Delaware | 37-1830464 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer | Accelerated filer | Non-accelerated filer x (Do not check if a smaller reporting company) | Smaller reporting company |
Page | ||
September 30, | June 21, | ||||||
2016 | 2016 | ||||||
(unaudited) | |||||||
Assets | |||||||
Total assets | $ | — | $ | — | |||
Shareholder's equity | |||||||
Common shares, $0.001 par value, 190,000,000 shares authorized, 41,619,472 issued and outstanding | 10 | 10 | |||||
Due from shareholder | (10 | ) | (10 | ) | |||
Total shareholder's equity | $ | — | $ | — |
Successor | Predecessor | |||||||||||||||||||
Three months ended | Nine months ended | For the period from | For the period from | |||||||||||||||||
September 30, | September 30, | March 14 to September 30, | January 1 to March 13, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2015 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
Net sales | $ | 480,145 | $ | 241,415 | $ | 1,120,287 | $ | 492,730 | $ | 132,620 | ||||||||||
Cost of goods sold | 371,123 | 196,139 | 880,494 | 424,544 | 117,831 | |||||||||||||||
Gross profit | 109,022 | 45,276 | 239,793 | 68,186 | 14,789 | |||||||||||||||
Selling, general & administrative expenses | (66,059 | ) | (45,119 | ) | (164,681 | ) | (92,835 | ) | (21,683 | ) | ||||||||||
Impairment and restructuring charges | (555 | ) | (598 | ) | (578 | ) | (941 | ) | (542 | ) | ||||||||||
Earnings from equity method investee | 4,146 | 2,946 | 9,014 | 6,718 | 67 | |||||||||||||||
Other operating income (expense) | 1,940 | (1,621 | ) | 4,473 | 2,309 | 994 | ||||||||||||||
(60,528 | ) | (44,392 | ) | (151,772 | ) | (84,749 | ) | (21,164 | ) | |||||||||||
Income (loss) from operations | 48,494 | 884 | 88,021 | (16,563 | ) | (6,375 | ) | |||||||||||||
Other income (expenses) | ||||||||||||||||||||
Interest expense | (31,756 | ) | (13,122 | ) | (73,885 | ) | (28,673 | ) | (84 | ) | ||||||||||
Other income (expense), net | (216 | ) | — | (1,393 | ) | (140 | ) | (39 | ) | |||||||||||
Income (loss) before income taxes | 16,522 | (12,238 | ) | 12,743 | (45,376 | ) | (6,498 | ) | ||||||||||||
Income tax (expense) benefit | (8,154 | ) | (2,729 | ) | 28,378 | (4,308 | ) | 742 | ||||||||||||
Net income (loss) | $ | 8,368 | $ | (14,967 | ) | $ | 41,121 | $ | (49,684 | ) | $ | (5,756 | ) |
Successor | Predecessor | |||||||||||||||||||
Three months ended | Nine months ended | For the period from | For the period from | |||||||||||||||||
September 30, | September 30, | March 14 to September 30, | January 1 to March 13, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2015 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
Net income (loss) | $ | 8,368 | $ | (14,967 | ) | $ | 41,121 | $ | (49,684 | ) | $ | (5,756 | ) | |||||||
Actuarial gains on defined benefit plans, net of tax | — | — | — | — | 2,645 | |||||||||||||||
Unrealized gain (loss) on derivative activities, net of tax | 174 | 539 | (1,253 | ) | 951 | — | ||||||||||||||
Foreign currency translation adjustment | 621 | (2,574 | ) | 5,404 | (7,900 | ) | (19,751 | ) | ||||||||||||
Comprehensive income (loss) | $ | 9,163 | $ | (17,002 | ) | $ | 45,272 | $ | (56,633 | ) | $ | (22,862 | ) |
Successor | |||||||
September 30, | December 31, | ||||||
2016 | 2015 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 36,217 | $ | 43,590 | |||
Receivables, net | 288,636 | 118,959 | |||||
Inventories | 310,653 | 210,615 | |||||
Other current assets | 20,639 | 2,844 | |||||
Total current assets | 656,145 | 376,008 | |||||
Non-current assets | |||||||
Property, plant and equipment, net | 646,719 | 388,924 | |||||
Goodwill | 421,994 | 75,537 | |||||
Intangible assets, net | 268,949 | 26,062 | |||||
Investment in equity method investee | 57,503 | 56,289 | |||||
Deferred tax assets | — | 3,087 | |||||
Derivative assets | — | 9,093 | |||||
Other long-term assets | — | 3,875 | |||||
Total assets | $ | 2,051,310 | $ | 938,875 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities | |||||||
Trade payables | $ | 148,449 | $ | 96,486 | |||
Accrued liabilities | 72,378 | 55,628 | |||||
Deferred revenue | 14,018 | 19,498 | |||||
Current portion of long-term debt | — | 2,191 | |||||
Total current liabilities | 234,845 | 173,803 | |||||
Non-current liabilities | |||||||
Senior Term Loan | 1,000,842 | 467,192 | |||||
Junior Term Loan | 237,624 | 236,446 | |||||
Revolving credit facility | 22,285 | — | |||||
Financing obligation | 210,429 | — | |||||
Deferred tax liabilities | 119,522 | 2,365 | |||||
Other long-term liabilities | 19,588 | 6,754 | |||||
Derivative liabilities | 1,788 | — | |||||
Total liabilities | 1,846,923 | 886,560 | |||||
Commitments and Contingencies (Note 13) | |||||||
Equity | |||||||
Contributed capital | 246,669 | 139,869 | |||||
Accumulated other comprehensive loss | (617 | ) | (4,768 | ) | |||
Retained deficit | (41,665 | ) | (82,786 | ) | |||
Total shareholders' equity | 204,387 | 52,315 | |||||
Total liabilities and shareholders' equity | $ | 2,051,310 | $ | 938,875 |
Successor | Predecessor | ||||||||||||
Nine months ended | For the period from | For the period from | |||||||||||
September 30, | March 14 to September 30, | January 1 to March 13, | |||||||||||
2016 | 2015 | 2015 | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||
Net income (loss) | $ | 41,121 | $ | (49,684 | ) | $ | (5,756 | ) | |||||
Adjustments to reconcile net income/ (loss) to net cash provided by (used in) operating activities: | |||||||||||||
Depreciation & amortization expense | 71,049 | 20,373 | 6,894 | ||||||||||
Loss on disposal of property, plant and equipment | 1,169 | 373 | — | ||||||||||
Amortization of debt discount and issuance costs | 6,393 | 3,193 | — | ||||||||||
Earnings from equity method investee | (9,014 | ) | (6,718 | ) | (67 | ) | |||||||
Distributions from equity method investee | 7,800 | 5,250 | — | ||||||||||
Unrealized foreign currency (gains) losses, net | 1,606 | (3,640 | ) | (26 | ) | ||||||||
Provision (recoveries) for doubtful accounts | (1,235 | ) | 1,076 | (31 | ) | ||||||||
Deferred taxes | (51,846 | ) | — | 2,749 | |||||||||
Other non-cash items | 45 | — | (1,831 | ) | |||||||||
Change in assets and liabilities: | |||||||||||||
Receivables, net | (61,591 | ) | (28,616 | ) | (7,520 | ) | |||||||
Inventories | 18,370 | 49,923 | (20,160 | ) | |||||||||
Other assets | (7,973 | ) | (1,066 | ) | (855 | ) | |||||||
Accounts payable and accrued liabilities | 7,854 | 69,242 | (20,119 | ) | |||||||||
Deferred revenue | (5,643 | ) | 7,646 | (1,068 | ) | ||||||||
Other long-term assets & liabilities | 12,767 | 3,314 | (434 | ) | |||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 30,872 | 70,666 | (48,224 | ) | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||
Purchase of property, plant and equipment | (27,043 | ) | (8,113 | ) | (2,762 | ) | |||||||
Assets and liabilities acquired, Sherman-Dixie, net | (66,751 | ) | — | — | |||||||||
Assets and liabilities acquired, U.S. Pipe, net | (775,110 | ) | — | — | |||||||||
Assets and liabilities acquired, Bio Clean, net | (30,610 | ) | — | — | |||||||||
Assets and liabilities acquired from HeidelbergCement, net | — | (640,428 | ) | — | |||||||||
NET CASH USED IN INVESTING ACTIVITIES | (899,514 | ) | (648,541 | ) | (2,762 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||
Proceeds from failed sale-leaseback | 216,280 | — | — | ||||||||||
Deferred transaction costs on failed sale-leaseback | (6,492 | ) | — | — | |||||||||
Payment of debt issuance costs | (10,638 | ) | (20,479 | ) | — | ||||||||
Payment of equity issuance costs | (6,669 | ) | — | — | |||||||||
Proceeds from Senior Term Loan, net of discount | 548,400 | 248,505 | — | ||||||||||
Proceeds from Junior Term Loan, net of discount | — | 244,300 | — | ||||||||||
Proceeds from Revolver | 131,611 | 35,619 | — | ||||||||||
Payments on Revolver | (55,173 | ) | (30,619 | ) | — | ||||||||
Payments on Senior Term Loan | (2,191 | ) | (3,175 | ) | — | ||||||||
Proceeds from settlement of derivatives | 6,546 | — | — | ||||||||||
Capital contribution from Predecessor Parent, net | — | — | 60,910 | ||||||||||
Capital contribution from parent | 402,127 | 167,482 | — | ||||||||||
Payments for return of contributed capital | (363,582 | ) | (30,621 | ) | — | ||||||||
Other financing activities | — | — | (3 | ) | |||||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 860,219 | 611,012 | 60,907 | ||||||||||
Effect of exchange rate changes on cash | 1,050 | (3,688 | ) | (130 | ) | ||||||||
Net change in cash and cash equivalents | (7,373 | ) | 29,449 | 9,791 | |||||||||
Cash and cash equivalents, beginning of period | 43,590 | — | 42 | ||||||||||
Cash and cash equivalents, end of period | $ | 36,217 | $ | 29,449 | $ | 9,833 | |||||||
SUPPLEMENTAL DISCLOSURES: | |||||||||||||
Cash interest paid | $ | 51,476 | $ | 17,057 | $ | — | |||||||
Net payments made on behalf of the Company by affiliates | 16,988 | 503 | — | ||||||||||
Repayments on Revolver by Parent | 51,438 | — | — | ||||||||||
Fair value changes of derivatives in other comprehensive income, net | (1,253 | ) | 951 | — |
• | Cretex Acquisition - On October 1, 2015, Forterra acquired Cretex for aggregate consideration of $245.1 million (the "Cretex Acquisition"). Cretex is a manufacturer of concrete pipe, box culverts, concrete precast drainage structures, pre-stressed bridge components and ancillary precast products in the Upper Midwestern United States. The Cretex Acquisition was financed with borrowings on LSF9's senior term loan and cash on hand. |
• | Sherman-Dixie Acquisition - On January 29, 2016, Forterra acquired substantially all the assets of Sherman-Dixie Concrete Industries (“Sherman-Dixie”) for aggregate consideration of $66.8 million (the "Sherman-Dixie Acquisition"). Sherman-Dixie is a manufacturer of precast concrete structures operating in Kentucky, Tennessee, Alabama and Indiana. The Sherman Dixie Acquisition was financed with borrowings on LSF9’s revolving credit facility. |
• | Roof Tile Divestiture - On April 12, 2016, Forterra sold its roof tile business for aggregate consideration of $10.5 million, subject to customary working capital adjustments (the "Roof Tile Divestiture"). |
• | U.S. Pipe Acquisition - On April 15, 2016, Forterra acquired all of the stock of USP Holdings Inc. (“USP”) for a purchase price of $775.1 million, subject to customary working capital adjustments (the "USP Acquisition"). USP is a manufacturer of water transmission pipe servicing residential, commercial and infrastructure customers. The USP Acquisition was financed with proceeds from a capital contribution, borrowings on LSF9's revolving credit facility and cash on hand. |
• | Bio Clean Acquisition - On August 4, 2016, Forterra acquired all of the stock of Bio Clean Environmental Services, Inc. and Modular Wetland Systems, Inc. (together, "Bio Clean") for aggregate consideration of $30.6 million (the "Bio Clean Acquisition"). Bio Clean designs and sells storm water management systems that meet the requirements of local regulatory bodies regulating storm water quality and owns technologies relating to drainage and storm water management. The Bio Clean Acquisition was financed with cash on hand. |
• | Bricks Disposition - On August 23, 2016, an affiliate of Lone Star entered into an agreement with an unaffiliated third party to contribute Forterra's bricks business to a newly formed joint venture with the unaffiliated third party (the "Bricks Joint Venture"). In exchange for the contribution of the bricks business, an affiliate of Lone Star received a 50% interest in the Bricks Joint Venture. On October 17th, 2016, Forterra distributed its bricks business to an affiliate of Lone Star (the "Bricks Disposition"). Following the Bricks Disposition, Forterra no longer had any relation to or business affiliation with its former bricks business or the Bricks Joint Venture other than contractual arrangements regarding certain limited transition services, the temporary use of the “Forterra” name, and a short-term loan which has subsequently been repaid in full. The Company will incur tax liabilities of approximately $32.3 million as a result of the Brick Disposition which will be recognized as a charge to income in the fourth quarter. |
• | J&G Acquisition - On October 14, 2016, Forterra acquired J&G Concrete Operations, LLC ("J&G") for aggregate consideration of $32.0 million, subject to customary working capital adjustments (the "J&G Acquisition"). J&G manufactures concrete pipe, box culverts and special fittings in North Texas. The J&G Acquisition was financed with borrowings on LSF9's revolving credit facility. |
• | Precast Concepts Acquisition - On October 14, 2016, Forterra acquired the business of Precast Concepts, LLC ("Precast Concepts") for aggregate consideration of $97.1 million, subject to customary working capital adjustments (the "Precast Concepts Acquisition"). Precast Concepts manufactures concrete pipe, box culverts, storm detention systems and other precast concrete and related products in Colorado through its three facilities. The Precast Concepts Acquisition was financed with borrowings on LSF9's revolving credit facility. |
Fair Value | |||
Net working capital | $ | 257,368 | |
Property, plant and equipment, net | 311,191 | ||
Investment in equity method investee | 56,400 | ||
Customer backlog intangible | 4,500 | ||
Other assets and other liabilities | (6,495 | ) | |
Net identifiable assets acquired | $ | 622,964 | |
Goodwill | 17,464 | ||
Consideration transferred, net of cash acquired | $ | 640,428 |
Fair Value | |||
Net working capital | $ | 149,683 | |
Property, plant and equipment, net | 246,241 | ||
Customer relationship intangible | 179,491 | ||
Trade names | 37,388 | ||
Patents | 13,093 | ||
Other intangibles | 7,659 | ||
Long-term liabilities | (10,613 | ) | |
Deferred tax liabilities | (160,906 | ) | |
Net identifiable assets acquired | 462,036 | ||
Goodwill | 313,074 | ||
Cash consideration transferred | $ | 775,110 |
Fair Value | |||
Net working capital | $ | 14,293 | |
Property, plant and equipment | 29,163 | ||
Customer relationship intangible | 5,100 | ||
Non-compete agreement intangible | 2,500 | ||
Other identifiable intangibles | 900 | ||
Deferred tax liability | (11,189 | ) | |
Net identifiable assets acquired | 40,767 | ||
Goodwill | 25,984 | ||
Consideration transferred, net of cash acquired | $ | 66,751 |
Fair Value | |||
Net working capital | $ | 2,554 | |
Property, plant and equipment | 181 | ||
Customer relationship intangible | 3,617 | ||
Non-compete agreement intangible | 105 | ||
Trade names | 1,065 | ||
Patents | 10,444 | ||
In-Process R&D | 6,699 | ||
Net identifiable assets acquired | $ | 24,665 | |
Goodwill | 5,945 | ||
Consideration transferred, net of cash acquired | $ | 30,610 |
Successor | |||||||
September 30, | December 31, | ||||||
2016 | 2015 | ||||||
Trade receivables | $ | 273,955 | $ | 108,065 | |||
Amounts billed, but not yet paid under retainage provisions | 2,466 | 2,053 | |||||
Other receivables | 14,192 | 12,436 | |||||
Total receivables | $ | 290,613 | $ | 122,554 | |||
Less: Allowance for doubtful accounts | (1,977 | ) | (3,595 | ) | |||
Receivables, net | $ | 288,636 | $ | 118,959 |
Successor | |||||||
September 30, | December 31, | ||||||
2016 | 2015 | ||||||
Finished goods | $ | 201,531 | $ | 146,635 | |||
Raw materials | 103,501 | 53,339 | |||||
Work in process | 5,621 | 10,641 | |||||
Total inventories | $ | 310,653 | $ | 210,615 |
Successor | |||||||
September 30, | December 31, | ||||||
2016 | 2015 | ||||||
Machinery and equipment | $ | 386,360 | $ | 158,349 | |||
Land, buildings and improvements | 290,820 | 243,496 | |||||
Other equipment | 3,564 | 1,142 | |||||
Construction-in-progress | 35,701 | 14,984 | |||||
Total property, plant and equipment | 716,445 | 417,971 | |||||
Less: accumulated depreciation | (69,726 | ) | (29,047 | ) | |||
Property, plant and equipment, net | $ | 646,719 | $ | 388,924 |
Drainage Pipe & Products | Water Pipe & Products | Bricks | Other | Total | |||||||||||||||
Successor | |||||||||||||||||||
Balance at December 31, 2015 | $ | 73,442 | $ | 2,050 | $ | 45 | $ | — | $ | 75,537 | |||||||||
Sherman Dixie acquisition | 25,984 | — | — | — | 25,984 | ||||||||||||||
U.S. Pipe acquisition | — | 313,074 | — | — | 313,074 | ||||||||||||||
Bio Clean acquisition | 5,945 | — | — | — | 5,945 | ||||||||||||||
Foreign currency | 469 | 985 | — | — | 1,454 | ||||||||||||||
Balance at September 30, 2016 | $ | 105,840 | $ | 316,109 | $ | 45 | $ | — | $ | 421,994 |
Weighted average amortization period (in years) | Gross carrying amount as of September 30, 2016 | Accumulated amortization | Net carrying value as of September 30, 2016 | ||||||||||
Customer relationships | 10 | $ | 212,908 | $ | (15,225 | ) | $ | 197,683 | |||||
Trade names | 5 | 39,153 | (2,947 | ) | 36,206 | ||||||||
Patents | 7 | 23,537 | (1,574 | ) | 21,963 | ||||||||
Customer backlog | 1 | 9,864 | (8,248 | ) | 1,616 | ||||||||
Non-compete agreements | 5 | 6,382 | (1,600 | ) | 4,782 | ||||||||
In-Process R&D | Indefinite-lived | 6,699 | — | 6,699 | |||||||||
Total intangible assets | $ | 298,543 | $ | (29,594 | ) | $ | 268,949 |
Weighted average amortization period (in years) | Gross carrying amount as of December 31, 2015 | Accumulated amortization | Net carrying value as of December 31, 2015 | ||||||||||
Customer relationships | 5 | $ | 24,700 | $ | (365 | ) | $ | 24,335 | |||||
Customer backlog | 1 | 5,182 | (3,955 | ) | 1,227 | ||||||||
Trade names | 2 | 600 | (100 | ) | 500 | ||||||||
Total intangible assets | $ | 30,482 | $ | (4,420 | ) | $ | 26,062 |
Fair value measurements at September 30, 2016 using | ||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value September 30, 2016 | |||||||||
Recurring: | ||||||||||||
Non-current liabilities | ||||||||||||
Derivative liability | $ | — | $ | 1,788 | $ | — | $ | 1,788 | ||||
Fair value measurements at December 31, 2015 using | ||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value December 31, 2015 | |||||||||
Recurring: | ||||||||||||
Non-current assets | ||||||||||||
Derivative assets | $ | — | $ | 9,093 | $ | — | $ | 9,093 |
Fair value measurements at September 30, 2016 using | ||||||||||||||
Carrying Amount September 30, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value September 30, 2016 | ||||||||||
Non-current liabilities | ||||||||||||||
Senior Term Loan | 1,000,842 | $ | — | $ | 1,037,016 | $ | — | $ | 1,037,016 | |||||
Junior Term Loan | 237,624 | — | 256,100 | — | 256,100 | |||||||||
Financing obligation | 210,429 | — | 217,043 | — | 217,043 |
Fair value measurements at December 31, 2015 using | |||||||||||||||
Carrying Amount December 31, 2015 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value December 31, 2015 | |||||||||||
Non-current liabilities | |||||||||||||||
Senior Term Loan | $ | 469,383 | $ | — | $ | 470,543 | $ | — | $ | 470,543 | |||||
Junior Term Loan | 236,446 | — | 259,675 | — | 259,675 |
Successor | |||||||
September 30, | December 31, | ||||||
2016 | 2015 | ||||||
Senior Term Loan Credit Agreement | |||||||
interest at 6.50%, net of debt issue costs and original issue discount of $34,880 and $20,129, respectively | $ | 1,000,842 | $ | 469,383 | |||
Junior Term Loan Credit Agreement | |||||||
interest at 10.50%, net of debt issue costs and original issue discount of $22,376 and $23,554, respectively | 237,624 | 236,446 | |||||
Revolving line of credit, net of debt issue costs of $2,715 | 22,285 | — | |||||
Financing obligation, net of $6,614 of deferred transaction costs (See Note 10) | 210,429 | — | |||||
Total debt | 1,471,180 | 705,829 | |||||
Less: current portion debt | — | (2,191 | ) | ||||
Total long-term debt | $ | 1,471,180 | $ | 703,638 |
Total | Senior Term | Junior Term | Revolver | Financing Obligation | |||||||||||||||
2016 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
2017 | — | — | — | — | — | ||||||||||||||
2018 | — | — | — | — | — | ||||||||||||||
2019 | — | — | — | — | — | ||||||||||||||
2020 | 25,000 | — | — | 25,000 | — | ||||||||||||||
Thereafter: | 1,512,764 | 1,035,721 | 260,000 | — | 217,043 | ||||||||||||||
$ | 1,537,764 | $ | 1,035,721 | $ | 260,000 | $ | 25,000 | $ | 217,043 |
Total | |||
2016 | $ | 4,237 | |
2017 | 17,229 | ||
2018 | 17,574 | ||
2019 | 17,925 | ||
2020 | 18,284 | ||
Thereafter: | 599,856 | ||
$ | 675,105 | ||
Successor | |||||||
September 30, | December 31, | ||||||
2016 | 2015 | ||||||
Accrued payroll and employee benefits | $ | 32,765 | $ | 24,690 | |||
Accrued taxes | 14,755 | 17,073 | |||||
Accrued rebates | 16,861 | 8,021 | |||||
Warranty | 3,368 | 2,429 | |||||
Other miscellaneous accrued liabilities | 2,714 | 2,512 | |||||
Environmental & reclamation obligation | 1,915 | 903 | |||||
Total accrued liabilities | $ | 72,378 | $ | 55,628 |
Successor | |||||||||||||||
September 30, 2016 | |||||||||||||||
Derivative Assets | Derivative Liabilities | ||||||||||||||
Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||
Foreign exchange forward contracts | $ | — | $ | — | $ | 79,531 | $ | (2,034 | ) | ||||||
Fixed-for-float cross currency swap | 81,991 | 246 | — | — | |||||||||||
Total derivatives, gross | 246 | (2,034 | ) | ||||||||||||
Less: Legally enforceable master netting agreements | — | — | |||||||||||||
Total derivatives, net | $ | 246 | $ | (2,034 | ) |
Successor | |||||||||||||||
December 31, 2015 | |||||||||||||||
Derivative Assets | Derivative Liabilities | ||||||||||||||
Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||
Foreign exchange forward contracts | $ | 79,531 | $ | 7,667 | $ | — | $ | — | |||||||
Fixed-for-float cross currency swap | 81,991 | 1,426 | — | — | |||||||||||
Total derivatives, gross | 9,093 | — | — | ||||||||||||
Less: Legally enforceable master netting agreements | — | — | |||||||||||||
Total derivatives, net | $ | 9,093 | $ | — |
Successor | ||||||||||||
Three months ended | Nine months ended | |||||||||||
September 30, | ||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Cash flow hedges | ||||||||||||
Cross currency swaps | ||||||||||||
Gain (loss) on derivatives recognized in Accumulated other comprehensive loss | $ | 174 | $ | 539 | $ | (1,253 | ) | $ | 951 | |||
Gain (loss) on derivatives not designated as hedges | 850 | 4,997 | (2,024 | ) | 6,101 |
For the three months ended September 30, 2016: | |||||||||||||||
Drainage Pipe & Products | Water Pipe & Products | Bricks | Corporate and Other | Total | |||||||||||
Net Sales | $ | 215,486 | $ | 225,645 | $ | 39,012 | $ | 2 | $ | 480,145 | |||||
Income (loss) before income taxes | 37,994 | 24,478 | 4,001 | (49,951 | ) | 16,522 | |||||||||
Depreciation and amortization | 10,057 | 18,351 | 2,139 | 82 | 30,629 | ||||||||||
Interest expense | 3,451 | 805 | — | 27,500 | 31,756 | ||||||||||
EBITDA | $ | 51,502 | $ | 43,634 | $ | 6,140 | $ | (22,369 | ) | $ | 78,907 | ||||
Capital expenditures | $ | 6,351 | $ | 6,632 | $ | 3,702 | — | $ | 16,685 | ||||||
Total assets at September 30, 2016 | $ | 753,044 | $ | 1,103,245 | $ | 138,146 | $ | 56,875 | $ | 2,051,310 |
For the nine months ended September 30, 2016: | |||||||||||||||
Drainage Pipe & Products | Water Pipe & Products | Bricks | Corporate and Other | Total | |||||||||||
Net Sales | $ | 552,035 | $ | 455,286 | $ | 110,436 | $ | 2,530 | $ | 1,120,287 | |||||
Income (loss) before income taxes | 90,205 | 43,821 | 7,277 | (128,560 | ) | 12,743 | |||||||||
Depreciation and amortization | 29,608 | 34,853 | 6,131 | 457 | 71,049 | ||||||||||
Interest expense | 6,723 | 1,577 | — | 65,585 | 73,885 | ||||||||||
EBITDA | $ | 126,536 | $ | 80,251 | $ | 13,408 | $ | (62,518 | ) | $ | 157,677 | ||||
Capital expenditures | $ | 12,621 | $ | 10,035 | $ | 8,410 | 624 | $ | 31,690 |
For the three months ended September 30, 2015: | |||||||||||||||
Drainage Pipe & Products | Water Pipe & Products | Bricks | Corporate and Other | Total | |||||||||||
Net Sales | $ | 143,087 | $ | 57,409 | $ | 39,184 | $ | 1,735 | $ | 241,415 | |||||
Income (loss) before income taxes | 25,007 | 6,188 | (1,786 | ) | (41,647 | ) | (12,238 | ) | |||||||
Depreciation and amortization | 4,206 | 2,460 | 2,416 | 231 | 9,313 | ||||||||||
Interest expense | — | — | — | 13,122 | 13,122 | ||||||||||
EBITDA | $ | 29,213 | $ | 8,648 | $ | 630 | $ | (28,294 | ) | $ | 10,197 | ||||
Capital expenditures | $ | 1,667 | $ | 948 | $ | 749 | $ | 1,085 | $ | 4,449 |
For the period from March 14 to September 30, 2015: | |||||||||||||||
Drainage Pipe & Products | Water Pipe & Products | Bricks | Corporate and Other | Total | |||||||||||
Net Sales | $ | 284,118 | $ | 119,297 | $ | 84,797 | $ | 4,518 | $ | 492,730 | |||||
Income (loss) before income taxes | 39,467 | 9,955 | (5,565 | ) | (89,233 | ) | (45,376 | ) | |||||||
Depreciation and amortization | 9,300 | 5,398 | 5,236 | 439 | 20,373 | ||||||||||
Interest (income)/expense | — | — | — | 28,673 | 28,673 | ||||||||||
EBITDA | $ | 48,767 | $ | 15,353 | $ | (329 | ) | $ | (60,121 | ) | $ | 3,670 | |||
Capital expenditures | $ | 4,516 | $ | 3,152 | $ | 2,742 | $ | 1,085 | $ | 11,495 | |||||
Total assets at December 31, 2015 | $ | 626,477 | $ | 136,909 | $ | 147,699 | $ | 27,790 | $ | 938,875 |
For the period from January 1 to March 13, 2015: | |||||||||||||||
Drainage Pipe & Products | Water Pipe & Products | Bricks | Corporate and Other | Total | |||||||||||
Net Sales | $ | 79,341 | $ | 30,464 | $ | 19,922 | $ | 2,893 | $ | 132,620 | |||||
Income (loss) before income taxes | 8,839 | (3,192 | ) | (4,000 | ) | (8,145 | ) | (6,498 | ) | ||||||
Depreciation and amortization | 3,231 | 1,030 | 2,505 | 128 | 6,894 | ||||||||||
Interest (income)/expense | — | — | 18 | 66 | 84 | ||||||||||
EBITDA | $ | 12,070 | $ | (2,162 | ) | $ | (1,477 | ) | $ | (7,951 | ) | $ | 480 | ||
Capital expenditures | $ | 621 | $ | 1,851 | $ | 272 | $ | — | $ | 2,744 |
Property, plant, and equipment, net: | |||||||
Successor | |||||||
September 30, | December 31, | ||||||
2016 | 2015 | ||||||
United States | $ | 554,837 | $ | 305,843 | |||
Canada | 85,335 | 83,081 | |||||
Mexico | 6,547 | — | |||||
$ | 646,719 | $ | 388,924 |
Net Sales: | Successor | Predecessor | ||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | Three months ended September 30, | For the period from March 14 to September 30, | For the period from January 1 to March 13, | ||||||||||||||||
2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||
United States | $ | 423,526 | $ | 988,961 | $ | 189,570 | $ | 397,720 | $ | 112,299 | ||||||||||
Canada | 53,475 | 125,223 | 51,845 | 95,010 | 20,321 | |||||||||||||||
Mexico | 3,144 | 6,103 | — | — | — | |||||||||||||||
$ | 480,145 | $ | 1,120,287 | $ | 241,415 | $ | 492,730 | $ | 132,620 |
Pension and Other Post-retirement Benefits (Predecessor) | ||
For the period from January 1 to March 13, | ||
2015 | ||
Service cost | 676 | |
Interest cost | (3 | ) |
Net Expense | 673 |
Three months ended | Nine months ended | |||||
September 30, | ||||||
2016 | 2016 | |||||
Net sales | $ | 39,123 | $ | 102,127 | ||
Gross profit | 12,827 | 30,841 | ||||
Income from operations | 8,557 | 18,654 | ||||
Net income | 8,463 | 18,674 |
• | the level of construction activity, particularly in the residential construction and non-residential construction markets; |
• | government funding of infrastructure and related construction activities; |
• | the highly competitive nature of our industry and our ability to effectively compete; |
• | energy costs; |
• | the availability and price of the raw materials we use in our business; |
• | the ability to implement our growth strategy; |
• | our dependence on key customers and the absence of long-term agreements with these customers; |
• | the level of construction activity in Texas; |
• | disruption at one of our manufacturing facilities or in our supply chain; |
• | construction project delays and our inventory management; |
• | our ability to successfully integrate our recent acquisitions; |
• | labor disruptions and other union activity; |
• | a tightening of mortgage lending or mortgage financing requirements; |
• | our current dispute with HeidelbergCement related to the payment of an earn-out; |
• | compliance with environmental laws and regulations; |
• | compliance with health and safety laws and regulations and other laws and regulations to which we are subject; |
• | our dependence on key executives and key management personnel; |
• | our ability to retain and attract additional skilled technical or sales personnel; |
• | credit and non-payment risks of our customers; |
• | warranty and related claims; |
• | legal and regulatory claims; |
• | the seasonality of our business and its susceptibility to severe adverse weather; |
• | our ability to maintain sufficient liquidity and ensure adequate financing or guarantees for large projects; |
• | delays or outages in our information technology systems and computer networks; and |
• | additional factors discussed in our filings with the Securities and Exchange Commission, or the SEC. |
• | Drainage Pipe & Products - We are a producer of concrete drainage pipe and precast products in the United States and Eastern Canada. Recently, we acquired concrete pipe and precast and related product manufacturers Cretex and Sherman-Dixie. |
• | Water Pipe & Products - We are a producer of ductile iron pipe (DIP) and concrete and steel pressure pipe. |
• | Bricks - We are a manufacturer of bricks in the United States and Eastern Canada. We operate manufacturing facilities, strategically located near major Census MSAs and raw material reserves. See the section entitled "-Recent Developments-" Bricks Disposition below for additional information regarding our bricks business. |
• | Corporate and Other - Consists of corporate overhead locations in the United States and our roof tile operations, which were sold in April 2016. |
Three months ended September 30, 2016 | % of net sales | Three months ended September 30, 2015 | % of net sales | Change | % Change | |||||||||||||||
Net sales | $ | 480,145 | 100.0 | % | $ | 241,415 | 100.0 | % | $ | 238,730 | 98.9 | % | ||||||||
Cost of goods sold | 371,123 | 77.3 | % | 196,139 | 81.2 | % | 174,984 | 89.2 | % | |||||||||||
Gross profit | 109,022 | 22.7 | % | 45,276 | 18.8 | % | 63,746 | 140.8 | % | |||||||||||
Selling, general & administrative expenses and other | (60,528 | ) | (12.6 | )% | (44,392 | ) | (18.4 | )% | (16,136 | ) | 36.3 | % | ||||||||
Income (loss) from operations | 48,494 | 10.1 | % | 884 | 0.4 | % | 47,610 | NM | ||||||||||||
Other income (expenses) | ||||||||||||||||||||
Interest expense | (31,756 | ) | (6.6 | )% | (13,122 | ) | (5.4 | )% | (18,634 | ) | 142.0 | % | ||||||||
Other income (expenses), net | (216 | ) | NM | — | NM | (216 | ) | NM | ||||||||||||
Income (loss) before income taxes | 16,522 | 3.4 | % | (12,238 | ) | (5.1 | )% | 28,760 | (235.0 | )% | ||||||||||
Income tax (expense) benefit | (8,154 | ) | (1.7 | )% | (2,729 | ) | (1.1 | )% | (5,425 | ) | 198.8 | % | ||||||||
Net income (loss) | $ | 8,368 | 1.7 | % | $ | (14,967 | ) | (6.2 | )% | $ | 23,335 | (155.9 | )% |
Drainage Pipe & Products | Water Pipe & Products | Bricks | Corporate and Other | Total | |||||||||||||||
For the three months ended September 30, 2016: | |||||||||||||||||||
Net sales | $ | 215,486 | $ | 225,645 | $ | 39,012 | $ | 2 | $ | 480,145 | |||||||||
Gross profit (loss) | 52,661 | 49,395 | 7,706 | (740 | ) | 109,022 | |||||||||||||
Income (loss) before income taxes | 37,994 | 24,478 | 4,001 | (49,951 | ) | 16,522 | |||||||||||||
For the three months ended September 30, 2015: | |||||||||||||||||||
Net sales | $ | 143,087 | $ | 57,409 | $ | 39,184 | $ | 1,735 | 241,415 | ||||||||||
Gross profit (loss) | 31,103 | 11,272 | 4,015 | (1,114 | ) | 45,276 | |||||||||||||
Income (loss) before income taxes | 25,007 | 6,188 | (1,786 | ) | (41,647 | ) | (12,238 | ) |
Nine months ended September 30, 2016 | % of Net Sales | |||||
Combined Statements of Income Data: | ||||||
Net sales | $ | 1,120,287 | 100.0 | % | ||
Cost of goods sold | 880,494 | 78.6 | % | |||
Gross profit | 239,793 | 21.4 | % | |||
Selling, general and administrative expenses | (164,681 | ) | (14.7 | )% | ||
Impairment and restructuring charges | (578 | ) | NM | |||
Earnings from equity method investee | 9,014 | 0.8 | % | |||
Other operating income | 4,473 | 0.4 | % | |||
(151,772 | ) | (13.5 | )% | |||
Income from operations | 88,021 | 7.9 | % | |||
Other income (expenses) | ||||||
Interest expense | (73,885 | ) | (6.6 | )% | ||
Other income (expense), net | (1,393 | ) | (0.1 | )% | ||
Income before income taxes | 12,743 | 1.1 | % | |||
Income tax benefit | 28,378 | 2.5 | % | |||
Net income | $ | 41,121 | 3.7 | % |
For nine months ended September 30, 2016: | |||||||||||||||||||
Drainage Pipe & Products | Water Pipe & Products | Bricks | Corporate and Other | Total | |||||||||||||||
Net sales | $ | 552,035 | $ | 455,286 | $ | 110,436 | $ | 2,530 | $ | 1,120,287 | |||||||||
Gross profit (loss) | 131,325 | 90,611 | 19,698 | (1,841 | ) | 239,793 | |||||||||||||
Income (loss) before income taxes | 90,205 | 43,821 | 7,277 | (128,560 | ) | 12,743 |
Successor | ||||||
For the period from March 14 to September 30, 2015 | % of Net Sales | |||||
Combined Statements of Income Data: | ||||||
Net sales | $ | 492,730 | 100.0 | % | ||
Cost of goods sold | 424,544 | 86.2 | % | |||
Gross profit | 68,186 | 13.8 | % | |||
Selling, general and administrative expenses | (92,835 | ) | (18.8 | )% | ||
Impairment and restructuring charges | (941 | ) | (0.2 | )% | ||
Earnings from equity method investee | 6,718 | 1.4 | % | |||
Other operating income | 2,309 | 0.5 | % | |||
(84,749 | ) | (17.2 | )% | |||
Loss from operations | (16,563 | ) | (3.4 | )% | ||
Other income (expenses) | ||||||
Interest expense | (28,673 | ) | (5.8 | )% | ||
Other income (expense), net | (140 | ) | NM | |||
Loss before income taxes | (45,376 | ) | (9.2 | )% | ||
Income tax benefit | (4,308 | ) | (1.0 | )% | ||
Net loss | $ | (49,684 | ) | (10.1 | )% |
For the period from March 14, 2015 to September 30, 2015: | |||||||||||||||||||
Drainage Pipe & Products | Water Pipe & Products | Bricks | Corporate and Other | Total | |||||||||||||||
Net sales | $ | 284,118 | $ | 119,297 | $ | 84,797 | $ | 4,518 | $ | 492,730 | |||||||||
Gross profit (loss) | 48,255 | 18,217 | 2,833 | (1,119 | ) | 68,186 | |||||||||||||
Income (loss) before income taxes | 39,467 | 9,955 | (5,565 | ) | (89,233 | ) | (45,376 | ) |
Predecessor | ||||||
For the period from January 1 to March 13, 2015 | % of Net Sales | |||||
Combined Statements of Income Data: | ||||||
Net sales | $ | 132,620 | 100.0 | % | ||
Cost of goods sold | 117,831 | 88.8 | % | |||
Gross profit | 14,789 | 11.2 | % | |||
Selling, general and administrative expenses | (21,683 | ) | (16.3 | )% | ||
Impairment and restructuring charges | (542 | ) | (0.4 | )% | ||
Earnings from equity method investee | 67 | 0.1 | % | |||
Other operating income | 994 | 0.7 | % | |||
(21,164 | ) | (16.0 | )% | |||
Income (loss) from operations | (6,375 | ) | (4.8 | )% | ||
Other income (expense) | ||||||
Interest expense | (84 | ) | (0.1 | )% | ||
Other income (expense), net | (39 | ) | NM | |||
Loss before income taxes | (6,498 | ) | (4.9 | )% | ||
Income tax expense | 742 | 0.6 | % | |||
Net loss | $ | (5,756 | ) | (4.3 | )% |
For the period from January 1, 2015 to March 13, 2015: | |||||||||||||||||||
Drainage Pipe & Products | Water Pipe & Products | Bricks | Corporate and Other | Total | |||||||||||||||
Net sales | $ | 79,341 | $ | 30,464 | $ | 19,922 | $ | 2,893 | $ | 132,620 | |||||||||
Gross profit | 13,567 | 413 | 429 | 380 | 14,789 | ||||||||||||||
Income (loss) before income taxes | 8,839 | (3,192 | ) | (4,000 | ) | (8,145 | ) | (6,498 | ) |
(In thousands) | |||||||||||||
Successor | Predecessor | ||||||||||||
Nine months ended September, 30 2016 | March 14, 2015 to September 30, 2015 | January 1, 2015 to March 13, 2015 | |||||||||||
Statement of Cash Flows data: | |||||||||||||
Net cash provided by (used in) operating activities | $ | 30,872 | $ | 70,666 | $ | (48,224 | ) | ||||||
Net cash used in investing activities | (899,514 | ) | (648,541 | ) | (2,762 | ) | |||||||
Net cash provided by (used in) financing activities | 860,219 | 611,012 | 60,907 |
◦ | Systems, processes and people: this material weakness related to the fact we (i) did not have adequate systems in place for recording transactions, (ii) did not have well designed processes under which we could complete our financial statement close process and (iii) were heavily dependent on HeidelbergCement’s people for support functions. |
• | Systems - The issue regarding our systems related to the fact we did not maintain a general ledger in which transactions were recorded on a basis that is consistent with policies established for purposes of complying with U.S. GAAP and consistent with our business practices independent of HeidelbergCement and its affiliates. At various times in 2015 prior to the Acquisition, our accounting records were maintained by affiliates of HeidelbergCement under accounting policies intended to comply with HeidelbergCement’s IFRS group reporting requirements or, following the Acquisition, under those same accounting policies under the terms of a transition services agreement with HeidelbergCement. In order to prepare financial statements as a stand-alone company in compliance with U.S. GAAP, we were required to record a significant number of manual adjusting entries and other adjustments necessary to adjust the financial statements to an appropriate degree of precision necessary for our stand-alone reporting to be accurate. |
• | Processes - Prior to the Acquisition, we were one member of HeidelbergCement’s large multinational group of companies and were therefore not required to produce stand-alone financial reporting. Our routine policies, procedures and practices that existed as of December 31, 2015 were developed to process transactions and produce financial data to meet HeidelbergCement’s financial reporting needs under IFRS. Our accounting policies and practices had not been substantially modified and documented since the Acquisition. As such, we had not established well-defined processes under which we could complete our financial statement close process for stand-alone U.S. GAAP financial reporting at that time. |
• | People (dependence on HeidelbergCement) - In order to produce financial statements in compliance with GAAP, we relied on the resources of HeidelbergCement and its affiliates following the Acquisition. Among other things, at times in 2015, both prior to the Acquisition and following the Acquisition pursuant to a |
◦ | Inventory: this material weakness related to the cumulative impact of control deficiencies found in our inventory cycle and the fact that the required standard costing and physical observation audit adjustments to inventory was considered material to our financial statements. |
• | The redesign and implementation of internal controls and process flows for each business cycle (Purchase to Pay, Quote to Cash, Inventory, Payroll and Benefits, and Financial Close and Reporting) and subsequent implementation of these processes and controls to field locations; |
• | Assessment of the design and operating effectiveness of our enterprise resource planning, or ERP, system; |
• | Training users on our ERP system use and controls; |
• | Assessing competencies of existing accounting and finance personnel with responsibilities for financial accounting and reporting, and developing ongoing training programs; |
• | Recruiting and hiring accounting and finance personnel with the appropriate accounting and reporting technical skills to support its financial reporting responsibilities; and |
• | Recruiting and hiring additional finance personnel to support internal control documentation, testing and monitoring of controls. |
FORTERRA, INC. | |||
(Registrant) | |||
/s/ Jeff Bradley | November 15, 2016 | ||
By: | Jeff Bradley | ||
President and Chief Executive Officer | |||
(Principal Executive Officer) | |||
/s/ William M. Brown | November 15, 2016 | ||
By: | William M. Brown | ||
Executive Vice President and Chief Financial Officer | |||
(Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Forterra, 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(s) 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; |
(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(s) 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 |
Date: November 15, 2016 | /s/ Jeff Bradley |
Jeff Bradley | |
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Forterra, 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15e) 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; |
5. | The registrant’s other certifying officer(s) 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): |
Date: November 15, 2016 | /s/ William M. Brown |
William M. Brown | |
Executive Vice President and Chief | |
Financial Officer |
• | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 15, 2016 | /s/ Jeff Bradley |
Jeff Bradley | |
President and Chief Executive Officer | |
Date: November 15, 2016 | /s/ William M. Brown |
William M. Brown | |
Executive Vice President and Chief | |
Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 11, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Forterra, Inc. | |
Entity Central Index Key | 0001678463 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 63,926,374 |
Condensed Combined Statements of Comprehensive Income (Loss) - Forterra Building Products - USD ($) $ in Thousands |
2 Months Ended | 3 Months Ended | 7 Months Ended | 9 Months Ended | |
---|---|---|---|---|---|
Mar. 13, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2015 |
Sep. 30, 2016 |
|
Successor | |||||
Net income (loss) | $ 8,368 | $ (14,967) | $ (49,684) | $ 41,121 | |
Actuarial gains on defined benefit plans, net of tax | 0 | 0 | 0 | 0 | |
Unrealized gain (loss) on derivative activities, net of tax | 174 | 539 | 951 | (1,253) | |
Foreign currency translation adjustment | 621 | (2,574) | (7,900) | 5,404 | |
Comprehensive income (loss) | $ 9,163 | $ (17,002) | $ (56,633) | $ 45,272 | |
Predecessor | |||||
Net income (loss) | $ (5,756) | ||||
Actuarial gains on defined benefit plans, net of tax | 2,645 | ||||
Unrealized gain (loss) on derivative activities, net of tax | 0 | ||||
Foreign currency translation adjustment | (19,751) | ||||
Comprehensive income (loss) | $ (22,862) |
Condensed Combined Balance Sheets (Parenthetical) - Forterra Inc. - $ / shares |
Sep. 30, 2016 |
Jun. 21, 2016 |
---|---|---|
Common shares, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common shares, authorized (in shares) | 190,000,000 | 190,000,000 |
Common shares, issued (in shares) | 41,619,472 | 41,619,472 |
Common shares, outstanding (in shares) | 41,619,472 | 41,619,472 |
Organization and description of the business |
9 Months Ended | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||
Organization And Description Of Business [Line Items] | |||||||||||||||||||||||||||||||||
Organization and description of the business | Organization and description of the business Forterra, Inc. (the "Company"), a Delaware corporation, was formed on June 21, 2016. The initial stockholder of the Company was LSF9 Stardust Holdings, L.P., which held all of the authorized, issued and outstanding shares of common stock. The Company was formed to hold the ownership interests of Forterra Building Products and its subsidiaries (together, the "Successor Entities"). On October 6, 2016, the Company filed an Amended and Restated Certificate of Incorporation which increased the number of authorized shares of common stock from 1,000 with a par value of $0.01 per share to 190,000,000 with a par value of $0.001 per share, and, immediately after which, effected a 41,619.472 for one stock split of its issued and outstanding common stock previously approved by the Company's Board of Directors. Following the stock split there were 41,619,472 shares of common stock outstanding. Prior to the consummation of the Company's initial public offering of its common stock (the "Offering"), LSF9 Concrete Holdings Ltd. ("LSF9"), an indirect wholly owned subsidiary of Lone Star Fund IX (U.S.), L.P. (along with its affiliates and associates, but excluding the Company and other companies that it owns as a result of its investment activity, "Lone Star") distributed its brick operations in the United States and Eastern Canada to an affiliate of Lone Star (the "Brick Disposition"). Following the Brick Disposition and prior to the consummation of the Offering, the remaining building products operations of LSF9 in the United States and Eastern Canada were transferred to Forterra, Inc. in an internal reorganization under common control transaction (the "Reorganization"). Following the Reorganization but prior to the consummation of the Offering, Forterra, Inc. was a wholly owned subsidiary of Forterra US Holdings, LLC, which is indirectly wholly owned by LSF9. Each of LSF9, Forterra US Holdings, LLC and Forterra, Inc. are affiliates of Lone Star. On October 25, 2016, the Company completed the Offering, in which it offered 18,420,000 shares of common stock at a public offering price of $18.00 per share. The Company received net proceeds from the Offering of $313.3 million, net of underwriting discounts and commissions and before deducting offering expenses, $296.0 million of which was used to repay indebtedness of the Successor Entities. |
||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||
Organization And Description Of Business [Line Items] | |||||||||||||||||||||||||||||||||
Organization and description of the business | Organization and description of the business Description of the business, the offering and reorganization Forterra Building Products (“Forterra” or the “Successor”) is involved in the manufacturing, sale and distribution of building materials in the United States (‘‘U.S.’’) and Canada. Forterra’s primary products are concrete drainage pipe, precast concrete structures, water transmission pipe used in drinking and wastewater systems, and bricks. These products are used in the residential, infrastructure and non-residential sectors of the construction industry. Forterra, Inc., a Delaware corporation, was formed on June 21, 2016 to hold the interest in the Successor following the Reorganization (as defined below). On October 25, 2016, Forterra, Inc. completed an initial public offering of its common stock (the "Offering"), in which it offered 18,420,000 shares of common stock at a public offering price of $18.00 per share. Forterra, Inc. received net proceeds from the Offering of $313.3 million, net of underwriting discounts and commissions and before deducting offering expenses, $296.0 million of which was used to repay indebtedness. Prior to the consummation of the Offering, LSF9 Concrete Holdings Ltd. ("LSF9"), an indirect wholly owned subsidiary of Lone Star Fund IX (U.S.), L.P. (along with its affiliates and associates, but excluding the Company and other companies that it owns as a result of its investment activity, "Lone Star") distributed its brick operations in the United States and Eastern Canada to an affiliate of Lone Star (the "Brick Disposition"). Following the Brick Disposition and prior to the consummation of the Offering, the remaining building products operations of LSF9 in the United States and Eastern Canada, were transferred to Forterra, Inc. in an internal reorganization under common control transaction (the "Reorganization"). Following the Reorganization but prior to the consummation of the Offering, Forterra, Inc. was a wholly owned subsidiary of Forterra US Holdings, LLC, which is indirectly wholly owned by LSF9. Each of LSF9, Forterra US Holdings, LLC and Forterra, Inc. are affiliates of Lone Star. Basis of Presentation - Successor Forterra includes indirect wholly-owned subsidiaries of LSF9. Lone Star, through its wholly-owned subsidiary LSF9, acquired Forterra on March 13, 2015 (the “Acquisition”). LSF9, which was formed on February 6, 2015 for the purpose of acquiring Forterra, had no operations prior to the date of the Acquisition. The legal entities that comprise Forterra are domiciled in the U.S. and Canada. Prior to the Acquisition, the entities comprising Forterra which were acquired by Lone Star were indirect wholly-owned subsidiaries of HeidelbergCement A.G. (“HC” or “Parent”), a publicly listed company in Germany, encompassing HC's North American building products operations (“BP NAM" or the “Predecessor”). LSF9 acquired Forterra in a business combination which also included the acquisition of HC’s U.K.-based building products operations for a total initial purchase price of $1.33 billion cash, including customary working capital adjustments and a possible earn-out of up to $100.0 million. The acquisition of BP NAM and HC's UK-based building products was funded with an equity investment of $432.3 million and third-party debt in the amount of $940.0 million. In the accompanying financial information, Successor refers to Forterra and Predecessor refers to BP NAM. The term “Company” is used throughout the combined financial statements and applies to either the Predecessor or the Successor. The Successor’s combined financial statements include certain assets and liabilities historically held at LSF9, including the proportionate debt and related interest expense incurred by LSF9 to acquire the Company that Forterra is obligated to pay. The Company's portion of Lone Star's initial $432.3 million equity investment is $167.5 million. The Company’s allocated portion of the $940.0 million of third party debt used to finance the Acquisition is $515.5 million. The remaining $424.5 million of the debt was allocated to affiliates of LSF9 that are not included in these financial statements based on the amounts affiliates of LSF9 have fully repaid. The Company and the affiliates of LSF9 were co-obligors and jointly and severally liable under the terms of the initial credit agreements. In April of 2016, the Company’s affiliate co-obligors were released from joint and several liability under the credit agreements and the Company is consequently the sole source of repayment for its $515.5 million share of the initial obligation under the credit agreements. See discussion of the joint and several obligations in Note 9, Debt and deferred financing costs. Recent Transactions A number of transactions have been completed since the Acquisition. These transactions include:
This transaction qualifies as a reorganization of businesses under common control as set forth in the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") 805, Business Combinations and, as such, will first be reflected in the Company's financial statements covering the date on which the transaction occurred. As of the disposition date, the carrying value of net assets related to the brick business will be removed from the Company's balance sheet and recognized as an equity distribution. Also, beginning in the fourth quarter of 2016, the Company will reclassify the operations of the Company's then-former brick business to discontinued operations for all periods presented on the statement of operations.
The financial statements contained herein have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The combined financial statements include the accounts of the Company. All intercompany transactions among the Successor entities have been eliminated. |
Summary of significant accounting policies |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Summary of significant accounting policies | Summary of significant accounting policies Basis of presentation The accompanying balance sheets are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). Statements of operations, cash flows and shareholder's equity are not presented as there was no activity from the date of inception through September 30, 2016. The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates or assumptions that affect the reported amounts and disclosures in the financial statements. Actual future results could differ from these estimates and assumptions. Offering and debt issuance costs In connection with the Offering and the related debt refinancing (the "Refinancing"), Forterra Building Products incurred legal, accounting, and related costs of approximately $42 million, which were paid by the Company following the completion of the Offering on October 25, 2016. Such direct and incremental costs attributable to the Offering and the Refinancing will be recorded as a reduction of the equity proceeds or offset against the carrying amount of the debt, respectively. |
Forterra Building Products | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Summary of significant accounting policies | Summary of significant accounting policies General The condensed combined financial statements have been prepared in accordance with U.S. GAAP and on the same basis as the Company's audited combined financial statements as of December 31, 2015. The condensed combined balance sheet as of September 30, 2016 and the condensed combined statements of operations, comprehensive income (loss) and cash flows for the periods presented herein reflect all adjustments that are of a normal recurring nature and are necessary for a fair statement of the results of the periods shown. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited condensed combined financial statements should be read in conjunction with the audited combined financial statements as provided in Forterra, Inc.'s Prospectus dated October 19, 2016, filed with the SEC on October 21, 2016. The results and trends in these interim financial statements may not be indicative of results for the full year or for any future period. Basis of Presentation - Predecessor Description of Business - Predecessor The legal entities comprising BP NAM were a component of the North American operating segment of HC and consist of U.S. operating entities that were directly owned by Lehigh Hanson, Inc. (‘‘LHI’’), a U.S. holding company, and Canadian operating entities that were directly owned by Hanson America Holdings (4), Ltd., a U.K. holding company. These financial statements are labeled as predecessor because they reflect the combined predecessor historical results of operations, financial position and cash flows of BP NAM, as they were historically managed under the control of HC, in conformity with U.S. GAAP. All intracompany transactions occurring between the predecessor entities have been eliminated. Certain transactions between the Company and HC have been included in these combined predecessor financial statements and are considered to be effectively settled at the time the transaction is recorded. The total net effect of the settlement of these transactions is reflected in the combined predecessor statements of shareholder's equity and Parent company net investment as net transfers (to)/from Parent, in the combined predecessor statements of cash flows as a financing activity and in the combined predecessor balance sheet as Parent company net investment. HC used a centralized approach to cash management and financing of its operations. Historically, the majority of the Predecessor's cash was transferred to HC daily and the Company was dependent on HC funding of the Company’s operating and investing activities as needed. This arrangement is not reflective of the manner in which the Company would have been able to finance its operations had it been a stand-alone business separate from HC during the periods presented. Cash transfers to and from HC's cash management accounts are reflected within Parent company net investment. The combined predecessor financial statements include certain assets and liabilities that have historically been held at the HC corporate level but are specifically identifiable or otherwise allocable to the Company. The cash and cash equivalents held by HC at the corporate level are not specifically identifiable to the Company and therefore were not allocated for any of the periods presented. Cash and cash equivalents in the combined predecessor balance sheets represent cash held locally by operations included in the combined predecessor financial statements. HC third-party debt, and the related interest expense, has not been allocated for any of the periods presented as the Company was not the legal obligor of the debt and HC's borrowings were not directly attributable to these operations. The historical costs and expenses reflected in the combined predecessor financial statements include an allocation for certain corporate functions historically provided by HC or its wholly-owned subsidiaries. Substantially all of the Company’s senior management were employed by HC and certain functions critical to the Company’s operations were centralized and managed by HC. Historically, the centralized functions have included executive senior management, financial reporting, financial planning and analysis, accounting, shared services, information technology, tax, risk management, treasury, legal, human resources, land management, and strategy and development. Additionally, the Company resided in office space provided by affiliates of HC. The cost of each of these services has been allocated to the Company on the basis of the Company’s relative net sales or head count as compared to that of HC depending upon which allocation methodology is more meaningful for each service. The Company and HC believe that these allocations reasonably reflect the utilization of services provided and benefits received. However, they may differ from the cost that would have been incurred had the Company operated as a stand-alone company for the periods presented or will be incurred by the Successor. Estimating actual costs that would have been incurred if the Company had been a stand-alone company is not practicable and would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including legal services, accounting and finance services, human resources, marketing and contract support, customer support, treasury, facility and other corporate and infrastructural services. Income taxes have been accounted for in these financial statements on a separate-return basis. Recent Accounting Guidance Adopted In March 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810), Amendments to the Consolidation Analysis, changing the analysis that a reporting entity must perform when deciding to consolidate a legal entity. This amendment changes the evaluation of whether limited partnerships are variable interest entities or voting interest entities and eliminates the presumption that a general partner should consolidate a limited partnership. All legal entities are subject to reevaluation under the revised consolidation model. The amendment is effective for fiscal years and interim periods beginning after December 15, 2015 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the beginning of the period of adoption. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, defining when and how companies are required to disclose going concern uncertainties, which must be evaluated each interim and annual period. Specifically, it requires management to determine whether substantial doubt exists regarding the entity’s going concern presumption. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date the financial statements are issued. If substantial doubt exists, certain disclosures are required. The provisions of this ASU are effective for annual periods ending after December 15, 2016 and to annual and interim periods thereafter. Early adoption is permitted. The ASU should be applied on a prospective basis. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). Topic 805 requires an acquirer to retrospectively adjust provisional amounts recognized in a business combination during the measurement period. To simplify the accounting for adjustments made to provisional amounts, the amendments in this update require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement-period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition, an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Recent Accounting Guidance Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers. The FASB subsequently voted to defer the application of the provisions of this standard for public companies until annual reporting periods beginning after December 15, 2017 in ASU 2015-14 Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, including interim periods within that reporting period. The Company is currently evaluating whether this ASU will have a material impact on its combined financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, requiring an entity to measure inventory within the scope of the ASU at the lower of cost and net realizable value. For public business entities, the amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company is currently evaluating whether this ASU will have a material impact on its combined financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), amending the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. For public business entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted as of the standard’s issuance date. ASU 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company believes this ASU will have a material impact on its combined financial statements as it will result in most of the Company’s leases and associated assets being presented on the balance sheet. In August 2016, the FASB issued ASU 2016-15 Statements of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, providing clarifications as to the presentation and classification in the cash flows of eight specific issues, including but not limited to prepayment of debt or debt extinguishment costs and contingent consideration payments made after a business combination. For public business entities, the amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of the ASU will impact the Company's cash flow presentation in future periods. |
Business combinations |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business combinations | Business combinations Transaction Overview – The Acquisition The Successor’s financial statements reflect the Acquisition of the Predecessor that occurred on March 13, 2015, which was accounted for as a business combination as defined by ASC 805, Business Combinations. Certain liabilities of the Predecessor were not assumed by the Successor including, but not limited to pension liabilities, tax and insurance related liabilities and multi-employer pension liabilities. The assets acquired and liabilities assumed are recorded at their respective fair values as of the date of the Acquisition with the excess of the purchase price over those fair values recorded as goodwill. The determination of the fair values of the acquired assets and assumed liabilities required significant judgment, including estimates impacting the determination of estimated lives of tangible and intangible assets, the calculation of the fair value of inventory, property, plant and equipment, and customer related intangibles. The fair values were determined primarily using the income method using level 3 inputs as defined by ASC 820. The following table summarizes the fair values of the assets acquired and liabilities assumed by the Company at the Acquisition date:
The goodwill recognized was attributable primarily to expected operating efficiencies and expansion opportunities in the business acquired. The goodwill is not expected to be deductible for tax purposes. Financing transactions Consideration to fund the Acquisition was provided by an equity investment of $167.5 million and proceeds from third-party debt, net of original discount and debt issuance costs, in the amount of $472.9 million. The financing transactions included a senior term loan in the amount of $254.9 million ($241.7 million, net of $13.2 million of original issue discount and debt issuance costs), a junior term loan in the amount of $260.0 million ($233.8 million, net of $26.2 million of original issue discount and debt issuance costs) and a revolving line of credit of up to $150.0 million. Funds of $0.6 million were initially drawn from the revolving line of credit at the closing date of the Acquisition. The Company incurred debt issuance costs related to the revolving line of credit in the amount of $3.2 million. Contingent Consideration As discussed in Note 1, the Acquisition included contingent consideration of up-to an additional $100.0 million based on the earnings of LSF9 for fiscal year 2015 as adjusted by the purchase agreement (“Earn-out”). The Earn-out is based on the achievement of an amount in excess of a certain minimum threshold of adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), as defined by the purchase agreement, for the calendar year ended December 31, 2015. The Company determined that achieving the required threshold to trigger a payout to the Seller was not probable and, therefore, the Company did not record a contingent liability related to the Earn-out as of the Acquisition date. Subsequent to year end, the Company concluded the Earn-out was not earned and, accordingly, did not record a liability as of December 31, 2015. See further discussion of the Earn-out contingency in Note 13, noting that HC is disputing the Earn-out and if LSF9 is unsuccessful in resolving the dispute, the Company could recognize a material charge to its earnings. Transaction Overview - USP Acquisition On April 15, 2016, Forterra acquired all of the stock of USP Holdings Inc. for a purchase price of $775.1 million, subject to customary working capital adjustments. All outstanding stock options of USP were settled by USP with proceeds from the acquisition and were not assumed by the Company in the transaction. The acquisition is accounted for as a business combination as defined by ASC 805. The Company allocated the purchase price to the individually identifiable assets acquired and liabilities assumed based on their estimated fair value on the date of acquisition. USP operates as part of the Company’s Water Pipe & Products reportable segment. The excess purchase price over those fair values was recorded as goodwill. The determination of fair values of the acquired assets and assumed liabilities required significant judgment, including estimates related to customer relationships, trade names and other intangibles, calculation of the fair value of property, plant and equipment and inventory. The allocation of the purchase price is preliminary and may be subject to change upon completion of the determination of the fair values of all acquired assets and liabilities. The fair values of assets and liabilities were determined using level 3 inputs as defined by ASC 820. The respective preliminary fair values of the assets acquired and liabilities assumed at the acquisition date are as follows:
The goodwill recognized was attributable primarily to expected operating efficiencies and expansion opportunities in the business acquired. The goodwill is not expected to be deductible for tax purposes. For the three and nine months ended September 30, 2016 revenues include $184.8 million and $335.1 million and income from operations include $18.8 million and $29.5 million, respectively, attributable to USP after the acquisition date. Transaction Overview - Sherman-Dixie Acquisition On January 29, 2016, Forterra completed the acquisition of all of the common stock of Sherman-Dixie for a cash purchase price of $66.8 million including customary working capital adjustments. The acquisition is accounted for as a business combination as defined by ASC 805. The Company allocated the purchase price to the individually identifiable assets acquired and liabilities assumed based on their estimated fair value on the date of acquisition. Sherman-Dixie operates as part of the Company’s Drainage Pipe & Products reportable segment. The excess purchase price over those fair values was recorded as goodwill. The determination of fair values of the acquired assets and assumed liabilities required significant judgment, including estimates related to contract backlog, calculation of the fair value of property, plant and equipment and inventory. The allocation of the purchase price is preliminary and may be subject to change upon completion of the determination of the fair values of all acquired assets and liabilities. The fair values of assets and liabilities were determined using level 3 inputs as defined by ASC 820. The respective preliminary fair values of the assets acquired and liabilities assumed at the acquisition date are as follows:
Transaction Overview - Bio Clean Acquisition On August 4, 2016, Forterra completed the acquisition of Bio Clean for $30.6 million in cash, subject to customary working capital adjustments. The respective preliminary fair values of the assets acquired and liabilities assumed at the acquisition date are as follows:
Supplemental pro-forma information (unaudited) If the Company had acquired USP, Sherman-Dixie, and Bio Clean on January 1, 2016, the Company's total net sales and income from continuing operations before taxes, on a pro-forma basis for the three months and nine months ended September 30, 2016 would have been approximately $481.8 million and $1,307.1 million and $22.1 million and $13.0 million, respectively. Transaction costs For the three and nine months ended September 30, 2016, for the three months ended September 30, 2015, for the period from March 14, 2015 to September 30, 2015, and for the period from January 1, 2015 to March 13, 2015 the Company recognized aggregate transaction costs, including legal, accounting, valuation, and advisory fees, specific to the Acquisition, Cretex Acquisition, USP Acquisition, Bio Clean Acquisition and Sherman Dixie Acquisition of $840, $8,507, $1,920, $15,292, and $2,079, respectively. These costs are recorded in the combined statements of operations within selling, general & administrative expenses. Roof Tile Divestiture On April 12, 2016, the Company entered into and closed a Stock Purchase Agreement to sell all of its ownership interest in its roof tile business for an initial price of $10.5 million subject to customary working capital adjustments. The sale of the roof tile business generated a loss of $0.8 million recorded in other income (expense), net. |
Receivables, net |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables, net | Receivables, net Receivables consist of the following at September 30, 2016 and December 31, 2015:
|
Inventories |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consists of the following at September 30, 2016 and December 31, 2015:
|
Property, plant and equipment, net |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment, net | Property, plant and equipment, net Property, plant and equipment, net consist of the following at September 30, 2016 and December 31, 2015:
Depreciation expense, including depreciation of assets subject to a failed sale-leaseback discussed in Note 10 Financing Obligation (Failed sale-leaseback), totaled $18,481, $45,830, $8,174, $17,842, and $6,894, for the three and nine months ended September 30, 2016, for the three months ended September 30, 2015, for the period from March 14, 2015 to September 30, 2015 and for the period from January 1, 2015 to March 13, 2015, respectively, which is included in cost of goods sold and selling, general and administrative expenses in the combined statements of operations. |
Goodwill and other intangible assets, net |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and other intangible assets, net | Goodwill and other intangible assets, net The table below presents goodwill by operating segment as of September 30, 2016:
Intangible assets other than goodwill at September 30, 2016 included the following:
Intangible assets other than goodwill at December 31, 2015 included the following:
Amortization expense totaled $12,148, $25,219, $1,139, $2,531 and $0, for the three and nine months ended September 30, 2016, for the three months ended September 30, 2015, for the period March 14, 2015 to September 30, 2015, and for the period from January 1, 2015 to March 13, 2015, respectively, which is included in cost of goods sold and selling, general and administrative expenses in the combined statements of operations. |
Fair value measurement |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurement | Fair value measurement The Company's financial instruments consist primarily of cash and cash equivalents, trade and other receivables, derivative instruments, accounts payable, long-term debt and accrued liabilities. The carrying value of the Company's trade receivables, other receivables, trade payables, the asset based revolver and accrued liabilities approximates fair value due to their short-term maturity. The Company may adjust the carrying amount of certain non-financial assets to fair value on a non-recurring basis when they are impaired. The estimated carrying amount and fair value of the Company’s financial instruments and other assets and liabilities measured and recorded at fair value on a recurring basis is as follows for the dates indicated:
Liabilities and assets classified as level 2 which are recorded at fair value are valued using observable market inputs. The fair values of derivative assets and liabilities are determined using quantitative models that utilize multiple market inputs including interest rates and exchange rates to generate continuous yield or pricing curves and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services. The fair values of derivative assets and liabilities include adjustments for market liquidity, counter-party credit quality and other instrument-specific factors, where appropriate. In addition, the Company incorporates within its fair value measurements a valuation adjustment to reflect the credit risk associated with the net position. Positions are netted by counter-parties, and fair value for net long exposures is adjusted for counter-party credit risk while the fair value for net short exposures is adjusted for the Company’s own credit risk. The estimated carrying amount and fair value of the Company’s financial instruments and liabilities for which fair value is only disclosed is as follows:
The fair value of debt is the estimated amount LSF9 would have to pay to transfer its debt, including any premium or discount attributable to the difference between the stated interest rate and market rate of interest at the balance sheet date. Fair values are supported by observable market transactions when available. |
Debt and deferred financing costs |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and deferred financing costs | Debt and deferred financing costs The Company’s debt consisted of the following:
In connection with the financing of the Acquisition, LSF9 entered into a Senior Term Loan Credit Agreement for borrowings of $635.0 million, a Junior Term Loan Credit Agreement for borrowings of $260.0 million, and drew $45.0 million under a $150.0 million revolving credit facility (the “Revolver”). Approximately $515.5 million is the obligation of Forterra as a joint and several obligation under ASC 405-40, Obligations Resulting from Joint and Several Liability Arrangements. See also Note 1, Basis of Presentation-Successor. In October 2015, the Company increased the size of the Senior Term Loan by $240.0 million for the Cretex Acquisition. Additionally, in April 2016, the Company's capacity on its revolving credit facility was increased to $285.0 million. In conjunction with the issuance of debt related to the Acquisition and the Cretex Acquisition, LSF9 incurred $71.6 million of debt issuance costs and debt discounts; of which $51.9 million is attributed to the Company debt obligation. The credit agreements are secured by substantially all of the assets of the Company. In April 2016, LSF9 borrowed $205.0 million on the Revolver in order to finance the USP Acquisition of which $203.4 million was repaid during April 2016 with proceeds from an affiliated entity controlled by LSF9 but not included among the legal entities that comprise the Company. In connection with the additional proceeds obtained in April 2016 which benefited the Company, under ASC 405-40, Obligations Resulting from Joint and Several Liability Arrangements, the Company assumed an additional obligation of $203.4 million that was recognized as an increase to the Company’s allocated share of LSF9’s outstanding Senior Term Loan balance with an associated increase in debt issuance fees and discount related to the Senior Term Loan of $8.9 million. The affiliated entity was subsequently released as a co-obligor and its joint and several liability under terms of all of the 3rd party credit agreements. On June 17, 2016, LSF9 borrowed an incremental $345.0 million on the Senior Term Loan and used the proceeds to pay a dividend of $338.3 million, net of debt issuance costs, to the shareholders of LSF9. The dividend was recorded as a return of capital. LSF9 incurred debt issuance fees and discount of $6.7 million in connection with the issuance of the debt. The incremental borrowings incur interest at the same rate as the Senior Term Loan and matures in March 2022. Under ASC 405-40 Obligations Resulting from Joint and Several Liability Arrangements, the Company recognized the full amount of the incremental borrowing, net of related issuance costs and discount, as an obligation in the combined balance sheet. The interest rate for both the Senior Term Loan and Junior Term Loan is set at LIBOR (with a 1% floor) plus a margin of 5.5% and 9.5%, respectively. The Senior Term Loan Agreement has a weighted average effective interest rate of 7.1% for the three and nine months ended September 30, 2016 and matures March 2022. The effective interest rate of the Junior Term Loan Credit Agreement was 11.8% for the period, and the debt matures March 2023. The effective interest rate includes the effects of deferred financing fees and original issue discount and premium amortization calculated using the effective interest method. At September 30, 2016, the Company’s Revolver, which matures in March 2020, had total borrowing capacity of $285.0 million, and $25.0 million outstanding. The Company incurred debt issuance costs of $3.8 million related to the Revolver. The available credit under the Revolver is limited by a borrowing base which includes a portion of the Company’s current assets. Interest is floating, based on a reference rate plus an applicable margin. The weighted average annual interest rate on the Revolver was 2.17% and 2.04% for the three and nine months ended September 30, 2016, respectively. In addition, Forterra pays a facility fee of between 25.0 and 37.5 basis points per annum based upon the utilization of the total Revolver facility. Availability under the Revolver at September 30, 2016 based on draws, and outstanding letters of credit and allowable borrowing base was $237.5 million. The Company incurred $58.3 million of cash interest expense for the nine months ended September 30, 2016, of which $6.9 million was paid by affiliates of the Company. As of September 30, 2016, minimum future principal payments on long-term debt are as follows:
Covenants, Events of Default and Provisions Under the terms of credit agreements above, LSF9 is required to comply with certain customary covenants, including among others, the limitation of indebtedness, limitations on liens, and limitations on certain cash distributions. The Revolver imposes only one financial covenant, which requires LSF9 to maintain a fixed charge coverage ratio of no less than 1.00 to 1.00 during a compliance period, which is triggered when the availability under the Revolver falls below a threshold set forth in the agreement. The fixed charge coverage ratio is the ratio of consolidated earnings before interest, depreciation, and amortization ("EBITDA") less cash payments for capital expenditures and income taxes to consolidated fixed charges (interest expense plus scheduled payments of principal on indebtedness). Lines of Credit and Other Debt Facilities The Company had stand-by letters of credit outstanding of $22.5 million as of September 30, 2016 which reduce the borrowings available under the Revolver. Joint and Several Obligations As discussed above, the Company has recorded debt on its combined balance sheet under ASC 405-40, Obligations Resulting from Joint and Several Liability Arrangements. The Company and the affiliates of LSF9 were co-obligors and jointly and severally liable under terms of the LSF9’s credit agreements. The Company’s allocated portion of the $940.0 million of third party debt used to finance the Acquisition is $515.5 million. The initial obligation of $515.5 million was reflected on the Company’s combined balance sheet at the Acquisition date as $254.9 million of Senior Term Loan, $260.0 million of Junior Term Loan and $0.6 million of Revolver obligations. The remaining $424.5 million of the debt was allocated to affiliates of LSF9 that are not included in these financial statements based on the amounts affiliates of LSF9 have fully repaid. In April of 2016, the Company’s affiliate co-obligors were released from joint and several liability under the LSF9 credit agreements. The Company is consequently the sole source of repayment for its $515.5 million share for the initial obligation under the credit agreements, as well as other obligations recorded on the balance sheet. In addition to the initial debt obligation of $515.5 million recorded by the Company additional LSF9 Senior Term Loan borrowings of $240.0 million in October 2015 were used to finance the Cretex Acquisition were allocated in full to the Company. In April 2016, LSF9 borrowed an additional $205.0 million on the Revolver to finance the USP Acquisition. On April 26, 2016, affiliates of the Company under control of LSF9 but not included in Forterra repaid $203.4 million of the Revolver balance that was drawn in April 2016 and $176.7 million of the Senior Term Loan, after which the other affiliates were released as obligors to the loan and the Company became the sole source of repayment under the LSF9 debt agreement. The Company has reflected the increased obligation as an increase in the Senior Term Loan in order to reflect the change in its obligation as a result of the additional borrowings of LSF9. A proportionate amount of debt issuance costs and discount related to the increased obligation under the Senior Term Loan has also been allocated to the Company at the time of the increased obligation. Additionally, in June 2016, LSF9 incurred an additional $345.0 million of Senior Term Loan debt used to pay a dividend of $338.3 million to Lone Star which was attributed to the Company as an additional obligation under the Senior Term Loan. The amounts recorded in the combined balance sheets represent the portion of LSF9's outstanding obligation at that balance sheet date the Company is obligated to repay. There are no other repayments that will be made by affiliates other than those mentioned above. As of September 30, 2016, the Company has recorded all debt held by LSF9 on its combined balance sheet as of September 30, 2016. The obligations are secured by substantially all of the assets of the Company. The Offering and Refinancing Forterra, Inc. received net proceeds of approximately $313.3 million in the Offering, net of underwriter discounts and commissions and before deducting offering expenses, which combined with the $1.05 billion in gross proceeds of the Refinancing and a $125.0 million draw on Forterra, Inc's new revolving credit facility, were used to repay in full the Company's existing Junior Term Loan of $260.0 million, existing Senior Term Loan of $1.04 billion, and the existing balance under the Revolver, in addition to related expenses associated with the Offering and Refinancing. The $260.0 million repayment toward the Junior Term Loan represented a full repayment of the outstanding principal on that loan, resulting in a related write-off of issue discounts and capitalized issuance costs of approximately $22 million. The repayment also triggered a prepayment penalty of approximately $7.8 million. Additionally, concurrent with the completion of the Offering, Forterra, Inc. entered into a new asset based revolving credit facility for working capital and general corporate uses and a new senior term loan facility, the proceeds of which, together with a portion of the proceeds of the Offering, were used to repay in full and terminate the existing Revolver and Senior Term Loan and pay related transaction costs. Immediately following the completion of the Offering and the concurrent debt refinancing (the "Refinancing"), Forterra, Inc. had $125.0 million outstanding on its new asset based revolving credit facility. See Note 19, Subsequent Events. The asset based revolving credit facility provides for an aggregate principal amount of up to $300.0 million, with up to $280.0 million to be made available to the U.S. borrowers and up to $20.0 million to be made available to the Canadian borrowers. Subject to the conditions set forth in the new revolving credit agreement, the new revolving credit facility may be increased by up to the greater of (i) $100.0 million and (ii) such amount as would not cause the aggregate borrowing base to be exceeded by more than $50.0 million. Borrowings under the new revolving credit facility may not exceed a borrowing base equal to the sum of (i) 100% of eligible cash, (ii) 85% of eligible accounts receivable and (iii) the lesser of (a) 75% of eligible inventory and (b) 85% of the orderly liquidation value of eligible inventory, with the U.S. and Canadian borrowings being subject to separate borrowing base limitations. The advance rates for accounts and inventory are subject to increase by 2.5% during certain periods. The new revolving credit facility matures on October 25, 2021. The facility will also provide for the issuance of letters of credit of up to an agreed sublimit. Interest will accrue on outstanding borrowings at a rate equal to LIBOR or CDOR plus a margin ranging from 1.25% to 1.75% per annum, or at an alternate base rate, Canadian prime rate or Canadian base rate plus a margin ranging from 0.25% to 0.75% per annum, in each case, based upon the average excess availability under the new revolving credit facility for the most recently completed calendar quarter. The obligations of the borrowers under the new revolving credit facility is guaranteed by Forterra, Inc. and its direct and indirect wholly-owned restricted subsidiaries other than certain excluded subsidiaries; provided that the obligations of the US borrowers is not guaranteed by the Canadian subsidiaries. The new revolving credit facility is secured by substantially all of the assets of the borrowers; provided that the obligations of the US borrowers are not secured by any liens on more than 65% of the voting stock of the Canadian subsidiaries or assets of the Canadian subsidiaries. The new revolving credit facility contains customary representations and warranties, and affirmative and negative covenants, including representations, warranties, and covenants that, among other things, restrict the ability of Forterra, Inc. and its restricted subsidiaries to incur additional debt, incur or permit liens on assets, make investments and acquisitions, consolidate or merge with any other company, engage in asset sales and pay dividends and make distributions. The new revolving credit agreement contains a financial covenant restricting Forterra, Inc. from allowing its fixed charge coverage ratio to drop below 1.00:1.00 during a compliance period, which is triggered when the availability under the new revolving credit facility falls below a threshold set forth in the new revolving credit agreement. Obligations under the new revolving credit agreement may be accelerated upon certain customary events of default (subject to grace periods, as appropriate). The new senior term loan facility provided for a $1.05 billion senior secured term loan that was made available to a newly formed direct subsidiary of Forterra, Inc. and used to repay the existing Senior Term Loan of Forterra Building Products. Subject to the conditions set forth in the term loan agreement, the new senior term loan facility may be increased by (i) up to the greater of $285.0 million and 1.0x consolidated EBITDA of Forterra, Inc. and its restricted subsidiaries for the four quarters most recently ended prior to such incurrence plus (ii) the aggregate amount of any voluntary prepayments, plus (iii) an additional amount, provided certain financial tests are met. The new senior term loan facility matures on October 25, 2023 and is subject to quarterly amortization equal to 0.25% of the initial principal amount. Interest will accrue on outstanding borrowings thereunder at a rate equal to LIBOR (with a floor of 1.0%) or an alternate base rate, in each case plus a margin of 3.50% or 2.50%, respectively. The obligations of the borrower under the new senior term loan facility are guaranteed by Forterra, Inc. and each of its direct and indirect material wholly-owned domestic subsidiaries other than any of Forterra Inc.'s Canadian subsidiaries and certain other excluded subsidiaries (the "Guarantors"). The new senior term loan facility is secured by substantially all of the assets of Forterra, Inc., the borrower and the Guarantors; provided that the obligations under the new senior term loan facility are not secured by any liens on more than 65% of the voting stock of the Canadian subsidiaries or assets of the Canadian subsidiaries. The new senior term loan facility contains customary representations and warranties, and affirmative and negative covenants, that, among other things, restrict the ability of Forterra, Inc. and its restricted subsidiaries to incur additional debt, incur or permit liens on assets, make investments and acquisitions, consolidate or merge with any other company, engage in asset sales and pay dividends and make distributions. The new senior term loan does not contain any financial covenants. Obligations under the new senior term loan may be accelerated upon certain customary events of default (subject to grace periods, as appropriate). |
Financing obligation (Failed sale-leaseback) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
Financing obligation (Failed sale-leaseback) | Financing obligation (Failed sale-leaseback) On April 5, 2016, the Company sold properties in 47 sites throughout the U.S. and Canada to Pipe Portfolio Owner (Multi) LP (the "U.S. Buyer") and FORT-BEN Holdings (ONQC) Ltd. (the “Canadian Buyer”) for an aggregate purchase price of approximately $204.3 million. On April 14, 2016, the Company sold additional properties in two sites located in the U.S. to the U.S. Buyer for an aggregate purchase price of approximately $11.9 million. In connection with these transactions, the Company and U.S. Buyer and an affiliate of the Canadian Buyer entered into master land and building lease agreements under which the Company agreed to lease back each of the properties for an initial term of twenty years, followed by one optional renewal terms of 9 years, 11 months. Leaseback rental will escalate annually by 2% during the initial term and based on changes in the Consumer Price Index capped at 4% during the optional renewal period. The proceeds received from the sale-leaseback transactions net of transaction costs of $6.5 million amounted to $209.7 million. The sale-leaseback transactions were considered to have one form of prohibited “continuing involvement” at the inception of the lease which preclude sale-leaseback accounting for transactions involving real estate in the combined financial statements of the Company because a guarantee by LSF9 provided the buyer-lessor or the lessor, as applicable, with additional collateral that reduced the buyer-lessor’s or the lessor's, as applicable, risk of loss. As a result, the assets subject to the sale-leaseback remain on the balance sheet of the Company and are being depreciated. For the three and nine months ended September 30, 2016, the Company recognized $1.3 million and $2.6 million, respectively, of depreciation expense on assets sold under the financing obligation recorded on the Company's combined balance sheet. The aggregate proceeds have been recorded as a financing obligation in the combined balance sheet. The Company has recorded a financing obligation of $210.4 million, net of $6.6 million of deferred transaction costs, in the combined balance sheet at September 30, 2016. During the three and nine months ended September 30, 2016 the Company recognized $4.3 million and $8.3 million, respectively, of interest expense related to payments made under the financing obligation. The table below shows the minimum lease payments under the failed sale-leasebacks for the years ended:
Change in Guarantor The Company entered into agreements to replace the current guarantor, LSF9, with Forterra, Inc. as the new guarantor, effective immediately following completion of the Reorganization. Due to the change in guarantor, the Sale Leaseback will qualify for sales recognition and be classified as an operating lease beginning in the fourth quarter of 2016. |
Accrued liabilities |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued liabilities | Accrued liabilities Accrued liabilities consist of the following at September 30, 2016 and December 31, 2015:
|
Derivatives and hedging |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and hedging | Derivatives and hedging The Company uses derivatives to manage selected foreign exchange and interest rate exposures. The Company does not use derivative instruments for speculative trading purposes, and cash flows from derivative instruments are included in net cash provided by (used in) financing activities in the combined statements of cash flows. In May of 2015, the Company entered into the following derivative instruments: foreign exchange forward contracts and fixed-for-float cross currency swaps. The fixed-for-float cross currency swaps are designated as cash flow hedges in accordance with ASC 815-20, Derivatives - Hedging, with the effective portion of the changes in the fair value of the derivatives recorded to accumulated other comprehensive income, and any ineffective portion reflected directly in earnings as other operating expense in the combined statements of operations. The foreign exchange forward contracts are not designated as hedge instruments; therefore changes in fair value are recognized immediately in earnings as other operating expenses in the combined statements of operations. The foreign exchange forward contracts entered into in May 2015 were accelerated in March 2016 for proceeds of $6.5 million. Proceeds from the settlement of the currency swaps were used to make payments on the outstanding balance on the Revolver. The Company entered into new foreign exchange forward contracts after the settlement. These foreign exchange forward contracts were not designated as hedge instruments and changes in fair value were recognized in earnings as other operating expenses. A quantitative analysis is utilized to assess hedge effectiveness for cash flow hedges. The Company assesses the hedge effectiveness and measures the amount of ineffectiveness for the hedge relationships based on changes in forward exchange rates. For the three and nine months ended September 30, 2016, for the three months ended September 30, 2015, for the period from March 14, 2015 to September 30, 2015 and for the period from January 1, 2015 to March 13, 2015, the Company recognized a foreign exchange gain/(loss) of $850, $(3,570), $4,997, $6,101, and $0, respectively, in other operating income in the combined statement of operations. A loss on settlement of $1,546 is included in the nine months ended September 30, 2016. The Company has elected to present all derivative assets and derivative liabilities, on a net basis on its combined balance sheets when a legally enforceable International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement exists. An ISDA Master Agreement is an agreement between two counterparties, which may have multiple derivative transactions with each other governed by such agreement, and such ISDA Master Agreement generally provides for the net settlement of all or a specified group of these derivative transactions, through a single payment, in a single currency, in the event of a default on, or affecting any, one derivative transaction or a termination event affecting all, or a specified group of, derivative transactions. At September 30, 2016 and December 31, 2015, the Company’s derivative instruments fall under an ISDA master netting agreement. The following table presents the fair values of derivative assets and liabilities in the combined successor balance sheets:
The following table presents the gain (loss) recognized in the statements of operations and comprehensive income on derivative instruments in cash flow hedging relationships. Gains (losses) on hedge instruments were recorded in other operating income in the combined statements of operations and represent the changes in accumulated other comprehensive loss related to the derivatives as reflected in the combined balance sheets.
Concurrent with the Refinancing, the Company's fixed-for-float cross currency swaps were terminated and the foreign exchange forward contracts were novated to Forterra, Inc. |
Commitments and contingencies |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Forterra Building Products | |
Other Commitments [Line Items] | |
Commitments and contingencies | Commitments and contingencies The Company is involved in legal proceedings and litigation in the ordinary course of business. In the opinion of management, the outcome of such matters will not have a material adverse effect on the Company’s combined financial position, results of operations, or liquidity. Other than routine litigation incidental to the Company's business and those matters described below, there are no material legal proceedings to which the Company is a party or to which any of the Company’s properties are subject. In connection with the Earn-out contingency described in Note 3, the Acquisition included contingent consideration of up to $100.0 million if and to the extent the 2015 financial results of the businesses acquired by Lone Star in the Acquisition, including the Company and HC's former building products business in the United Kingdom, exceeded a specified Adjusted EBITDA target for fiscal year 2015, as calculated pursuant to the terms of the purchase agreement. If such Adjusted EBITDA calculation exceeds the specified target, LSF9, and therefore, Forterra would be required to pay HC an amount equal to a multiple of such excess Adjusted EBITDA, with any payment capped at $100.0 million. In April 2016, the Company provided an earn-out statement to HC demonstrating that no payment was required. On June 13, 2016, HC provided notification that it is disputing, among other things, the Company’s calculation of Adjusted EBITDA under the purchase agreement and asserting that a payment should be made in the amount of $100.0 million. The Company does not believe HC’s position has merit and intends to vigorously oppose HC’s assertions. On October 5, 2016, affiliates of HC filed a lawsuit in the Delaware Court of Chancery seeking specific performance and claiming access to the Company's books, records, and personnel; seeking a declaratory judgment concerning the scope of the neutral accounting expert’s authority; and in the alternative, claiming a breach of contract and seeking the $100.0 million and other damages. As of September 30, 2016, no liability for this contingency has been accrued as payment of any earn-out is not considered probable. However, the outcome of this matter is uncertain, and no assurance can be given to the ultimate outcome of the resulting proceedings. If LSF9 is unsuccessful in resolving the dispute, the Company could recognize a material charge to its earnings. Long-term incentive plan Following the Acquisition the Company implemented a cash-based long term incentive plan (the “LTIP”), which entitles the participants in the LTIP a potential cash payout upon a monetization event as defined by the LTIP. Potential monetization events include the sale of the Company, an initial public offering where Lone Star reduces its ownership interest in the Company below 50% or at Lone Star’s discretion, or through certain cash distribution as defined in the LTIP. Before the payout of any cash the LTIP requires Lone Star receive a return of their investment plus a specified internal rate of return, which is calculated by comparing the return to Lone Star over the timeline of the investment in the Company. As of September 30, 2016, no such monetization events had occurred, and therefore no amounts were accrued in the accompanying combined balance sheets as of September 30, 2016 and December 31, 2015. The Offering did not reach the required return on investment to trigger a payout under the LTIP. |
Related party transactions |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Forterra Building Products | |
Related Party Transaction [Line Items] | |
Related party transactions | Related party transactions Successor Hudson Advisors The Company has an advisory agreement with Hudson Advisors, an affiliate of Lone Star, to provide certain management oversight services to the Company, including assistance and advice on strategic plans, obtaining and maintaining certain legal documents, and communicating and coordinating with service providers. The Company incurred fees totaling $1.0 million, $4.1 million, $3.8 million, and $7.0 million for the three and nine months ended September 30, 2016, for the three months ended September 30, 2015 and for the period from March 14 to September 30, 2015, respectively, included in Selling, general and administrative expense on the combined Successor statement of operations. In conjunction with the Offering, the advisory agreement with Hudson Advisors has been terminated. Affiliates receivable The Company pays for certain services provided for affiliates which the Company bills to its affiliates. At September 30, 2016, the Company recorded a receivable of $91 for services paid on behalf of affiliates in other current assets on the Combined Balance Sheet. Tax receivable agreement In connection with the Offering, the Company entered into a tax receivable agreement with Lone Star that provides for, among other things, the payment by the Company to Lone Star of 85% of the amount of certain covered tax benefits, which may reduce the actual liability for certain taxes that the Company might otherwise be required to pay. The tax benefits subject to the tax receivable agreement include: (i) all depreciation and amortization deductions, and any offset to taxable income and gain or increase to taxable loss, resulting from the tax basis that the Company had in its assets as of the time of the consummation of the Offering, (ii) the utilization of the Company's and its subsidiaries’ net operating losses and tax credits, if any, attributable to periods prior to the Offering, (iii) deductions in respect of payments made, funded or reimbursed by an initial party to the tax receivable agreement (other than the Company or one of its subsidiaries) or an affiliate thereof to participants under the LSF9 Concrete Holdings Ltd. Long Term Incentive Plan, (iv) deductions in respect of transaction expenses attributable to the USP Acquisition and (v) certain other tax benefits attributable to payments made under the tax receivable agreement. For purposes of the tax receivable agreement, the aggregate reduction in income tax payable by the Company will be computed by comparing the Company's actual income tax liability with its hypothetical liability had it not been able to utilize the related tax benefits. The agreement will remain in effect until all such related tax benefits remain. Based upon the Company's preliminary estimates, the initial liability is estimated to be between $114.0 million and $124.0 million, which will be recognized as a reduction to equity in the fourth quarter as of October 25, 2016, the closing date of the Offering. Subsequent changes in estimates, as applicable, will be recognized in income. Predecessor Parent company net investment During the Predecessor period the combined financial statements for the Company are based on the accounting records of HC. Within these records, each subsidiary of BP NAM has its own equity accounts in the books and records, as well as intercompany balances due (to)/from affiliates and operations within HC. These intercompany balances are considered by HC as part of the capital structure of these entities and are not regularly settled in cash with the affiliate counterparties. Therefore, these intercompany balances act as clearing accounts between the parties and consist of the accumulated net transactions between the Company and other entities and operations of HC and may include both operating items (allocated expenses and purchases of services and materials) and equity items (transfers of assets, cash and dividends). The Company has recorded all such equity and intercompany balances in a single caption, Parent company net investment. Allocated expenses The Predecessor was allocated selling, general and administrative expenses from the Parent for certain shared services of $4,112, for the period from January 1, 2015 to March 13, 2015. The allocated costs are included in costs of goods sold or selling, general and administrative expenses in the combined statements of operations. The historical costs and expenses reflected in the Company's combined financial statements include an allocation for certain corporate functions historically provided by HC or its wholly-owned subsidiaries. Substantially all of the Company’s senior management were employed by HC and certain functions critical to the Company’s operations were centralized and managed by HC. Historically, the centralized functions have included executive senior management, financial reporting, financial planning and analysis, accounting, shared services, information technology, tax, risk management, treasury, legal, human resources, land management and strategy and development. Additionally, the Company temporarily rented office space provided by affiliates of HC. The cost of each of these services has been allocated to the Company on the basis of the Company’s relative net sales or head count as compared to that of HC depending upon which allocation methodology is more meaningful for each service. The Company and HC believe that these allocations reasonably reflect the utilization of services provided and benefits received. However, these amounts are not necessarily representative of the amounts that would have been incurred by the Company as a standalone entity. |
Segment reporting |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment reporting | Segment reporting Segment information is presented in accordance with ASC 280, Segment Reporting (“ASC 280”), which establishes standards for reporting information about operating segments. It also establishes standards for related disclosures about products and geographic areas. Operating segments are defined as components of an enterprise that engage in business activities that earn revenues, incur expenses and prepare separate financial information that is evaluated regularly by the Company’s chief operating decision maker ("CODM") in order to allocate resources and assess performance. The Corporate and Other segment includes expenses related to certain executive salaries, interest costs related to long-term debt, acquisition related costs, and other corporate costs that are not directly attributable to the Company's operating segments. Net sales from the major products sold to external customers include drainage pipe and precast products, concrete and steel water transmission pipe, and clay bricks and concrete blocks. The Company’s three geographic areas consist of the United States, Canada and Mexico for which it reports net sales, fixed assets and total assets. For purposes of evaluating segment profit, the CODM reviews earnings before interest, taxes, depreciation and amortization (“EBITDA”) as a basis for making the decisions to allocate resources and assess performance. The following tables set forth reportable segment information with respect to net sales and other financial information attributable to the Company's reportable segments for the three and nine months ended September 30, 2016, for the three months ended September 30, 2015, for the period from March 14, 2015 to September 30, 2015 and for the period from January 1, 2015 to March 13, 2015: Successor
Predecessor
The Company is also required by ASC 280 to disclose additional information related to geographic location. The Company has operations in the United States, Canada and Mexico. The Company has both revenues and long-lived assets in each country and those assets and revenues are recorded within geographic location as follows:
|
Income Taxes |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Forterra Building Products | |
Income Tax Contingency [Line Items] | |
Income Taxes | Income Taxes The Company recorded income tax benefits/ (expense) of $(8,154), $(2,729), $28,378, $(4,308), and $742 for the three months ended September 30, 2016 and 2015, for the nine months ended September 30, 2016, for the period from March 13, 2015 to September 30, 2015 and for the period from January 1, 2015 to March 13, 2015, respectively. The income tax benefit for the nine months ended September 30, 2016 is primarily attributable to the reduction of the Company’s valuation allowance and corresponding recognition of a deferred tax benefit after giving consideration to deferred income tax liabilities of $34.9 million recorded in the acquisition of Sherman-Dixie and USP. The income tax expense for the period from March 13, 2015 to September 30, 2015 is primarily attributable to the profitability of foreign operations. The Company's quarterly provision for income taxes has historically been calculated using the annual effective rate method which applies an estimated annual effective tax rate to pre-tax income or loss. However, for the three and nine months ended September 30, 2016, interim income taxes were recorded using the actual year-to-date effective tax rate (the “discrete method”), as allowed under ASC 740-270, Accounting for Income Taxes-Interim Reporting, when a reliable estimate cannot be made for the annual effective tax rate. The estimated annual effective tax rate method was not reliable due to its sensitivity to small changes to forecasted annual pre-tax earnings, which create results with significant variations in the customary relationship between income tax expense and pre-tax income for the interim periods. As a result, the Company determined that using the discrete method is more appropriate than using the annual effective tax rate method. |
Employee benefit plans |
9 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||||||||||||||||||||||
Employee benefit plans | Employee benefit plans Defined Contribution Plans - Successor Subsequent to the Acquisition, the Company’s employees were able to participate in a 401K defined contribution plan. The Company contributes funds into this plan subject to certain limits. For the three and nine months ended September 30, 2016, for the three months ended September 30, 2015 and for the period from March 14, 2015 to September 30, 2015 the Company recorded an expense of $4,171, $10,507, $2,660 and $8,791 for these contributions. For the period from January 1 through March 13, 2015, the Company recorded an expense of $1,724 for the Predecessor’s participation in a similar plan sponsored by HC. Defined Benefit Pension Plans and Other Post-Retirement Benefits - Predecessor Employees of the Predecessor participated in defined benefit plans as described below that were both sponsored by the Predecessor and sponsored by others. The combined Predecessor financial statements have been prepared on a historical basis reflecting the applicable liabilities and financial statement disclosures related to the defined benefit plans participated in under HC. The defined benefit obligations and disclosures do not necessarily reflect the costs the Predecessor would have incurred as a stand-alone entity. The related pension and post-retirement benefit liabilities were previously allocated to the Predecessor but were retained by HC subsequent to the Acquisition of the Company. Canadian employee benefit plans The Canadian companies within the Predecessor sponsored several qualified and nonqualified pension plans and other postretirement benefit plans (“OPEB”) for substantially all of their employees. Such plans are defined benefit plans. The benefits provided under these plans are based primarily on years of credited service and final average pensionable pay as defined under the respective plan provisions. The obligations associated with these benefit plans were not retained by the Successor. The detail of the net period cost for the defined benefit plans for the period from January 1, 2015 to March 13, 2015 is shown below.
|
Investment in equity method investee |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in equity method investee | Investment in equity method investee The Company’s 50% investment in a joint venture that produces concrete pipe and precast concrete is $57,503 at September 30, 2016, which is included within the Drainage Pipe & Products segment. Selected historical financial data for the investee is as follows (unaudited):
|
Subsequent events |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Subsequent Event [Line Items] | |
Subsequent events | Subsequent events The Offering On October 25, 2016, the Company completed the Offering in which it received net proceeds of approximately $313.3 million, net of underwriting discounts and commissions and before deducting offering expenses, which combined with the $1.05 billion in gross proceeds of the Company's debt refinancing and a $125.0 million draw on the Company’s new revolving credit facility, were used to repay in full Forterra Building Products' existing Junior Term Loan of $260.0 million, existing Senior Term Loan of $1.04 billion, and existing balance under its revolving credit facility, in addition to related expenses. The Stock Split On October 6, 2016, the Company filed an Amended and Restated Certificate of Incorporation which increased the authorized number of shares of common stock from 1,000 with a par value of $0.01 per share to 190,000,000 with a par value of $0.001 per share. Also on October 6, 2016, the Company effected a 41,619.472 for one stock split of its issued and outstanding shares of common stock. Reorganization Prior to the consummation of the Offering, LSF9 distributed its brick operations in the United States and Eastern Canada to an affiliate of Lone Star in the Brick Disposition. Following the Brick Disposition and prior to the consummation of the Offering, the remaining building products operations of LSF9 in the United States and Eastern Canada, were transferred to the Company in an internal reorganization under common control transaction in the Reorganization. Following the Reorganization but prior to the consummation of the Offering, Forterra, Inc. was a wholly owned subsidiary of Forterra US Holdings, LLC, which is indirectly wholly owned by LSF9. Each of LSF9, Forterra US Holdings, LLC and Forterra, Inc. are affiliates of Lone Star. Refinancing Concurrent with the completion of the Offering, in the Refinancing the Company entered into a new asset based revolving credit facility for working capital and general corporate purposes and a new senior term loan facility, the proceeds of which, together with the proceeds from the Offering, were used to repay in full and terminate the existing debt of Forterra Building Products and pay related transaction costs. Immediately subsequent to the completion of the Offering, Forterra, Inc. had $125.0 million outstanding on its new asset based revolving credit facility. The asset based revolving credit facility provides for an aggregate principal amount of up to $300.0 million, with up to $280.0 million to be made available to the U.S. borrowers and up to $20.0 million to be made available to the Canadian borrowers. Subject to the conditions set forth in the new revolving credit agreement, the new revolving credit facility may be increased by up to the greater of (i) $100.0 million and (ii) such amount as would not cause the aggregate borrowing base to be exceeded by more than $50.0 million. Borrowings under the new revolving credit facility may not exceed a borrowing base equal to the sum of (i) 100% of eligible cash, (ii) 85% of eligible accounts receivable and (iii) the lesser of (a) 75% of eligible inventory and (b) 85% of the orderly liquidation value of eligible inventory, with the U.S. and Canadian borrowings being subject to separate borrowing base limitations. The advance rates for accounts and inventory are subject to increase by 2.5% during certain periods. The new revolving credit facility matures on October 25, 2021. The facility will also provide for the issuance of letters of credit of up to an agreed sublimit. Interest will accrue on outstanding borrowings at a rate equal to LIBOR or CDOR plus a margin ranging from 1.25% to 1.75% per annum, or at an alternate base rate, Canadian prime rate or Canadian base rate plus a margin ranging from 0.25% to 0.75% per annum, in each case, based upon the average excess availability under the new revolving credit facility for the most recently completed calendar quarter. The obligations of the borrowers under the new revolving credit facility is guaranteed by the Company and its direct and indirect wholly-owned restricted subsidiaries other than certain excluded subsidiaries; provided that the obligations of the US borrowers is not guaranteed by the Canadian subsidiaries. The new revolving credit facility is secured by substantially all of the assets of the borrowers; provided that the obligations of the US borrowers are not secured by any liens on more than 65% of the voting stock of the Canadian subsidiaries or assets of the Canadian subsidiaries. The new revolving credit facility contains customary representations and warranties, and affirmative and negative covenants, including representations, warranties, and covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to incur additional debt, incur or permit liens on assets, make investments and acquisitions, consolidate or merge with any other company, engage in asset sales and pay dividends and make distributions. The new revolving credit agreement contains a financial covenant restricting the Company from allowing its fixed charge coverage ratio to drop below 1.00:1.00 during a compliance period, which is triggered when the availability under the new revolving credit facility falls below a threshold set forth in the new revolving credit agreement. Obligations under the new revolving credit agreement may be accelerated upon certain customary events of default (subject to grace periods, as appropriate). The new senior term loan facility provided for a $1.05 billion senior secured term loan that was made available to a newly formed direct subsidiary of Forterra, Inc. and the proceeds of which were used to repay the existing Senior Term Loan of Forterra Building Products. Subject to the conditions set forth in the new senior term loan agreement, the new senior term loan facility may be increased by up to (i) the greater of $285.0 million and 1.0x consolidated EBITDA of the Company and its restricted subsidiaries for the four quarters most recently ended prior to such incurrence, plus (ii) the aggregate amount of any voluntary prepayments, plus (iii) an additional amount, provided certain financial tests are met. The new senior term loan facility matures on October 25, 2023 and is subject to quarterly amortization equal to 0.25% of the initial principal amount. Interest will accrue on outstanding borrowings thereunder at a rate equal to LIBOR (with a floor of 1.0%) or an alternate base rate, in each case plus a margin of 3.50% or 2.50%, respectively. The obligations of the borrower under the new senior term loan facility are guaranteed by the Company and each of its direct and indirect material wholly-owned domestic subsidiaries other than any of the Company's Canadian subsidiaries and certain other excluded subsidiaries (the "Guarantors").The new senior term loan facility is secured by substantially all of the assets of the Company, the borrower and the Guarantors; provided that the obligations under the new senior term loan facility are not secured by any liens on more than 65% of the voting stock of the Canadian subsidiaries or assets of the Canadian subsidiaries. The new senior term loan facility contains customary representations and warranties, and affirmative and negative covenants, that, among other things, restrict the ability of the Company and its restricted subsidiaries to incur additional debt, incur or permit liens on assets, make investments and acquisitions, consolidate or merge with any other company, engage in asset sales and pay dividends and make distributions. The new senior term loan does not contain any financial covenants. Obligations under the senior term loan may be accelerated upon certain customary events of default (subject to grace periods, as appropriate). Tax receivable agreement In connection with the Offering, the Company entered into a tax receivable agreement with Lone Star that provides for, among other things, the payment by the Company to Lone Star of 85% of the amount of certain covered tax benefits, which may reduce the actual liability for certain taxes that the Company might otherwise be required to pay. The tax benefits subject to the tax receivable agreement include: (i) all depreciation and amortization deductions, and any offset to taxable income and gain or increase to taxable loss, resulting from the tax basis that the Company had in its assets as of the time of the consummation of the Offering, (ii) the utilization of the Company's and its subsidiaries’ net operating losses and tax credits, if any, attributable to periods prior to the Offering, (iii) deductions in respect of payments made, funded or reimbursed by an initial party to the tax receivable agreement (other than the Company or one of its subsidiaries) or an affiliate thereof to participants under the LSF9 Concrete Holdings Ltd. Long Term Incentive Plan, (iv) deductions in respect of transaction expenses attributable to the acquisition of U.S. Pipe and (v) certain other tax benefits attributable to payments made under the tax receivable agreement. For purposes of the tax receivable agreement, the aggregate reduction in income tax payable by the Company will be computed by comparing the Company's actual income tax liability with its hypothetical liability had it not been able to utilize the related tax benefits. The agreement will remain in effect until all such related tax benefits remain. Based upon the Company's preliminary estimates, the initial liability will be between $114.0 million and $124.0 million, which will be recognized as a reduction to equity in the fourth quarter as of October 25, 2016, the closing of the Offering. Subsequent changes in estimates, as applicable, will be recognized in income. 2016 Stock Incentive Plan The Company’s maintains the Forterra, Inc. 2016 Stock Incentive Plan (the "2016 Incentive Plan"). The 2016 Incentive Plan became effective October 19, 2016, upon the approval of the Company's sole equityholder, and will serve as the umbrella plan for the Company’s stock-based and cash-based incentive compensation programs for its directors, officers and other eligible employees. The aggregate number of shares of common stock that may be issued under the 2016 Incentive Plan may not exceed 5,000,000. Effective October 19, 2016, the board of directors granted employees and independent directors 361,590 options to purchase shares of common stock at an exercise price of $18.00 per share and 136,900 shares of restricted common stock. Both the options and restricted shares awarded to employees are subject to a four-year vesting period and the options and restricted shares awarded to independent directors are subject to a one-year vesting period. |
Forterra Building Products | |
Subsequent Event [Line Items] | |
Subsequent events | Subsequent events The Offering Forterra, Inc. received net proceeds of approximately $313.3 million in the Offering, which combined with the $1.05 billion in gross proceeds of the Refinancing and a $125.0 million draw on Forterra, Inc.’s new revolving credit facility were used to repay in full the Company's existing Junior Term Loan of $260.0 million, existing Senior Term Loan of $1.04 billion, and the existing balance under the Revolver, in addition to related expenses associated with the Offering and Refinancing. Reorganization Prior to the consummation of the Offering, an affiliate of Lone Star transferred its building products operations in the United States and Eastern Canada, in the Reorganization, to Forterra, Inc. Following the Reorganization, Forterra, Inc. became a wholly owned subsidiary of Forterra US Holdings, LLC, which is indirectly wholly owned by an affiliate of Lone Star. Refinancing Concurrent with the completion of the Offering, in the Refinancing Forterra, Inc. entered into a new asset based revolving credit facility for working capital and general corporate purposes and a new senior term loan facility, the proceeds of which, together with the proceeds from the Offering, were used to repay in full and terminate the existing Revolver, Senior Term Loan and Junior Term Loan. The terms of Forterra, Inc.'s new senior term loan and revolving credit facility are described in greater detail in Note 9, Debt and deferred financing costs. Tax receivable agreement In connection with the Offering, the Company entered into a tax receivable agreement with Lone Star. The tax receivable agreement is described in greater detail in Note 14, Related party transactions. Sale Leaseback As discussed in Note 10, Financing obligation (Failed sale-leaseback), at lease inception the Company was considered to have a form of prohibited “continuing involvement” with the properties because a guarantee by LSF9 provides the buyer-lessor or lessor, as applicable, with additional collateral that reduces the buyer-lessor’s or lessor's, as applicable, risk of loss. As a result, the Company was precluded from applying sale-leaseback accounting to the Sale Leaseback, and has accounted for the transaction as a financing obligation. The assets subject to the Sale Leaseback remain on the balance sheet and continue to be depreciated over their remaining useful lives as a “failed sale-leaseback”. However, the Company entered into agreements to replace the current guarantor, LSF9, with Forterra, Inc. as the new guarantor, effective immediately following completion of the Reorganization. Due to the change in guarantor, the Sale Leaseback will qualify for sales recognition and be classified as an operating lease beginning in the fourth quarter of 2016, resulting in a loss on the disposal of assets of approximately $19.6 million. Brick Disposition On October 17, 2016, Forterra distributed its bricks business to an affiliate of Lone Star in the Bricks Disposition. Following the Bricks Disposition, Forterra had no relation to or business affiliation with its former bricks business or the Bricks Joint Venture other than contractual arrangements regarding certain limited transition services, the temporary use of the “Forterra” name and short-term loan which has subsequently been repaid in full. See additional detail in Note 1, Organization and description of the business. J&G and Precast Concepts Acquisitions On October 14, 2016, the Company completed the J&G Acquisition and the Precast Concepts Acquisition, which are described in greater detail in Note 1, Organization and description of business. |
Summary of significant accounting policies (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Basis of presentation | Basis of presentation The accompanying balance sheets are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). Statements of operations, cash flows and shareholder's equity are not presented as there was no activity from the date of inception through September 30, 2016. The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates or assumptions that affect the reported amounts and disclosures in the financial statements. Actual future results could differ from these estimates and assumptions. |
Offering and debt issuance costs | Offering and debt issuance costs In connection with the Offering and the related debt refinancing (the "Refinancing"), Forterra Building Products incurred legal, accounting, and related costs of approximately $42 million, which were paid by the Company following the completion of the Offering on October 25, 2016. Such direct and incremental costs attributable to the Offering and the Refinancing will be recorded as a reduction of the equity proceeds or offset against the carrying amount of the debt, respectively. |
Forterra Building Products | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Basis of presentation | The condensed combined financial statements have been prepared in accordance with U.S. GAAP and on the same basis as the Company's audited combined financial statements as of December 31, 2015. The condensed combined balance sheet as of September 30, 2016 and the condensed combined statements of operations, comprehensive income (loss) and cash flows for the periods presented herein reflect all adjustments that are of a normal recurring nature and are necessary for a fair statement of the results of the periods shown. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited condensed combined financial statements should be read in conjunction with the audited combined financial statements as provided in Forterra, Inc.'s Prospectus dated October 19, 2016, filed with the SEC on October 21, 2016. The results and trends in these interim financial statements may not be indicative of results for the full year or for any future period. |
Intracompany transactions and consolidation | All intracompany transactions occurring between the predecessor entities have been eliminated. Certain transactions between the Company and HC have been included in these combined predecessor financial statements and are considered to be effectively settled at the time the transaction is recorded. The total net effect of the settlement of these transactions is reflected in the combined predecessor statements of shareholder's equity and Parent company net investment as net transfers (to)/from Parent, in the combined predecessor statements of cash flows as a financing activity and in the combined predecessor balance sheet as Parent company net investment. HC used a centralized approach to cash management and financing of its operations. Historically, the majority of the Predecessor's cash was transferred to HC daily and the Company was dependent on HC funding of the Company’s operating and investing activities as needed. This arrangement is not reflective of the manner in which the Company would have been able to finance its operations had it been a stand-alone business separate from HC during the periods presented. Cash transfers to and from HC's cash management accounts are reflected within Parent company net investment. The combined predecessor financial statements include certain assets and liabilities that have historically been held at the HC corporate level but are specifically identifiable or otherwise allocable to the Company. The cash and cash equivalents held by HC at the corporate level are not specifically identifiable to the Company and therefore were not allocated for any of the periods presented. Cash and cash equivalents in the combined predecessor balance sheets represent cash held locally by operations included in the combined predecessor financial statements. HC third-party debt, and the related interest expense, has not been allocated for any of the periods presented as the Company was not the legal obligor of the debt and HC's borrowings were not directly attributable to these operations. The historical costs and expenses reflected in the combined predecessor financial statements include an allocation for certain corporate functions historically provided by HC or its wholly-owned subsidiaries. Substantially all of the Company’s senior management were employed by HC and certain functions critical to the Company’s operations were centralized and managed by HC. Historically, the centralized functions have included executive senior management, financial reporting, financial planning and analysis, accounting, shared services, information technology, tax, risk management, treasury, legal, human resources, land management, and strategy and development. Additionally, the Company resided in office space provided by affiliates of HC. The cost of each of these services has been allocated to the Company on the basis of the Company’s relative net sales or head count as compared to that of HC depending upon which allocation methodology is more meaningful for each service. The Company and HC believe that these allocations reasonably reflect the utilization of services provided and benefits received. However, they may differ from the cost that would have been incurred had the Company operated as a stand-alone company for the periods presented or will be incurred by the Successor. Estimating actual costs that would have been incurred if the Company had been a stand-alone company is not practicable and would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including legal services, accounting and finance services, human resources, marketing and contract support, customer support, treasury, facility and other corporate and infrastructural services. Income taxes have been accounted for in these financial statements on a separate-return basis. |
Recent Accounting Guidance Adopted and Not Yet Adopted | Recent Accounting Guidance Adopted In March 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810), Amendments to the Consolidation Analysis, changing the analysis that a reporting entity must perform when deciding to consolidate a legal entity. This amendment changes the evaluation of whether limited partnerships are variable interest entities or voting interest entities and eliminates the presumption that a general partner should consolidate a limited partnership. All legal entities are subject to reevaluation under the revised consolidation model. The amendment is effective for fiscal years and interim periods beginning after December 15, 2015 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the beginning of the period of adoption. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, defining when and how companies are required to disclose going concern uncertainties, which must be evaluated each interim and annual period. Specifically, it requires management to determine whether substantial doubt exists regarding the entity’s going concern presumption. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date the financial statements are issued. If substantial doubt exists, certain disclosures are required. The provisions of this ASU are effective for annual periods ending after December 15, 2016 and to annual and interim periods thereafter. Early adoption is permitted. The ASU should be applied on a prospective basis. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). Topic 805 requires an acquirer to retrospectively adjust provisional amounts recognized in a business combination during the measurement period. To simplify the accounting for adjustments made to provisional amounts, the amendments in this update require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement-period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition, an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Recent Accounting Guidance Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers. The FASB subsequently voted to defer the application of the provisions of this standard for public companies until annual reporting periods beginning after December 15, 2017 in ASU 2015-14 Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, including interim periods within that reporting period. The Company is currently evaluating whether this ASU will have a material impact on its combined financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, requiring an entity to measure inventory within the scope of the ASU at the lower of cost and net realizable value. For public business entities, the amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company is currently evaluating whether this ASU will have a material impact on its combined financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), amending the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. For public business entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted as of the standard’s issuance date. ASU 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company believes this ASU will have a material impact on its combined financial statements as it will result in most of the Company’s leases and associated assets being presented on the balance sheet. In August 2016, the FASB issued ASU 2016-15 Statements of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, providing clarifications as to the presentation and classification in the cash flows of eight specific issues, including but not limited to prepayment of debt or debt extinguishment costs and contingent consideration payments made after a business combination. For public business entities, the amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of the ASU will impact the Company's cash flow presentation in future periods. |
Business combinations (Tables) - Forterra Building Products |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
HeidelbergCement Hanson Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair values of assets acquired and liabilities assumed | The following table summarizes the fair values of the assets acquired and liabilities assumed by the Company at the Acquisition date:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Pipe | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair values of assets acquired and liabilities assumed | The respective preliminary fair values of the assets acquired and liabilities assumed at the acquisition date are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sherman-Dixie | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair values of assets acquired and liabilities assumed | The respective preliminary fair values of the assets acquired and liabilities assumed at the acquisition date are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bio Clean | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair values of assets acquired and liabilities assumed | The respective preliminary fair values of the assets acquired and liabilities assumed at the acquisition date are as follows:
|
Receivables, net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of receivables, net | Receivables consist of the following at September 30, 2016 and December 31, 2015:
|
Inventories (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | Inventories consists of the following at September 30, 2016 and December 31, 2015:
|
Property, plant and equipment, net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property, plant and equipment, net | Property, plant and equipment, net consist of the following at September 30, 2016 and December 31, 2015:
|
Goodwill and other intangible assets, net (Tables) - Forterra Building Products |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill by segment | The table below presents goodwill by operating segment as of September 30, 2016:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangible assets | Intangible assets other than goodwill at September 30, 2016 included the following:
Intangible assets other than goodwill at December 31, 2015 included the following:
|
Fair value measurement (Tables) - Forterra Building Products |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of fair value measurements on a recurring basis | The estimated carrying amount and fair value of the Company’s financial instruments and other assets and liabilities measured and recorded at fair value on a recurring basis is as follows for the dates indicated:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of carrying and fair value amounts for financial instruments and liabilities | The estimated carrying amount and fair value of the Company’s financial instruments and liabilities for which fair value is only disclosed is as follows:
|
Debt and deferred financing costs (Tables) - Forterra Building Products |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | The Company’s debt consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of minimum future principal payments | As of September 30, 2016, minimum future principal payments on long-term debt are as follows:
|
Financing obligation (Failed sale-leaseback) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||
Sale Leaseback Transaction [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of sale-leaseback transactions | The table below shows the minimum lease payments under the failed sale-leasebacks for the years ended:
|
Accrued liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued liabilities | Accrued liabilities consist of the following at September 30, 2016 and December 31, 2015:
|
Derivatives and hedging (Tables) - Forterra Building Products |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives, Fair Value [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair values of derivative assets and liabilities in the balance sheets | The following table presents the fair values of derivative assets and liabilities in the combined successor balance sheets:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain (loss) recognized in the statements of operations and comprehensive income on derivative instruments in cash flow hedging relationships | The following table presents the gain (loss) recognized in the statements of operations and comprehensive income on derivative instruments in cash flow hedging relationships. Gains (losses) on hedge instruments were recorded in other operating income in the combined statements of operations and represent the changes in accumulated other comprehensive loss related to the derivatives as reflected in the combined balance sheets.
|
Segment reporting (Tables) - Forterra Building Products |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following tables set forth reportable segment information with respect to net sales and other financial information attributable to the Company's reportable segments for the three and nine months ended September 30, 2016, for the three months ended September 30, 2015, for the period from March 14, 2015 to September 30, 2015 and for the period from January 1, 2015 to March 13, 2015: Successor
Predecessor
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-lived Assets by Geographic Areas | The Company is also required by ASC 280 to disclose additional information related to geographic location. The Company has operations in the United States, Canada and Mexico. The Company has both revenues and long-lived assets in each country and those assets and revenues are recorded within geographic location as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from External Customers by Geographic Areas |
|
Employee benefit plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||
Forterra Building Products | |||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||||||||||||||||||||||
Detail of the net period cost for the defined benefit plans | The detail of the net period cost for the defined benefit plans for the period from January 1, 2015 to March 13, 2015 is shown below.
|
Investment in equity method investee (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forterra Building Products | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | Selected historical financial data for the investee is as follows (unaudited):
|
Organization and description of the business - Description of the Business Narrative (Details) - Subsequent Event $ / shares in Units, $ in Millions |
Oct. 25, 2016
USD ($)
$ / shares
shares
|
Oct. 06, 2016
$ / shares
shares
|
Oct. 05, 2016
$ / shares
shares
|
---|---|---|---|
Subsidiary, Sale of Stock [Line Items] | |||
Common shares, authorized (in shares) | shares | 190,000,000 | 1,000 | |
Common shares, par value (in usd per share) | $ / shares | $ 0.001 | $ 0.01 | |
Stock split (in shares) | 41,619.472 | ||
Common shares, outstanding (in shares) | shares | 41,619,472 | ||
Net proceeds from offering | $ | $ 313.3 | ||
Repayments of debt | $ | $ 296.0 | ||
IPO | |||
Subsidiary, Sale of Stock [Line Items] | |||
Number of shares issued in stock offering (in shares) | shares | 18,420,000 | ||
Public offering price (in usd per share) | $ / shares | $ 18.00 | ||
Net proceeds from offering | $ | $ 313.3 |
Summary of significant accounting policies (Details) $ in Millions |
Oct. 25, 2016
USD ($)
|
---|---|
Forterra Building Products | Subsequent Event | |
Debt Instrument [Line Items] | |
Offering and debt related costs | $ 42 |
Receivables, net (Details) - Forterra Building Products - Successor - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | $ 290,613 | $ 122,554 |
Less: Allowance for doubtful accounts | (1,977) | (3,595) |
Receivables, net | 288,636 | 118,959 |
Trade receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | 273,955 | 108,065 |
Amounts billed, but not yet paid under retainage provisions | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | 2,466 | 2,053 |
Other receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | $ 14,192 | $ 12,436 |
Inventories (Details) - Forterra Building Products - Successor - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory [Line Items] | ||
Finished goods | $ 201,531 | $ 146,635 |
Raw materials | 103,501 | 53,339 |
Work in process | 5,621 | 10,641 |
Total inventories | $ 310,653 | $ 210,615 |
Fair value measurement - Assets and Liablities Measured on Recurring Basis (Details) - Forterra Building Products - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Non-current liabilities | ||
Derivative liability | $ 1,788 | |
Non-current assets | ||
Derivative assets | $ 9,093 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Non-current liabilities | ||
Derivative liability | 0 | |
Non-current assets | ||
Derivative assets | 0 | |
Significant Other Observable Inputs (Level 2) | ||
Non-current liabilities | ||
Derivative liability | 1,788 | |
Non-current assets | ||
Derivative assets | 9,093 | |
Significant Unobservable Inputs (Level 3) | ||
Non-current liabilities | ||
Derivative liability | $ 0 | |
Non-current assets | ||
Derivative assets | $ 0 |
Debt and deferred financing costs - Future Minimum Principal Payments (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
2016 | $ 0 |
2017 | 0 |
2018 | 0 |
2019 | 0 |
2020 | 25,000 |
Thereafter | 1,512,764 |
Total | 1,537,764 |
Senior Notes | |
Debt Instrument [Line Items] | |
2016 | 0 |
2017 | 0 |
2018 | 0 |
2019 | 0 |
2020 | 0 |
Thereafter | 1,035,721 |
Total | 1,035,721 |
Junior Term Loan | |
Debt Instrument [Line Items] | |
2016 | 0 |
2017 | 0 |
2018 | 0 |
2019 | 0 |
2020 | 0 |
Thereafter | 260,000 |
Total | 260,000 |
Line of Credit | |
Debt Instrument [Line Items] | |
2016 | 0 |
2017 | 0 |
2018 | 0 |
2019 | 0 |
2020 | 25,000 |
Thereafter | 0 |
Total | 25,000 |
Financing obligation | |
Debt Instrument [Line Items] | |
2016 | 0 |
2017 | 0 |
2018 | 0 |
2019 | 0 |
2020 | 0 |
Thereafter | 217,043 |
Total | $ 217,043 |
Financing obligation (Failed sale-leaseback) - Minimum Lease Payments (Details) - Forterra Building Products $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Sale Leaseback Transaction [Line Items] | |
2016 | $ 4,237 |
2017 | 17,229 |
2018 | 17,574 |
2019 | 17,925 |
2020 | 18,284 |
Thereafter: | 599,856 |
Minimum lease payments under failed sale-leasebacks | $ 675,105 |
Accrued liabilities (Details) - Successor - Forterra Building Products - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Payables and Accruals [Line Items] | ||
Accrued payroll and employee benefits | $ 32,765 | $ 24,690 |
Accrued taxes | 14,755 | 17,073 |
Accrued rebates | 16,861 | 8,021 |
Warranty | 3,368 | 2,429 |
Other miscellaneous accrued liabilities | 2,714 | 2,512 |
Environmental & reclamation obligation | 1,915 | 903 |
Total accrued liabilities | $ 72,378 | $ 55,628 |
Derivatives and hedging (Details) - Forterra Building Products - USD ($) $ in Thousands |
2 Months Ended | 3 Months Ended | 7 Months Ended | 9 Months Ended | |
---|---|---|---|---|---|
Mar. 13, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2015 |
Sep. 30, 2016 |
|
Derivative [Line Items] | |||||
Foreign exchange gain/(loss) | $ 0 | $ 850 | $ 4,997 | $ 6,101 | $ (3,570) |
Loss on settlement | (1,546) | ||||
Successor | |||||
Derivative [Line Items] | |||||
Proceeds from settlement of derivatives | $ 0 | $ 6,546 |
Derivatives and hedging - Derivative Instruments, Gain (Loss) (Details) - Successor - Forterra Building Products - USD ($) $ in Thousands |
3 Months Ended | 7 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Gain (loss) on derivatives recognized in Accumulated other comprehensive loss | $ 174 | $ 539 | $ 951 | $ (1,253) | |
Cross currency swaps | Designated as Hedging Instrument | Cash flow hedges | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Gain (loss) on derivatives recognized in Accumulated other comprehensive loss | 174 | 539 | (1,253) | $ 951 | |
Cross currency swaps | Not Designated as Hedging Instrument | Cash flow hedges | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Gain (loss) on derivatives not designated as hedges | $ 850 | $ 4,997 | $ (2,024) | $ 6,101 |
Commitments and contingencies (Details) - Forterra Building Products - USD ($) |
Oct. 05, 2016 |
Mar. 13, 2015 |
---|---|---|
Loss Contingencies [Line Items] | ||
Ownership interest | 50.00% | |
Subsequent Event | HeidelbergCement, Case | Pending Litigation | ||
Loss Contingencies [Line Items] | ||
Loss contingency, damages sought | $ 100,000,000 | |
Predecessor | HeidelbergCement Hanson Building Products | ||
Loss Contingencies [Line Items] | ||
Business acquisition, possible maximum earn out | $ 100,000,000.0 |
Income Taxes (Details) - Forterra Building Products - USD ($) $ in Thousands |
2 Months Ended | 3 Months Ended | 7 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|---|
Mar. 13, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Apr. 14, 2016 |
|
Successor | ||||||
Income Tax Contingency [Line Items] | ||||||
Income tax (expense) benefit | $ (8,154) | $ (2,729) | $ (4,308) | $ 28,378 | ||
Predecessor | ||||||
Income Tax Contingency [Line Items] | ||||||
Income tax (expense) benefit | $ 742 | |||||
Sherman-Dixie and USP | ||||||
Income Tax Contingency [Line Items] | ||||||
Deferred income tax liabilities acquired | $ 34,900 |
Employee benefit plans (Details) - USD ($) $ in Thousands |
2 Months Ended | 3 Months Ended | 7 Months Ended | 9 Months Ended | |
---|---|---|---|---|---|
Mar. 13, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2015 |
Sep. 30, 2016 |
|
Successor | Forterra Building Products | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Defined contribution plan, cost recognized | $ 4,171 | $ 2,660 | $ 8,791 | $ 10,507 | |
Predecessor | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Service cost | $ 676 | ||||
Interest cost | (3) | ||||
Net Expense | 673 | ||||
Predecessor | Forterra Building Products | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Defined contribution plan, cost recognized | $ 1,724 |
Investment in equity method investee (Details) - Forterra Building Products - Joint Venture - Drainage Pipe & Products $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2016
USD ($)
|
|
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50.00% | 50.00% |
Investment in equity method investee | $ 57,503 | $ 57,503 |
Net sales | 39,123 | 102,127 |
Gross profit | 12,827 | 30,841 |
Income from operations | 8,557 | 18,654 |
Net income | $ 8,463 | $ 18,674 |
Subsequent events - Stock Split (Details) - Subsequent Event |
Oct. 06, 2016
$ / shares
shares
|
Oct. 05, 2016
$ / shares
shares
|
---|---|---|
Subsequent Event [Line Items] | ||
Common shares, authorized (in shares) | shares | 190,000,000 | 1,000 |
Common shares, par value (in usd per share) | $ / shares | $ 0.001 | $ 0.01 |
Stock split (in shares) | 41,619.472 |
Subsequent events - Tax receivable agreement (Details) - Forecast - Subsequent Event $ in Millions |
3 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Minimum | |
Subsequent Event [Line Items] | |
Income tax benefits, recognized as reduction to equity | $ 114.0 |
Maximum | |
Subsequent Event [Line Items] | |
Income tax benefits, recognized as reduction to equity | $ 124.0 |
Subsequent events - 2016 Stock Incentive Plan (Details) - Subsequent Event - $ / shares |
Oct. 21, 2016 |
Oct. 19, 2016 |
---|---|---|
Subsequent Event [Line Items] | ||
Number of shares available under stock incentive plan | 5,000,000 | |
Stock options granted (in shares) | 361,590 | |
Stock incentive plan exercise price (in usd per share) | $ 18.00 | |
Stock options | ||
Subsequent Event [Line Items] | ||
Stock incentive plan award vesting period | 4 years | |
Restricted stock | ||
Subsequent Event [Line Items] | ||
Stock incentive plan shares granted (in shares) | 136,900 | |
Stock incentive plan award vesting period | 4 years |
Subsequent events - Sale Leaseback (Details) $ in Millions |
3 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Forterra Building Products | Forecast | Subsequent Event | |
Subsequent Event [Line Items] | |
Loss on disposal of property, plant and equipment | $ 19.6 |
[['W>3 ^9@:
M^Q 8%3M3'T1K]M? 'JHW9'/<0]K9FWA!DW<)=#0J2[K]3$G!&79B';04[>PU
M^N ?1RB'2M8"TF>M;^Y"*D&L(1@@Z4BZ1#Y*5&YPHUJ;[#7Y(<4OG7+?U/3
MGS^U7HV^@O_Z>/YK\F%M[&<(1WJ.*,5]S1(LE_:?^71A'Z_.59EIMV # \#2)SV=$7/B6?1]2XD6%6RA=<(!=H*U,1 NZ?WJ]VA"(@(
M^"E@LA=[$KP?$5]"\+W9TRQ8 FU"PK<+R=X "F#D"_\.FN^EPS$R_U9_3%V
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M?F'+,Z_^ %!+ P04 " !QKVY)Y]VET*T! #P P &0 'AL+W=O3(^!V<7&CA$]F W=! E0@C.'RAFB]",F&4L/9(PNJ,XRMG"
M,",F\?C&0W=,Q7BV4,N(27T^M] =VC"9+9HRG&(6F(\$CY;<80;5;.V2X?0%
M))1'ED7WAD<]6T=DQ"RUCQYW5,!T-IEGQ"R%Q_X1[I @HMG
040<+"^ G?-&4H0PA=R"W^,-?\NZ8.W_4OU
ME[!;9[_G!DHE?K65;9PLBT@%-3\)^Z:&;S!N(1@>E##A2@XG8Y6\1"(B^2>V
M;1?: >^L-V-L.I",@>0:B-.'@>486/X3H&@6]O656U[D6@W$]-S_V?'6X=H7
M<96)VXQQSRG4U.%)%?FYV*0Y/?LZ=T@2D&=$DGFB1")C5X2Z]2DP4U58(8$(J-L)!<(# EDL9_?+##(T 89,"AR!HVB*^9 2SI(K*$!H)$
MB;-F%%F=67-&5;!O5&5S'&W.R!/++*P5:*H0-6/T&F59:8$W:)I.&O&4.8,\
M>*WGR "JF"00TS3%-&!,,QVM0%39X%A[H*WPQC/*]M"XTA'LT9P]$1<\XX)K
M4%7:6(FS)]H>X)_F^ 4B=FY&2>5U,T*1*PU@%+!O!B:HP8X
M*O$$0W/4C.SSGAD+:"J3@N;>->J"]EF2/]$@-2/^/ =VT+B>X. I,E&
M@7,:&J4&4*K9*;*PS%5@9PAD,49'AJF!F'*!6(06:NY7 >;,C%$@3TT3 W"E O%((K]
M\F$G:)19E:(@ES1T,FF0IH+TPM (-(! PP4L$%6))>4:928JR5NWBK3( @H-
MMPI!Q$$9)/VF)'H!PRQ-50O9J>$"%HA8:X"HL3=&"Q!F::1:X" 'RQ6(6',,
MI" JB*PI;$X!J(;+!D%4]
Y+<%MA<"JRCP&8J,;LMD%UUD/WO
M'T7,8<9LOR1A9TU1H)LP>X:4.'0V]F0Y7<;[/@U-_807><\;^,UU(SI#CFC=
M:(0.UH@67/KD+J.D=0]PV4BHK0^_N5C'F8P;B_W\PI9G7GP 4$L#!!0 (
M '&O;DG@XPL7JP$ /(# 9 >&PO=V]R:W-H965T
:T(+LKX:H7N,)ZX]Q@\(V*C'K0@48A.O,5C>GI/
MSWS"=$RX>BR0W0ND7B#S\8ODL4 >3)"/"=:A9^0Q^PFS>6Q2!$T*+T 6I%P%
M:ZZ6UUP'$ZP7U!PQ9,'+L F:;$:!!:\#3H(]W?'"HA@'0V"\H.H$(ND"'Q+V
M&5]]DBV02,-MT_]HFX539$O:CB"2_^,3WTP5#K)VPU.AH[ATV@^5^70>T,_$
M3:5/>%7VM(8?5-9MI]!!:#/;W @Z"Z'!^"=/>80:\PF9-PS.VBY79BW]4/4;
M+?KI&S%_J*J_4$L#!!0 ( '&O;DFZ"T&RKP$ /(# 9 >&PO=V]R
M:W-H965T
M=L]JHB2>VE;64IK=?[^2"+I)!R2A2V.[#T"0!%Z!M)?/S?%G^U#7W>S?_>[0
MGLT?NN[QW6+1WCS4^ZI]VSS6A_Y_[IKCONKZM\?[1?MXK*O;T6B_6R@A[&)?
M;0_SU7+\[-MQM6R>NMWV4'\[SMJG_;XZ_O>AWC7/9W,Y#Q]\W]X_=,,'B]5R
M<;*[W>[K0[MM#K-C?74
MDKFHBA 5-Z:2C*G$F%Q\6S:>4<*5R9 N/%>8]"Y_\9@L59J[1 [42":6 L<%
MX7@K(06Y%./'_5JD@OJ(D!3 77