Bank of America, N.A., as administrative agent |
Trend | Trend Windows & Doors Pty. Ltd. |
U.S. | United States of America |
WADOE | Washington State Department of Ecology |
Three Months Ended | Nine Months Ended | |||||||||||||||
(amounts in thousands, except share and per share data) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | ||||||||||||
Net revenues | $ | 1,136,949 | $ | 991,325 | $ | 3,255,625 | $ | 2,787,966 | ||||||||
Cost of sales | 895,160 | 763,431 | 2,559,176 | 2,147,090 | ||||||||||||
Gross margin | 241,789 | 227,894 | 696,449 | 640,876 | ||||||||||||
Selling, general and administrative | 230,285 | 139,186 | 570,195 | 422,768 | ||||||||||||
Impairment and restructuring charges | 3,891 | 2,262 | 9,378 | 4,018 | ||||||||||||
Operating income | 7,613 | 86,446 | 116,876 | 214,090 | ||||||||||||
Interest expense, net | 18,341 | 17,200 | 51,832 | 61,639 | ||||||||||||
Gain on previously held shares of an equity investment | — | — | (20,767 | ) | — | |||||||||||
Other (income) expense | (8,007 | ) | 6,004 | (5,617 | ) | 17,602 | ||||||||||
(Loss) income before taxes, equity earnings | (2,721 | ) | 63,242 | 91,428 | 134,849 | |||||||||||
Income tax (benefit) expense | (31,606 | ) | 13,042 | (12,442 | ) | 32,997 | ||||||||||
Income from continuing operations, net of tax | 28,885 | 50,200 | 103,870 | 101,852 | ||||||||||||
Equity earnings of non-consolidated entities | — | 1,075 | 738 | 2,629 | ||||||||||||
Net income | $ | 28,885 | $ | 51,275 | $ | 104,608 | $ | 104,481 | ||||||||
Less net income (loss) attributable to non-controlling interest | 6 | — | (47 | ) | — | |||||||||||
Convertible preferred stock dividends | — | — | — | 10,462 | ||||||||||||
Net income attributable to common shareholders | $ | 28,879 | $ | 51,275 | $ | 104,655 | $ | 94,019 | ||||||||
Weighted average common shares outstanding | ||||||||||||||||
Basic | 104,169,833 | 105,064,299 | 105,309,185 | 94,718,021 | ||||||||||||
Diluted | 105,937,429 | 108,962,240 | 107,477,049 | 98,807,146 | ||||||||||||
Income per share from continuing operations | ||||||||||||||||
Basic | $ | 0.28 | $ | 0.49 | $ | 0.99 | $ | 0.99 | ||||||||
Diluted | $ | 0.27 | $ | 0.47 | $ | 0.97 | $ | 0.95 | ||||||||
Net income per share | ||||||||||||||||
Basic | $ | 0.28 | $ | 0.49 | $ | 0.99 | $ | 0.99 | ||||||||
Diluted | $ | 0.27 | $ | 0.47 | $ | 0.97 | $ | 0.95 |
Three Months Ended | Nine Months Ended | |||||||||||||||
(amounts in thousands) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | ||||||||||||
Net income | $ | 28,885 | $ | 51,275 | $ | 104,608 | $ | 104,481 | ||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Foreign currency translation adjustments, net of tax of $0 | (10,259 | ) | 25,549 | (46,880 | ) | 81,180 | ||||||||||
Interest rate hedge adjustments, net of tax (benefit) expense of ($52), $567, ($402) and $1,453, respectively | 574 | 1,837 | 1,966 | 3,942 | ||||||||||||
Defined benefit pension plans, net of tax expense of $822, $644, $2,841and $2,424, respectively | 1,503 | 2,252 | 5,484 | 6,281 | ||||||||||||
Total other comprehensive (loss) income, net of tax | (8,182 | ) | 29,638 | (39,430 | ) | 91,403 | ||||||||||
Comprehensive income | $ | 20,703 | $ | 80,913 | $ | 65,178 | $ | 195,884 |
(amounts in thousands, except share and per share data) | September 29, 2018 | December 31, 2017 | ||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 151,436 | $ | 220,175 | ||||
Restricted cash | 440 | 36,059 | ||||||
Accounts receivable, net | 598,398 | 453,251 | ||||||
Inventories | 519,582 | 405,353 | ||||||
Other current assets | 51,371 | 30,403 | ||||||
Total current assets | 1,321,227 | 1,145,241 | ||||||
Property and equipment, net | 806,327 | 756,711 | ||||||
Deferred tax assets | 219,669 | 183,726 | ||||||
Goodwill | 595,323 | 549,063 | ||||||
Intangible assets, net | 226,537 | 166,313 | ||||||
Other assets | 33,653 | 61,886 | ||||||
Total assets | $ | 3,202,736 | $ | 2,862,940 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 277,756 | $ | 259,934 | ||||
Accrued payroll and benefits | 137,402 | 122,212 | ||||||
Accrued expenses and other current liabilities | 276,278 | 186,605 | ||||||
Notes payable and current maturities of long-term debt | 64,525 | 8,770 | ||||||
Total current liabilities | 755,961 | 577,521 | ||||||
Long-term debt | 1,467,841 | 1,264,933 | ||||||
Unfunded pension liability | 113,190 | 116,586 | ||||||
Deferred credits and other liabilities | 74,032 | 102,614 | ||||||
Deferred tax liabilities | 13,969 | 9,249 | ||||||
Total liabilities | 2,424,993 | 2,070,903 | ||||||
Commitments and contingencies (Note 23) | ||||||||
Shareholders’ equity | ||||||||
Preferred Stock, par value $0.01 per share, 90,000,000 shares authorized; no shares issued and outstanding | — | — | ||||||
Common Stock: 900,000,000 shares authorized, par value $0.01 per share, 103,420,959 shares outstanding as of September 29, 2018; 900,000,000 shares authorized, par value $0.01 per share, 105,990,483 shares outstanding as of December 31, 2017 | 1,034 | 1,060 | ||||||
Additional paid-in capital | 656,951 | 652,666 | ||||||
Retained earnings | 254,752 | 233,658 | ||||||
Accumulated other comprehensive loss | (134,777 | ) | (95,347 | ) | ||||
Total shareholders’ equity attributable to common shareholders | 777,960 | 792,037 | ||||||
Non-controlling interest | (217 | ) | — | |||||
Total shareholders’ equity | 777,743 | 792,037 | ||||||
Total liabilities and shareholders’ equity | $ | 3,202,736 | $ | 2,862,940 |
September 29, 2018 | September 30, 2017 | ||||||||||||
(amounts in thousands, except share and per share amounts) | Shares | Amount | Shares | Amount | |||||||||
Preferred stock, $0.01 par value per share | — | $ | — | — | $ | — | |||||||
Common stock, $0.01 par value per share | |||||||||||||
Common stock | |||||||||||||
Balance as of January 1 | 105,990,483 | $ | 1,060 | 17,894,393 | $ | 178 | |||||||
Shares issued for exercise/vesting of share-based compensation awards | 761,568 | 8 | 729,540 | 8 | |||||||||
Shares repurchased | (3,080,594 | ) | (31 | ) | — | — | |||||||
Shares issued upon conversion of Class B-1 Common Stock | — | — | 309,404 | 3 | |||||||||
Shares issued upon conversion of convertible preferred stock to Common Stock | — | — | 64,211,172 | 642 | |||||||||
Shares surrendered for tax obligations for employee share-based transactions | (250,498 | ) | (3 | ) | (222,488 | ) | (2 | ) | |||||
Shares issued in initial public offering | — | — | 22,272,727 | 223 | |||||||||
Balance at period end | 103,420,959 | 1,034 | 105,194,748 | 1,052 | |||||||||
Class B-1 Common Stock | |||||||||||||
Balance as of January 1 | — | — | 177,221 | 2 | |||||||||
Class B-1 Common Stock converted to common | — | — | (177,221 | ) | (2 | ) | |||||||
Balance at period end | — | — | — | — | |||||||||
Balance at period end | $ | 1,034 | $ | 1,052 | |||||||||
Additional paid-in capital | |||||||||||||
Balance as of January 1 | $ | 653,327 | $ | 37,205 | |||||||||
Shares issued for exercise/vesting of share-based compensation awards | 189 | 1,018 | |||||||||||
Shares surrendered for tax obligations for employee share-based transactions | (7,940 | ) | (7,237 | ) | |||||||||
Conversion of convertible preferred stock | — | 150,901 | |||||||||||
Initial public offering proceeds, net of underwriting fees and commissions | — | 480,306 | |||||||||||
Costs associated with initial public offering | — | (7,923 | ) | ||||||||||
Amortization of share-based compensation | 12,017 | 14,237 | |||||||||||
Balance at period end | 657,593 | 668,507 | |||||||||||
Employee stock notes | |||||||||||||
Balance as of January 1 | (661 | ) | (843 | ) | |||||||||
Net issuances, payments and accrued interest on notes | 19 | 5 | |||||||||||
Balance at period end | (642 | ) | (838 | ) | |||||||||
Balance at period end | $ | 656,951 | $ | 667,669 | |||||||||
Retained earnings | |||||||||||||
Balance as of January 1 | $ | 233,658 | $ | 222,232 | |||||||||
Share repurchased | (83,561 | ) | — | ||||||||||
Adoption of new accounting standard ASU 2016-09 | — | 635 | |||||||||||
Net income | 104,655 | 104,481 | |||||||||||
Balance at period end | $ | 254,752 | $ | 327,348 |
September 29, 2018 | September 30, 2017 | ||||||||||
Accumulated other comprehensive (loss) income | Shares | Amount | Shares | Amount | |||||||
Foreign currency adjustments | |||||||||||
Balance as of January 1 | $ | 21,985 | $ | (65,949 | ) | ||||||
Change during period | (46,880 | ) | 81,180 | ||||||||
Balance at period end | (24,895 | ) | 15,231 | ||||||||
Unrealized (loss) gain on interest rate hedges | |||||||||||
Balance as of January 1 | (8,810 | ) | (13,296 | ) | |||||||
Change during period | 1,966 | 3,942 | |||||||||
Balance at period end | (6,844 | ) | (9,354 | ) | |||||||
Net actuarial pension (loss) gain | |||||||||||
Balance as of January 1 | (108,522 | ) | (117,937 | ) | |||||||
Change during period | 5,484 | 6,281 | |||||||||
Balance at period end | (103,038 | ) | (111,656 | ) | |||||||
Balance at period end | $ | (134,777 | ) | $ | (105,779 | ) | |||||
Non-controlling interest | |||||||||||
Balance as of January 1 | $ | — | $ | — | |||||||
Acquisition of non-controlling interest | (184 | ) | — | ||||||||
Net loss | (47 | ) | — | ||||||||
Foreign currency translation | 14 | — | |||||||||
Balance at period end | $ | (217 | ) | $ | — | ||||||
Total shareholders’ equity at period end | $ | 777,743 | $ | 890,290 |
Nine Months Ended | ||||||||
(amounts in thousands) | September 29, 2018 | September 30, 2017 | ||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 104,608 | $ | 104,481 | ||||
Adjustments to reconcile net income to cash used in operating activities: | ||||||||
Depreciation and amortization | 90,279 | 80,603 | ||||||
Deferred income taxes | (40,979 | ) | 13,171 | |||||
Loss on sale of business units, property and equipment | 476 | 240 | ||||||
Adjustment to carrying value of assets | 1,018 | 216 | ||||||
Equity earnings in non-consolidated entities | (738 | ) | (2,629 | ) | ||||
Amortization of deferred financing costs | 1,566 | 8,437 | ||||||
Non-cash gain on previously held shares of an equity investment | (20,767 | ) | — | |||||
Stock-based compensation | 12,374 | 15,840 | ||||||
Contributions to U.S. pension plan | (2,750 | ) | — | |||||
Amortization of U.S. pension expense | 8,325 | 9,000 | ||||||
Other items, net | 2,395 | (11,371 | ) | |||||
Net change in operating assets and liabilities, net of effect of acquisitions: | ||||||||
Accounts receivable | (100,576 | ) | (75,424 | ) | ||||
Inventories | (31,577 | ) | (26,387 | ) | ||||
Other assets | (16,288 | ) | (2,479 | ) | ||||
Accounts payable and accrued expenses | 89,659 | 59,480 | ||||||
Change in long term tax liabilities | (9,056 | ) | 1,170 | |||||
Net cash provided by operating activities | 87,969 | 174,348 | ||||||
INVESTING ACTIVITIES | ||||||||
Purchases of property and equipment | (68,701 | ) | (29,810 | ) | ||||
Proceeds from sale of business units, property and equipment | 1,580 | 688 | ||||||
Purchase of intangible assets | (11,419 | ) | (2,579 | ) | ||||
Purchases of businesses, net of cash acquired | (167,136 | ) | (123,733 | ) | ||||
Cash received for notes receivable | 325 | 1,967 | ||||||
Net cash used in investing activities | (245,351 | ) | (153,467 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Change in long-term debt | 151,102 | (386,098 | ) | |||||
Payments of notes payable | — | (155 | ) | |||||
Employee note repayments | 39 | 26 | ||||||
Contingent consideration for acquisitions | (3,701 | ) | — | |||||
Common stock issued for exercise of options | 197 | 1,026 | ||||||
Common stock repurchased | (82,843 | ) | — | |||||
Payments to tax authority for employee share-based compensation | (8,133 | ) | (7,239 | ) | ||||
Proceeds from the sale of common stock, net of underwriting fees and commissions | — | 480,306 | ||||||
Payments associated with initial public offering | — | (2,066 | ) | |||||
Net cash provided by financing activities | 56,661 | 85,800 | ||||||
Effect of foreign currency exchange rates on cash | (3,637 | ) | 10,319 | |||||
Net (decrease) increase in cash and cash equivalents | (104,358 | ) | 117,000 | |||||
Cash, cash equivalents and restricted cash, beginning | 256,234 | 103,452 | ||||||
Cash, cash equivalents and restricted cash, ending | $ | 151,876 | $ | 220,452 | ||||
For further information see Footnote 25 - Supplemental Cash Flow. |
Three Months Ended | |||||||||||||||||||
September 30, 2017 | |||||||||||||||||||
(amounts in thousands, except per share data) | As Reported | Revision | ASU 2017-07 | Re-classification* | As Revised | ||||||||||||||
Consolidated Statement of Operations: | |||||||||||||||||||
Net revenues | $ | 991,408 | $ | — | $ | — | $ | (83 | ) | $ | 991,325 | ||||||||
Cost of sales | 763,196 | 621 | — | (386 | ) | 763,431 | |||||||||||||
Gross margin | 228,212 | (621 | ) | — | 303 | 227,894 | |||||||||||||
Selling, general and administrative | 142,615 | (621 | ) | (2,808 | ) | — | 139,186 | ||||||||||||
Operating income | 83,335 | — | 2,808 | 303 | 86,446 | ||||||||||||||
Other expense | 2,893 | — | 2,808 | 303 | 6,004 |
Nine Months Ended | |||||||||||||||||||
September 30, 2017 | |||||||||||||||||||
(amounts in thousands, except per share data) | As Reported | Revision | ASU 2017-07 | Re-classification* | As Revised | ||||||||||||||
Consolidated Statement of Operations: | |||||||||||||||||||
Net revenues | $ | 2,787,931 | $ | — | $ | — | $ | 35 | $ | 2,787,966 | |||||||||
Cost of sales | 2,145,425 | 2,549 | — | (884 | ) | 2,147,090 | |||||||||||||
Gross margin | 642,506 | (2,549 | ) | — | 919 | 640,876 | |||||||||||||
Selling, general and administrative | 433,743 | (2,549 | ) | (8,426 | ) | — | 422,768 | ||||||||||||
Operating income | 204,745 | — | 8,426 | 919 | 214,090 | ||||||||||||||
Other expense | 8,257 | — | 8,426 | 919 | 17,602 |
September 30, 2017 | |||||||||||
(amounts in thousands) | As Reported | Retrospective Application | As Revised | ||||||||
Cash, cash equivalents and restricted cash, beginning | $ | 102,701 | $ | 751 | $ | 103,452 | |||||
Cash, cash equivalents and restricted cash, ending | 219,457 | 995 | 220,452 | ||||||||
Effect of foreign currency exchange rates on cash | 10,296 | 23 | 10,319 | ||||||||
Net change in other assets | (2,700 | ) | 221 | (2,479 | ) |
• | In April 2018, we acquired the assets of D&K, a long-standing supplier of cavity sliders to our Corinthian Doors business. D&K is now part of our Australasia segment. |
• | In March 2018, we acquired the remaining issued and outstanding shares and membership interests of ABS, a premier supplier of value-added services for the millwork industry located in Sacramento, California. ABS is now part of our North America segment. |
• | In February 2018, we acquired all of the issued and outstanding shares of A&L, a leading manufacturer of residential aluminum windows and patio doors. A&L is now part of our Australasia segment. |
• | In February 2018, we acquired the Domoferm Group of companies from Domoferm International GmbH. The Domoferm Group of companies is a leading provider of steel doors, steel door frames, and fire doors for commercial and residential markets. Domoferm is now part of our Europe segment. |
(amounts in thousands) | Preliminary Allocation | Measurement Period Adjustment | Revised Preliminary Allocation | ||||||||
Fair value of identifiable assets and liabilities: | |||||||||||
Accounts receivable | $ | 58,714 | $ | 393 | $ | 59,107 | |||||
Inventories | 97,305 | (1,732 | ) | 95,573 | |||||||
Other current assets | 14,910 | (2,438 | ) | 12,472 | |||||||
Property and equipment | 53,128 | 2,160 | 55,288 | ||||||||
Identifiable intangible assets | 70,057 | 19 | 70,076 | ||||||||
Goodwill | 64,950 | (1,169 | ) | 63,781 | |||||||
Other assets | 7,283 | 69 | 7,352 | ||||||||
Total assets | $ | 366,347 | $ | (2,698 | ) | $ | 363,649 | ||||
Accounts payable | 29,512 | (2,549 | ) | 26,963 | |||||||
Current maturities of long-term debt | 17,278 | 933 | 18,211 | ||||||||
Other current liabilities | 27,595 | 1,120 | 28,715 | ||||||||
Long-term debt | 47,369 | (198 | ) | 47,171 | |||||||
Other liabilities | 17,735 | (138 | ) | 17,597 | |||||||
Non-controlling interest | (184 | ) | — | (184 | ) | ||||||
Total liabilities | $ | 139,305 | $ | (832 | ) | $ | 138,473 | ||||
Purchase price: | |||||||||||
Cash consideration, net of cash acquired | $ | 169,002 | $ | (1,866 | ) | $ | 167,136 | ||||
Contingent consideration | 3,898 | — | 3,898 | ||||||||
Gain on previously held shares | 20,767 | — | 20,767 | ||||||||
Existing investment in acquired entity | 33,483 | — | 33,483 | ||||||||
Non-cash consideration related to acquired intercompany balances | (108 | ) | — | (108 | ) | ||||||
Total consideration, net of cash acquired | $ | 227,042 | $ | (1,866 | ) | $ | 225,176 |
(amounts in thousands) | September 29, 2018 | December 31, 2017 | |||||
Raw materials | $ | 316,706 | $ | 283,772 | |||
Work in process | 43,503 | 35,734 | |||||
Finished goods | 159,373 | 85,847 | |||||
Total inventories | $ | 519,582 | $ | 405,353 |
(amounts in thousands) | September 29, 2018 | December 31, 2017 | |||||
Property and equipment | $ | 1,940,332 | $ | 1,863,624 | |||
Accumulated depreciation | (1,134,005 | ) | (1,106,913 | ) | |||
Total property and equipment, net | $ | 806,327 | $ | 756,711 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(amounts in thousands) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Cost of sales | $ | 20,658 | $ | 20,191 | $ | 61,655 | $ | 58,162 | |||||||
Selling, general and administrative | 2,408 | 1,788 | 6,898 | 5,722 | |||||||||||
Total depreciation expense | $ | 23,066 | $ | 21,979 | $ | 68,553 | $ | 63,884 |
(amounts in thousands) | North America | Europe | Australasia | Total Reportable Segments | |||||||||||
Balance as of January 1 | $ | 201,560 | $ | 268,162 | $ | 79,341 | $ | 549,063 | |||||||
Acquisitions - preliminary allocation | 17,645 | 30,167 | 17,138 | 64,950 | |||||||||||
Acquisition remeasurements | 918 | (1,174 | ) | 24 | (232 | ) | |||||||||
Currency translation | (208 | ) | (11,347 | ) | (6,903 | ) | (18,458 | ) | |||||||
Balance at period end | $ | 219,915 | $ | 285,808 | $ | 89,600 | $ | 595,323 |
(amounts in thousands) | September 29, 2018 | December 31, 2017 | |||||
Customer relationships and agreements | $ | 110,704 | $ | 105,485 | |||
Patents, licenses and rights | 78,466 | 47,385 | |||||
Trademarks and trade names | 53,547 | 38,600 | |||||
Software | 55,212 | 35,191 | |||||
Total amortizable intangibles | $ | 297,929 | $ | 226,661 | |||
Accumulated amortization | (71,392 | ) | (60,348 | ) | |||
Total intangibles, net | $ | 226,537 | $ | 166,313 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(amounts in thousands) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Amortization expense | $ | 5,120 | $ | 4,007 | $ | 14,987 | $ | 10,924 |
(amounts in thousands) | September 29, 2018 | December 31, 2017 | |||||
Customer displays | $ | 15,671 | $ | 12,702 | |||
Deposits | 5,419 | 3,640 | |||||
Long-term notes receivable | 4,866 | 4,984 | |||||
Overfunded pension benefit obligation | 2,011 | 1,903 | |||||
Other prepaid expenses | 1,760 | 1,869 | |||||
Other long-term accounts receivable | 1,684 | 1,556 | |||||
Debt issuance costs on unused portion of revolver facility | 1,051 | 2,045 | |||||
Long-term taxes receivable | 800 | — | |||||
Investments | 391 | 33,187 | |||||
Total other assets | $ | 33,653 | $ | 61,886 |
(amounts in thousands) | September 29, 2018 | December 31, 2017 | |||||
Current portion of legal claims provision | $ | 79,594 | $ | 4,137 | |||
Accrued sales and advertising rebates | 74,445 | 73,585 | |||||
Non-income related taxes | 28,417 | 19,996 | |||||
Accrued expenses | 21,572 | 23,530 | |||||
Current portion of warranty liability (Note 10) | 20,954 | 19,547 | |||||
Current portion of accrued income taxes payable | 12,126 | 10,962 | |||||
Accrued interest payable | 11,394 | 1,945 | |||||
Current portion of deferred revenue (Note 15) | 10,970 | 9,970 | |||||
Current portion of accrued claim costs relating to self-insurance programs | 10,203 | 12,866 | |||||
Current portion of restructuring accrual (Note 18) | 4,680 | 7,162 | |||||
Current portion of derivative liability (Note 20) | 1,923 | 2,905 | |||||
Total accrued expenses and other current liabilities | $ | 276,278 | $ | 186,605 |
(amounts in thousands) | September 29, 2018 | September 30, 2017 | |||||
Balance as of January 1 | $ | 46,256 | $ | 45,398 | |||
Current period expense | 19,493 | 12,952 | |||||
Liabilities assumed due to acquisition | 1,541 | — | |||||
Experience adjustments | 500 | (29 | ) | ||||
Payments | (20,128 | ) | (14,015 | ) | |||
Currency translation | (548 | ) | 978 | ||||
Balance as of period end | 47,114 | 45,284 | |||||
Current portion | (20,954 | ) | (17,524 | ) | |||
Long-term portion | $ | 26,160 | $ | 27,760 |
(amounts in thousands) | September 29, 2018 Interest Rate | September 29, 2018 | December 31, 2017 | ||||||
Senior notes | 4.63% - 4.88% | $ | 800,000 | $ | 800,000 | ||||
Term loans | 1.25% - 4.80% | 486,464 | 440,568 | ||||||
Revolving credit facilities | 0.85% - 3.91% | 152,084 | — | ||||||
Mortgage notes | 1.65% | 31,209 | 33,517 | ||||||
Installment notes | 1.90% - 8.10% | 73,762 | 10,290 | ||||||
Installment notes for stock | 3.25% - 5.25% | 1,035 | 1,944 | ||||||
Unamortized debt issuance costs | (12,188 | ) | (12,616 | ) | |||||
1,532,366 | 1,273,703 | ||||||||
Current maturities of long-term debt | (64,525 | ) | (8,770 | ) | |||||
Long-term debt | $ | 1,467,841 | $ | 1,264,933 |
(amounts in thousands) | North America | Europe | Australasia | Total Operating Segments | Corporate and Unallocated Costs | Total Consolidated | |||||||||||||||||
Three Months Ended September 29, 2018 | |||||||||||||||||||||||
Total net revenues | $ | 668,386 | $ | 292,975 | $ | 179,659 | $ | 1,141,020 | $ | — | $ | 1,141,020 | |||||||||||
Intersegment net revenues | (206 | ) | (66 | ) | (3,799 | ) | (4,071 | ) | — | (4,071 | ) | ||||||||||||
Net revenues from external customers | $ | 668,180 | $ | 292,909 | $ | 175,860 | $ | 1,136,949 | $ | — | $ | 1,136,949 | |||||||||||
Impairment and restructuring charges | 2,233 | 1,053 | 318 | 3,604 | 287 | 3,891 | |||||||||||||||||
Adjusted EBITDA | 84,117 | 28,133 | 26,261 | 138,511 | (5,562 | ) | 132,949 | ||||||||||||||||
Three Months Ended September 30, 2017 | |||||||||||||||||||||||
Total net revenues | $ | 572,398 | $ | 265,372 | $ | 156,141 | $ | 993,911 | $ | — | $ | 993,911 | |||||||||||
Intersegment net revenues | (520 | ) | (255 | ) | (1,811 | ) | (2,586 | ) | — | (2,586 | ) | ||||||||||||
Net revenues from external customers | $ | 571,878 | $ | 265,117 | $ | 154,330 | $ | 991,325 | $ | — | $ | 991,325 | |||||||||||
Impairment and restructuring charges | 911 | 1,395 | (49 | ) | 2,257 | 5 | 2,262 | ||||||||||||||||
Adjusted EBITDA | 82,494 | 33,375 | 22,901 | 138,770 | (10,554 | ) | 128,216 |
(amounts in thousands) | North America | Europe | Australasia | Total Operating Segments | Corporate and Unallocated Costs | Total Consolidated | |||||||||||||||||
Nine Months Ended September 29, 2018 | |||||||||||||||||||||||
Total net revenues | $ | 1,840,227 | $ | 914,222 | $ | 512,656 | $ | 3,267,105 | $ | — | $ | 3,267,105 | |||||||||||
Intersegment net revenues | (885 | ) | (930 | ) | (9,665 | ) | (11,480 | ) | — | (11,480 | ) | ||||||||||||
Net revenues from external customers | $ | 1,839,342 | $ | 913,292 | $ | 502,991 | $ | 3,255,625 | $ | — | $ | 3,255,625 | |||||||||||
Impairment and restructuring charges | 4,424 | 1,758 | 4,068 | 10,250 | (872 | ) | 9,378 | ||||||||||||||||
Adjusted EBITDA | 210,794 | 99,873 | 67,198 | 377,865 | (22,123 | ) | 355,742 | ||||||||||||||||
Nine Months Ended September 30, 2017 | |||||||||||||||||||||||
Total net revenues | $ | 1,609,326 | $ | 767,466 | $ | 421,173 | $ | 2,797,965 | $ | — | $ | 2,797,965 | |||||||||||
Intersegment net revenues | (1,548 | ) | (1,138 | ) | (7,313 | ) | (9,999 | ) | — | (9,999 | ) | ||||||||||||
Net revenues from external customers | $ | 1,607,778 | $ | 766,328 | $ | 413,860 | $ | 2,787,966 | $ | — | $ | 2,787,966 | |||||||||||
Impairment and restructuring charges | 1,246 | 2,719 | (49 | ) | 3,916 | 102 | 4,018 | ||||||||||||||||
Adjusted EBITDA | 212,502 | 97,645 | 53,485 | 363,632 | (29,127 | ) | 334,505 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(amounts in thousands) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Net income | $ | 28,885 | $ | 51,275 | $ | 104,608 | $ | 104,481 | |||||||
Equity earnings of non-consolidated entities | — | (1,075 | ) | (738 | ) | (2,629 | ) | ||||||||
Income tax (benefit) expense | (31,606 | ) | 13,042 | (12,442 | ) | 32,997 | |||||||||
Depreciation and amortization | 31,248 | 27,551 | 90,279 | 80,603 | |||||||||||
Interest expense, net (a) | 18,341 | 17,200 | 51,832 | 61,639 | |||||||||||
Impairment and restructuring charges (b) | 3,891 | 2,262 | 9,378 | 4,019 | |||||||||||
Gain on previously held shares of equity investment | — | — | (20,767 | ) | — | ||||||||||
Gain on sale of property and equipment | (103 | ) | (105 | ) | (86 | ) | (182 | ) | |||||||
Stock-based compensation expense | 4,133 | 5,057 | 12,374 | 15,840 | |||||||||||
Non-cash foreign exchange transaction/translation loss (income) | 2,838 | (1,805 | ) | 905 | 5,309 | ||||||||||
Other non-cash items (c) | (13 | ) | 549 | 12,210 | 534 | ||||||||||
Other items (d) | 75,145 | 14,261 | 107,924 | 31,602 | |||||||||||
Costs relating to debt restructuring and debt refinancing (e) | 190 | 4 | 265 | 292 | |||||||||||
Adjusted EBITDA | $ | 132,949 | $ | 128,216 | $ | 355,742 | $ | 334,505 |
(a) | Interest expense for the nine months ended September 30, 2017 includes $6,097 related to the write-off of a portion of the unamortized debt issuance costs and original issue discount associated with the Term Loan Facility. |
(b) | Impairment and restructuring charges consist of (i) impairment and restructuring charges that are included in our unaudited consolidated statements of operations plus (ii) additional charges relating to inventory and/or manufacturing of our products that are included in cost of sales in the accompanying unaudited consolidated statements of operations in the amount of $1 for the nine months ended September 30, 2017. For further explanation of impairment and restructuring charges that are included in our unaudited consolidated statements of operations, see Note 18 - Impairment and Restructuring Charges in our unaudited financial statements. |
(c) | Other non-cash items include; (i) charges of $12,191 for the fair value adjustment to the inventory acquired as part of our ABS acquisition in the nine months ended September 29, 2018; and (2) charges of $439 for the fair value adjustment to the inventory acquired as part of our Mattiovi acquisition in the three and nine months ended September 30, 2017. |
(d) | Other items not core to business activity include: (i) in the three months ended September 29, 2018, (1) $76,500 in litigation contingency accruals, (2) $1,789 in acquisition costs, partially offset by (3) $(3,700) in realized gain on hedges ; (ii) in the three months ended September 30, 2017, (1) $9,144 in legal costs, (2) $2,720 in realized loss on hedges, (3) $1,358 in acquisition costs; and (4) $281 in secondary offering costs; (iii) in the nine months ended September 29, 2018 (1) $76,500 in litigation contingency accruals, (2) $24,328 in legal costs, (3) $5,953 in acquisition costs, (4) $2,401 in costs related to the exit of the former CEO, partially offset by (5) $(3,700) in realized gain on hedges; and (iv) in the nine months ended September 30, 2017 (1) $24,907 in legal costs, (2) $2,720 in realized loss on hedges, (3) $1,432 in acquisition costs, (4) $1,307 in secondary offering costs, (5) $811 in legal entity consolidation costs, (5) $562 in facility shut down costs, (6) $348 in IPO costs, partially offset by (7) $(2,247) gain on settlement of contract escrow. |
(e) | Includes non-recurring fees and expenses related to professional advisors, financial advisors and financial monitors retained in connection with the refinancing of our debt obligations. |
(amounts in thousands) | September 29, 2018 | ||
Balance as of January 1 | $ | 9,970 | |
Increases due to cash received | 61,069 | ||
Liabilities assumed due to acquisition | 747 | ||
Revenue recognized during the period | (60,078 | ) | |
Currency translation | (738 | ) | |
Balance at period end | $ | 10,970 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(amounts in thousands, except share and per share amounts) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Earnings per share basic: | |||||||||||||||
Income from continuing operations | $ | 28,885 | $ | 50,200 | $ | 103,870 | $ | 101,852 | |||||||
Equity earnings of non-consolidated entities | — | 1,075 | 738 | 2,629 | |||||||||||
Income from continuing operations and equity earnings of non-consolidated entities | 28,885 | 51,275 | 104,608 | 104,481 | |||||||||||
Undeclared Series A Convertible Preferred Stock dividends | — | — | — | (10,462 | ) | ||||||||||
Net income (loss) attributable to non-controlling interest | 6 | — | (47 | ) | — | ||||||||||
Net income attributable to common shareholders | $ | 28,879 | $ | 51,275 | $ | 104,655 | $ | 94,019 | |||||||
Weighted average outstanding shares of common stock basic | 104,169,833 | 105,064,299 | 105,309,185 | 94,718,021 | |||||||||||
Net income per share - basic | $ | 0.28 | $ | 0.49 | $ | 0.99 | $ | 0.99 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(amounts in thousands, except share and per share amounts) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Earnings per share diluted: | |||||||||||||||
Net income attributable to common shareholders - basic and diluted | $ | 28,879 | $ | 51,275 | $ | 104,655 | $ | 94,019 | |||||||
Weighted average outstanding shares of common stock basic | 104,169,833 | 105,064,299 | 105,309,185 | 94,718,021 | |||||||||||
Restricted stock units, performance share units and options to purchase common stock | 1,767,596 | 3,897,941 | 2,167,864 | 4,089,125 | |||||||||||
Weighted average outstanding shares of common stock diluted | 105,937,429 | 108,962,240 | 107,477,049 | 98,807,146 | |||||||||||
Net income per share - diluted | $ | 0.27 | $ | 0.47 | $ | 0.97 | $ | 0.95 |
Three Months Ended | Nine Months Ended | ||||||||||
September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | ||||||||
Common stock options | 1,130,020 | 569,916 | 806,309 | 587,893 | |||||||
Restricted stock units | 187,144 | — | 30,953 | — | |||||||
Performance share units | 108,667 | — | — | — |
Three Months Ended | |||||||||||||
September 29, 2018 | September 30, 2017 | ||||||||||||
Shares | Weighted Average Exercise Price Per Share | Shares | Weighted Average Exercise Price Per Share | ||||||||||
Options granted | 21,849 | $ | 28.74 | 12,525 | $ | 29.78 | |||||||
Options canceled | 124,104 | $ | 18.10 | 21,784 | $ | 8.66 | |||||||
Options exercised | 300,084 | $ | 11.93 | 645,211 | $ | 12.70 | |||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | ||||||||||
RSUs granted - non-employee directors | — | $ | — | 2,047 | $ | 32.15 | |||||||
RSUs granted - employee | 31,906 | $ | 27.91 | 192,995 | $ | 29.32 | |||||||
PSUs granted - employee | — | $ | — | — | $ | — |
Nine Months Ended | |||||||||||||
September 29, 2018 | September 30, 2017 | ||||||||||||
Shares | Weighted Average Exercise Price Per Share | Shares | Weighted Average Exercise Price Per Share | ||||||||||
Options granted | 838,912 | $ | 32.16 | 505,122 | $ | 27.78 | |||||||
Options canceled | 524,225 | $ | 18.04 | 162,937 | $ | 13.79 | |||||||
Options exercised | 1,305,489 | $ | 14.47 | 1,020,779 | $ | 12.84 | |||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | ||||||||||
RSUs granted - non-employee directors | 341,983 | $ | 31.62 | 23,245 | $ | 31.22 | |||||||
RSUs granted - employee | 300,296 | $ | 31.10 | 339,097 | $ | 28.66 | |||||||
PSUs granted - employee | 193,763 | $ | 31.60 | — | $ | — |
Three Months Ended | Nine Months Ended | ||||||||||||||
(amounts in thousands) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Impairments | $ | 302 | $ | 216 | $ | 1,018 | $ | 216 | |||||||
Restructuring charges, net of fair value adjustment gains | 3,589 | 2,046 | 8,360 | 3,802 | |||||||||||
Total impairment and restructuring charges | $ | 3,891 | $ | 2,262 | $ | 9,378 | $ | 4,018 |
(amounts in thousands) | Beginning Accrual Balance | Additions Charged to Expense | Payments or Utilization | Ending Accrual Balance | |||||||||||
September 29, 2018 | |||||||||||||||
Severance and sales restructuring costs | $ | 7,232 | $ | 6,638 | $ | (10,378 | ) | $ | 3,492 | ||||||
Disposal of property and equipment | — | 289 | (289 | ) | — | ||||||||||
Lease obligations and other | 3,807 | 1,433 | (2,477 | ) | 2,763 | ||||||||||
Total | $ | 11,039 | $ | 8,360 | $ | (13,144 | ) | $ | 6,255 | ||||||
September 30, 2017 | |||||||||||||||
Severance and sales restructuring costs | $ | 836 | $ | 3,136 | $ | (1,778 | ) | $ | 2,194 | ||||||
Disposal of property and equipment | — | 147 | (147 | ) | — | ||||||||||
Lease obligations and other | 4,183 | 519 | (1,805 | ) | 2,897 | ||||||||||
Total | $ | 5,019 | $ | 3,802 | $ | (3,730 | ) | $ | 5,091 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(amounts in thousands) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Legal settlement income | $ | (7,258 | ) | $ | (1,301 | ) | $ | (7,340 | ) | $ | (1,332 | ) | |||
Foreign currency (gains) losses | (2,811 | ) | 5,148 | (5,385 | ) | 13,897 | |||||||||
Pension benefit expense | 2,103 | 2,809 | 8,333 | 8,427 | |||||||||||
Other items | (41 | ) | (652 | ) | (1,225 | ) | (1,143 | ) | |||||||
Settlement of contract escrow | — | — | — | (2,247 | ) | ||||||||||
Total other (income) expense | $ | (8,007 | ) | $ | 6,004 | $ | (5,617 | ) | $ | 17,602 |
(amounts in thousands) | Notional (1) | Weighted Average Rate | |
December 2015 - June 2016 | $273,000 | 1.997% | |
June 2016 - September 2016 | $486,000 | 2.054% | |
September 2016 - December 2016 | $759,000 | 2.161% | |
December 2016 - December 2017 | $914,250 | 2.188% |
(1) | Aggregate notional amounts in effect during the period shown. |
Derivative assets | |||||||||
(amounts in thousands) | Balance Sheet Location | September 29, 2018 | December 31, 2017 | ||||||
Derivatives not designated as hedging instruments: | |||||||||
Foreign currency forward contracts | Other current assets | $ | 5,240 | $ | 2,235 |
Derivatives liabilities | |||||||||
(amounts in thousands) | Balance Sheet Location | September 29, 2018 | December 31, 2017 | ||||||
Derivatives not designated as hedging instruments: | |||||||||
Foreign currency forward contracts | Accrued expenses and other current liabilities | $ | 1,923 | $ | 2,905 |
September 29, 2018 | |||||||||||||||
(amounts in thousands) | Level 1 | Level 2 | Level 3 | Total Fair Value | |||||||||||
Cash equivalents | $ | — | $ | — | $ | — | $ | — | |||||||
Derivative assets, recorded in other current assets | — | 5,240 | — | 5,240 | |||||||||||
Derivative liabilities, recorded in accrued expenses and deferred credits | — | (1,923 | ) | — | (1,923 | ) | |||||||||
Total | $ | — | $ | 3,317 | $ | — | $ | 3,317 |
December 31, 2017 | |||||||||||||||
(amounts in thousands) | Level 1 | Level 2 | Level 3 | Total Fair Value | |||||||||||
Cash equivalents | $ | — | $ | 44,091 | $ | — | $ | 44,091 | |||||||
Derivative assets, recorded in other current assets | — | 2,235 | — | 2,235 | |||||||||||
Derivative liabilities, recorded in accrued expenses and deferred credits | — | (2,905 | ) | — | (2,905 | ) | |||||||||
Total | $ | — | $ | 43,421 | $ | — | $ | 43,421 |
September 29, 2018 | |||||||||||||||||||
(amounts in thousands) | Level 1 | Level 2 | Level 3 | Fair Value | Total Losses | ||||||||||||||
Closed operations | $ | — | $ | — | $ | 154 | $ | 154 | $ | 302 | |||||||||
Continuing operations | — | — | 48 | 48 | 175 | ||||||||||||||
Total | $ | — | $ | — | $ | 202 | $ | 202 | $ | 477 |
December 31, 2017 | |||||||||||||||||||
(amounts in thousands) | Level 1 | Level 2 | Level 3 | Fair Value | Total Losses | ||||||||||||||
Closed operations | $ | — | $ | — | $ | 914 | $ | 914 | $ | 1,473 | |||||||||
Total | $ | — | $ | — | $ | 914 | $ | 914 | $ | 1,473 |
(amounts in thousands) | September 29, 2018 | December 31, 2017 | |||||
Self-insurance workers’ compensation | $ | 27,958 | $ | 21,072 | |||
Environmental | 14,552 | 14,452 | |||||
Liability and other insurance | 12,451 | 12,900 | |||||
Other | 10,798 | 6,650 | |||||
Total outstanding performance bonds and stand-by letters of credit | $ | 65,759 | $ | 55,074 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(amounts in thousands) | September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | |||||||||||
Components of pension benefit expense - U.S. benefit plan: | |||||||||||||||
Administrative cost | $ | 1,223 | $ | 825 | $ | 2,873 | $ | 2,475 | |||||||
Interest cost | 3,300 | 3,350 | 10,000 | 10,050 | |||||||||||
Expected return on plan assets | (5,200 | ) | (4,525 | ) | (14,250 | ) | (13,575 | ) | |||||||
Amortization of net actuarial pension loss | 2,325 | 3,000 | 8,325 | 9,000 | |||||||||||
Pension benefit expense | $ | 1,648 | $ | 2,650 | $ | 6,948 | $ | 7,950 |
Nine Months Ended | |||||||
(amounts in thousands) | September 29, 2018 | September 30, 2017 | |||||
Non-cash Investing Activities: | |||||||
Property, equipment and intangibles purchased in accounts payable | $ | 8,331 | $ | 10,318 | |||
Property and equipment purchased for debt | 13,617 | 204 | |||||
Customer accounts receivable converted to notes receivable | 110 | 229 | |||||
Cash Financing Activities: | |||||||
Proceeds from issuance of new debt, net of discount | $ | 38,823 | $ | — | |||
Borrowings on long-term debt | 142,999 | 4,785 | |||||
Payments of long-term debt | (30,648 | ) | (389,739 | ) | |||
Payments of debt issuance and extinguishment costs, including underwriting fees | (72 | ) | (1,144 | ) | |||
Change in long-term debt | $ | 151,102 | $ | (386,098 | ) | ||
Non-cash Financing Activities: | |||||||
Prepaid insurance funded through short-term debt borrowings | $ | 2,757 | $ | 2,662 | |||
Costs associated with initial public offering formerly capitalized in prepaid expenses | — | 5,857 | |||||
Shares surrendered for tax obligations for employee share-based transactions in accrued liabilities | 379 | — | |||||
Shares repurchased and cash not yet distributed to shareholders | 749 | — | |||||
Accounts payable converted to installment notes | 10,134 | — | |||||
Other Supplemental Cash Flow Information: | |||||||
Cash taxes paid, net of refunds | $ | 37,489 | $ | 15,766 | |||
Cash interest paid | 40,833 | 51,654 |
• | negative trends in overall business, financial market and economic conditions, and/or activity levels in our end markets; |
• | increases in interest rates and reduced availability of financing for the purchase of new homes and home construction and improvements; |
• | changes in building codes that could increase the cost of our products or lower the demand for our windows and doors; |
• | lack of transparency, threat of fraud, public sector corruption, and other forms of criminal activity involving government officials; |
• | other risks and uncertainties, including those listed under Item 1A- Risk Factors in our 10-K. |
• | Overview and Background. This section provides a general description of our Company and operating segments, business and industry trends, our key business strategies and background information on other matters discussed in this MD&A. |
• | Consolidated Results of Operations and Operating Results by Business Segment. This section provides our analysis and outlook for the significant line items on our unaudited consolidated statements of operations, as well as other information that we deem meaningful to an understanding of our results of operations on both a consolidated basis and a business segment basis. |
• | Liquidity and Capital Resources. This section contains an overview of our financing arrangements and provides an analysis of trends and uncertainties affecting liquidity, cash requirements for our business and sources and uses of our cash. |
• | Critical Accounting Policies and Estimates. This section discusses the accounting policies that we consider important to the evaluation and reporting of our financial condition and results of operations, and whose application requires significant judgments or a complex estimation process. |
Three Months Ended | |||||||||||||
September 29, 2018 | September 30, 2017 | ||||||||||||
(amounts in thousands) | % of Net Revenues | % of Net Revenues | |||||||||||
Net revenues | $ | 1,136,949 | 100.0 | % | $ | 991,325 | 100.0 | % | |||||
Cost of sales | 895,160 | 78.7 | % | 763,431 | 77.0 | % | |||||||
Gross margin | 241,789 | 21.3 | % | 227,894 | 23.0 | % | |||||||
Selling, general and administrative | 230,285 | 20.3 | % | 139,186 | 14.0 | % | |||||||
Impairment and restructuring charges | 3,891 | 0.3 | % | 2,262 | 0.2 | % | |||||||
Operating income | 7,613 | 0.7 | % | 86,446 | 8.7 | % | |||||||
Interest expense, net | 18,341 | 1.6 | % | 17,200 | 1.7 | % | |||||||
Other (income) expense | (8,007 | ) | (0.7 | )% | 6,004 | 0.6 | % | ||||||
(Loss) income before taxes, equity earnings and discontinued operations | (2,721 | ) | (0.2 | )% | 63,242 | 6.4 | % | ||||||
Income tax (benefit) expense | (31,606 | ) | (2.8 | )% | 13,042 | 1.3 | % | ||||||
Income from continuing operations, net of tax | 28,885 | 2.5 | % | 50,200 | 5.1 | % | |||||||
Equity earnings of non-consolidated entities | — | — | % | 1,075 | 0.1 | % | |||||||
Net income | $ | 28,885 | 2.5 | % | $ | 51,275 | 5.2 | % |
Nine Months Ended | |||||||||||||
September 29, 2018 | September 30, 2017 | ||||||||||||
(amounts in thousands) | % of Net Revenues | % of Net Revenues | |||||||||||
Net revenues | $ | 3,255,625 | 100.0 | % | $ | 2,787,966 | 100.0 | % | |||||
Cost of sales | 2,559,176 | 78.6 | % | 2,147,090 | 77.0 | % | |||||||
Gross margin | 696,449 | 21.4 | % | 640,876 | 23.0 | % | |||||||
Selling, general and administrative | 570,195 | 17.5 | % | 422,768 | 15.2 | % | |||||||
Impairment and restructuring charges | 9,378 | 0.3 | % | 4,018 | 0.1 | % | |||||||
Operating income | 116,876 | 3.6 | % | 214,090 | 7.7 | % | |||||||
Interest expense, net | 51,832 | 1.6 | % | 61,639 | 2.2 | % | |||||||
Other (income) expense | (26,384 | ) | (0.8 | )% | 17,602 | 0.6 | % | ||||||
Income before taxes, equity earnings and discontinued operations | 91,428 | 2.8 | % | 134,849 | 4.8 | % | |||||||
Income tax (benefit) expense | (12,442 | ) | (0.4 | )% | 32,997 | 1.2 | % | ||||||
Income from continuing operations, net of tax | 103,870 | 3.2 | % | 101,852 | 3.7 | % | |||||||
Equity earnings of non-consolidated entities | 738 | — | % | 2,629 | 0.1 | % | |||||||
Net income | $ | 104,608 | 3.2 | % | $ | 104,481 | 3.7 | % |
Three Months Ended | |||||||||||
(amounts in thousands) | September 29, 2018 | September 30, 2017 | |||||||||
Net revenues from external customers | % Variance | ||||||||||
North America | $ | 668,180 | $ | 571,878 | 16.8 | % | |||||
Europe | 292,909 | 265,117 | 10.5 | % | |||||||
Australasia | 175,860 | 154,330 | 14.0 | % | |||||||
Total Consolidated | $ | 1,136,949 | $ | 991,325 | 14.7 | % | |||||
Percentage of total consolidated net revenues | |||||||||||
North America | 58.8 | % | 57.7 | % | |||||||
Europe | 25.7 | % | 26.7 | % | |||||||
Australasia | 15.5 | % | 15.6 | % | |||||||
Total Consolidated | 100.0 | % | 100.0 | % | |||||||
Adjusted EBITDA(1) | |||||||||||
North America | $ | 84,117 | $ | 82,494 | 2.0 | % | |||||
Europe | 28,133 | 33,375 | (15.7 | )% | |||||||
Australasia | 26,261 | 22,901 | 14.7 | % | |||||||
Corporate and unallocated costs | (5,562 | ) | (10,554 | ) | (47.3 | )% | |||||
Total Consolidated | $ | 132,949 | $ | 128,216 | 3.7 | % | |||||
Adjusted EBITDA as a percentage of segment net revenues | |||||||||||
North America | 12.6 | % | 14.4 | % | |||||||
Europe | 9.6 | % | 12.6 | % | |||||||
Australasia | 14.9 | % | 14.8 | % | |||||||
Total Consolidated | 11.7 | % | 12.9 | % |
(1) | Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted EBITDA, see Note 13 - Segment Information. |
Nine Months Ended | |||||||||||
(amounts in thousands) | September 29, 2018 | September 30, 2017 | |||||||||
Net revenues from external customers | % Variance | ||||||||||
North America | $ | 1,839,342 | $ | 1,607,778 | 14.4 | % | |||||
Europe | 913,292 | 766,328 | 19.2 | % | |||||||
Australasia | 502,991 | 413,860 | 21.5 | % | |||||||
Total Consolidated | $ | 3,255,625 | $ | 2,787,966 | 16.8 | % | |||||
Percentage of total consolidated net revenues | |||||||||||
North America | 56.5 | % | 57.7 | % | |||||||
Europe | 28.1 | % | 27.5 | % | |||||||
Australasia | 15.4 | % | 14.8 | % | |||||||
Total Consolidated | 100.0 | % | 100.0 | % | |||||||
Adjusted EBITDA(1) | |||||||||||
North America | $ | 210,794 | $ | 212,502 | (0.8) | % | |||||
Europe | 99,873 | 97,645 | 2.3 | % | |||||||
Australasia | 67,198 | 53,485 | 25.6 | % | |||||||
Corporate and unallocated costs | (22,123 | ) | (29,127 | ) | (24.0) | % | |||||
Total Consolidated | $ | 355,742 | $ | 334,505 | 6.3 | % | |||||
Adjusted EBITDA as a percentage of segment net revenues | |||||||||||
North America | 11.5 | % | 13.2 | % | |||||||
Europe | 10.9 | % | 12.7 | % | |||||||
Australasia | 13.4 | % | 12.9 | % | |||||||
Total Consolidated | 10.9 | % | 12.0 | % |
(1) | Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted EBITDA, see Note 13 - Segment Information. |
Nine Months Ended | ||||||||
(amounts in thousands) | September 29, 2018 | September 30, 2017 | ||||||
Cash provided by (used in): | ||||||||
Operating activities | $ | 87,969 | $ | 174,348 | ||||
Investing activities | (245,351 | ) | (153,467 | ) | ||||
Financing activities | 56,661 | 85,800 | ||||||
Effect of changes in exchange rates on cash and cash equivalents | (3,637 | ) | 10,319 | |||||
Net change in cash and cash equivalents | $ | (104,358 | ) | $ | 117,000 |
(a) | (b) | (c) | (d) | |||||||||||
Period | Total Number of Shares (or Units) Purchased 1 | Average Price Paid Per Share (or Unit) 2 | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under The Plans or Programs | ||||||||||
July 1, 2018 - July 28, 2018 | — | $— | — | $203,009 | ||||||||||
July 29, 2018 - August 25, 2018 | 1,099,849 | $25.49 | 1,099,849 | $174,971 | ||||||||||
August 26, 2018 - September 29, 2018 | 336,828 | $25.42 | 336,828 | $166,408 |
Exhibit No. | Exhibit Description | Form | File No. | Exhibit | Filing Date | ||
31.1* | |||||||
31.2* | |||||||
32.1* | |||||||
101.INS* | XBRL Instance Document. | ||||||
101.SCH* | XBRL Taxonomy Extension Schema Document. | ||||||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | ||||||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | ||||||
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | ||||||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. | ||||||
* | Filed herewith. | ||||||
+ | Indicates management contract or compensatory plan |
JELD-WEN HOLDING, INC. | |
(Registrant) | |
By: | /s/ L. Brooks Mallard |
L. Brooks Mallard | |
Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q for the fiscal period ended September 29, 2018 of JELD-WEN Holding, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | I have reviewed this Quarterly Report on Form 10-Q for the fiscal period ended September 29, 2018 of JELD-WEN Holding, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 29, 2018 |
Nov. 02, 2018 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | JELD-WEN Holding, Inc. | |
Entity Central Index Key | 0001674335 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 29, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 103,163,856 |
Consolidated Statement of Operations - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Income Statement [Abstract] | ||||
Net revenues | $ 1,136,949 | $ 991,325 | $ 3,255,625 | $ 2,787,966 |
Cost of sales | 895,160 | 763,431 | 2,559,176 | 2,147,090 |
Gross margin | 241,789 | 227,894 | 696,449 | 640,876 |
Operating expenses | ||||
Selling, general and administrative | 230,285 | 139,186 | 570,195 | 422,768 |
Impairment and restructuring charges | 3,891 | 2,262 | 9,378 | 4,018 |
Operating income | 7,613 | 86,446 | 116,876 | 214,090 |
Interest expense, net | 18,341 | 17,200 | 51,832 | 61,639 |
Gain on previously held shares of an equity investment | 0 | 0 | (20,767) | 0 |
Other (income) expense | (8,007) | 6,004 | (5,617) | 17,602 |
(Loss) income before taxes, equity earnings | (2,721) | 63,242 | 91,428 | 134,849 |
Income tax (benefit) expense | (31,606) | 13,042 | (12,442) | 32,997 |
Income from continuing operations, net of tax | 28,885 | 50,200 | 103,870 | 101,852 |
Equity earnings of non-consolidated entities | 0 | 1,075 | 738 | 2,629 |
Net income | 28,885 | 51,275 | 104,608 | 104,481 |
Less net income (loss) attributable to non-controlling interest | 6 | 0 | (47) | 0 |
Convertible preferred stock dividends | 0 | 0 | 0 | 10,462 |
Net income attributable to common shareholders | $ 28,879 | $ 51,275 | $ 104,655 | $ 94,019 |
Weighted average common shares outstanding | ||||
Basic (shares) | 104,169,833 | 105,064,299 | 105,309,185 | 94,718,021 |
Diluted (shares) | 105,937,429 | 108,962,240 | 107,477,049 | 98,807,146 |
Income per share from continuing operations | ||||
Basic (usd per share) | $ 0.28 | $ 0.49 | $ 0.99 | $ 0.99 |
Diluted (usd per share) | 0.27 | 0.47 | 0.97 | 0.95 |
Net income per share | ||||
Basic (usd per share) | 0.28 | 0.49 | 0.99 | 0.99 |
Diluted (usd per share) | $ 0.27 | $ 0.47 | $ 0.97 | $ 0.95 |
Consolidated Statements of Other Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 28,885 | $ 51,275 | $ 104,608 | $ 104,481 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments, net of tax of $0 | (10,259) | 25,549 | (46,880) | 81,180 |
Interest rate hedge adjustments, net of tax (benefit) expense of ($52), $567, ($402) and $1,453, respectively | 574 | 1,837 | 1,966 | 3,942 |
Defined benefit pension plans, net of tax expense of $822, $644, $2,841and $2,424, respectively | 1,503 | 2,252 | 5,484 | 6,281 |
Total other comprehensive (loss) income, net of tax | (8,182) | 29,638 | (39,430) | 91,403 |
Comprehensive income | $ 20,703 | $ 80,913 | $ 65,178 | $ 195,884 |
Consolidated Statements of Other Comprehensive Income (Loss) (Parentheticals) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Foreign currency translation adjustments, tax | $ 0 | $ 0 | $ 0 | $ 0 |
Interest rate hedge adjustments, tax (benefit) | (52) | 567 | (402) | 1,453 |
Defined benefit pension plans, tax | $ 822 | $ 644 | $ 2,841 | $ 2,424 |
Consolidated Balance Sheets (Parentheticals) - $ / shares |
Sep. 29, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (shares) | 90,000,000 | 90,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, shares authorized (shares) | 900,000,000 | 900,000,000 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares outstanding (shares) | 103,420,959 | 105,990,483 |
Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of Company and Summary of Significant Accounting Policies | Description of Company and Summary of Significant Accounting Policies Nature of Business – JELD-WEN Holding, Inc., along with its subsidiaries, is a vertically integrated global manufacturer and distributor of windows and doors that derives substantially all of its revenues from the sale of its door and window products. Unless otherwise specified or the context otherwise requires, all references in these notes to “JELD-WEN,” “we,” “us,” “our,” or the “Company” are to JELD-WEN Holding, Inc. and its subsidiaries. We have facilities located in the U.S., Canada, Europe, Australia, Asia, Mexico, and South America, and our products are marketed primarily under the JELD-WEN brand name in the U.S. and Canada and under JELD-WEN and a variety of acquired brand names in Europe, Australia and Asia. Our revenues are affected by the level of new housing starts and remodeling activity in each of our markets. Our sales typically follow seasonal new construction and repair and remodeling industry patterns. The peak season for home construction and remodeling in many of our markets generally corresponds with the second and third calendar quarters, and therefore, sales volume is typically higher during those quarters. Our first and fourth quarter sales volumes are generally lower due to reduced repair and remodeling activity and reduced activity in the building and construction industry as a result of colder and more inclement weather in certain of our geographic end markets. Basis of Presentation – The statement of operations for the three and nine months ended September 30, 2017 has been revised to reflect the correction of certain errors and other accumulated misstatements as described in Note 36 - Revision of Prior Period Financial Statements in our Form 10-K for the year ended December 31, 2017. The errors did not impact the subtotals for cash flows from operating activities, investing activities or financing activities for any of the periods affected. We do not believe the errors corrected were material to our previously issued financial statements. The errors are summarized in the “Revision” column in the table below. As a result of our retrospective application of ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, we reclassified certain amounts in our statement of operations for the three and nine months ended September 30, 2017 as noted below. See “Recently Adopted Accounting Standards” below for additional information. In addition, to conform with current-period presentation of revenues, we reclassified certain amounts in our statement of operations for the three and nine months ended September 30, 2017. The reclassification was not material to our previously issued financial statements and is summarized in the “Reclassification” column in the table below.
* Note: reclassification relates entirely to revenue in our North America segment. As a result of our early adoption of ASU No. 2016-15, restricted cash balances previously presented in other assets are now presented in beginning and ending cash and cash equivalents in the accompanying unaudited consolidated statements of cash flows. See “Recently Adopted Accounting Standards” below for additional information. In addition, certain amounts within the notes accompanying these unaudited consolidated financial statements and balances in the accompanying unaudited consolidated statements of cash flows have been reclassified to conform with current-period presentation. All U.S. dollar and other currency amounts, except per share amounts, are presented in thousands unless otherwise noted. Ownership – On October 3, 2011, Onex invested $700.0 million in return for shares of our Series A Convertible Preferred Stock. Concurrent with the investment, Onex provided $171.0 million in the form of a convertible bridge loan due in April 2013. In October 2012, Onex invested an additional $49.8 million in return for additional shares of our Series A Convertible Preferred Stock to fund an acquisition. In April 2013, the $71.6 million outstanding balance of the convertible bridge loan was converted into additional shares of our Series A Convertible Preferred Stock. In March 2014, Onex purchased $65.8 million in common stock from another investor. As part of the IPO, Onex sold 6,477,273 shares of our Common Stock. In May 2017 and November 2017, Onex sold a total of 15,693,139 and 14,211,736 shares of our Common Stock, respectively, in secondary offerings. We did not receive any proceeds from the shares of Common Stock sold by Onex, in any offering. As of September 29, 2018, Onex owned approximately 31.7% of the outstanding shares of our Common Stock. Stock Split – On January 3, 2017, our shareholders approved amendments to our then-existing certificate of incorporation increasing the authorized number of shares and effecting an 11-for-1 stock split of our then-outstanding common stock and Class B-1 Common Stock. Accordingly, all share and per share amounts for all periods presented in these unaudited consolidated financial statements and notes thereto have been adjusted to reflect this stock split. Stock Conversion and Initial Public Offering – Prior to the IPO, we had the authority to issue up to 8,750,000 shares of preferred stock, par value of $0.01, of which 8,749,999 shares were designated as Series A Convertible Preferred Stock and one share was designated as Series B Preferred Stock. Series A Convertible Preferred Stock consisted of 2,922,634 shares of Series A-1 Stock, 208,760 shares of Series A-2 Stock, 843,132 shares of Series A-3 Stock, and 4,775,473 shares of Series A-4 Stock. On February 1, 2017, immediately prior to the closing of our IPO, the outstanding shares of our Series A Convertible Preferred Stock and all accumulated and unpaid dividends converted into 64,211,172 shares of our Common Stock, and all of the outstanding shares of our Class B-1 Common Stock converted into 309,404 shares of our Common Stock. In addition, the one outstanding share of our Series B Preferred Stock was canceled. We filed our Charter with the Secretary of State of the State of Delaware, and our Bylaws became effective, each as contemplated by the registration statement we filed as part of our IPO. The Charter, among other things, provided that our authorized capital stock consists of 900,000,000 shares of Common Stock, par value $0.01 per share and 90,000,000 shares of preferred stock, par value $0.01 per share. On February 1, 2017, we closed our IPO and received $472.4 million in proceeds, net of underwriting discounts, fees and commissions and $7.9 million of offering expenses from the issuance of 22,272,727 shares of our common stock. Share Repurchases – In April 2018, our Board of Directors authorized the repurchase of up to $250.0 million of our Common Stock. Repurchased shares are retired, and the excess of the repurchase price over the par value of the shares is charged to retained earnings. We have repurchased 3,080,594 shares for total consideration of $83.6 million through September 29, 2018. Fiscal Year – We operate on a fiscal calendar year, and each interim quarter is comprised of two 4-week periods and one 5-week period, with each week ending on a Saturday. Our fiscal year always begins on January 1 and ends on December 31. As a result, our first and fourth quarters may have more or fewer days included than a traditional 91-day fiscal quarter. Use of Estimates – The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the unaudited consolidated financial statements and related notes. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets including goodwill and other intangible assets, employee benefit obligations, income tax uncertainties, contingent assets and liabilities, provisions for bad debt, inventory, warranty liabilities, legal claims, valuation of derivatives, environmental remediation and claims relating to self-insurance. Actual results could differ due to the uncertainty inherent in the nature of these estimates. Recently Adopted Accounting Standards – In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“SAB 118”). The amendments in this update provide guidance on when to record and disclose provisional amounts for certain income tax effects of the Tax Act. The amendments also require any provisional amounts or subsequent adjustments to be included in net income from continuing operations. Additionally, this ASU discusses required disclosures that an entity must make with regard to the Tax Act. This ASU is effective immediately as new information is available to adjust provisional amounts that were previously recorded. We have accounted for the tax effects of the Tax Act under the guidance of SAB 118 on a provisional basis. Our accounting for certain income tax effects is incomplete, but we have determined reasonable estimates for those effects and have recorded provisional amounts in our consolidated financial statements as of September 29, 2018 and December 31, 2017. We expect to complete our analysis within the measurement period in accordance with SAB 118. In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The ASU provides guidance as to which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. We adopted this ASU in the first quarter of 2018 and the adoption of this standard did not impact our unaudited consolidated financial statements; however, modification accounting is now required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. We adopted this ASU using the retrospective transition method in the first quarter of 2018 and applied the practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. We report the service cost component of the net periodic pension and post-retirement costs in the same line item in the statement of operations as other compensation costs arising from services rendered by the employees during the period for both our U.S. and Non-U.S. plans. The other components of net periodic pension and post-retirement costs are presented in other income in the unaudited consolidated statements of operations. We adjusted the unaudited consolidated statements of operations in all comparative periods presented as noted in “Basis of Presentation,” above. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this ASU provide new guidance to determine when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in an identifiable asset or group of similar identifiable assets. If this threshold is met, the set of transferred assets is not a business. If the threshold is not met, the entity then must evaluate whether the set includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. This ASU removes the evaluation of whether a market participant could replace missing elements. The amendments also narrow the definition of the term output so that the term is consistent with how outputs are described in Topic 606. We adopted this standard prospectively in the first quarter of 2018. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The standard requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments in this update eliminate the exception for an intra-entity transfer of an asset other than inventory. The amendments do not include new disclosure requirements; however, existing disclosure requirements might be applicable when accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. We adopted this ASU in the first quarter of 2018 on a modified retrospective basis and the adoption did not have a material impact on our unaudited consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU enhances the reporting model for financial instruments to provide users of financial statements with more decision-useful information by requiring equity investments to be measured at fair value with changes in fair value recognized in net income. It simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment and eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities. It also requires an entity to present separately in other comprehensive income (loss) the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the consolidated financial statements. We adopted this ASU in the first quarter of 2018 and the adoption did not have a material impact on our unaudited consolidated financial statements. ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, eliminates the diversity in practice related to the classification of certain cash receipts and payments for debt prepayment or extinguishment costs, the maturing of a zero-coupon bond, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, distributions from certain equity method investees and beneficial interest obtained in a financial asset securitization. ASU No. 2016-18, Topic 230: Restricted Cash, requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. We elected to early adopt these ASUs using the retrospective transition method in the quarter ended December 31, 2017 and adjusted the consolidated statements of cash flows in all comparative periods presented. The adjustments to the prior period statements of cash flows are as follows:
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606) as modified by subsequently issued ASU No. 2016-08 - Principal versus Agent Considerations (Reporting Revenue Gross versus Net) and ASU Nos. 2015-14, 2016-10, 2016-12 and 2016-20 (collectively ASU No. 2014-09). ASU No. 2014-09 superseded existing revenue recognition standards with a single model unless those contracts were within the scope of other standards. ASC 606 is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services and satisfaction of performance obligations to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. We adopted ASU No. 2014-09 in the first quarter of 2018, using the modified retrospective transition practical expedient that allows us to evaluate the impact of contracts as of the adoption date rather than evaluating the impact of the contracts at the time they occurred prior to the adoption date. There was no material effect associated with the election of this practical expedient. As a practical expedient, shipping and handling fee revenues and the related expenses are reported as fulfillment revenues and expenses for all customers. Therefore, all shipping and handling costs associated with outbound freight are accounted for as fulfillment costs and are included in cost of sales. As a practical expedient, we do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less. We do not typically include extended payment terms in our contracts with customers. We have also elected not to provide the remaining performance obligations disclosures related to service contracts in accordance with the practical expedient in ASC 606-10-55-18. We recognize revenue in the amount to which the entity has a right to invoice and have adopted this election to not provide the remaining performance obligations related to service contracts. See Note 15 - Revenue Recognition for additional information. Recent Accounting Standards Not Yet Adopted – In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which clarifies the accounting treatment for implementation costs for cloud computing arrangements (hosting arrangements) that are service contracts. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. We are currently assessing the effect that this ASU will have on our consolidated financial statements and disclosures. In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which adds, modifies and clarifies several disclosure requirements for employers that sponsor defined benefit pension or other post retirement plans. This guidance is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. We are currently assessing the effect that this ASU will have on our disclosures. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, Fair Value Measurement. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. We are currently assessing the effect that this ASU will have on our disclosures. In June 2018, the FASB issued ASU No. 2018-07 - Compensation - Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under ASU No. 2018-07, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted for any interim and annual financial statements that have not yet been issued. We are currently evaluating the potential impact of this ASU on our consolidated financial statements and disclosures. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Act. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted for any interim and annual financial statements that have not yet been issued. We are currently evaluating the potential impact on our consolidated financial statements and disclosures. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The targeted amendments help simplify certain aspects of hedge accounting and result in a more accurate portrayal of the economics of an entity’s risk management activities in its financial statements. For cash flow and net investment hedges as of the adoption date, the guidance requires a modified retrospective approach. The guidance is effective for annual periods beginning after December 15, 2018 and interim periods within those years, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To simplify the measurement of goodwill impairments, this ASU eliminates Step 2 from the goodwill impairment test, which required the calculation of the implied fair value of goodwill. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The guidance will be effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Section A - Leases: Amendments to the FASB Accounting Standards Codification. The standard requires lessees to recognize the assets and liabilities arising from leases on the balance sheet and retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. The accounting standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are currently identifying our leases as that term is defined in the standard, extracting data from the leases into our technology solution, and are assessing the impact of the standard on our financial statements. We will adopt the practical expedients outlined in ASU 2018-01, Leases (Topic 842) Land Easement Practical Expedient for transition to ASC 842, and the additional transition method outlined in ASU 2018-11, Leases (Topic 842) Targeted Improvements. Under this new transition method, we will apply the new standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We continue evaluating the practical expedients as they are issued, but we have not decided on the utilization of practical expedients. However, the adoption of this standard will result in the recognition of a lease liability and related right-of-use asset and will materially impact our balance sheet. With the exception of the new standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the quarter ended September 29, 2018 that are of significance or potential significance to us. |
Acquisitions |
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Acquisitions | Acquisitions For the nine months ended September 29, 2018, we completed the following acquisitions:
The preliminary fair values of the assets and liabilities acquired of the completed acquisitions are summarized below:
Preliminary goodwill of $63.8 million, calculated as the excess of the purchase price over the fair value of net assets, represents operational efficiencies and sales synergies, and no amount is expected to be tax-deductible. The intangible assets include tradenames, software, patents and customer relationships and will be amortized over a preliminary estimated weighted average amortization period of 19 years. Acquisition-related costs of $1.6 million and $5.3 million were expensed as incurred and are included in SG&A expense in the accompanying unaudited consolidated statements of operations for the three and nine months ended September 29, 2018. The contingent consideration relating to the A&L acquisition was based on underlying business performance through June 2018 and was paid in the third quarter of 2018 in the amount of $3.7 million. The gain on previously held shares relates to the remeasurement of our existing 50% ownership interest to fair value for one of the recent acquisitions. Since their dates of acquisition, the cumulative net revenues and net income of our 2018 acquisitions were $358.2 million and $2.0 million, respectively. We evaluated these acquisitions quantitatively and qualitatively and determined them to be insignificant both individually and in the aggregate. Therefore, certain pro forma disclosures under ASC 805-10-50 have been omitted. During the second and third quarters of 2017, we completed three acquisitions for total consideration of approximately $131.7 million, net of cash acquired. The excess purchase price over the preliminary fair value of net assets acquired of $25.1 million and $46.7 million was allocated to goodwill and intangible assets, respectively. Goodwill is the excess of the purchase price over the fair value of net assets acquired in business combinations and represents operational efficiencies and sales synergies, and $14.2 million is expected to be tax-deductible. The intangible assets include tradenames, software, and customer relationships and will be amortized over an estimated weighted average amortization period of 18 years. There were $0.9 million of acquisition-related costs included in SG&A expense in the accompanying unaudited consolidated statements of operations for the three and nine months ended September 30, 2017. In 2017, the measurement period adjustment reduced the preliminary allocation of goodwill by $23.6 million and increased the preliminary allocation of property and equipment, intangible assets, and cash consideration, net of cash acquired by $16.7 million, $16.3 million and $7.7 million, respectively, with the remaining preliminary allocation changes related to other working capital accounts. In 2018, the measurement period adjustment increased the preliminary allocation of goodwill by $0.9 million with the offset primarily to working capital accounts. As of September 29, 2018, the purchase price allocation was considered complete for each of the three 2017 acquisitions. The results of the acquisitions are included in our unaudited consolidated financial statements from the date of their acquisition. |
Accounts Receivable |
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Receivables [Abstract] | |
Accounts Receivable | Accounts Receivable We sell our manufactured products to a large number of customers, primarily in the residential housing construction and remodel sectors, broadly dispersed across many domestic and foreign geographic regions. We perform ongoing credit evaluations of our customers to minimize credit risk. We do not usually require collateral for accounts receivable but will require advance payment, guarantees, a security interest in the products sold to a customer, and/or letters of credit in certain situations. Customer accounts receivable converted to notes receivable are primarily collateralized by inventory or other collateral. At September 29, 2018 and December 31, 2017, we had an allowance for doubtful accounts of $5.7 million and $4.4 million, respectively. |
Inventories |
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Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs.
The increase in finished goods was due primarily to our recent acquisitions. For further information, see Note 2 - Acquisitions. |
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Property and Equipment, Net | Property and Equipment, Net
We monitor all property and equipment for any indicators of potential impairment. We recorded impairment charges of $0.3 million and $0.9 million in the three and nine months ended September 29, 2018, respectively. We recorded impairment charges of $0.2 million during the three and nine months ended September 30, 2017. In November of 2016, we entered into a 17-year, non-cancelable build-to-suit arrangement for a corporate headquarters facility in Charlotte, North Carolina that is accounted for under the build-to-suit guidance contained in ASC 840, Leases. The lease commenced upon completion of construction in February 2018. Since we were involved in the construction of structural improvements prior to the commencement of the lease and took some level of construction risk, we were considered the accounting owner of the assets and land during the construction period. Further, since certain terms of the lease do not meet normal sale-leaseback criteria, we are considered the accounting owner after the construction period as well. During the first quarter of 2018, we recorded $20.0 million of build-to-suit assets included in property and equipment, net, and set up a corresponding financial obligation of $20.4 million included in long-term debt in the accompanying unaudited consolidated balance sheet. In the second quarter of 2018, we received a tenant improvement allowance, increasing long-term debt by $4.2 million. The build-to-suit asset is being depreciated over its estimated useful life and lease payments are being applied as debt service against the liability. Depreciation expense was recorded as follows:
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Goodwill |
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Goodwill | Goodwill The following table summarizes the changes in goodwill by reportable segment:
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Intangible Assets, Net | Intangible Assets, Net The cost and accumulated amortization values of our intangible assets were as follows:
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Intangible assets that become fully amortized are removed from the accounts in the period that they become fully amortized. Amortization expense was recorded as follows:
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Other Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | Other Assets
As of December 31, 2017, our investments consisted primarily of one of our 50% owned investments that was accounted for under the equity method as well as eight investments accounted for under the cost method. During the first quarter of 2018, we purchased the remaining outstanding shares of an acquired entity, and we recognized a gain of $20.8 million on the previously held shares. This investment is now eliminated in consolidation. Prior period balances in the table above have been reclassified to conform to current-period presentation. |
Accrued Expenses and Other Current Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities
In the table above, the legal claims provision balance in the current period relates primarily to the $76.5 million litigation contingency associated with the ongoing antitrust and trade secrets litigation with Steves & Sons, Inc. For further information regarding this litigation, see Note 23 - Commitments and Contingencies. The accrued sales and advertising rebate, accrued interest payable, and non-income related taxes can fluctuate significantly from quarter to quarter due to timing of payments. Prior period balances in the table above have been reclassified to conform to current-period presentation. |
Warranty Liability |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warranty Liability | Warranty Liability Warranty terms vary from one year to lifetime on certain window and door components. Warranties are normally limited to servicing or replacing defective components for the original customer. Some warranties are transferable to subsequent owners and are either limited to 10 years from the date of manufacture, or require pro-rata payments from the customer. A provision for estimated warranty costs is recorded at the time of sale based on historical experience, and we periodically adjust these provisions to reflect actual experience. An analysis of our warranty liability is as follows:
The increase in current period expense and payments over the prior period was primarily due to acquisitions and to operational issues in our Europe segment that have been resolved. The most significant component of our warranty liability is in the North America segment, which totaled $41.1 million at September 29, 2018 after discounting future estimated cash flows at rates between 0.76% and 4.75%. Without discounting, the liability would have been higher by approximately $2.7 million. |
Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt Our long-term debt, net of original issue discount and unamortized debt issuance costs, consisted of the following:
Summaries of our outstanding debt agreements as of September 29, 2018 are as follows: Senior Notes – In December 2017, we issued $800.0 million of unsecured Senior Notes in two tranches: $400.0 million bearing interest at 4.63% and maturing in December 2025, and $400.0 million bearing interest at 4.88% and maturing in December 2027 in a private placement for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act. Each tranche was issued at par. Interest is payable semiannually in arrears each June and December through maturity. Debt issuance costs of $11.7 million are being amortized to interest expense over the life of the notes using the effective interest method. Term Loans U.S. Facility - In November 2016, we borrowed an additional $375.0 million, and refinanced and amended certain terms and provisions of the Term Loan Facility. The proceeds, along with cash on hand and borrowings on our ABL Facility, were used to fund a distribution to shareholders and holders of equity awards. We incurred $8.1 million of debt issuance costs related to this amendment. In February 2017, we prepaid $375.0 million of outstanding principal with the proceeds from our IPO. As a result, we recorded a proportional write-off of $5.2 million of unamortized debt issuance costs and $0.9 million of original issue discount to interest expense. In March 2017, we amended the facility to reduce the interest rate and remove the cap on the amount of cash used in the calculation of net debt. The offering price of the amended term loans was par. Pursuant to this amendment, certain lenders converted their commitments in an aggregate amount, along with an additional commitment advanced by a replacement lender. We incurred $1.1 million of debt issuance costs related to this term loan amendment, which is included as an offset to long-term debt in the accompanying unaudited consolidated balance sheets. In December 2017, along with the issuance of the Senior Notes, we re-priced and amended the facility and repaid $787.4 million of outstanding borrowings with the net proceeds from the Senior Notes which resulted in a principal balance of $440.0 million. In connection with the debt extinguishment, we expensed the related unamortized original discount of $5.9 million, unamortized debt issuance costs of $15.4 million, and bank fees of $1.7 million as a loss on extinguishment of debt in our consolidated statements of operations. The re-priced term loans were offered at par, will mature in December 2024 (extended from July 2022), and bear interest at LIBOR (subject to a floor of 0.00%) plus a margin of 1.75% to 2.00%, determined by our corporate credit ratings. This compares favorably to the previous rate of LIBOR (subject to a floor of 1.00%) plus a margin of 2.75% to 3.00%, determined by our net leverage ratio, under the prior amendment. This amendment also modifies other terms and provisions, including providing for additional covenant flexibility and additional capacity under the facility, and conforming to certain terms and provisions of the Senior Notes. This amendment requires that 0.25% (or $1.1 million) of the aggregate principal amount be repaid quarterly prior to the final maturity date. The facility is secured by the same collateral and guaranteed by the same guarantors as it was under each of the prior amendments, and we incurred $0.7 million of debt issuance costs related to this amendment, which are being amortized to interest expense over the life of the facility using the effective interest method. At September 29, 2018, the outstanding principal balance under the facility was $436.7 million. Australia Facility - In February 2018, we amended the Australia Senior Secured Credit Facility to include an additional AUD $55.0 million floating rate term loan facility with a base rate of BBSY plus a margin ranging from 1.00% to 1.10% which matures in February 2023. We pay a commitment fee of 1.25% on the unused portion of the facility. This facility is secured by guarantees of JWA and had an outstanding principal balance of $36.1 million as of September 29, 2018. Other Acquired Facilities - During the first quarter of 2018, we acquired an $11.6 million term loan facility associated with our ABS acquisition, which consisted of five separate term loans with maturity dates from March 2019 to December 2022. These loans bear interest at LIBOR plus margins ranging from 1.85% to 2.00%. Principal is required to be repaid monthly in equal installments through each loan’s maturity. As of September 29, 2018, we had $9.7 million outstanding under this facility. In addition, we acquired $9.1 million in various term loan facilities associated with our Domoferm acquisition. The current facilities mature between 2021 and 2022, with both fixed and variable interest rates ranging from 1.25% to 2.74%. Included within this is a $2.1 million obligation under a sale and leaseback agreement relating to the land and buildings at the Gänserndorf, Austria facility, which matures in 2021. At September 29, 2018, we had $3.6 million outstanding under these facilities. Revolving Credit Facilities ABL Facility - In December 2017, along with the offering of the Senior Notes and repricing of the Term Loan Facility, we amended our $300.0 million ABL Facility. The facility will mature in December 2022 (extended from October 2019) and bears interest primarily at LIBOR (subject to a floor of 0.00%) plus a margin of 1.25% to 1.75%, determined by availability. This compares favorably to the rate of LIBOR (subject to a floor of 0.00%) plus a margin of 1.50% to 2.00% under the previous amendment. This amendment also made certain adjustments to the borrowing base and modified other terms and provisions, including providing for additional covenant flexibility and additional flexibility under the facility, and conforming to certain terms and provisions of the Senior Notes and Term Loan Facility. In connection with the amendment to the ABL Facility, we expensed $0.2 million of unamortized loan fees as a loss on extinguishment of debt in our consolidated statements of operations. Debt issuance costs related to the ABL Facility are reclassified to other assets in the consolidated balance sheets, in proportion to the commitment amount, less loan utilization. Extensions of credit under the ABL Facility are limited by a borrowing base calculated periodically based on specified percentages of the value of eligible accounts receivable, eligible inventory and certain other assets, subject to certain reserves and other adjustments. We pay a fee between 0.25% to 0.38% on the unused portion of the commitments under the facility. As of September 29, 2018, we had $125.0 million in borrowings, $39.2 million in letters of credit and $127.0 million available under the ABL Facility. The ABL Facility has a minimum fixed charge coverage ratio that we are obligated to comply with under certain circumstances. The ABL Facility has various non-financial covenants, including restrictions on liens, indebtedness, and dividends, customary representations and warranties, and customary events of defaults and remedies. The ABL Facility permits us to request commitment increases up to the greater of $100 million or the greatest amount by which the borrowing base has exceeded the maximum global credit amount at the end of any of the twelve fiscal months prior to the effective date of the commitment increase, subject to certain conditions. Australia Senior Secured Credit Facility - In February 2018, we amended the Australia Senior Secured Credit Facility to provide for an AUD $15.0 million floating rate revolving loan facility, an AUD $12.0 million interchangeable facility for guarantees and letters of credit, an AUD $7.0 million electronic payaway facility, an AUD $2.5 million asset finance facility, an AUD $1.0 million commercial card facility and an AUD $5.0 million overdraft line of credit. Apart from the AUD $55.0 million floating rate term loan facility mentioned above, the Australia Senior Secured Credit Facility matures in June 2019. Loans under the revolving loan facility bear interest at BBSY plus a margin of 0.75%, and a line fee of 1.15% is also paid on the revolving facility limit. Overdraft balances bear interest at the bank’s reference rate minus a margin of 1.00%, and a line fee of 1.15% is paid on the overdraft facility limit. At September 29, 2018, we had AUD $15.0 million (or $10.8 million) available under the revolving loan facility, AUD $1.9 million (or $1.3 million) under the interchangeable facility, AUD $7.0 million (or $5.1 million) under the electronic payaway facility, AUD $2.5 million (or $1.8 million) under the asset finance facility, AUD $0.8 million (or $0.6 million) under the commercial card facility and AUD $5.0 million (or $3.6 million) available under the overdraft line of credit. The credit facility is secured by guarantees of the subsidiaries of JWA, fixed and floating charges on the assets of the JWA group, and mortgages on certain real properties owned by the JWA group. The agreement requires that JWA maintain certain financial ratios, including a minimum consolidated interest coverage ratio and a maximum consolidated debt to EBITDA ratio. The agreement limits dividends and repayments of intercompany loans where the JWA group is the borrower and limits acquisitions without the bank’s consent. Euro Revolving Facility - In January 2015, we entered into the Euro Revolving Facility, a €39 million revolving credit facility, which includes an option to increase the commitment by an amount of up to €10 million, with a syndicate of lenders and Danske Bank A/S, as agent. The Euro Revolving Facility matures on January 30, 2019. Loans under the Euro Revolving Facility bear interest at an IBOR, specific to the borrowing currency, (subject to a floor of 0.00%), plus a margin of 2.50%. A commitment fee of 1.00% is paid on the unutilized amount of the facility. As of September 29, 2018, we had no outstanding borrowings, €0.5 million (or $0.5 million) of bank guarantees outstanding, and €38.5 million (or $44.7 million) available under this facility. The facility requires JELD-WEN ApS to maintain certain financial ratios, including a maximum ratio of senior leverage to Adjusted EBITDA (as calculated therein), and a minimum ratio of Adjusted EBITDA (as calculated therein) to net finance charges. In addition, the facility has various non-financial covenants including restrictions on liens, indebtedness, and dividends, customary representations and warranties, and customary events of default and remedies. Other Acquired Facilities - During the first quarter of 2018, we acquired a $45.0 million revolving credit facility associated with our ABS acquisition. Loans under this facility bear interest at LIBOR plus a margin ranging from 1.40% to 1.90% determined by the acquired company’s leverage. The acquired company had $29.4 million outstanding on the date of acquisition. This facility matures in July 2019. As of September 29, 2018, we had $26.0 million in outstanding borrowings and $19.0 million available under this facility. In addition, we acquired €8.5 million in various overdraft facilities associated with our Domoferm acquisition. The acquired company had €7.6 million (or $9.4 million) outstanding on the date of acquisition. The current outstanding facilities have variable interest rates ranging from 0.85% - 1.00% and are included in the current portion of long term debt. As of September 29, 2018, we had €0.9 million (or $1.0 million) in outstanding borrowings and €1.3 million (or $1.6 million) available under these facilities. At September 29, 2018, we had combined borrowing availability of $203.0 million under our revolving facilities. Mortgage Notes – In December 2007, we entered into thirty-year mortgage notes secured by land and buildings with principal payments beginning in 2018. As of September 29, 2018, we had DKK 200.8 million (or $31.2 million) outstanding under these notes. Installment Notes – Installment notes represent insurance premium financing, capitalized lease obligations, and loans secured by equipment. We acquired $5.8 million in various installment notes associated with our Domoferm and A&L acquisitions. The current notes mature between 2018 and 2022, with both fixed and variable interest rates which range from 1.90% to 4.84%. As of September 29, 2018, we had $4.0 million outstanding under these acquired facilities. At September 29, 2018, we had $73.8 million outstanding in installment notes. The increase in installment notes during 2018 was primarily due to the addition of the build-to-suit lease in the first quarter (Note 5 - Property and Equipment, Net), and the addition of equipment and software leases that were entered into during the second and third quarters due to attractive interest rates. Maturities of installment notes range from 2018 to 2035. Installment Notes for Stock – We entered into installment notes for stock representing amounts due to former or retired employees for repurchases of our stock that are payable over 5 or 10 years depending on the amount with payments through 2020. As of September 29, 2018, we had $1.0 million outstanding under these notes. As of September 29, 2018 and December 31, 2017, we were in compliance with the terms of all of our credit facilities. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective income tax rate for continuing operations was 1,161.6% and (13.6)% for the three and nine months ended September 29, 2018, respectively, compared to 20.6% and 24.5% for the three and nine months ended September 30, 2017, respectively. In accordance with ASC 740-270, we recorded tax benefit of $31.6 million and $12.4 million from continuing operations in the three and nine months ended September 29, 2018, respectively, compared to a tax expense of $13.0 million and $33.0 million for the corresponding periods ended September 30, 2017, respectively, by applying an estimated annual effective tax rate to our year-to-date income for includable entities during the respective periods. Our estimated annual effective tax rate for the current year includes the impact of the new tax on GILTI. We continue evaluating the accounting policy election for GILTI of either (1) treating taxes due for GILTI as a current-period expense when incurred or (2) factoring such amounts into our measurement of deferred taxes. The selection of an accounting policy will depend upon a detailed analysis of the additional guidance on the operation of the GILTI provisions provided by the U.S. Treasury and our global income and other tax attributes to determine the potential impact, if any, of these provisions. Any subsequent adjustments to this provisional estimate will be reflected on a current basis when determined. The application of the estimated annual effective tax rate in interim periods may result in a significant variation in the customary relationship between income tax expense and pretax accounting income due to the seasonality of our global business. Entities that are currently generating losses and for which there is a full valuation allowance are excluded from the worldwide effective tax rate calculation and are calculated separately. The impact of significant discrete items is separately recognized in the quarter in which they occur. The tax benefit related to discrete items included in the tax provision for continuing operations for the three months ended September 29, 2018 was $59.8 million compared to a tax benefit of $2.7 million for the three months ended September 30, 2017. The discrete tax benefits for the three months ended September 29, 2018 were comprised primarily of $40.2 million for adjustments to our SAB 118 provisional estimates related to tax reform and $19.6 million for the accrual recorded in connection with the Steves’ litigation. The discrete benefit amounts for the three months ended September 30, 2017 were comprised primarily of tax benefits attributable to a tax effect of deductions in excess of share-based compensation costs of $2.7 million, and $1.9 million of tax benefit attributable to Latvia tax reform, offset by tax expense of $1.9 million attributable to current period interest expense on uncertain tax positions and return-to-provision adjustments for certain foreign subsidiaries. The tax benefit related to discrete items included in the tax provision for continuing operations for the nine months ended September 29, 2018 was $65.1 million, compared to $4.0 million for the nine months ended September 30, 2017. The discrete tax benefits for the nine months ended September 29, 2018 were comprised primarily of $40.2 million for adjustments to our SAB 118 provisional estimates related to tax reform, $19.6 million for the accrual recorded in connection with the Steves’ litigation, $7.1 million attributable to the write-off of the outside basis difference of our investment formerly held as an equity method investment and $1.8 million attributable to stock compensation exercises and expirations, offset by tax expense of $2.7 million for a net increase to uncertain tax positions arising from certain tax examinations, including interest, and $0.9 million attributable to current period interest expense on uncertain tax positions. The discrete benefit amounts for the nine months ended September 30, 2017 were comprised primarily of tax benefits attributable to the tax effect of deductions in excess of share-based compensation costs of $4.4 million, and $1.9 million of tax benefit attributable to Latvia tax reform, offset by tax expense of $2.3 million attributable to current period interest expense on uncertain tax positions and return-to-provision adjustments for certain foreign subsidiaries. Under ASC 740-10, we provide for uncertain tax positions and the related interest expense by adjusting unrecognized tax benefits and accrued interest accordingly. We recognize potential interest and penalties related to unrecognized tax benefits in income tax expense. We had unrecognized tax benefits of $13.9 million and $13.3 million as of September 29, 2018 and December 31, 2017, respectively. In December 2017, the Tax Act was signed into law, which resulted in significant changes to U.S. tax rules. We recorded provisional estimates of the impacts of the Tax Act on our financial statements as of December 2017 in accordance with ASU 2018-05 and SAB 118 issued by the SEC. The direct impacts of these provisional estimates recorded in December 2017 were due primarily to the change in the U.S. corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017 and the one-time deemed repatriation tax. As a result of the lowering of the U.S. federal tax rate, we revalued our net deferred tax assets in the U.S. reflecting the lower expected benefit in the U.S. in the future. This revaluation resulted in additional tax expense totaling approximately $21.1 million for the year ended December 31, 2017. The one-time deemed repatriation tax, which effectively subjected our net aggregate historic foreign earnings to taxation in the U.S., resulted in a further tax charge of $11.3 million. During the fourth quarter of 2017, we undertook certain transactions that involved the potential repatriation of certain earnings from foreign subsidiaries (“the Repatriation Transactions”). While these transactions were not undertaken as a direct result of tax reform, the U.S. tax implications were heavily impacted due to the timing of the transactions and the measurement dates as outlined in the Tax Act. We recorded a net increase to tax expense of $65.8 million related to these transactions and their impacts under the Tax Act. SAB 118 requires filers to report any adjustments made to their provisional estimates in interim periods “upon obtaining, preparing, or analyzing additional information about facts and circumstances that existed as of the enactment date that, if known, would have affected the income tax effects initially reported as provisional amounts.” We continue to assess the impact of this legislation on our consolidated financial statements; however, we have refined portions of the estimates outlined above based on guidance issued to date by the federal government and refinements in our U.S. federal tax return filing positions as called for under SAB 118. In September 2018, we recorded adjustments to the above provisional estimates specifically related to the one-timed deemed repatriation tax as well as the impact of the Repatriation Transactions resulting in an additional net tax benefit of approximately $40.2 million. Specifically, we have reduced the additional tax expense related to the one-time deemed repatriation tax by $11.3 million and reduced the additional tax expense previously recorded related to the Repatriation Transactions by $63.1 million. Due to certain adjustments related to the Repatriation Transactions, our deferred tax asset related to federal NOL carryforwards was increased as of December 2017. This increased deferred asset was then subject to revaluation due to the reduction of the federal tax rate resulting in additional tax expense of approximately $34.2 million. We do not consider these adjustments to be final amounts and expect to continue to refine these provisional estimates through our fiscal year-end in accordance with SAB 118. |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We report our segment information in the same way management internally organizes the business in assessing performance and making decisions regarding allocation of resources in accordance with ASC 280-10- Segment Reporting. We determined that we have three reportable segments, organized and managed principally by geographic region. Our reportable segments are North America, Europe and Australasia. We report all other business activities in Corporate and unallocated costs. Factors considered in determining the three reportable segments include the nature of business activities, the management structure accountable directly to the CODM, the discrete financial information available and the information regularly reviewed by the CODM. Management reviews net revenues and Adjusted EBITDA (as defined below) to evaluate segment performance and allocate resources. We define Adjusted EBITDA as net income (loss), adjusted for the following items: equity earnings of non-consolidated entities; income tax; depreciation and amortization; interest expense, net; impairment and restructuring charges; gain on previously held shares of equity investment; (gain) loss on sale of property and equipment; share-based compensation expense; non-cash foreign exchange transaction/translation (income) loss; other non-cash items; other items; and costs related to debt restructuring and debt refinancing. Prior year balances have been revised with the activity being adjusted through the “Net revenues from external customers - North America” line below. See detail in Note 1 - Description of Company and Summary of Significant Accounting Policies. The following tables set forth certain information relating to our segments’ operations.
Reconciliations of net income to Adjusted EBITDA are as follows:
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Capital Stock |
9 Months Ended |
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Sep. 29, 2018 | |
Equity [Abstract] | |
Capital Stock | Capital Stock On February 1, 2017, immediately prior to the closing of the IPO, the Company filed its Charter with the Delaware Secretary of State, and the Company’s Bylaws became effective, each as contemplated by the registration statement we filed in connection with our IPO. The Charter, among other things, provides that the Company’s authorized capital stock consists of 900,000,000 shares of Common Stock, par value $0.01 per share and 90,000,000 shares of preferred stock, par value $0.01 per share. Preferred Stock – Our Board of Directors is authorized to issue Preferred Stock from time to time in one or more series and with such rights, privileges and preferences as the Board may from time to time determine. We have not issued any shares of preferred stock. Common Stock – As of December 31, 2016, we were governed by our pre-IPO charter, which provided the authority to issue 22,810,000 shares of common stock, with a par value of $0.01 per share, of which 22,379,800 shares were designated common stock and 430,200 shares were designated as Class B-1 Common Stock. On January 3, 2017, our pre-IPO charter was amended authorizing us to issue 900,000,000 shares of common stock, with a par value of $0.01 per share. Each share of common stock had the same rights, privileges, interest and attributes and was subject to the same limitations as every other share. Under our pre-IPO charter, each share of Class B-1 Common Stock was convertible at the option of the holder into shares of common stock at the same ratio on the date of conversion as a share of Series A-1 Stock would have been convertible on such date of conversion, assuming that no cash dividends had been paid on the Series A-1 Stock (or its predecessor security) since the date of initial issuance. Immediately prior to the closing of our IPO, all of the outstanding shares of Class B-1 Common Stock were converted into 309,404 shares of common stock. Common Stock includes the basis of shares outstanding plus amounts recorded as additional paid-in capital. Shares outstanding exclude the shares issued to the Employee Benefit Trust that are considered similar to treasury shares and total 193,941 shares at both September 29, 2018 and December 31, 2017 with a total original issuance value of $12.4 million. On February 1, 2017, we closed our IPO and received $480.3 million in proceeds, net of underwriting discounts and commissions. Costs associated with our initial public offering of $7.9 million, including $5.9 million of capitalized costs included in “other assets” as of previous period end, were charged to equity upon completion of the IPO. In April 2018, our Board of Directors authorized the repurchase of up to $250 million of our Common Stock. Purchases are made in accordance with all applicable securities laws and regulations and may be funded from available liquidity including available cash or borrowings under existing or future credit facilities. The timing and amount of any repurchases of Common Stock will be based on JELD-WEN’s liquidity, general business and market conditions and other factors, including alternative investment opportunities. The term of the repurchase program extends through December 31, 2019. During the three months ended September 29, 2018, we repurchased 1,436,677 shares of our Common Stock at an average purchase price per share of $25.48. During the nine months ended September 29, 2018, we repurchased 3,080,594 shares of our Common Stock at an average purchase price per share of $27.14. |
Revenue Recognition |
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition Revenue is recognized when obligations under the terms of a contract with our customer are satisfied. Generally, this occurs with the transfer of control of our products or services. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. The taxes we collect concurrent with revenue-producing activities (e.g., sales tax, value added tax, and other taxes) are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The expected costs associated with our base warranties and field service actions continue to be recognized as expense when the products are sold (see Note 10 - Warranty Liabilities). Since payment is due at or shortly after the point of sale, the contract asset is classified as a receivable. We disaggregate revenues from product sales and services based on geographical location. See Note 13 - Segment Information for further information on disaggregated revenue. Deferred Revenue – We record deferred revenue when we collect pre-payments from customers for performance obligations we expect to fulfill through future performance of a service or delivery of a product. We classify our deferred revenue based on our estimate as to when we expect to satisfy the related performance obligations. Current deferred revenues are included in accrued expenses and other current liabilities in the accompanying unaudited consolidated balance sheets. Significant changes in the deferred revenue balances during the period are as follows:
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic earnings per share is calculated by dividing net earnings attributable to common shareholders by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net earnings per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common share equivalents outstanding for the period, determined using the treasury-stock method. Common stock options, unvested Common Restricted Stock Units and unvested Common Performance Share Units are considered to be common stock equivalents included in the calculation of diluted net income per share. The basic and diluted income per share calculations are presented below:
The following table provides the securities that could potentially dilute basic earnings per share in the future, but were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive:
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Stock Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation | Stock Compensation Prior to the IPO, our Amended and Restated Stock Incentive Plan, the “Stock Incentive Plan,” allowed us to offer common options, B-1 common options and common RSUs for the benefit of our employees, affiliate employees and key non-employees. Under the Stock Incentive Plan, we could award up to an aggregate of 2,761,000 common shares and 4,732,200 B-1 common shares. The Stock Incentive Plan provided for accelerated vesting of awards upon the occurrence of certain events. Through December 31, 2016, we issued 5,156,976 options and 385,220 RSUs under the Stock Incentive Plan. In connection with our IPO, the Board adopted and our shareholders approved the JELD-WEN Holding, Inc. 2017 Omnibus Equity Plan, the “Omnibus Equity Plan.” Under the Omnibus Equity Plan, equity awards may be made in respect of 7,500,000 shares of our common stock. Under the Omnibus Equity Plan, awards may be granted in the form of options, RSUs, stock appreciation rights, dividend equivalent rights, share awards, and performance-based awards (including performance share units and performance-based restricted stock). The activity under our incentive plans for the periods presented are reflected in the following tables.
Stock-based compensation expense was $4.2 million and $12.4 million for the three and nine months ended September 29, 2018, respectively and $5.1 million and $15.8 million in the corresponding periods ended September 30, 2017, respectively. As of September 29, 2018, there was $27.7 million of total unrecognized compensation expense related to non-vested share-based compensation arrangements. This cost is expected to be recognized over the remaining weighted-average vesting period of 2.2 years. |
Impairment and Restructuring Charges |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment and Restructuring Charges | Impairment and Restructuring Charges Closure costs and impairment charges for operations not qualifying as discontinued operations are classified as impairment and restructuring charges in our unaudited consolidated statements of operations. In the third quarter of 2018, we incurred impairment and restructuring costs of $3.9 million, primarily due to severance costs in the U.S. and Europe. In the third quarter of 2017, we incurred impairment and restructuring costs of $2.3 million, primarily related to administrative restructuring in the U.S. and restructuring in our Europe segment. In the second quarter of 2018, we incurred impairment and restructuring costs of $2.5 million, primarily due to a $2.4 million charge resulting from exiting several facilities in our Australasia segment and charges related to personnel restructuring of $0.7 million in our Europe and Corporate segments, offset by a favorable impact of $0.6 million in the North America segment primarily related to a reduction in reserve for an early lease termination. In the second quarter of 2017, we incurred impairment and restructuring costs of $0.6 million, primarily related to restructuring in our Europe segment. In the first quarter of 2018, we incurred impairment and restructuring costs of $3.0 million, including $2.9 million for plant consolidations in Canada and Australia, $1.5 million for lease termination costs and reduction in workforce in the U.S. and $0.7 million of other costs offset by $2.1 million of reduction in expense due to a favorable tax ruling in the U.S. related to a prior divestiture. In the first quarter of 2017, we incurred impairment and restructuring costs of $1.2 million, primarily related to restructuring in our Europe segment. The table below summarizes the amounts included in impairment and restructuring charges in the accompanying unaudited consolidated statements of operations:
Short-term restructuring accruals are recorded in accrued expenses and totaled $4.7 million and $7.2 million as of September 29, 2018 and December 31, 2017, respectively. Long-term restructuring accruals are recorded in deferred credits and other liabilities and totaled $1.6 million and $3.9 million as of September 29, 2018 and December 31, 2017, respectively. The following is a summary of the restructuring accruals recorded and charges incurred:
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Other (Income) Expense |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (Income) Expense | Other (Income) Expense The table below summarizes the amounts included in other (income) expense in the accompanying unaudited consolidated statements of operations:
In accordance with our adoption of ASU 2017-07, prior year balances have been revised with the activity being adjusted through the “Pension benefit expense” line above. See detail in Note 1 - Description of Company and Summary of Significant Accounting Policies. Prior period balances in the table above have been reclassified to conform to current-period presentation. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments All derivatives are recorded as assets or liabilities in the unaudited consolidated balance sheets at their respective fair values. For derivatives that qualify for hedge accounting, changes in the fair value related to the effective portion of the hedge are recognized in earnings at the same time as either the change in fair value of the underlying hedged item or the effect of the hedged item’s exposure to the variability of cash flows. Changes in fair value related to the ineffective portion of the hedge are recognized immediately in earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting, or fail to meet the criteria thereafter, are also recognized in the unaudited consolidated statements of operations. See Note 21 - Fair Value Measurements for additional information on the fair value of our derivative assets and liabilities. Foreign currency derivatives – We are exposed to the impact of foreign currency fluctuations in certain countries in which we operate. In most of these countries, the exposure to foreign currency movements is limited because the operating revenues and expenses of our business units are substantially denominated in the local currency. To the extent borrowings, sales, purchases or other transactions are not executed in the local currency of the operating unit, we are exposed to foreign currency risk. To mitigate the exposure, we enter into a variety of foreign currency derivative contracts, such as forward contracts, option collars and cross-currency swaps. We use foreign currency derivative contracts, with a total notional amount of $141.0 million, to manage the effect of exchange fluctuations on forecasted sales, purchases, acquisitions, inventory and capital expenditures and certain intercompany transactions that are denominated in foreign currencies. We use foreign currency derivative contracts, with a total notional amount of $73.4 million, to hedge the effects of translation gains and losses on intercompany loans and interest. We also use foreign currency derivative contracts, with a total notional amount of $132.4 million, to mitigate the impact to the consolidated earnings of the Company from the effect of the translation of certain subsidiaries’ local currency results into U.S. dollars. We do not use derivative financial instruments for trading or speculative purposes. Hedge accounting has not been elected for any foreign currency derivative contracts. We record mark-to-market changes in the values of these derivatives in other (income) expense. We recorded mark-to-market losses of $3.7 million and gains of $4.0 million in the three and nine months ended September 29, 2018, respectively, and mark-to-market losses of $0.3 million and $12.1 million in the corresponding periods ended September 30, 2017, respectively. Interest rate swap derivatives – We are exposed to interest rate risk in connection with our variable rate long-term debt. During the fourth quarter of 2014, we entered into interest rate swap agreements to manage this risk. These interest rate swaps were set to mature in September 2019 with half of the $488.3 million amortized aggregate notional amount having become effective in September 2015, and the other half having become effective in September 2016. On July 1, 2015, we amended our Term Loan Facility, and we received an additional $480.0 million in long-term borrowings. In conjunction with the issuance of the incremental term loan debt, we entered into additional interest rate swap agreements to manage our increased exposure to the interest rate risk associated with variable rate long-term debt. The additional interest rate swaps were set to mature in September 2019 with half of the $426.0 million aggregate notional amount having become effective in June 2016 and the other half having become effective in December 2016. In conjunction with the December 2017 refinancing of the Term Loan Facility (see Note 11 - Long-Term Debt), we terminated all of the interest rate swaps having outstanding notional amounts of $914.3 million and recorded a loss on termination of $3.6 million in consolidated other comprehensive income (loss), which will be amortized as interest expense over the life of the original interest rate swaps. The unamortized, pre-tax balance of this loss recorded in consolidated other comprehensive income (loss) was $1.9 million and $3.4 million at September 29, 2018 and December 31, 2017, respectively. The interest rate swap agreements were designated as cash flow hedges and, prior to their termination in December 2017, effectively changed the LIBOR-based portion of the interest rate (or “base rate”) on a portion of the debt outstanding under our Term Loan Facility to the weighted average fixed rates per the time frames below:
We recorded $2.1 million and $7.2 million of interest expense deriving from the interest rate swaps that were in effect during the three and nine months ended September 30, 2017, respectively. The agreements with our counterparties contained a provision where we could be declared in default on our derivative obligations if we either default or, in certain cases, are capable of being declared in default on any of our indebtedness greater than specified thresholds. These agreements also contained a provision where we could be declared in default subsequent to a merger or restructuring type event if the creditworthiness of the resulting entity is materially weaker. The fair values of derivative instruments held are as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements We record financial assets and liabilities at fair value based on FASB guidance related to fair value measurements. The guidance requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A valuation hierarchy consisting of three levels was established based on observable and non-observable inputs. The three levels of inputs are: Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-driven valuations whose significant inputs are observable or whose significant value drivers are observable. Level 3 – Significant inputs to the valuation model that are unobservable. The recorded fair values of these instruments were as follows:
Derivative assets and liabilities reported in level 2 include foreign currency contracts. The fair values of the foreign currency contracts were determined using a conventional valuation system with observable inputs. See Note 20 - Derivative Financial Instruments for additional information about our derivative assets and liabilities. The non-financial assets that are measured at fair value on a non-recurring basis are presented below:
The valuation methodologies for the level 3 items are based primarily on internal cash flow projections. Fair Value of Financial Instruments As part of our normal business activities we invest in financial assets and incur financial liabilities. Our recorded financial instruments consist primarily of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, notes receivable, notes payable and fair value of derivative instruments. The fair values of these financial instruments approximate their recorded values as of September 29, 2018 and December 31, 2017 due to their short-term nature, variable interest rates and mark-to-market accounting for derivative contracts. The fair values of long-term receivables were evaluated using a discounted cash flow analysis and long-term debt is valued using market price quotes. The fair value of long-term receivables approximated carrying values at both September 29, 2018 and December 31, 2017. The fair value of our debt is estimated using quoted market prices when available. When quoted market prices are not available, fair value is estimated based on current market interest rates for debt with similar maturities and credit quality. Long-term debt indicated a fair value of $62.5 million lower and $8.7 million higher than the gross recorded value as of September 29, 2018 and December 31, 2017, respectively. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value Measurements We record financial assets and liabilities at fair value based on FASB guidance related to fair value measurements. The guidance requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A valuation hierarchy consisting of three levels was established based on observable and non-observable inputs. The three levels of inputs are: Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-driven valuations whose significant inputs are observable or whose significant value drivers are observable. Level 3 – Significant inputs to the valuation model that are unobservable. The recorded fair values of these instruments were as follows:
Derivative assets and liabilities reported in level 2 include foreign currency contracts. The fair values of the foreign currency contracts were determined using a conventional valuation system with observable inputs. See Note 20 - Derivative Financial Instruments for additional information about our derivative assets and liabilities. The non-financial assets that are measured at fair value on a non-recurring basis are presented below:
The valuation methodologies for the level 3 items are based primarily on internal cash flow projections. Fair Value of Financial Instruments As part of our normal business activities we invest in financial assets and incur financial liabilities. Our recorded financial instruments consist primarily of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, notes receivable, notes payable and fair value of derivative instruments. The fair values of these financial instruments approximate their recorded values as of September 29, 2018 and December 31, 2017 due to their short-term nature, variable interest rates and mark-to-market accounting for derivative contracts. The fair values of long-term receivables were evaluated using a discounted cash flow analysis and long-term debt is valued using market price quotes. The fair value of long-term receivables approximated carrying values at both September 29, 2018 and December 31, 2017. The fair value of our debt is estimated using quoted market prices when available. When quoted market prices are not available, fair value is estimated based on current market interest rates for debt with similar maturities and credit quality. Long-term debt indicated a fair value of $62.5 million lower and $8.7 million higher than the gross recorded value as of September 29, 2018 and December 31, 2017, respectively. |
Commitment and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Litigation – We are involved in various legal proceedings, claims, and government audits arising in the ordinary course of business. We record our best estimate of a loss when the loss is considered probable and the amount of such loss can be reasonably estimated. Legal judgments and estimated settlements have been included in accrued expenses in the accompanying unaudited consolidated balance sheets. When a loss is probable and there is a range of estimated loss with no best estimate within the range, we record the minimum estimated liability related to the lawsuit or claim. As additional information becomes available, we assess the potential liability related to pending litigation and claims and revise our accruals if necessary. Because of uncertainties related to the resolution of lawsuits and claims, the ultimate outcome may differ materially from our estimates. In the opinion of management and based on the liability accruals provided, other than as described below, as of September 29, 2018, there are no current proceedings or litigation matters involving the Company or its property that we believe would have a material adverse effect on our unaudited consolidated financial position or cash flows, although they could have a material adverse effect on our operating results for a particular reporting period. Steves & Sons, Inc. vs JELD-WEN – We sell molded door skins to certain customers pursuant to long-term contracts, and these customers in turn use the molded door skins to manufacture interior doors and compete directly against us in the marketplace. We have given notice of termination of one of these contracts and, on June 29, 2016, the counterparty to the agreement, Steves and Sons, Inc. (“Steves”) filed a claim against JWI in the U.S. District Court for the Eastern District of Virginia, Richmond Division (“Eastern District of Virginia”). The complaint alleges that our acquisition of CMI, a competitor in the molded door skins market, together with subsequent price increases and other alleged acts and omissions, violated antitrust laws and constituted a breach of contract and breach of warranty. Specifically, the complaint alleges that our acquisition of CMI substantially lessened competition in the molded door skins market. The complaint seeks declaratory relief, ordinary and treble damages, and injunctive relief, including divestiture of certain assets acquired in the CMI acquisition. On February 15, 2018, a jury in the Eastern District of Virginia returned a verdict that was unfavorable to JWI with respect to Steves’ claims that our acquisition of CMI violated Section 7 of the Clayton Act and found that JWI breached the supply agreement between the parties. The verdict awarded Steves $12.2 million for past damages under both the Clayton Act and breach of contract claims and $46.5 million in future lost profits under the Clayton Act claim. In October 2018, the presiding judge vacated a portion of the jury verdict, reducing the contract damages award by $2.2 million. We expect that Steves will be required to elect to recover its past damages either under the Clayton Act claims or the contract claims, but not both. If a judgment is entered under the Clayton Act, any damages awarded will be trebled. In addition, if a judgment is entered under either theory in accordance with the verdict, Steves will be entitled to an award of attorney’s fees, which amounts have not yet been quantified. We asserted a position that, because future lost profits were awarded, Steves is not permitted to pursue its claim for divestiture of certain assets acquired in the CMI acquisition. An evidentiary hearing on equitable remedies, including divestiture, was held in April 2018. On October 5, 2018, the presiding judge issued an opinion finding that a remedy of divestiture is an appropriate remedy. We intend to vigorously oppose entry of an adverse judgment, and to appeal any adverse judgment that may be entered. We continue to believe that Steves’ claims lack merit, Steves’ damages calculations are speculative and excessive, and Steves is not entitled in any event to the extraordinary remedy of divestiture. We believe that multiple pretrial and trial rulings were erroneous and improperly limited the Company’s defenses, and that judgment in accordance with the verdict would be improper for several reasons under applicable law. However, based upon the recent rulings described above, in the current period the Company recorded a charge of $76.5 million associated with this loss contingency. The charge reflects the judgment anticipated to be entered against the Company, including the trebling of $12.2 million of past damages under the Clayton Act, and estimated legal fees. The charge does not include any amount for lost profits or divestiture. Steves has indicated its intention to elect divestiture, rather than lost profits. Any judgment entered that awards lost profits, if ultimately upheld after exhaustion of our appellate remedies, could have a material adverse effect on our financial position, operating results, or cash flows, particularly for the reporting period in which a loss is recorded. Because the operations acquired from CMI have been fully integrated into the Company’s other operations, divestiture of those operations would be difficult if not impossible and, therefore, it is not possible to estimate the cost of any final divestiture order or the extent to which such an order would have a material adverse effect on our financial position, operating results or cash flows. During the course of the proceedings in the Eastern District of Virginia, we discovered certain facts that led us to conclude that Steves, its principals and certain former employees of the Company had misappropriated Company trade secrets, violated the terms of various agreements between the Company and those parties and violated other laws. On May 11, 2018, a jury in the Eastern District of Virginia returned a verdict on our trade secrets claims against Steves and awarded damages in the amount of $1.2 million. The presiding judge has entered a judgment in our favor for those amounts. Our claim for a permanent injunction remains pending and our other claims remain pending in Bexar County, Texas. Grubb Lumber Company, Inc. v. Masonite Corporation and JELD-WEN, Inc. - On October 19, 2018, Grubb Lumber Company, on behalf of itself and others similarly situated, filed a putative class action lawsuit against us and one of our competitors in the doors market, Masonite Corporation (“Masonite”) in the Eastern District of Virginia. The suit alleges that Masonite and we violated Section 1 of the Sherman Act by engaging in a scheme to artificially raise, fix, maintain, or stabilize the prices of interior molded doors in the United States. The suit further alleges that our acquisition of CMI violated Section 7 of the Clayton Act by substantially lessening competition in the molded doors market. The complaint seeks unquantified ordinary and treble damages, declaratory relief, interest, costs and attorneys’ fees. The Company believes the claims lack merit and intends to vigorously defend against the action. At this early stage of the proceedings, we are unable to conclude that a loss is probable or to estimate the potential magnitude of any loss in this matter, although a loss could have a material adverse effect on our operating results, consolidated financial position or cash flows. Self-Insured Risk – We self-insure substantially all of our domestic business liability risks including general liability, product liability, warranty, personal injury, auto liability, workers’ compensation and employee medical benefits. Excess insurance policies from independent insurance companies generally cover exposures between $3.0 million and $250.0 million for domestic product liability risk and exposures between $0.5 million and $250.0 million for auto, general liability, personal injury and workers’ compensation. We have no stop-gap coverage on claims covered by our self-insured domestic employee medical plan and are responsible for all claims thereunder. We estimate our provision for self-insured losses based upon an evaluation of current claim exposure and historical loss experience. Actual self-insurance losses may vary significantly from these estimates. At September 29, 2018 and December 31, 2017, our accrued liability for self-insured risks was $72.6 million and $73.3 million respectively. Indemnifications – At September 29, 2018, we had commitments related to certain representations made in contracts for the purchase or sale of businesses or property. These representations primarily relate to past actions such as responsibility for transfer taxes if they should be claimed, and the adequacy of recorded liabilities, warranty matters, employment benefit plans, income tax matters or environmental exposures. These guarantees or indemnification responsibilities typically expire within one to three years. We are not aware of any material amounts claimed or expected to be claimed under these indemnities. From time to time and in limited geographic areas, we have entered into agreements for the sale of our products to certain customers that provide additional indemnifications for liabilities arising from construction or product defects. We cannot estimate the potential magnitude of such exposures, but to the extent specific liabilities have been identified related to product sales, liabilities have been provided in the warranty accrual in the accompanying unaudited consolidated balance sheets. Performance Bonds and Letters of Credit – At times, we are required to provide letters of credit, surety bonds or guarantees to customers, vendors and others. Stand-by letters of credit are provided to certain customers and counterparties in the ordinary course of business as credit support for contractual performance guarantees, advanced payments received from customers and future funding commitments. The outstanding performance bonds and stand-by letters of credit were as follows:
Environmental Contingencies – We periodically incur environmental liabilities associated with remediating our current and former manufacturing sites as well as penalties for not complying with environmental rules and regulations. We record a liability for remediation costs when it is probable that we will be responsible for such costs and the costs can be reasonably estimated. These environmental liabilities are estimated based on current available facts and current laws and regulations. Accordingly, it is likely that adjustments to the estimated liabilities will be necessary as additional information becomes available. Short-term environmental liabilities and settlements are recorded in accrued expenses in the accompanying unaudited consolidated balance sheets and totaled $0.5 million at both September 29, 2018 and December 31, 2017. Long-term environmental liabilities are recorded in deferred credits and other liabilities in the accompanying unaudited consolidated balance sheets. No long-term environmental liabilities were recorded at September 29, 2018 and $0.1 million were recorded at December 31, 2017. Everett, Washington WADOE Action - In 2008, we entered into an Agreed Order with the WADOE to assess historic environmental contamination at our former manufacturing site in Everett, Washington. As part of this order, we also agreed to develop a CAP identifying remediation options and the feasibility thereof. We are currently working with WADOE to finalize our assessment and draft CAP. We estimate the remaining cost to complete our assessment and develop the CAP at $0.5 million, which we have fully accrued. We are working with insurance carriers who provided coverage to a previous owner and operator of the site, and at this time we cannot reasonably estimate the cost associated with any remedial action we would be required to undertake and have not provided for any remedial action in our accompanying unaudited consolidated financial statements. Should extensive remedial action ultimately be required, and if those costs are not found to be covered by insurance, the cost of remediation could have a material adverse effect on our results of operations and cash flows. Everett, Washington NRD Action - In November 2014, we received a letter from the NRD, a federal agency, regarding a potential multi-party settlement of an impending damage claim related to historic environmental contamination on a site we sold in December 2013. In April 2018, the court approved a settlement agreement under which we paid $1.3 million to settle the claim. Of the $1.3 million, the prior insurance carrier for the site has agreed to fund $1.1 million of the settlement. Amounts related to the settlement are fully paid, and we do not expect to incur any further significant loss related to the settlement of this matter. Towanda, Pennsylvania Consent Order - In 2015, we entered into a COA with the PaDEP to remove a pile of wood fiber waste from our site in Towanda, Pennsylvania, which we acquired in connection with our acquisition of CMI in 2013, by using it as fuel for a boiler at that site. The COA replaced a 1995 Consent Decree between CMI’s predecessor Masonite, Inc. and PaDEP. Under the COA, we are required to achieve certain periodic removal objectives and ultimately remove the entire pile by August 31, 2022. There are currently $11.0 million in bonds posted in connection with these obligations. If we are unable to remove this pile by August 31, 2022, then the bonds will be forfeited and we may be subject to penalties by PaDEP. We currently anticipate meeting all applicable removal deadlines; however, if our operations at this site decrease and we burn less fuel than currently anticipated, we may not be able to meet such deadlines. Service Agreements – In February 2015, we entered into a strategic servicing agreement with a third-party vendor to identify and execute cost reduction opportunities. The agreement provided for a tiered fee structure directly tied to cost savings realized. This contract terminated pursuant to its own terms on December 31, 2015, and we made a final payment of $6.3 million on January 2, 2018. We expect no further costs related to this issue. Employee Stock Ownership Plan – We have historically provided cash to our U.S. ESOP in order to fund required distributions to participants through the repurchase of shares of our common stock. Following our February 2017 IPO, the value of a share of Common Stock held through the ESOP is now based on our public share price. We do not anticipate that we will fund future distributions. |
Employee Retirement and Pension Benefits |
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Employee Retirement and Pension Benefits | Employee Retirement and Pension Benefits U.S. Defined Benefit Pension Plan – Certain U.S. hourly employees participate in our defined benefit pension plan. The plan is not open to new employees. Pension expense, as recorded in the accompanying unaudited consolidated statements of operations, is determined by using spot rate assumptions made on January 1 of each year as summarized below:
During the three and nine months ended September 29, 2018, we made required contributions to our U.S. defined benefit pension plan, or “the Plan,” amounting to $1.4 million and $2.7 million, respectively. During the three and nine months ended September 30, 2017, there were no required contributions to the Plan. We did not make any voluntary contributions during any of the periods described above. During fiscal year 2018, we expect to make additional cash contributions to the Plan of approximately $1.4 million. In accordance with our adoption of ASU 2017-07, pension benefit expenses are recorded in other (income) expense and totaled $1.6 million and $6.9 million for the three and nine months ended September 29, 2018, respectively, and $2.7 million and $8.0 million for the three and nine months ended September 30, 2017, respectively. Prior year amounts have been reclassified to conform to the current year presentation. |
Supplemental Cash Flow Information |
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Supplemental Cash Flow Information | Supplemental Cash Flow Information
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Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events We have evaluated subsequent events from the balance sheet date through November 6, 2018, and determined that there are no other items to disclose. |
Description of Company and Summary of Significant Accounting Policies (Policies) |
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Basis of Presentation | Basis of Presentation – The statement of operations for the three and nine months ended September 30, 2017 has been revised to reflect the correction of certain errors and other accumulated misstatements as described in Note 36 - Revision of Prior Period Financial Statements in our Form 10-K for the year ended December 31, 2017. The errors did not impact the subtotals for cash flows from operating activities, investing activities or financing activities for any of the periods affected. We do not believe the errors corrected were material to our previously issued financial statements. The errors are summarized in the “Revision” column in the table below. As a result of our retrospective application of ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, we reclassified certain amounts in our statement of operations for the three and nine months ended September 30, 2017 as noted below. See “Recently Adopted Accounting Standards” below for additional information. |
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Fiscal Year | Fiscal Year – We operate on a fiscal calendar year, and each interim quarter is comprised of two 4-week periods and one 5-week period, with each week ending on a Saturday. Our fiscal year always begins on January 1 and ends on December 31. As a result, our first and fourth quarters may have more or fewer days included than a traditional 91-day fiscal quarter. |
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Use of Estimates | Use of Estimates – The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the unaudited consolidated financial statements and related notes. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets including goodwill and other intangible assets, employee benefit obligations, income tax uncertainties, contingent assets and liabilities, provisions for bad debt, inventory, warranty liabilities, legal claims, valuation of derivatives, environmental remediation and claims relating to self-insurance. Actual results could differ due to the uncertainty inherent in the nature of these estimates. |
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Recently Adopted Accounting Standards and Recent Accounting Standards Not Yet Adopted | Recently Adopted Accounting Standards – In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“SAB 118”). The amendments in this update provide guidance on when to record and disclose provisional amounts for certain income tax effects of the Tax Act. The amendments also require any provisional amounts or subsequent adjustments to be included in net income from continuing operations. Additionally, this ASU discusses required disclosures that an entity must make with regard to the Tax Act. This ASU is effective immediately as new information is available to adjust provisional amounts that were previously recorded. We have accounted for the tax effects of the Tax Act under the guidance of SAB 118 on a provisional basis. Our accounting for certain income tax effects is incomplete, but we have determined reasonable estimates for those effects and have recorded provisional amounts in our consolidated financial statements as of September 29, 2018 and December 31, 2017. We expect to complete our analysis within the measurement period in accordance with SAB 118. In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The ASU provides guidance as to which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. We adopted this ASU in the first quarter of 2018 and the adoption of this standard did not impact our unaudited consolidated financial statements; however, modification accounting is now required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. We adopted this ASU using the retrospective transition method in the first quarter of 2018 and applied the practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. We report the service cost component of the net periodic pension and post-retirement costs in the same line item in the statement of operations as other compensation costs arising from services rendered by the employees during the period for both our U.S. and Non-U.S. plans. The other components of net periodic pension and post-retirement costs are presented in other income in the unaudited consolidated statements of operations. We adjusted the unaudited consolidated statements of operations in all comparative periods presented as noted in “Basis of Presentation,” above. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this ASU provide new guidance to determine when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in an identifiable asset or group of similar identifiable assets. If this threshold is met, the set of transferred assets is not a business. If the threshold is not met, the entity then must evaluate whether the set includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. This ASU removes the evaluation of whether a market participant could replace missing elements. The amendments also narrow the definition of the term output so that the term is consistent with how outputs are described in Topic 606. We adopted this standard prospectively in the first quarter of 2018. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The standard requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments in this update eliminate the exception for an intra-entity transfer of an asset other than inventory. The amendments do not include new disclosure requirements; however, existing disclosure requirements might be applicable when accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. We adopted this ASU in the first quarter of 2018 on a modified retrospective basis and the adoption did not have a material impact on our unaudited consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU enhances the reporting model for financial instruments to provide users of financial statements with more decision-useful information by requiring equity investments to be measured at fair value with changes in fair value recognized in net income. It simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment and eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities. It also requires an entity to present separately in other comprehensive income (loss) the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the consolidated financial statements. We adopted this ASU in the first quarter of 2018 and the adoption did not have a material impact on our unaudited consolidated financial statements. ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, eliminates the diversity in practice related to the classification of certain cash receipts and payments for debt prepayment or extinguishment costs, the maturing of a zero-coupon bond, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, distributions from certain equity method investees and beneficial interest obtained in a financial asset securitization. ASU No. 2016-18, Topic 230: Restricted Cash, requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. We elected to early adopt these ASUs using the retrospective transition method in the quarter ended December 31, 2017 and adjusted the consolidated statements of cash flows in all comparative periods presented. The adjustments to the prior period statements of cash flows are as follows:
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606) as modified by subsequently issued ASU No. 2016-08 - Principal versus Agent Considerations (Reporting Revenue Gross versus Net) and ASU Nos. 2015-14, 2016-10, 2016-12 and 2016-20 (collectively ASU No. 2014-09). ASU No. 2014-09 superseded existing revenue recognition standards with a single model unless those contracts were within the scope of other standards. ASC 606 is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services and satisfaction of performance obligations to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. We adopted ASU No. 2014-09 in the first quarter of 2018, using the modified retrospective transition practical expedient that allows us to evaluate the impact of contracts as of the adoption date rather than evaluating the impact of the contracts at the time they occurred prior to the adoption date. There was no material effect associated with the election of this practical expedient. As a practical expedient, shipping and handling fee revenues and the related expenses are reported as fulfillment revenues and expenses for all customers. Therefore, all shipping and handling costs associated with outbound freight are accounted for as fulfillment costs and are included in cost of sales. As a practical expedient, we do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less. We do not typically include extended payment terms in our contracts with customers. We have also elected not to provide the remaining performance obligations disclosures related to service contracts in accordance with the practical expedient in ASC 606-10-55-18. We recognize revenue in the amount to which the entity has a right to invoice and have adopted this election to not provide the remaining performance obligations related to service contracts. See Note 15 - Revenue Recognition for additional information. Recent Accounting Standards Not Yet Adopted – In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which clarifies the accounting treatment for implementation costs for cloud computing arrangements (hosting arrangements) that are service contracts. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. We are currently assessing the effect that this ASU will have on our consolidated financial statements and disclosures. In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which adds, modifies and clarifies several disclosure requirements for employers that sponsor defined benefit pension or other post retirement plans. This guidance is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. We are currently assessing the effect that this ASU will have on our disclosures. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, Fair Value Measurement. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. We are currently assessing the effect that this ASU will have on our disclosures. In June 2018, the FASB issued ASU No. 2018-07 - Compensation - Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under ASU No. 2018-07, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted for any interim and annual financial statements that have not yet been issued. We are currently evaluating the potential impact of this ASU on our consolidated financial statements and disclosures. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Act. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted for any interim and annual financial statements that have not yet been issued. We are currently evaluating the potential impact on our consolidated financial statements and disclosures. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The targeted amendments help simplify certain aspects of hedge accounting and result in a more accurate portrayal of the economics of an entity’s risk management activities in its financial statements. For cash flow and net investment hedges as of the adoption date, the guidance requires a modified retrospective approach. The guidance is effective for annual periods beginning after December 15, 2018 and interim periods within those years, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To simplify the measurement of goodwill impairments, this ASU eliminates Step 2 from the goodwill impairment test, which required the calculation of the implied fair value of goodwill. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The guidance will be effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Section A - Leases: Amendments to the FASB Accounting Standards Codification. The standard requires lessees to recognize the assets and liabilities arising from leases on the balance sheet and retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. The accounting standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are currently identifying our leases as that term is defined in the standard, extracting data from the leases into our technology solution, and are assessing the impact of the standard on our financial statements. We will adopt the practical expedients outlined in ASU 2018-01, Leases (Topic 842) Land Easement Practical Expedient for transition to ASC 842, and the additional transition method outlined in ASU 2018-11, Leases (Topic 842) Targeted Improvements. Under this new transition method, we will apply the new standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We continue evaluating the practical expedients as they are issued, but we have not decided on the utilization of practical expedients. However, the adoption of this standard will result in the recognition of a lease liability and related right-of-use asset and will materially impact our balance sheet. With the exception of the new standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the quarter ended September 29, 2018 that are of significance or potential significance to us. As a result of our retrospective application of ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, we reclassified certain amounts in our statement of operations for the three and nine months ended September 30, 2017 as noted below. See “Recently Adopted Accounting Standards” below for additional information. In addition, to conform with current-period presentation of revenues, we reclassified certain amounts in our statement of operations for the three and nine months ended September 30, 2017. The reclassification was not material to our previously issued financial statements and is summarized in the “Reclassification” column in the table below.
* Note: reclassification relates entirely to revenue in our North America segment. As a result of our early adoption of ASU No. 2016-15, restricted cash balances previously presented in other assets are now presented in beginning and ending cash and cash equivalents in the accompanying unaudited consolidated statements of cash flows. See “Recently Adopted Accounting Standards” below for additional information. In addition, certain amounts within the notes accompanying these unaudited consolidated financial statements and balances in the accompanying unaudited consolidated statements of cash flows have been reclassified to conform with current-period presentation. All U.S. dollar and other currency amounts, except per share amounts, are presented in thousands unless otherwise noted. |
Description of Company and Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | In addition, to conform with current-period presentation of revenues, we reclassified certain amounts in our statement of operations for the three and nine months ended September 30, 2017. The reclassification was not material to our previously issued financial statements and is summarized in the “Reclassification” column in the table below.
* Note: reclassification relates entirely to revenue in our North America segment. The adjustments to the prior period statements of cash flows are as follows:
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Acquisitions Acquisitions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The preliminary fair values of the assets and liabilities acquired of the completed acquisitions are summarized below:
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory |
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Property and Equipment, Net (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Depreciation expense was recorded as follows:
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Goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The following table summarizes the changes in goodwill by reportable segment:
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Intangible Assets, Net (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | The cost and accumulated amortization values of our intangible assets were as follows:
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Schedule of Indefinite-Lived Intangible Assets | The cost and accumulated amortization values of our intangible assets were as follows:
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Finite-lived Intangible Assets Amortization Expense | Intangible assets that become fully amortized are removed from the accounts in the period that they become fully amortized. Amortization expense was recorded as follows:
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Other Assets (Tables) |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets |
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Accrued Expenses and Other Current Liabilities (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses and Other Current Liabilities |
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Warranty Liability (Tables) |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis of Warranty Liability | An analysis of our warranty liability is as follows:
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Our long-term debt, net of original issue discount and unamortized debt issuance costs, consisted of the following:
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reportable Segments, by Segment | The following tables set forth certain information relating to our segments’ operations.
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Reconciliation of Net Income to Adjusted EBITDA | Reconciliations of net income to Adjusted EBITDA are as follows:
|
Revenue Recognition (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||
Deferred Revenue | Significant changes in the deferred revenue balances during the period are as follows:
|
Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Earnings Per Share | The basic and diluted income per share calculations are presented below:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table provides the securities that could potentially dilute basic earnings per share in the future, but were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive:
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Stock Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | The activity under our incentive plans for the periods presented are reflected in the following tables.
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Impairment and Restructuring Charges (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment and Restructuring Costs | The table below summarizes the amounts included in impairment and restructuring charges in the accompanying unaudited consolidated statements of operations:
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Schedule of Restructuring Reserve by Type of Cost | The following is a summary of the restructuring accruals recorded and charges incurred:
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Other (Income) Expense (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other (Income) Expense | The table below summarizes the amounts included in other (income) expense in the accompanying unaudited consolidated statements of operations:
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Derivative Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions | The interest rate swap agreements were designated as cash flow hedges and, prior to their termination in December 2017, effectively changed the LIBOR-based portion of the interest rate (or “base rate”) on a portion of the debt outstanding under our Term Loan Facility to the weighted average fixed rates per the time frames below:
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The fair values of derivative instruments held are as follows:
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The recorded fair values of these instruments were as follows:
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Fair Value Measurements, Nonrecurring | The non-financial assets that are measured at fair value on a non-recurring basis are presented below:
|
Commitment and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Outstanding Performance Bonds and Stand-by Letter of Credit | The outstanding performance bonds and stand-by letters of credit were as follows:
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Employee Retirement and Pension Benefits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 29, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | Certain U.S. hourly employees participate in our defined benefit pension plan. The plan is not open to new employees. Pension expense, as recorded in the accompanying unaudited consolidated statements of operations, is determined by using spot rate assumptions made on January 1 of each year as summarized below:
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Supplemental Cash Flow Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Disclosures |
|
Accounts Receivable - Narratives (Details) - USD ($) $ in Millions |
Sep. 29, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
Allowance for doubtful accounts | $ 5.7 | $ 4.4 |
Inventories (Details) - USD ($) $ in Thousands |
Sep. 29, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 316,706 | $ 283,772 |
Work in process | 43,503 | 35,734 |
Finished goods | 159,373 | 85,847 |
Total inventories | $ 519,582 | $ 405,353 |
Property and Equipment, Net (Details) - USD ($) $ in Thousands |
Sep. 29, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Property and equipment | $ 1,940,332 | $ 1,863,624 |
Accumulated depreciation | (1,134,005) | (1,106,913) |
Total property and equipment, net | $ 806,327 | $ 756,711 |
Property and Equipment, Net - Narratives (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|---|
Nov. 30, 2016 |
Sep. 29, 2018 |
Jun. 30, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
Mar. 31, 2018 |
|
Property, Plant and Equipment | |||||||
Capital lease obligation | $ 20.4 | ||||||
Tenants improvements | $ 4.2 | ||||||
Increase in long term debt | $ 4.2 | ||||||
Property, Plant and Equipment | |||||||
Property, Plant and Equipment | |||||||
Impairment of assets | $ 0.3 | $ 0.2 | $ 0.9 | $ 0.2 | |||
Build-To-Suit Asset | |||||||
Property, Plant and Equipment | |||||||
BTS, term | 17 years | ||||||
Construction in progress | $ 20.0 |
Property and Equipment, Net - Depreciation (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Depreciation | ||||
Total depreciation expense | $ 23,066 | $ 21,979 | $ 68,553 | $ 63,884 |
Cost of sales | ||||
Depreciation | ||||
Total depreciation expense | 20,658 | 20,191 | 61,655 | 58,162 |
Selling, general and administrative | ||||
Depreciation | ||||
Total depreciation expense | $ 2,408 | $ 1,788 | $ 6,898 | $ 5,722 |
Goodwill - Rollforward (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 29, 2018
USD ($)
| |
Goodwill | |
Balance as of January 1 | $ 549,063 |
Acquisitions - preliminary allocation | 64,950 |
Acquisition remeasurements | (232) |
Currency translation | (18,458) |
Balance at period end | 595,323 |
North America | |
Goodwill | |
Balance as of January 1 | 201,560 |
Acquisitions - preliminary allocation | 17,645 |
Acquisition remeasurements | 918 |
Currency translation | (208) |
Balance at period end | 219,915 |
Europe | |
Goodwill | |
Balance as of January 1 | 268,162 |
Acquisitions - preliminary allocation | 30,167 |
Acquisition remeasurements | (1,174) |
Currency translation | (11,347) |
Balance at period end | 285,808 |
Australasia | |
Goodwill | |
Balance as of January 1 | 79,341 |
Acquisitions - preliminary allocation | 17,138 |
Acquisition remeasurements | 24 |
Currency translation | (6,903) |
Balance at period end | $ 89,600 |
Intangible Assets, Net - Cost and Accumulated Amortization (Details) - USD ($) $ in Thousands |
Sep. 29, 2018 |
Dec. 31, 2017 |
---|---|---|
Finite-Lived Intangible Assets | ||
Total amortizable intangibles | $ 297,929 | $ 226,661 |
Accumulated amortization | (71,392) | (60,348) |
Total intangibles, net | 226,537 | 166,313 |
Customer relationships and agreements | ||
Finite-Lived Intangible Assets | ||
Total amortizable intangibles | 110,704 | 105,485 |
Patents, licenses and rights | ||
Finite-Lived Intangible Assets | ||
Total amortizable intangibles | 78,466 | 47,385 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets | ||
Total amortizable intangibles | 53,547 | 38,600 |
Software | ||
Finite-Lived Intangible Assets | ||
Total amortizable intangibles | $ 55,212 | $ 35,191 |
Intangible Assets, Net - Amortization Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 5,120 | $ 4,007 | $ 14,987 | $ 10,924 |
Other Assets (Details) - USD ($) $ in Thousands |
Sep. 29, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Customer displays | $ 15,671 | $ 12,702 |
Deposits | 5,419 | 3,640 |
Long-term notes receivable | 4,866 | 4,984 |
Overfunded pension benefit obligation | 2,011 | 1,903 |
Other prepaid expenses | 1,760 | 1,869 |
Other long-term accounts receivable | 1,684 | 1,556 |
Debt issuance costs on unused portion of revolver facility | 1,051 | 2,045 |
Long-term taxes receivable | 800 | 0 |
Investments | 391 | 33,187 |
Total other assets | $ 33,653 | $ 61,886 |
Other Assets - Narratives (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 29, 2018 |
Mar. 31, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||
Equity method investment ownership percentage | 50.00% | |||||
Gain on previously held shares of an equity investment | $ 0 | $ 20,800 | $ 0 | $ 20,767 | $ 0 |
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 29, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|---|
Accounts Payable and Accrued Liabilities, Current | |||
Current portion of legal claims provision | $ 79,594 | $ 4,137 | |
Accrued sales and advertising rebates | 74,445 | 73,585 | |
Non-income related taxes | 28,417 | 19,996 | |
Accrued expenses | 21,572 | 23,530 | |
Current portion of warranty liability (Note 10) | 20,954 | 19,547 | $ 17,524 |
Current portion of accrued income taxes payable | 12,126 | 10,962 | |
Accrued interest payable | 11,394 | 1,945 | |
Current portion of deferred revenue (Note 15) | 10,970 | 9,970 | |
Current portion of accrued claim costs relating to self-insurance programs | 10,203 | 12,866 | |
Current portion of restructuring accrual (Note 18) | 4,680 | 7,162 | |
Current portion of derivative liability (Note 20) | 1,923 | 2,905 | |
Total accrued expenses and other current liabilities | 276,278 | $ 186,605 | |
Steve and Sons | |||
Accounts Payable and Accrued Liabilities, Current | |||
Current portion of legal claims provision | $ 76,500 |
Warranty Liability - Rollforward (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) | |||
Balance as of January 1 | $ 46,256 | $ 45,398 | |
Current period expense | 19,493 | 12,952 | |
Liabilities assumed due to acquisition | 1,541 | 0 | |
Experience adjustments | 500 | (29) | |
Payments | (20,128) | (14,015) | |
Currency translation | (548) | 978 | |
Balance as of period end | 47,114 | 45,284 | |
Current portion | (20,954) | (17,524) | $ (19,547) |
Long-term portion | $ 26,160 | $ 27,760 |
Warranty Liability - Narratives (Details) - USD ($) $ in Thousands |
9 Months Ended | |||
---|---|---|---|---|
Sep. 29, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Product Warranty Liability [Line Items] | ||||
Accrued warranty liability | $ 47,114 | $ 46,256 | $ 45,284 | $ 45,398 |
Minimum | ||||
Product Warranty Liability [Line Items] | ||||
Product warranty term | 1 year | |||
Maximum | ||||
Product Warranty Liability [Line Items] | ||||
Product warranty term | 10 years | |||
North America | ||||
Product Warranty Liability [Line Items] | ||||
Accrued warranty liability | $ 41,100 | |||
Product warranty, discount adjustment | $ 2,700 | |||
North America | Minimum | ||||
Product Warranty Liability [Line Items] | ||||
Product warranty discount rate (percentage) | 0.76% | |||
North America | Maximum | ||||
Product Warranty Liability [Line Items] | ||||
Product warranty discount rate (percentage) | 4.75% |
Long-Term Debt - Senior Notes (Details) - Senior notes |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
tranch
| |
Debt Instrument | |
Debt instrument face amount | $ 800,000,000.0 |
Number of tranches | tranch | 2 |
Debt issuance costs | $ 11,700,000 |
Senior Note Maturing December 2025 | |
Debt Instrument | |
Debt instrument face amount | $ 400,000,000.0 |
Stated interest rate (percent) | 4.63% |
Senior Note Maturing December 2027 | |
Debt Instrument | |
Debt instrument face amount | $ 400,000,000.0 |
Stated interest rate (percent) | 4.88% |
Segment Information - Narratives (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 29, 2018
USD ($)
segment
|
Sep. 30, 2017
USD ($)
|
|
Segment Reporting Information | ||||
Number of reportable segments | segment | 3 | |||
Write off of debt issuance cost | $ 6,097 | |||
Additional inventory costs | 1 | |||
Legal fees | $ 9,144 | $ 24,328 | 24,907 | |
Business acquisition, transaction costs | $ 1,789 | 1,358 | 5,953 | 1,432 |
Realized gain (loss) on hedge | 3,700 | (2,720) | 3,700 | (2,720) |
Secondary offering | 281 | 1,307 | ||
Legal settlement accrual | $ 76,500 | 76,500 | ||
Executive compensation expense | 2,401 | |||
Consolidating cost | 811 | |||
Business exit costs | 562 | |||
IPO cost | 348 | |||
Gain on the settlement of contract | 2,247 | |||
ABS | ||||
Segment Reporting Information | ||||
Inventory write-down | $ 12,191 | |||
Mattiovi | ||||
Segment Reporting Information | ||||
Inventory write-down | $ 439 | $ 439 |
Segment Information - Reconciliation of Net Income to EBITDA (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 29, 2018 |
Mar. 31, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Segment Reporting, Other Significant Reconciling Item, Consolidated | |||||
Net income | $ 28,885 | $ 51,275 | $ 104,608 | $ 104,481 | |
Equity earnings in non-consolidated entities | 0 | (1,075) | (738) | (2,629) | |
Income tax (benefit) expense | (31,606) | 13,042 | (12,442) | 32,997 | |
Depreciation and amortization | 31,248 | 27,551 | 90,279 | 80,603 | |
Interest expense, net | 18,341 | 17,200 | 51,832 | 61,639 | |
Impairment and restructuring charges | 3,891 | 2,262 | 9,378 | 4,019 | |
Gain on previously held shares of an equity investment | 0 | $ (20,800) | 0 | (20,767) | 0 |
Gain on sale of property and equipment | (103) | (105) | (86) | (182) | |
Stock-based compensation | 4,133 | 5,057 | 12,374 | 15,840 | |
Non-cash foreign exchange transaction/translation loss (income) | 2,838 | (1,805) | 905 | 5,309 | |
Other non-cash expenses | (13) | 549 | 12,210 | 534 | |
Other items | 75,145 | 14,261 | 107,924 | 31,602 | |
Costs relating to debt restructuring, debt refinancing | 190 | 4 | 265 | 292 | |
Adjusted EBITDA | $ 132,949 | $ 128,216 | $ 355,742 | $ 334,505 |
Revenue Recognition - Deferred Revenue (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 29, 2018
USD ($)
| |
Change in Contract with Customer, Liability | |
Balance as of January 1 | $ 9,970 |
Increases due to cash received | 61,069 |
Liabilities assumed due to acquisition | 747 |
Revenue recognized during the period | (60,078) |
Currency translation | (738) |
Balance at period end | $ 10,970 |
Earnings Per Share - Basic Loss Per Share Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Earnings per share basic: | ||||
Income from continuing operations | $ 28,885 | $ 50,200 | $ 103,870 | $ 101,852 |
Equity earnings of non-consolidated entities | 0 | 1,075 | 738 | 2,629 |
Income from continuing operations and equity earnings of non-consolidated entities | 28,885 | 51,275 | 104,608 | 104,481 |
Undeclared Series A Convertible Preferred Stock dividends | 0 | 0 | 0 | (10,462) |
Net income (loss) attributable to non-controlling interest | 6 | 0 | (47) | 0 |
Net income attributable to common shareholders | $ 28,879 | $ 51,275 | $ 104,655 | $ 94,019 |
Weighted average outstanding shares of common stock basic (shares) | 104,169,833 | 105,064,299 | 105,309,185 | 94,718,021 |
Net income per share - basic (usd per share) | $ 0.28 | $ 0.49 | $ 0.99 | $ 0.99 |
Earnings Per Share - Diluted Loss Per Share Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Earnings per share diluted: | ||||
Net income attributable to common shareholders - basic and diluted | $ 28,879 | $ 51,275 | $ 104,655 | $ 94,019 |
Weighted average outstanding shares of common stock basic (shares) | 104,169,833 | 105,064,299 | 105,309,185 | 94,718,021 |
Restricted stock units and options to purchase common stock (shares) | 1,767,596 | 3,897,941 | 2,167,864 | 4,089,125 |
Weighted average outstanding shares of common stock diluted (shares) | 105,937,429 | 108,962,240 | 107,477,049 | 98,807,146 |
Net income per share - diluted (usd per share) | $ 0.27 | $ 0.47 | $ 0.97 | $ 0.95 |
Earnings Per Share - Potentially Dilutive Securities (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
RSUs | ||||
Incremental Weighted Average Shares Attributable to Dilutive Effect | ||||
Antidilutive securities excluded from computation of diluted earnings per share | 187,144 | 0 | 30,953 | 0 |
Performance share units | ||||
Incremental Weighted Average Shares Attributable to Dilutive Effect | ||||
Antidilutive securities excluded from computation of diluted earnings per share | 108,667 | 0 | 0 | 0 |
Common stock | Stock options | ||||
Incremental Weighted Average Shares Attributable to Dilutive Effect | ||||
Antidilutive securities excluded from computation of diluted earnings per share | 1,130,020 | 569,916 | 806,309 | 587,893 |
Impairment and Restructuring Charges - Summary (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 29, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Restructuring and Related Activities [Abstract] | ||||||
Impairments | $ 302 | $ 216 | $ 1,018 | $ 216 | ||
Restructuring charges, net of fair value adjustment gains | 3,589 | 2,046 | 8,360 | 3,802 | ||
Total impairment and restructuring charges | $ 3,891 | $ 2,500 | $ 3,000 | $ 2,262 | $ 9,378 | $ 4,018 |
Impairment and Restructuring Charges - Restructuring Accrual (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Restructuring Reserve | ||
Beginning Accrual Balance | $ 11,039 | $ 5,019 |
Additions Charged to Expense | 8,360 | 3,802 |
Payments or Utilization | (13,144) | (3,730) |
Ending Accrual Balance | 6,255 | 5,091 |
Severance and sales restructuring costs | ||
Restructuring Reserve | ||
Beginning Accrual Balance | 7,232 | 836 |
Additions Charged to Expense | 6,638 | 3,136 |
Payments or Utilization | (10,378) | (1,778) |
Ending Accrual Balance | 3,492 | 2,194 |
Disposal of property and equipment | ||
Restructuring Reserve | ||
Beginning Accrual Balance | 0 | 0 |
Additions Charged to Expense | 289 | 147 |
Payments or Utilization | (289) | (147) |
Ending Accrual Balance | 0 | 0 |
Lease obligations and other | ||
Restructuring Reserve | ||
Beginning Accrual Balance | 3,807 | 4,183 |
Additions Charged to Expense | 1,433 | 519 |
Payments or Utilization | (2,477) | (1,805) |
Ending Accrual Balance | $ 2,763 | $ 2,897 |
Other (Income) Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Other Income and Expenses [Abstract] | ||||
Legal settlement income | $ (7,258) | $ (1,301) | $ (7,340) | $ (1,332) |
Foreign currency (gains) losses | (2,811) | 5,148 | (5,385) | 13,897 |
Pension benefit expense | 2,103 | 2,809 | 8,333 | 8,427 |
Other items | (41) | (652) | (1,225) | (1,143) |
Settlement of contract escrow | (2,247) | |||
Total other (income) expense | $ (8,007) | $ 6,004 | $ (5,617) | $ 17,602 |
Derivative Financial Instruments - Interest Rate (Details) - Derivatives designated as hedging instruments: - Cash Flow Hedge - USD ($) $ in Thousands |
Sep. 29, 2018 |
Dec. 31, 2017 |
---|---|---|
December 2015 - June 2016 | ||
Notional Disclosures | ||
Notional | $ 273,000 | |
Weighted average rate | 1.997% | |
June 2016 - September 2016 | ||
Notional Disclosures | ||
Notional | $ 486,000 | |
Weighted average rate | 2.054% | |
September 2016 - December 2016 | ||
Notional Disclosures | ||
Notional | $ 759,000 | |
Weighted average rate | 2.161% | |
December 2016 - December 2017 | ||
Notional Disclosures | ||
Notional | $ 914,250 | $ 914,300 |
Weighted average rate | 2.188% |
Derivative Financial Instruments - Fair Value (Details) - Derivatives not designated as hedging instruments: - Foreign currency forward contracts - USD ($) $ in Thousands |
Sep. 29, 2018 |
Dec. 31, 2017 |
---|---|---|
Other current assets | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | ||
Foreign currency forward contracts | $ 5,240 | $ 2,235 |
Accrued expenses and other current liabilities | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | ||
Fair value, gross liability | $ 1,923 | $ 2,905 |
Fair Value Measurements - Non-Financial Assets and Liabilities (Details) - Nonrecurring - USD ($) $ in Thousands |
Sep. 29, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Assets Measured on Nonrecurring Basis | ||
Closed operations | $ 154 | $ 914 |
Continuing operations | 48 | |
Total | 202 | 914 |
Changes Measurement | ||
Fair Value, Assets Measured on Nonrecurring Basis | ||
Closed operations | 302 | 1,473 |
Continuing operations | 175 | |
Total | 477 | 1,473 |
Level 1 | ||
Fair Value, Assets Measured on Nonrecurring Basis | ||
Closed operations | 0 | 0 |
Continuing operations | 0 | |
Total | 0 | 0 |
Level 2 | ||
Fair Value, Assets Measured on Nonrecurring Basis | ||
Closed operations | 0 | 0 |
Continuing operations | 0 | |
Total | 0 | 0 |
Level 3 | ||
Fair Value, Assets Measured on Nonrecurring Basis | ||
Closed operations | 154 | 914 |
Continuing operations | 48 | |
Total | $ 202 | $ 914 |
Fair Value of Financial Instruments - Narratives (Details) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 29, 2018 |
Dec. 31, 2017 |
|
Debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Long term fixed debt fair value adjustment | $ (62.5) | $ 8.7 |
Commitment and Contingencies - Litigation (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
May 11, 2018 |
Feb. 15, 2018 |
Oct. 31, 2018 |
Sep. 29, 2018 |
Sep. 29, 2018 |
|
Loss Contingencies | |||||
Legal settlement accrual | $ 76,500 | $ 76,500 | |||
Steve and Sons | |||||
Loss Contingencies | |||||
Legal settlement accrual | 76,500 | ||||
Settlement proceeds awarded | $ 1,200 | ||||
Steve and Sons | Subsequent Events | |||||
Loss Contingencies | |||||
Decrease to settlement amount | $ 2,200 | ||||
Steve and Sons | Settlement One | |||||
Loss Contingencies | |||||
Damages awarded to plaintiff | $ 12,200 | ||||
Steve and Sons | Settlement Two | |||||
Loss Contingencies | |||||
Damages awarded to plaintiff | $ 46,500 | ||||
Clayton Act | |||||
Loss Contingencies | |||||
Legal settlement accrual | $ 12,200 |
Commitment and Contingencies - Indemnification (Details) |
9 Months Ended |
---|---|
Sep. 29, 2018 | |
Minimum | |
Loss Contingencies | |
Indemnification. term | 1 year |
Maximum | |
Loss Contingencies | |
Indemnification. term | 3 years |
Commitment and Contingencies - Performance Bond and Letter of Credit (Details) - USD ($) $ in Thousands |
Sep. 29, 2018 |
Dec. 31, 2017 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Self-insurance workers’ compensation | $ 27,958 | $ 21,072 |
Environmental | 14,552 | 14,452 |
Liability and other insurance | 12,451 | 12,900 |
Other | 10,798 | 6,650 |
Total outstanding performance bonds and stand-by letters of credit | $ 65,759 | $ 55,074 |
Commitment and Contingencies - Environmental Contingencies (Details) - USD ($) |
1 Months Ended | |||
---|---|---|---|---|
Apr. 30, 2018 |
Sep. 29, 2018 |
Dec. 31, 2017 |
Dec. 31, 2008 |
|
Site Contingency | ||||
Environmental loss contingencies, current | $ 500,000 | $ 500,000 | ||
Environmental loss contingencies, non-current | 0 | $ 100,000 | ||
WADOE | ||||
Site Contingency | ||||
Environmental loss contingencies | $ 500,000 | |||
NRD | ||||
Site Contingency | ||||
Payment for legal settlement | $ 1,300,000 | |||
Insurance covered litigation expense | $ 1,100,000 | |||
PaDEP | ||||
Site Contingency | ||||
Collateralized bond | $ 11,000,000 |
Commitment and Contingencies - Service Agreements (Details) $ in Millions |
Jan. 02, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Service agreement payments | $ 6.3 |
Employee Retirement and Pension Benefits - Components of Pension Benefit/ Expense (Details) - U.S. - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Defined Benefit Plan Disclosure | ||||
Administrative cost | $ 1,223 | $ 825 | $ 2,873 | $ 2,475 |
Interest cost | 3,300 | 3,350 | 10,000 | 10,050 |
Expected return on plan assets | (5,200) | (4,525) | (14,250) | (13,575) |
Amortization of net actuarial pension loss | 2,325 | 3,000 | 8,325 | 9,000 |
Pension benefit expense | $ 1,648 | $ 2,650 | $ 6,948 | $ 7,950 |
Employee Retirement and Pension Benefits - Narratives (Details) - U.S. - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2018 |
Sep. 30, 2017 |
Sep. 29, 2018 |
Sep. 30, 2017 |
|
Defined Benefit Plan Disclosure | ||||
Company contribution | $ 1,400,000 | $ 0 | $ 2,700,000 | $ 0 |
Expected future compensation | 1,400,000 | 1,400,000 | ||
Pension benefit expense | $ 1,648,000 | $ 2,650,000 | $ 6,948,000 | $ 7,950,000 |