(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | Non-accelerated filer | Smaller reporting company | Emerging growth company | |||||||||||||||||||||||
o | x | o |
Page | ||||||||
Part I | Financial Information | |||||||
Item 1. | Financial Statements | |||||||
Condensed Consolidated Statements of Operations | ||||||||
Condensed Consolidated Statements of Comprehensive Income | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
Condensed Consolidated Statements of Shareholders' Equity | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
Notes to the Unaudited Condensed Consolidated Financial Statements | ||||||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |||||||
Item 4. | Controls and Procedures | |||||||
Part II | Other Information | |||||||
Item 1. | Legal Proceedings | |||||||
Item 1A. | Risk Factors | |||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||
Item 3. | Defaults Upon Senior Securities | |||||||
Item 4. | Mine Safety Disclosures | |||||||
Item 5. | Other Information | |||||||
Item 6. | Exhibits | |||||||
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||
Net sales | $ | $ | $ | $ | |||||||||||||||||||
Cost of goods sold | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Selling, general & administrative expenses | ( | ( | ( | ( | |||||||||||||||||||
Impairment and exit charges | ( | ( | ( | ( | |||||||||||||||||||
Other operating income (expense), net | ( | ( | |||||||||||||||||||||
( | ( | ( | ( | ||||||||||||||||||||
Income from operations | |||||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Gain on extinguishment of debt | |||||||||||||||||||||||
Earnings from equity method investee | |||||||||||||||||||||||
Income before income taxes | |||||||||||||||||||||||
Income tax expense | ( | ( | ( | ( | |||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Change in other postretirement benefit plans, net of tax | ( | ||||||||||||||||||||||
Foreign currency translation adjustment | ( | ||||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
June 30, 2021 | December 31, 2020 | ||||||||||
ASSETS | (unaudited) | ||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Receivables, net | |||||||||||
Inventories | |||||||||||
Prepaid expenses | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Non-current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Investment in equity method investee | |||||||||||
Other long-term assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities | |||||||||||
Trade payables | $ | $ | |||||||||
Accrued liabilities | |||||||||||
Deferred revenue | |||||||||||
Current portion of long-term debt | |||||||||||
Current portion of tax receivable agreement | |||||||||||
Total current liabilities | |||||||||||
Non-current liabilities | |||||||||||
Long-term debt | |||||||||||
Long-term finance lease liabilities | |||||||||||
Long-term operating lease liabilities | |||||||||||
Deferred tax liabilities | |||||||||||
Other long-term liabilities | |||||||||||
Long-term tax receivable agreement | |||||||||||
Total liabilities | |||||||||||
Commitments and Contingencies (Note 14) | |||||||||||
Equity | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in-capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Retained earnings (deficit) | ( | ||||||||||
Total shareholders' equity | |||||||||||
Total liabilities and shareholders' equity | $ | $ |
Common Stock | ||||||||||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-in-Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Deficit) | Total Shareholders' Equity | |||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based plan activity | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | ||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | ( | ( | ||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based plan activity | — | — | — | |||||||||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | ||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-in-Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Deficit) | Total Shareholders' Equity | |||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based plan activity | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
Change in other postretirement benefit plans, net of tax | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | ( | ( | ||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based plan activity | — | — | — | |||||||||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | ||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
Six months ended | ||||||||||||||
June 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | (unaudited) | |||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||
Depreciation & amortization expense | ||||||||||||||
(Gain) loss on disposal of property, plant and equipment | ( | |||||||||||||
Gain on extinguishment of debt | ( | |||||||||||||
Amortization of debt discount and issuance costs | ||||||||||||||
Stock-based compensation expense | ||||||||||||||
Impairment charges | ||||||||||||||
Write-off of debt discount and issuance costs | ||||||||||||||
Earnings from equity method investee | ( | ( | ||||||||||||
Distributions from equity method investee | ||||||||||||||
Unrealized (gain) loss on derivative instruments, net | ( | |||||||||||||
Unrealized foreign currency (gain) loss, net | ( | |||||||||||||
Provision for doubtful accounts | ||||||||||||||
Deferred taxes | ||||||||||||||
Other non-cash items | ||||||||||||||
Change in assets and liabilities: | ||||||||||||||
Receivables, net | ( | ( | ||||||||||||
Inventories | ( | ( | ||||||||||||
Other current assets | ( | |||||||||||||
Accounts payable and accrued liabilities | ||||||||||||||
Other assets and liabilities | ( | |||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | ( | |||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||
Purchase of property, plant and equipment, and intangible assets | ( | ( | ||||||||||||
Proceeds from sale of fixed assets | ||||||||||||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | ( | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||
Payment of debt issuance costs | ( | |||||||||||||
Repayments of term loans | ( | ( | ||||||||||||
Proceeds from revolver | ||||||||||||||
Repayments of revolver | ( | ( | ||||||||||||
Proceeds from issuance of common stock | ||||||||||||||
Other financing activities | ( | ( | ||||||||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | ( | |||||||||||||
Effect of exchange rate changes on cash | ( | |||||||||||||
Net change in cash and cash equivalents | ||||||||||||||
Cash and cash equivalents, beginning of period | ||||||||||||||
Cash and cash equivalents, end of period | $ | $ | ||||||||||||
SUPPLEMENTAL DISCLOSURES: | ||||||||||||||
Cash interest paid | $ | $ | ||||||||||||
Income taxes paid (refunds received), net | ( | |||||||||||||
(1) | each restricted stock unit that is solely subject to time-based vesting requirements granted under the Company Stock Plans that is outstanding immediately prior to the Effective Time shall fully vest and be converted into the right to receive an amount in cash (without interest and subject to applicable tax withholdings) equal to the product of (i) the Merger Consideration multiplied by (ii) the number of shares of Common Stock subject to such vested restricted stock unit; |
(2) | each restricted stock unit that is subject to performance-based vesting requirements granted under the Company Stock Plans that is outstanding immediately prior to the Effective Time shall immediately vest and be converted into the right to receive an amount in cash (without interest and subject to applicable tax withholdings) equal to the product of (i) the Merger Consideration multiplied by (ii) the number of shares subject to such vested restricted stock unit immediately prior to the Effective Time as determined in accordance with the Merger Agreement; |
(3) | each option to purchase shares of Common Stock granted under the Company Stock Plans that is outstanding immediately prior to the Effective Time shall fully vest, to the extent not vested previously, and be converted into the right to receive an amount in cash (without interest and subject to applicable tax withholdings) equal to the product of (i) the remainder, if positive, of (A) the Merger Consideration minus (B) the exercise price per share of Common Stock of such option multiplied by (ii) the number of shares of Common Stock subject to such vested option; and |
(4) | each Company Restricted Share that is outstanding immediately prior to the Effective Time shall immediately vest in full and be converted into the right to receive an amount in cash (without interest and subject to applicable tax withholdings) equal to the Merger Consideration. |
June 30, | December 31, | ||||||||||
2021 | 2020 | ||||||||||
Trade receivables | $ | $ | |||||||||
Amounts billed but not yet paid under retainage provisions | |||||||||||
Other receivables | |||||||||||
Total receivables | |||||||||||
Less: Allowance for doubtful accounts | ( | ( | |||||||||
Receivables, net | $ | $ |
June 30, | December 31, | ||||||||||
2021 | 2020 | ||||||||||
Finished goods | $ | $ | |||||||||
Raw materials | |||||||||||
Work in process | |||||||||||
Total inventories | $ | $ |
Three months ended | Six months ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||
Distribution received from CP&P | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
Share of earnings in CP&P | |||||||||||||||||
Amortization of excess fair value of investment | ( | ( | ( | ( |
Three months ended | Six months ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||
Net sales | $ | $ | $ | $ | |||||||||||||
Gross profit | |||||||||||||||||
Income from operations | |||||||||||||||||
Net income |
June 30, | December 31, | ||||||||||
2021 | 2020 | ||||||||||
Machinery and equipment | $ | $ | |||||||||
Land, buildings and improvements | |||||||||||
Other equipment | |||||||||||
Construction-in-progress | |||||||||||
Total property, plant and equipment | |||||||||||
Less: accumulated depreciation | ( | ( | |||||||||
Property, plant and equipment, net | $ | $ |
Drainage Pipe & Products | Water Pipe & Products | Total | |||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | ||||||||||||||
Foreign currency and other adjustments | |||||||||||||||||
Balance at June 30, 2021 | $ | $ | $ |
Net carrying value as of June 30, 2021 | Net carrying value as of December 31, 2020 | ||||||||||
Customer relationships | $ | $ | |||||||||
Trade names | |||||||||||
Patents | |||||||||||
Non-compete agreements | |||||||||||
Developed technology | |||||||||||
Other | |||||||||||
Total intangible assets | $ | $ |
Fair value measurements at June 30, 2021 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 June 30, 2021 | |||||||||||
Liabilities: | ||||||||||||||
Derivative liability | $ | $ | $ | $ | ||||||||||
Fair value measurements at December 31, 2020 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, 2020 | |||||||||||
Liabilities: | ||||||||||||||
Derivative liability | $ | $ | $ | $ |
Fair value measurements at June 30, 2021 using | |||||||||||||||||
Carrying Amount June 30, 2021 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value June 30, 2021 | |||||||||||||
Liabilities: | |||||||||||||||||
Term Loan | $ | $ | $ | $ | $ | ||||||||||||
Senior Secured Notes | |||||||||||||||||
Tax receivable agreement payable |
Fair value measurements at December 31, 2020 using | |||||||||||||||||
Carrying Amount December 31, 2020 | 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, 2020 | |||||||||||||
Liabilities: | |||||||||||||||||
Term Loan | $ | $ | $ | $ | $ | ||||||||||||
Senior Secured Notes | |||||||||||||||||
Tax receivable agreement payable |
June 30, | December 31, | ||||||||||
2021 | 2020 | ||||||||||
Accrued payroll and employee benefits | $ | $ | |||||||||
Short-term finance leases | |||||||||||
Short-term operating leases | |||||||||||
Accrued taxes | |||||||||||
Warranty | |||||||||||
Accrued rebates | |||||||||||
Other miscellaneous accrued liabilities | |||||||||||
Total accrued liabilities | $ | $ |
June 30, | December 31, | ||||||||||
2021 | 2020 | ||||||||||
Term Loan, net of debt issuance costs and original issuance discount of $ | $ | $ | |||||||||
Senior Secured Notes, net of debt issuance costs and original issuance discount of $ | |||||||||||
Revolver, net of debt issuance costs of $ | |||||||||||
Total debt | $ | $ | |||||||||
Less: current portion debt | ( | ( | |||||||||
Total long-term debt | $ | $ |
Percentage | |||||
2022 | % | ||||
2023 | % | ||||
2024 and thereafter | % |
Total | Term Loan | Notes | Revolver | ||||||||||||||||||||
2021 | $ | $ | $ | $ | |||||||||||||||||||
2022 | |||||||||||||||||||||||
2023 | |||||||||||||||||||||||
2024 | |||||||||||||||||||||||
2025 | |||||||||||||||||||||||
$ | $ | $ | $ |
June 30, 2021 | |||||||||||||||||||||||
Derivative Assets | Derivative Liabilities | ||||||||||||||||||||||
Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | |||||||||||||||||||
Total derivatives, gross | |||||||||||||||||||||||
Less: Legally enforceable master netting agreements | |||||||||||||||||||||||
Total derivatives, net | $ | $ |
December 31, 2020 | |||||||||||||||||||||||
Derivative Assets | Derivative Liabilities | ||||||||||||||||||||||
Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | |||||||||||||||||||
Total derivatives, gross | |||||||||||||||||||||||
Less: Legally enforceable master netting agreements | |||||||||||||||||||||||
Total derivatives, net | $ | $ |
Three months ended | Six months ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||
Derivatives not designated as hedges | |||||||||||||||||
Interest rate swaps | |||||||||||||||||
Gain (loss) on derivatives not designated as hedges included in interest expense | ( | ( | |||||||||||||||
For the three months ended June 31, | For the six months ended June 30, | ||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||
Less: Earnings allocated to unvested restricted stock awards | |||||||||||||||||
Earnings available to common shareholders | $ | $ | $ | $ | |||||||||||||
Common stock: | |||||||||||||||||
Weighted average basic shares outstanding | |||||||||||||||||
Effect of dilutive securities | |||||||||||||||||
Weighted average diluted shares outstanding | |||||||||||||||||
Basic earnings per share: | |||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||
Diluted earnings per share: | |||||||||||||||||
Net income | $ | $ | $ | $ |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Net sales: | |||||||||||||||||||||||
Drainage Pipe & Products | $ | $ | $ | $ | |||||||||||||||||||
Water Pipe & Products | |||||||||||||||||||||||
Corporate and Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Depreciation and amortization: | |||||||||||||||||||||||
Drainage Pipe & Products | $ | $ | $ | $ | |||||||||||||||||||
Water Pipe & Products | |||||||||||||||||||||||
Corporate and Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Segment EBITDA and reconciliation to income (loss) before income taxes: | |||||||||||||||||||||||
Drainage Pipe & Products | $ | $ | $ | $ | |||||||||||||||||||
Water Pipe & Products | |||||||||||||||||||||||
Corporate and Other | ( | ( | ( | ( | |||||||||||||||||||
Less: Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Depreciation and amortization | ( | ( | ( | ( | |||||||||||||||||||
Income before income taxes | $ | $ | $ | $ | |||||||||||||||||||
Capital expenditures: | |||||||||||||||||||||||
Drainage Pipe & Products | $ | $ | $ | $ | |||||||||||||||||||
Water Pipe & Products | |||||||||||||||||||||||
Corporate and Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Total assets: | |||||||||||||||||||||||
Drainage Pipe & Products | $ | $ | |||||||||||||||||||||
Water Pipe & Products | |||||||||||||||||||||||
Corporate and Other | |||||||||||||||||||||||
Total | $ | $ | |||||||||||||||||||||
June 30, | December 31, | ||||||||||
2021 | 2020 | ||||||||||
Investment in equity method investee | $ | $ |
Property, plant, and equipment, net: | June 30, | December 31, | |||||||||
2021 | 2020 | ||||||||||
United States | $ | $ | |||||||||
Canada | |||||||||||
Mexico | |||||||||||
$ | $ |
Net sales: | For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||
Canada | |||||||||||||||||
Mexico | |||||||||||||||||
$ | $ | $ | $ |
Statements of Income Data: | Three months ended June 30, 2021 | Three months ended June 30, 2020 | % Change | ||||||||||||||
Net sales | $ | 492,800 | $ | 426,186 | 15.6 | % | |||||||||||
Cost of goods sold | 373,228 | 320,607 | 16.4 | % | |||||||||||||
Gross profit | 119,572 | 105,579 | 13.3 | % | |||||||||||||
Selling, general and administrative expenses | (56,257) | (53,283) | 5.6 | % | |||||||||||||
Impairment and exit charges | (65) | (265) | (75.5) | % | |||||||||||||
Other operating income, net | 384 | (1,001) | * | ||||||||||||||
(55,938) | (54,549) | 2.5 | % | ||||||||||||||
Income from operations | 63,634 | 51,030 | 24.7 | % | |||||||||||||
Other income (expenses) | |||||||||||||||||
Interest expense | (19,074) | (19,702) | (3.2) | % | |||||||||||||
Loss on extinguishment of debt | — | 116 | * | ||||||||||||||
Earnings from equity method investee | 3,570 | 3,126 | 14.2 | % | |||||||||||||
Income before income taxes | 48,130 | 34,570 | 39.2 | % | |||||||||||||
Income tax expense | (12,065) | (7,455) | 61.8 | % | |||||||||||||
Net income | $ | 36,065 | $ | 27,115 | 33.0 | % |
For the three months ended June 30, | |||||||||||||||||
(in thousands) | 2021 | 2020(2) | % Change | ||||||||||||||
Net sales: | |||||||||||||||||
Drainage Pipe & Products | $ | 258,532 | $ | 238,906 | 8.2 | % | |||||||||||
Water Pipe & Products | 234,268 | 187,280 | 25.1 | % | |||||||||||||
Corporate and Other | — | — | * | ||||||||||||||
Total | $ | 492,800 | $ | 426,186 | 15.6 | % | |||||||||||
Gross profit (loss): | |||||||||||||||||
Drainage Pipe & Products | 66,333 | 59,948 | 10.7 | % | |||||||||||||
Water Pipe & Products | 53,241 | 45,630 | 16.7 | % | |||||||||||||
Corporate and Other | (2) | 1 | * | ||||||||||||||
Total | $ | 119,572 | $ | 105,579 | 13.3 | % | |||||||||||
Segment EBITDA(1): | |||||||||||||||||
Drainage Pipe & Products | 58,692 | 54,618 | 7.5 | % | |||||||||||||
Water Pipe & Products | 49,305 | 42,513 | 16.0 | % | |||||||||||||
Corporate and Other | (20,240) | (20,453) | (1.0) | % | |||||||||||||
Key Operational Statistics | % Change | ||||
Drainage Pipe & Products(3) | |||||
Shipment Volumes | +13% | ||||
Average Selling Prices | -2% | ||||
Water Pipe & Products(4) | |||||
Shipment Volumes | +18% | ||||
Average Selling Prices | +7% |
Statements of Income Data: | Six months ended June 30, 2021 | Six months ended June 30, 2020 | % Change | ||||||||||||||
Net sales | $ | 860,914 | $ | 757,062 | 13.7 | % | |||||||||||
Cost of goods sold | 659,078 | 592,741 | 11.2 | % | |||||||||||||
Gross profit | 201,836 | 164,321 | 22.8 | % | |||||||||||||
Selling, general and administrative expenses | (111,301) | (107,523) | 3.5 | % | |||||||||||||
Impairment and exit charges | (474) | (1,089) | (56.5) | % | |||||||||||||
Other operating income, net | 12,503 | (671) | * | ||||||||||||||
(99,272) | (109,283) | (9.2) | % | ||||||||||||||
Income from operations | 102,564 | 55,038 | 86.4 | % | |||||||||||||
Other income (expenses) | |||||||||||||||||
Interest expense | (37,420) | (40,447) | (7.5) | % | |||||||||||||
Loss on extinguishment of debt | — | 66 | * | ||||||||||||||
Earnings from equity method investee | 6,161 | 5,925 | 4.0 | % | |||||||||||||
Income before income taxes | 71,305 | 20,582 | * | ||||||||||||||
Income tax expense | (16,564) | (7,533) | * | ||||||||||||||
Net income | $ | 54,741 | $ | 13,049 | * |
For the six months ended June 30, | |||||||||||||||||
(in thousands) | 2021 | 2020(2) | % Change | ||||||||||||||
Net sales: | |||||||||||||||||
Drainage Pipe & Products | $ | 450,351 | $ | 415,332 | 8.4 | % | |||||||||||
Water Pipe & Products | 410,563 | 341,730 | 20.1 | % | |||||||||||||
Corporate and Other | — | — | * | ||||||||||||||
Total | $ | 860,914 | $ | 757,062 | 13.7 | % | |||||||||||
Gross profit (loss): | |||||||||||||||||
Drainage Pipe & Products | 113,310 | 92,656 | 22.3 | % | |||||||||||||
Water Pipe & Products | 88,536 | 71,637 | 23.6 | % | |||||||||||||
Corporate and Other | (10) | 28 | * | ||||||||||||||
Total | $ | 201,836 | $ | 164,321 | 22.8 | % | |||||||||||
Segment EBITDA(1): | |||||||||||||||||
Drainage Pipe & Products | 110,457 | 81,062 | 36.3 | % | |||||||||||||
Water Pipe & Products | 80,394 | 64,995 | 23.7 | % | |||||||||||||
Corporate and Other | (41,111) | (40,121) | 2.5 | % | |||||||||||||
Key Operational Statistics | % Change | ||||
Drainage Pipe & Products (3) | |||||
Shipment Volumes | +11% | ||||
Average Selling Prices | -1% | ||||
Water Pipe & Products (4) | |||||
Shipment Volumes | +12% | ||||
Average Selling Prices | +9% |
Parent - Forterra, Inc. and Subsidiary Guarantors | ||||||||
June 30, 2021 | December 31, 2020 | |||||||
Current assets | $ | 570,775 | $ | 443,839 | ||||
Intercompany payable to non-guarantor subsidiaries | 5,627 | 8,384 | ||||||
Non-current assets | 1,087,009 | 1,115,191 | ||||||
Current liabilities | 305,185 | 267,672 | ||||||
Non-current liabilities | 1,184,581 | 1,176,492 |
Parent - Forterra, Inc. and Subsidiary Guarantors | ||||||||
Six months ended June 30, 2021 | Year ended December 31, 2020 | |||||||
Net sales | $ | 811,921 | $ | 1,514,556 | ||||
Gross profit | 181,048 | 347,854 | ||||||
Income before taxes | 57,718 | 58,880 | ||||||
Net income | 43,881 | 52,273 |
For the six months ended | |||||||||||
June 30, 2021 | June 30, 2020 | ||||||||||
Statement of Cash Flows data: | |||||||||||
Net cash provided by (used in) operating activities | $ | (1,955) | $ | 40,239 | |||||||
Net cash provided by (used in) investing activities | (3,666) | 1,536 | |||||||||
Net cash provided by (used in) financing activities | 13,722 | (23,556) |
Exhibit No. | Description of Exhibit | |||||||||||||
Agreement and Plan of Merger, dated February 19, 2021, by and among Quikrete Holdings, Inc., Jordan Merger Sub, Inc. and Forterra, Inc. | (a) | |||||||||||||
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | * | |||||||||||||
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | * | |||||||||||||
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ^ | |||||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | * | ||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | * | ||||||||||||
101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document. | * | ||||||||||||
101.DEF | Inline XBRL Taxonomy Definition Linkbase Document. | * | ||||||||||||
101.LAB | Inline XBRL Taxonomy Label Linkbase Document. | * | ||||||||||||
101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document. | * | ||||||||||||
104.1 | Cover page interactive data file - The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 is formatted in Inline XBRL (included as Exhibit 101). | * |
* | Filed herewith | |||||||
^ | Exhibit 32.1 shall not be deemed filed with the SEC, nor shall it be deemed incorporated by reference in any filing with the SEC under the Exchange Act or the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filings. | |||||||
(a) | Previously filed on February 22, 2021 as an exhibit to the Company's Current Report on Form 8-K and incorporated herein by reference. |
FORTERRA, INC. | |||||||||||
(Registrant) | |||||||||||
/s/ Karl Watson, Jr. | July 29, 2021 | ||||||||||
By: | Karl Watson, Jr. | ||||||||||
Chief Executive Officer | |||||||||||
(Principal Executive Officer) | |||||||||||
/s/ Charles R. Brown, II | July 29, 2021 | ||||||||||
By: | Charles R. Brown, II | ||||||||||
Executive Vice President and Chief Financial Officer | |||||||||||
(Principal Financial Officer) |
Date: | July 29, 2021 | /s/ Karl Watson, Jr. | ||||||
Karl Watson, Jr. | ||||||||
Chief Executive Officer |
Date: | July 29, 2021 | /s/ Charles R. Brown, II | ||||||
Charles R. Brown, II | ||||||||
Executive Vice President and Chief | ||||||||
Financial Officer |
Date: | July 29, 2021 | /s/ Karl Watson, Jr. | ||||||
Karl Watson, Jr. | ||||||||
Chief Executive Officer | ||||||||
Date: | July 29, 2021 | /s/ Charles R. Brown, II | ||||||
Charles R. Brown, II | ||||||||
Executive Vice President and Chief | ||||||||
Financial Officer |
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Income Statement [Abstract] | ||||
Net sales | $ 492,800 | $ 426,186 | $ 860,914 | $ 757,062 |
Cost of goods sold | 373,228 | 320,607 | 659,078 | 592,741 |
Gross profit | 119,572 | 105,579 | 201,836 | 164,321 |
Selling, general & administrative expenses | (56,257) | (53,283) | (111,301) | (107,523) |
Impairment and exit charges | (65) | (265) | (474) | (1,089) |
Other operating income (expense), net | 384 | (1,001) | 12,503 | (671) |
Operating expenses | (55,938) | (54,549) | (99,272) | (109,283) |
Income from operations | 63,634 | 51,030 | 102,564 | 55,038 |
Other income (expense) | ||||
Interest expense | (19,074) | (19,702) | (37,420) | (40,447) |
Gain on extinguishment of debt | 0 | 116 | 0 | 66 |
Earnings from equity method investee | 3,570 | 3,126 | 6,161 | 5,925 |
Income before income taxes | 48,130 | 34,570 | 71,305 | 20,582 |
Income tax expense | (12,065) | (7,455) | (16,564) | (7,533) |
Net income | $ 36,065 | $ 27,115 | $ 54,741 | $ 13,049 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.54 | $ 0.42 | $ 0.82 | $ 0.20 |
Diluted (in dollars per share) | $ 0.52 | $ 0.40 | $ 0.79 | $ 0.19 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 66,687 | 65,093 | 66,463 | 64,948 |
Diluted (in shares) | 69,511 | 67,191 | 69,475 | 67,458 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 36,065 | $ 27,115 | $ 54,741 | $ 13,049 |
Change in other postretirement benefit plans, net of tax | 0 | 0 | 0 | (681) |
Foreign currency translation adjustment | 944 | 2,437 | 1,603 | (3,262) |
Comprehensive income | $ 37,009 | $ 29,552 | $ 56,344 | $ 9,106 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common shares, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common shares, authorized (in shares) | 190,000,000 | 190,000,000 |
Common shares, issued (in shares) | 66,921,000 | 65,981,000 |
Common shares, outstanding (in shares) | 66,921,000 | 65,981,000 |
Description of the business |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the business | Description of the business Forterra, Inc. (“Forterra” or the ‘‘Company’’) is involved in the manufacturing, sale and distribution of building products in the United States (“U.S.”) and Eastern Canada. Forterra’s primary products are concrete drainage pipe, precast concrete structures, and water transmission pipe used in drinking and wastewater systems. These products are used in the infrastructure, residential and non-residential sectors of the construction industry. |
Summary of significant accounting policies |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies | Summary of significant accounting policies General The Company's condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and include the accounts and results of operations of the Company and its consolidated subsidiaries. All intercompany transactions have been eliminated in consolidation. The condensed consolidated balance sheets and the condensed consolidated statements of operations, comprehensive income, cash flows and equity 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”). The results of operations for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. Seasonal changes and other conditions can affect the sales volumes of the Company's products. The financial results for any interim period do not necessarily indicate the expected results for the year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2020 as provided in Forterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 25, 2021 (the “2020 10-K”). The Company has continued to follow the accounting policies set forth in those financial statements, except as supplemented and documented below. Certain prior year numbers were reclassified to conform with current year presentation. Such reclassification had no impact on the previously reported results of operations. See Note 17, Segment reporting, for further detail. Use of estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the reporting date, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. The more significant estimates made by management relate to fair value estimates for assets and liabilities acquired in business combinations; estimates for accrued liabilities for environmental cleanup, bodily injury and insurance claims; estimates for commitments and contingencies; and estimates for the realizability of deferred tax assets, the tax receivable agreement obligation, inventory reserves, allowance for doubtful accounts and impairment of goodwill and long-lived assets. Certain accounting matters that generally require consideration of forecasted financial information were assessed in light of the impact from the coronavirus disease ("COVID-19") pandemic. The accounting matters assessed included, but were not limited to, the Company’s allowance for doubtful accounts, inventory reserves, goodwill impairment, impairment of property and equipment and valuation allowances for tax assets. While the assessments resulted in no material impacts to the Company’s condensed consolidated financial statements as of and for the six months ended June 30, 2021, the Company believes the full impact of the COVID-19 outbreak remains uncertain and will continue to assess if ongoing developments related to the outbreak may cause future material impacts to its consolidated financial statements. Concentration of Credit Risk The Company had an individual customer within its Water Pipe & Products segment that accounted for approximately 20% and 15% of the Company's total net sales for the six months ended June 30, 2021 and 2020, respectively, and receivables at June 30, 2021 and December 31, 2020 representing 20% and 16% of the Company's total receivables, net, respectively. Credit Losses Trade accounts receivable. The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The Company's exposure to credit losses may increase if one or more of its customers are adversely affected by changes in laws or other government recommendations or mandates, economic pressures or uncertainty associated with local or global economic recessions, disruption or other impacts associated with the COVID-19 pandemic, or other customer-specific factors. Although the Company has historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade receivables as customers are impacted by the COVID-19 pandemic. Recent Accounting Guidance Adopted In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in the ASU provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to reference rate reform. The guidance was effective upon issuance and generally can be applied through December 31, 2022 and has not had any material impact to the Company's condensed consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The new guidance simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. The Company adopted this ASU on January 1, 2021 on a prospective basis, which did not have a material impact on the Company's condensed consolidated financial statements.
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Merger and dispositions |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mergers and dispositions | Mergers and dispositions Quikrete Merger Agreement On February 19, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Quikrete Holdings, Inc., a Delaware corporation (“Parent”), and Jordan Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”). Pursuant to the Merger Agreement, subject to the satisfaction or waiver of specified conditions, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of Parent. Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of common stock (the “Common Stock”) of the Company (other than (i) any shares held in the treasury of the Company or owned, directly or indirectly, by Parent, Merger Sub or any wholly-owned subsidiary of the Company immediately prior to the Effective Time, (ii) shares that are subject to any vesting restrictions (“Company Restricted Shares”) granted under the Company’s stock incentive plans (the “Company Stock Plans”) and (iii) any shares owned by stockholders who have properly exercised and perfected appraisal rights under Delaware law) will be automatically canceled and converted into the right to receive $24.00 in cash, without interest (the “Merger Consideration”), subject to deduction for any required withholding tax. At the Effective Time:
Each party’s obligation to consummate the Merger is subject to certain conditions, including, among others: (i) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (ii) the absence of any order issued by any court of competent jurisdiction, other legal restraint or prohibition or any law enacted or deemed applicable by a governmental entity that prohibits or makes illegal the consummation of the Merger; (iii) the passing of twenty (20) days from the date on which the Company mails to the Company’s stockholders the definitive information statement regarding the stockholder approval of the Merger by written consent; (iv) subject to certain qualifications, the accuracy of representations and warranties of the other party set forth in the Merger Agreement; and (v) the performance by the other party in all material respects of its obligations under the Merger Agreement. Parent’s obligation to consummate the Merger is also conditioned on, among other things, the absence of any Material Adverse Effect (as defined in the Merger Agreement). Entry into the Merger Agreement has been unanimously approved by the board of directors of the Company. The Merger Agreement includes customary representations, warranties and covenants of the Company, Parent and Merger Sub. Among other things, the Company has agreed to use commercially reasonable efforts to conduct its business in the ordinary course of business consistent with past practice and use commercially reasonable efforts to preserve intact its businesses until the Merger is consummated. The Company and Parent have also agreed to use their respective reasonable best efforts to obtain any approvals from governmental authorities for the Merger, including all required antitrust approvals, on the terms and subject to the conditions set forth in the Merger Agreement, provided that Parent and its affiliates will not be required to take, or agree to take, certain actions with respect to assets, businesses or product lines of Parent or any of its subsidiaries, or the Company or any of its subsidiaries, accounting for more than $80 million of EBITDA (as defined in the Merger Agreement) for the 12 months ended December 31, 2020, measured in accordance with the Merger Agreement. The Merger Agreement contains certain provisions giving each of Parent and the Company rights to terminate the Merger Agreement under certain circumstances, including the right for either Parent or the Company to terminate the Merger Agreement if the Merger has not been consummated on or before November 19, 2021, which date will be automatically extended for up to two additional 60-day periods in specified circumstances as described in the Merger Agreement (such date, as may be so extended pursuant to the Merger Agreement, the “Outside Date”). Upon termination of the Merger Agreement under specified circumstances, the Company will be required to pay Parent a termination fee of $50 million. The Merger Agreement further provides that Parent will be required to pay the Company a reverse termination fee of $85 million under certain circumstances if the Merger Agreement is terminated due to the failure of the parties to obtain required approvals under Antitrust Laws (as defined in the Merger Agreement) prior to the Outside Date or as a result of a Restraint (as defined in the Merger Agreement) arising under applicable Antitrust Laws. If the Merger is consummated, the shares of Common Stock will be delisted from the Nasdaq Stock Market LLC and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Transaction costs For the three and six months ended June 30, 2021, the Company recognized aggregate transaction costs, including legal, accounting, valuation, and advisory fees, specific to the Merger of $1.9 million and $4.9 million, respectively. These costs are recorded in the condensed consolidated statements of operations within selling, general & administrative expenses.
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Receivables, net |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables, net | Receivables, net Receivables consist of the following (in thousands):
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Inventories |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consist of the following (in thousands):
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Investment in equity method investee |
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in equity method investee | Investment in equity method investee The Company owns 50% of the Common Unit voting shares of Concrete Pipe & Precast LLC ("CP&P") and consequently, has recorded its investment in the Common Unit voting shares in accordance with ASC 323, Investments – Equity Method and Joint Ventures, under the equity method of accounting. The Company's investment in the joint venture was $49.9 million at June 30, 2021, which is included within the Drainage Pipe & Products segment. At June 30, 2021, the difference between the amount at which the Company's investment is carried and the amount of the Company's share of the underlying equity in net assets of CP&P was approximately $12.9 million. The basis difference is primarily attributed to the value of land and equity method goodwill associated with the investment. The following reflects the Company's distribution and earnings in the equity investment (in thousands):
Selected financial data for CP&P on a 100% basis is as follows (in thousands):
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Property, plant and equipment, net |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment, net | Property, plant and equipment, net Property, plant and equipment, net, consist of the following (in thousands):
Depreciation expense totaled $12.2 million and $24.4 million for the three and six months ended June 30, 2021, respectively, and $12.1 million and $24.3 million for the three and six months ended June 30, 2020, respectively, which is included in cost of goods sold and selling, general and administrative expenses in the condensed consolidated statements of operations.
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Goodwill and other intangible assets, net |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and other intangible assets, net | Goodwill and other intangible assets, net The Company has recorded goodwill in connection with its acquisition of businesses. The following table summarizes the changes in goodwill by operating segment for the six months ended June 30, 2021 (in thousands):
Intangible assets other than goodwill at June 30, 2021 and December 31, 2020 included the following (in thousands):
Amortization expense totaled $8.3 million and $16.6 million for the three and six months ended June 30, 2021, respectively, and $10.3 million and $20.6 million for the three and six months ended June 30, 2020, respectively, which is included in selling, general and administrative expenses in the condensed consolidated statements of operations. All of the Company's intangible assets are amortizable.
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Fair value measurement |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, operating and finance lease liabilities, accrued liabilities and the tax receivable agreement obligation. 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 or other terms related to these financial instruments. 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 measured and recorded at fair value on a recurring basis are as follows for the dates indicated (in thousands):
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 counterparties, 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 (in thousands):
The fair value of debt is valued using a market approach based on indicative quoted prices for the Company's debt instruments traded in over-the-counter markets and, therefore, is classified as Level 2 within the fair value hierarchy. See Note 11, Debt and deferred financing costs, for a further discussion of Company debt. The determination of the fair value of the Company's tax receivable agreement payable was made using a discounted cash flow methodology with level 3 inputs as defined by ASC 820, Fair Value Measurements and Disclosures. The determination of fair value required significant judgment, including estimates of the timing and amounts of various tax attributes. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. Actual results could differ from these estimates. See Note 14, Commitments and contingencies, for a further discussion of the Company's tax receivable agreement.
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Accrued liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued liabilities | Accrued liabilities Accrued liabilities consist of the following (in thousands):
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Debt and deferred financing costs |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and deferred financing costs | Debt and deferred financing costs The Company’s debt consisted of the following (in thousands):
As of June 30, 2021, Forterra had $20 million borrowings under its $350 million asset based revolving credit facility under its ABL Credit Agreement dated October 25, 2016 (the “ABL Credit Agreement”) for working capital and general corporate purposes (“Revolver”), $408.6 million outstanding under its senior term loan facility (“Term Loan”) and $500 million senior secured notes due 2025 (the “Notes”). Senior Secured Notes On July 16, 2020, Forterra Finance, LLC and FRTA Finance Corp., both wholly-owned subsidiaries of the Company, completed the issuance of $500 million aggregate principal amount of senior secured notes due in 2025. The Notes have a fixed annual interest rate of 6.50% which will be paid semi-annually on January 15 and July 15 of each year. The Notes will mature on July 15, 2025. The Company used the net proceeds from the offering to repay $492.5 million of the principal amount of the Term Loan at par, plus accrued interest. The Company incurred debt issuance costs of $8.8 million and will amortize them over the term of the Notes under the effective interest method. Obligations under the Notes are guaranteed by the Company and the Company’s existing and future subsidiaries (other than the issuing companies) that guarantee the Term Loan and the obligations of the U.S. borrowers under the Revolver. The Notes and the related guarantees are secured by first-priority liens on the collateral that secures the Term Loan on a first-priority basis (which is generally all assets other than those that secure the Revolver on a first-priority basis as set forth below) and second-priority liens on the collateral that secures the Revolver on a first-priority basis (which is generally inventory, accounts receivable, deposit accounts, securities accounts, certain intercompany loans and related assets), which second-priority liens will be ratable with the liens on such assets securing the obligations under the Term Loan and junior to the liens on such assets securing the Revolver. At any time prior to July 15, 2022, the Company may on any one or more occasions redeem all or part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus a “make whole premium” as of, and accrued and unpaid interest to the date of redemption, subject to the right of holders of Notes on the relevant record date to receive interest due on an interest payment date occurring on or prior to the redemption date. In addition, at any time prior to July 15, 2022, the Company may on any one or more occasions redeem up to 40% of the aggregate principal amount of the Notes (calculated after giving effect to the issuance of any additional notes) issued under the Indenture at a redemption price equal to 106.500% of the principal amount of Notes redeemed, plus accrued and unpaid interest to the date of redemption (subject to the right of holders of Notes on the relevant record date to receive interest due on an interest payment date occurring on or prior to the redemption date), with the net cash proceeds of an equity offering. Furthermore, at any time on or after July 15, 2022, the Company may on any one or more occasions redeem all or part of the Notes at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest on the Notes redeemed, to the applicable date of redemption, if redeemed during the 12-month period beginning on July 15 of the years indicated below, subject to the rights of holders of Notes on a relevant record date to receive interest on an interest payment date occurring on or prior to the redemption date:
The Notes contain customary negative covenants, including, among other things, limitations or prohibitions on restricted payments, incurrence of additional indebtedness, liens, mergers, asset sales and transactions with affiliates. In addition, the Indenture contains customary events of default. Term Loan The Term Loan provides for a $1.25 billion senior secured term loan. Subject to the conditions set forth in the term loan agreement, the Term Loan may be increased by (i) up to the greater of $285.0 million and 1.0x consolidated EBITDA (defined below) of Forterra 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 unlimited amount, provided (x) in the case of any incremental debt that is secured by a lien that is pari passu with the liens securing the Term Loan, the first lien leverage ratio does not exceed 4.10 to 1.00, (y) in the case of incremental debt that is secured by a lien that is junior to the liens securing the Term Loan, the total leverage ratio does not exceed 5.50 to 1.00 and (z) in the case of incremental debt that is unsecured, the total leverage ratio does not exceed 5.75 to 1.00, in each case, determined on a pro forma basis. The Term Loan matures on October 25, 2023 and is subject to quarterly amortization equal to 0.25% of the initial principal amount. Interest accrues on outstanding borrowings thereunder at a rate equal to adjusted LIBOR (with a floor of 1.0%) or an alternate base rate (the base rate, which is the highest of the then current federal funds rate plus 0.50%, the prime rate most recently announced by the administrative agent under the Term Loan, and the one-month adjusted LIBOR plus 1.00%), in each case plus a margin of 3.00% or 2.00%, respectively. The weighted average interest rates for the Term Loan were 4.0%, 4.0%, 4.0% and 4.3% for the three and six months ended June 30, 2021 and June 30, 2020, respectively. During the six months ended June 30, 2020, the Company repurchased $15.5 million of the Term Loan before its maturity at a market value of $15.1 million. Consequently, the Company wrote off a proportionate share of debt issuance costs of $0.3 million and recognized a net gain of $0.1 million on the early extinguishment of debt which was included in the condensed consolidated statements of operation. Outstanding borrowings under the Term Loan are guaranteed by Forterra and each of its direct and indirect material wholly-owned domestic subsidiaries except certain excluded subsidiaries (the "Guarantors"). The Term Loan is secured by substantially all of the assets of Forterra, the borrower and the Guarantors; provided that the obligations under the Term Loan are not secured by any liens on more than 65% of the voting stock of foreign subsidiaries or assets of foreign subsidiaries. The Term Loan contains customary representations and warranties, and affirmative and negative covenants, that, among other things, restrict the ability of Forterra 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 Term Loan does not contain any financial covenants. Obligations under the Term Loan may be accelerated upon certain customary events of default (subject to grace periods, as appropriate). Asset Based Revolving Facility On June 17, 2020, the Company entered into a First Amendment (the “Amendment”) to the ABL Credit Agreement. The Amendment, among other things, (i) increased the size of the Revolver from $300.0 million to $350.0 million of aggregate commitments, with up to $330.0 million to be made available to the U.S. Borrowers and up to $20.0 million to be made available to the Canadian Borrowers (the allocation may be modified periodically at the Company's request), (ii) extended the maturity date of the Revolver to June 17, 2025, subject to earlier maturity if greater than $75.0 million of the Company’s Term Loan remains outstanding 91 days prior to the scheduled maturity of the term loan credit facility or any refinancing thereof, and (iii) modified the interest rates on outstanding borrowings under the Revolver to a rate equal to LIBOR or CDOR plus a margin ranging from 1.75% to 2.25% per annum, or an alternate base rate, Canadian prime rate or Canadian base rate plus a margin ranging from 0.75% to 1.25% per annum, in each case, based upon the average excess availability under the Revolver for the most recently completed calendar quarter and the Company’s total leverage ratio as of the end of the most recent fiscal quarter for which financial statements have been delivered. The Company incurred $2.6 million of fees and expenses in connection with this Amendment and recorded it to “Other Long-term Assets” in its condensed consolidated balance sheet. In addition, the Company wrote off $0.4 million of previously deferred issuance cost related to the banks that are no longer part of the ABL Credit Facility. Subject to the conditions set forth in the ABL Credit Agreement, as amended, the Revolver 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 Revolver 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 receivable and inventory are subject to increase by 2.5% during certain periods. As of June 30, 2021 and December 31, 2020 the Company had $20.0 million and no outstanding borrowings, respectively, under the Revolver. The weighted average interest rates for the borrowings under the Revolver were 2.75%, 2.75%, 1.98% and 2.00% for the three and six months ended June 30, 2021 and June 30, 2020, respectively. The Revolver also provides for the issuance of letters of credit of up to an agreed sublimit. The obligations of the borrowers under the Revolver are guaranteed by Forterra and its direct and indirect wholly-owned restricted subsidiaries other than certain excluded subsidiaries; provided that the obligations of the U.S. borrowers are not guaranteed by the Canadian subsidiaries. The Revolver is secured by substantially all of the assets of the borrowers; provided that the obligations of the U.S. borrowers are not secured by any liens on more than 65% of the voting stock of foreign subsidiaries or assets of foreign subsidiaries. In addition, Forterra pays a facility fee of between 20.0 and 32.5 basis points per annum based upon the utilization of the total Revolver. Availability under the Revolver, based on draws, outstanding letters of credit of $18.8 million, as well as allowable borrowing base as of June 30, 2021, was $301.4 million. The Revolver contains customary representations and warranties, and affirmative and negative covenants, including representations, warranties, and covenants that, among other things, restrict the ability of Forterra 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 Revolver contains a financial covenant restricting Forterra 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 Revolver falls below a threshold set forth in the ABL Credit Agreement, as amended. Obligations under the Revolver may be accelerated upon certain customary events of default (subject to grace periods, as appropriate). 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). As of June 30, 2021, the Company was in compliance with all applicable covenants under the Revolver, the Term Loan, and the Notes. As of June 30, 2021, scheduled maturities of long-term debt were as follows (in thousands).
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Derivatives and hedging |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 operating activities in the condensed consolidated statements of cash flows. On March 30, 2020, Forterra entered into an interest rate swap transaction with a notional value of $400 million to reduce exposure to interest rate fluctuations associated with a portion of the Term Loan. Under the terms of the swap transaction, Forterra agreed to pay a fixed rate of interest of 1.08% and receive floating rate of interest indexed to one-month LIBOR, subject to a minimum of 1.00%, with monthly settlement terms with the swap counterparty. The swap has a 30-month term and expires on September 30, 2022. The interest rate swap is not designated as a cash flow hedge, therefore all changes in the fair value of the instrument are captured as a component of interest expense in the condensed consolidated statements of operations. Accordingly, cash flows from the monthly interest rate swap settlements are included in net cash provided by (used in) operating activities in the condensed consolidated statements of cash flows. On February 9, 2017, Forterra entered into interest rate swap transactions with a combined notional value of $525 million. Under the terms of the swap transactions, Forterra agreed to pay a fixed rate of interest of 1.52% and receive floating rate interest indexed to one-month LIBOR with monthly settlement terms with the swap counterparties. The swaps were not designated as cash flow hedges, had a three-year term, and expired on March 31, 2020. The Company elects to present all derivative assets and derivative liabilities on a net basis on its condensed consolidated 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 June 30, 2021 and December 31, 2020, 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 condensed consolidated balance sheets (in thousands):
The following table presents the effect of derivative instruments on the condensed consolidated statements of operations (in thousands):
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Leases |
6 Months Ended |
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Jun. 30, 2021 | |
Leases [Abstract] | |
Leases | Leases The Company leases land and buildings, office spaces, vehicles, machinery and equipment under various lease agreements. A large portion of the Company’s leases were the result of the 2016 sale and leaseback of land and buildings related to certain production facilities. These leases have an initial term of 25 years, followed by one optional renewal term of approximately ten years that may be exercised at the Company’s discretion. These leases, with the exception of certain land leases, are classified as finance leases. The Company’s operating leases are mainly comprised of land and buildings, office spaces, vehicles, machinery and equipment leases, and have remaining terms of to 25 years, some of which include options to extend the leases for up to 10 years. The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Operating leases are included in operating lease right-of-use, or ROU, assets, accrued liabilities, and long-term operating lease liabilities in the condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, accrued liabilities, and long-term finance lease liabilities in the condensed consolidated balance sheets.
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Leases | Leases The Company leases land and buildings, office spaces, vehicles, machinery and equipment under various lease agreements. A large portion of the Company’s leases were the result of the 2016 sale and leaseback of land and buildings related to certain production facilities. These leases have an initial term of 25 years, followed by one optional renewal term of approximately ten years that may be exercised at the Company’s discretion. These leases, with the exception of certain land leases, are classified as finance leases. The Company’s operating leases are mainly comprised of land and buildings, office spaces, vehicles, machinery and equipment leases, and have remaining terms of to 25 years, some of which include options to extend the leases for up to 10 years. The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Operating leases are included in operating lease right-of-use, or ROU, assets, accrued liabilities, and long-term operating lease liabilities in the condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, accrued liabilities, and long-term finance lease liabilities in the condensed consolidated balance sheets.
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Commitments and contingencies |
6 Months Ended |
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Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies Legal matters 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 condensed consolidated 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. Derivative Action On January 15, 2019, a putative shareholder derivative complaint captioned Lee v. Bradley, et al., was filed in the United States District Court for the District of Delaware, naming as defendants certain of the Company’s current and former directors and officers (the "Lee Action"). The complaint alleges the defendants violated Section 14A of the Securities and Exchange Act of 1934, as amended, and related rules by failing to make certain disclosures in the Company's proxy solicitation in advance of the 2017 Annual Meeting of Stockholders, and that defendants breached their fiduciary duties, wasted corporate assets, and committed constructive fraud. The complaint also asserts unjust enrichment claims against certain defendants. The complaint seeks, on behalf of the Company, unspecified damages, an order directing the return of certain payments to the defendants, certain injunctive relief, and reasonable costs and attorneys' fees. After initially staying the case until the court in a prior, unrelated securities class action suit that has now been settled ruled on the motion to dismiss in that case, on December 11, 2019, the court in the Lee Action entered a Stipulation and Order consolidating the Lee Action and another derivative action filed in the same court into a single case (the "Consolidated Lee Action"), and providing a schedule for filing of an amended complaint and motions to dismiss, which has been further extended by agreement of the parties. A mediation of the dispute was held on June 12, 2020 but was not successful in resolving the dispute. Plaintiffs filed an amended complaint in August 2020 and Defendants filed a motion to dismiss the complaint in September 2020, which is now fully briefed and before the court. In light of the Company’s entry into the Merger Agreement, the parties agreed that the action should be stayed pending the completion of the Merger, and the Court entered an order on March 19, 2021 staying the Lee Action until after the completion of the Merger. The Company and other defendants are vigorously defending the Consolidated Lee Action. Given the stage of the proceedings, the Company cannot reasonably estimate at this time the possible loss or range of loss, if any, that may arise from the Consolidated Lee Action. Merger-Related Litigation On March 24, 2021, Anand Choudhuri, a purported owner of Forterra common stock brought a lawsuit against the Company and each of the members of its Board of Directors in the U.S. District Court for the Southern District of New York (the "Choudhuri Action"). The plaintiff alleges, among other things, that the directors breached their fiduciary duties by entering into the Merger Agreement through an unfair process and for inadequate compensation, and that the Information Statement filed by the Company to explain the Merger to its stockholders (the "Merger Information Statement") omits material information related to the sales process, the Company’s financial projections, and Citigroup Global Markets Inc.’s (“Citi”) analysis of the proposed transaction reflected in the Merger Agreement, in violation of the federal securities laws and seeks to enjoin the Merger and/or damages in an unspecified amount. On March 31, 2021, Christopher Jones, a purported owner of Forterra common stock brought a lawsuit against the Company and each of the members of its Board of Directors in the U.S. District Court for the District of Colorado (the "Jones Action"). The plaintiff alleges, among other things, that defendants violated federal securities laws by failing to disclose certain information in the Merger Information Statement, the Company’s financial projections, and Citi's analysis of the proposed transaction reflected in the Merger Agreement and seeks to enjoin the Merger and/or damages in an unspecified amount. On April 1, 2021, Adam Franchi, a purported owner of Forterra common stock brought a lawsuit against Forterra and individual members of the Board of Directors in the U.S. District Court for the District of Delaware (the "Franchi Action") (collectively, the Choudhuri Action, the Jones Action and the Franchi Action are the “Merger-Related Litigation”). The plaintiff in the Franchi Action alleges, among other things, that defendants violated federal securities laws by failing to disclose certain information in the Merger Information Statement, the Company’s financial projections, and Citi's analysis of the proposed transaction reflected in the Merger Agreement and seeks to enjoin the Merger and/or damages in an unspecified amount. The Company filed supplemental disclosures relating to the Merger Information Statement which further explained the proposed transaction that is contemplated by the Merger Agreement. Following the supplemental disclosure filings, in late April 2021 each of the three cases was voluntarily dismissed by the applicable plaintiff, and it is expected that the plaintiffs in these actions may seek compensation for their expenses and attorneys' fees. Given the stage of the proceedings, the Company cannot reasonably estimate at this time the possible loss or range of loss, if any, that may arise from the Merger-Related Litigation. In addition, certain stockholders have informed the Company that they will seek to exercise their appraisal rights under Delaware law with respect to their shares. No further action has been taken by these stockholders to date. Long-term Incentive Plan Following the original acquisition of the Company's business by affiliates of Lone Star, Lone Star implemented a cash-based long term incentive plan (the “LTIP”) which entitles the participants in the LTIP to a potential cash payout upon a monetization event as defined by the LTIP. Potential monetization events include the sale, transfer or otherwise disposition of all or a portion of the Company or successor entities of LSF9, an initial public offering where Lone Star reduces its ownership interest in the Company or successor entities of LSF9, or through certain cash distribution as defined in the LTIP. Before the payout of any cash the LTIP requires Lone Star realize in cash the full 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 its investment in the Company and certain successor entities of LSF9. As of June 30, 2021, no such monetization events that meet the required return for an LTIP payment have occurred, and therefore no amounts were accrued in the accompanying condensed consolidated balance sheets. While no payments have occurred thus far, payments under the LTIP could be significant depending upon future monetization events. The timing and amount of such payments are unknown and are dependent upon future monetization events and market conditions that are outside of the control of the Company or the participants of the plan. Subsequent to the IPO, Forterra became directly liable for any payment obligations triggered under the LTIP, but LSF9 or one of its affiliates will remain obligated to make payments to the Company in amounts equal to any payment obligations triggered under the LTIP as and when such payment obligations are triggered. It is expected that if the Merger is completed under the terms of the Merger Agreement, the Merger will constitute a Liquidity Event that will trigger certain payments under the terms of the LTIP. Leases The Company leases certain property and equipment for various periods under non-cancelable operating and finance leases. Tax receivable agreement The Company has a tax receivable agreement (the "TRA") 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 TRA 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 IPO, (ii) the utilization of the Company's and its subsidiaries’ net operating losses and tax credits, if any, attributable to periods prior to the IPO, (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 LTIP, (iv) deductions in respect of transaction expenses attributable to the acquisition of USP Holdings, Inc. and (v) certain other tax benefits attributable to payments made under the tax receivable agreement. For purposes of the TRA, 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 for the period of time in which any such related tax benefits remain. The Company accounts for potential payments under the TRA as a contingent liability, with amounts accrued when considered probable and reasonably estimable. The liability recorded by the Company for the TRA at June 30, 2021 and December 31, 2020 was $64.2 million and $64.2 million, respectively. The timing and amount of future tax benefits associated with the TRA are subject to change, and additional payments may be required which could be materially different from the current accrued liability. The Company anticipates that it will have sufficient taxable income in future periods to realize the full value of the obligation recorded. Future tax receivable agreement payments related to the tax basis of assets at the time of the IPO will be recorded as a reduction to the liability and will be recorded as a financing activity in the consolidated statement of cash flows. During the six months ended June 30, 2021, the Company made no payments on the TRA to Lone Star. It is expected that if the Merger is completed under the terms of the Merger Agreement, payments to Lone Star will continue to be made by the surviving entity under the Merger Agreement according to the terms of the TRA.
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Earnings per share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | Earnings per share Basic earnings per share (“EPS”) is calculated by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Potentially dilutive securities include employee stock options and shares of restricted stock. Diluted EPS reflects the assumed exercise, vesting or conversion of all dilutive securities. The calculations of the basic and diluted EPS for the three and six months ended June 30, 2021 and 2020 are presented below (in thousands, except per share amounts):
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Income taxes |
6 Months Ended |
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Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The Company recorded income tax expense of $12.1 million and $16.6 million for the three and six months ended June 30, 2021, and $7.5 million and $7.5 million for the three and six months ended June 30, 2020. The income tax expense for the three months ended June 30, 2021 was calculated in accordance with FASB ASC 740 "Income Taxes" principles. The income tax expense for the three months ended June 30, 2021 differs from the expense computed at the federal statutory rate primarily due to the current period state income tax expense recorded in the period. The income tax expense for the six months ended June 30, 2021 differs from the expense computed at the federal statutory rate primarily due to the current period state income tax expense on the current earnings, partially offset by the current period benefit related to equity compensation recorded during the period. The income tax expense for the three months ended June 30, 2020 differs from the expense computed at the federal statutory rate primarily due to the movement of the valuation allowance recorded in the quarter and state income tax expense. The income tax expense for the six months ended June 30, 2020 differs from the expense computed at the federal statutory rate primarily due to the movement of the valuation allowance recorded in the period and state income tax expense. On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), as well as issued other final regulations during 2020. The Company has considered the favorable impact of the released final regulations in the preparation of the condensed consolidated financial statements. On March 11, 2021, the U.S. government enacted the COVID-19 Stimulus Package called the American Rescue Plan Act of 2021 (“ARPA”). There are no material provisions that impacted the Company’s condensed consolidated financial statements.
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Segment reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment reporting | Segment reporting Segment information is presented in accordance with FASB ASC 280, Segment Reporting, 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 Company's Chief Executive Officer is its CODM. The Corporate and Other segment includes expenses related to certain executive salaries, interest costs related to the Company's credit agreements, acquisition-related costs, and other corporate costs that are not directly attributable to the Company's operating segments. The Company's segments follow the same accounting policies as the Company. During the year ended December 31, 2020, the Company moved its concrete and steel pressure pipe business from the Water Pipe & Products segment to the Drainage Pipe & Products segment to better align with how the CODM manages the businesses. The prior year period has been updated to conform with the re-segmentation, which resulted in an immaterial impact to the prior periods' segment information. Net sales from the major products sold to external customers include drainage pipe and precast products and concrete and steel water transmission pipe. 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 EBITDA as a basis for making the decisions to allocate resources and assess performance. The following tables set forth the disaggregation of revenue earned from contracts with customers based on the Company's reportable segments as well as other financial information attributable to the Company's reportable segments for the three and six months ended June 30, 2021 and 2020 (in thousands):
The Company has an investment in an equity method investee included in the Drainage Pipe & Products segment for which earnings from equity method investee were $3.6 million, $6.2 million, $3.1 million and $5.9 million for the three and six months ended June 30, 2021 and June 30, 2020, respectively, and with the following balances (in thousands):
Disaggregated revenue by geographic location is provided in the tables below. The Company has operations in the United States, Canada and Mexico. The economic characteristics of the Company's customers do not significantly vary across geographic locations or product lines. The Company has both revenues and long-lived assets in each country; and those assets and revenues are recorded within geographic location as follows (in thousands):
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Related party transactions |
6 Months Ended |
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Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related party transactions | Related party transactions Tax receivable agreement The Company has a TRA 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. See Note 14, Commitments and contingencies, for additional information on the tax receivable agreement. CP&P The Company sold certain goods and services to its joint venture, CP&P, including spare parts for repairs, and property rentals. For the six months ended June 30, 2021, Forterra sold $0.4 million of product to CP&P and purchased goods and services from CP&P for an amount of $0.1 million. For the six months ended June 30, 2020, Forterra sold $0.9 million of product to CP&P and purchased $0.6 million of goods and services from CP&P. Master Builders Solutions US, LLC For the six months ended June 30, 2021, Forterra purchased goods from Master Builders Solutions US, LLC, an affiliate of Lone Star, for an amount of $0.4 million.
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Summary of significant accounting policies (Policies) |
6 Months Ended |
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Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
General | General The Company's condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and include the accounts and results of operations of the Company and its consolidated subsidiaries.The condensed consolidated balance sheets and the condensed consolidated statements of operations, comprehensive income, cash flows and equity 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”). The results of operations for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. Seasonal changes and other conditions can affect the sales volumes of the Company's products. The financial results for any interim period do not necessarily indicate the expected results for the year. |
Consolidation | All intercompany transactions have been eliminated in consolidation. |
Reclassifications | Certain prior year numbers were reclassified to conform with current year presentation. Such reclassification had no impact on the previously reported results of operations. See Note 17, Segment reporting, for further detail. |
Use of Estimates | Use of estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the reporting date, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. The more significant estimates made by management relate to fair value estimates for assets and liabilities acquired in business combinations; estimates for accrued liabilities for environmental cleanup, bodily injury and insurance claims; estimates for commitments and contingencies; and estimates for the realizability of deferred tax assets, the tax receivable agreement obligation, inventory reserves, allowance for doubtful accounts and impairment of goodwill and long-lived assets. Certain accounting matters that generally require consideration of forecasted financial information were assessed in light of the impact from the coronavirus disease ("COVID-19") pandemic. The accounting matters assessed included, but were not limited to, the Company’s allowance for doubtful accounts, inventory reserves, goodwill impairment, impairment of property and equipment and valuation allowances for tax assets. While the assessments resulted in no material impacts to the Company’s condensed consolidated financial statements as of and for the six months ended June 30, 2021, the Company believes the full impact of the COVID-19 outbreak remains uncertain and will continue to assess if ongoing developments related to the outbreak may cause future material impacts to its consolidated financial statements.
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Credit Losses | Credit Losses Trade accounts receivable. The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The Company's exposure to credit losses may increase if one or more of its customers are adversely affected by changes in laws or other government recommendations or mandates, economic pressures or uncertainty associated with local or global economic recessions, disruption or other impacts associated with the COVID-19 pandemic, or other customer-specific factors. Although the Company has historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade receivables as customers are impacted by the COVID-19 pandemic.
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Recent Accounting Guidance Adopted | Recent Accounting Guidance Adopted In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in the ASU provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to reference rate reform. The guidance was effective upon issuance and generally can be applied through December 31, 2022 and has not had any material impact to the Company's condensed consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The new guidance simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. The Company adopted this ASU on January 1, 2021 on a prospective basis, which did not have a material impact on the Company's condensed consolidated financial statements.
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Receivables, net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of receivables, net and allowance for doubtful accounts | Receivables consist of the following (in thousands):
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Inventories (Tables) |
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | Inventories consist of the following (in thousands):
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Investment in equity method investee (Tables) |
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Company's distribution and earnings and selected financial data from equity investment | The following reflects the Company's distribution and earnings in the equity investment (in thousands):
Selected financial data for CP&P on a 100% basis is as follows (in thousands):
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Property, plant and equipment, net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property, plant and equipment, net | Property, plant and equipment, net, consist of the following (in thousands):
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Goodwill and other intangible assets, net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill by operating segment | The following table summarizes the changes in goodwill by operating segment for the six months ended June 30, 2021 (in thousands):
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Schedule of intangible assets | Intangible assets other than goodwill at June 30, 2021 and December 31, 2020 included the following (in thousands):
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Fair value measurement (Tables) |
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of estimated carrying amount and fair value of financial instruments measured and recorded at fair value on recurring basis | The estimated carrying amount and fair value of the Company’s financial instruments measured and recorded at fair value on a recurring basis are as follows for the dates indicated (in thousands):
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Schedule of carrying and fair value amounts for financial instruments | 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 (in thousands):
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Accrued liabilities (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands):
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Debt and deferred financing costs (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | The Company’s debt consisted of the following (in thousands):
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Schedule of debt redemption price percentage | Furthermore, at any time on or after July 15, 2022, the Company may on any one or more occasions redeem all or part of the Notes at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest on the Notes redeemed, to the applicable date of redemption, if redeemed during the 12-month period beginning on July 15 of the years indicated below, subject to the rights of holders of Notes on a relevant record date to receive interest on an interest payment date occurring on or prior to the redemption date:
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Schedule of maturities of long-term debt | As of June 30, 2021, scheduled maturities of long-term debt were as follows (in thousands).
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Derivatives and hedging (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair values of derivative assets and liabilities in condensed consolidated balance sheets | The following table presents the fair values of derivative assets and liabilities in the condensed consolidated balance sheets (in thousands):
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Schedule of effect of derivative instruments on the condensed consolidated statements of operations | The following table presents the effect of derivative instruments on the condensed consolidated statements of operations (in thousands):
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Earnings per share (Tables) |
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of calculations of basic and diluted earnings per share | The calculations of the basic and diluted EPS for the three and six months ended June 30, 2021 and 2020 are presented below (in thousands, except per share amounts):
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Segment reporting (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of disaggregation of revenue earned from contracts with customers based on reportable segments as well as other financial information attributable to reportable segments | The following tables set forth the disaggregation of revenue earned from contracts with customers based on the Company's reportable segments as well as other financial information attributable to the Company's reportable segments for the three and six months ended June 30, 2021 and 2020 (in thousands):
The Company has an investment in an equity method investee included in the Drainage Pipe & Products segment for which earnings from equity method investee were $3.6 million, $6.2 million, $3.1 million and $5.9 million for the three and six months ended June 30, 2021 and June 30, 2020, respectively, and with the following balances (in thousands):
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Schedule of long-lived assets by geographic areas | Disaggregated revenue by geographic location is provided in the tables below. The Company has operations in the United States, Canada and Mexico. The economic characteristics of the Company's customers do not significantly vary across geographic locations or product lines. The Company has both revenues and long-lived assets in each country; and those assets and revenues are recorded within geographic location as follows (in thousands):
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Schedule of disaggregation of revenue by geographic areas |
|
Summary of significant accounting policies (Details) - Customer Concentration Risk - Individual Customer - Water Pipe & Products |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
|
Sales Revenue, Net | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 20.00% | 15.00% | |
Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 20.00% | 16.00% |
Mergers and dispositions (Details) - Quikrete Merger Agreement $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Feb. 19, 2021
USD ($)
extension
$ / shares
|
Jun. 30, 2021
USD ($)
|
Jun. 30, 2021
USD ($)
|
|
Business Acquisition [Line Items] | |||
Cash price per share (in dollars per share) | $ / shares | $ 24.00 | ||
Period to on which date the Company will mail the Information Statement to stockholders | 20 days | ||
EBITDA amount (more than) | $ 80.0 | ||
Number of extension periods | extension | 2 | ||
Extension periods | 60 days | ||
Termination fee payable to Parent | $ 50.0 | ||
Reverse termination fee payable from the Parent to the Company | $ 85.0 | ||
Transaction costs | $ 1.9 | $ 4.9 |
Receivables, net (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total receivables | $ 310,793 | $ 229,045 |
Less: Allowance for doubtful accounts | (1,738) | (1,097) |
Receivables, net | 309,055 | 227,948 |
Trade receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total receivables | 292,685 | 195,997 |
Amounts billed but not yet paid under retainage provisions | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total receivables | 2,690 | 4,022 |
Other receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total receivables | $ 15,418 | $ 29,026 |
Inventories (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished goods | $ 170,243 | $ 145,872 |
Raw materials | 95,293 | 76,322 |
Work in process | 772 | 734 |
Total inventories | $ 266,308 | $ 222,928 |
Investment in equity method investee - Narrative (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Schedule of Equity Method Investments [Line Items] | ||
Investment in equity method investee | $ 49,946 | $ 48,285 |
Drainage Pipe & Products | ||
Schedule of Equity Method Investments [Line Items] | ||
Investment in equity method investee | $ 49,946 | $ 48,285 |
CP&P | Drainage Pipe & Products | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investment, ownership percentage | 50.00% | |
Investment in equity method investee | $ 49,900 | |
Company's share of the underlying equity net assets of the investee | $ 12,900 |
Investment in equity method investee - Company's Distribution and Earnings in Equity Method Investment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Schedule of Equity Method Investments [Line Items] | ||||
Distribution received from CP&P | $ (4,500) | $ (4,500) | ||
Share of earnings in CP&P | $ 3,570 | $ 3,126 | 6,161 | 5,925 |
CP&P | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Distribution received from CP&P | (3,000) | (2,900) | (4,500) | (4,500) |
Share of earnings in CP&P | 3,589 | 3,146 | 6,197 | 5,961 |
Amortization of excess fair value of investment | $ (18) | $ (18) | $ (36) | $ (36) |
Investment in equity method investee - Selected Financial Data from the Investee (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2021 |
Mar. 31, 2021 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Schedule of Equity Method Investments [Line Items] | ||||||
Net sales | $ 492,800 | $ 426,186 | $ 860,914 | $ 757,062 | ||
Gross profit | 119,572 | 105,579 | 201,836 | 164,321 | ||
Income from operations | 63,634 | 51,030 | 102,564 | 55,038 | ||
Net income | 36,065 | $ 18,676 | 27,115 | $ (14,066) | 54,741 | 13,049 |
CP&P | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Net sales | 46,701 | 40,427 | 83,956 | 79,519 | ||
Gross profit | 12,130 | 10,933 | 21,780 | 21,470 | ||
Income from operations | 7,181 | 6,259 | 12,154 | 11,879 | ||
Net income | $ 7,117 | $ 6,209 | $ 12,025 | $ 11,767 |
Property, plant and equipment, net (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
|
Property, Plant and Equipment [Line Items] | |||||
Total property, plant and equipment | $ 697,415 | $ 697,415 | $ 683,393 | ||
Less: accumulated depreciation | (253,364) | (253,364) | (232,311) | ||
Property, plant and equipment, net | 444,051 | 444,051 | 451,082 | ||
Depreciation expense | 12,200 | $ 12,100 | 24,400 | $ 24,300 | |
Machinery and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, plant and equipment | 428,145 | 428,145 | 410,436 | ||
Land, buildings and improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, plant and equipment | 234,476 | 234,476 | 234,251 | ||
Other equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, plant and equipment | 13,291 | 13,291 | 12,633 | ||
Construction-in-progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, plant and equipment | $ 21,503 | $ 21,503 | $ 26,073 |
Goodwill and other intangible assets, net - Goodwill by Operating Segment (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2021
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at December 31, 2020 | $ 509,127 |
Foreign currency and other adjustments | 401 |
Balance at June 30, 2021 | 509,528 |
Drainage Pipe & Products | |
Goodwill [Roll Forward] | |
Balance at December 31, 2020 | 190,767 |
Foreign currency and other adjustments | 401 |
Balance at June 30, 2021 | 191,168 |
Water Pipe & Products | |
Goodwill [Roll Forward] | |
Balance at December 31, 2020 | 318,360 |
Foreign currency and other adjustments | 0 |
Balance at June 30, 2021 | $ 318,360 |
Goodwill and other intangible assets, net - Intangible Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | $ 84,818 | $ 101,409 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 58,566 | 70,503 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 12,754 | 14,935 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 4,009 | 5,029 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 3,736 | 4,962 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 5,420 | 5,606 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | $ 333 | $ 374 |
Goodwill and other intangible assets, net - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Selling, general and administrative expenses | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 8.3 | $ 10.3 | $ 16.6 | $ 20.6 |
Fair value measurement - Estimated Carrying Amount and Fair Value of Financial Instruments Measured and Recorded at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Liabilities: | ||
Derivative liability | $ 367 | $ 572 |
Fair Value, Measurements, Recurring | ||
Liabilities: | ||
Derivative liability | 367 | 572 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Liabilities: | ||
Derivative liability | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Liabilities: | ||
Derivative liability | 367 | 572 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Liabilities: | ||
Derivative liability | $ 0 | $ 0 |
Accrued liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued payroll and employee benefits | $ 48,882 | $ 49,434 |
Short-term finance leases | 17,817 | 17,009 |
Short-term operating leases | 7,885 | 7,448 |
Accrued taxes | 16,134 | 13,642 |
Warranty | 3,877 | 7,069 |
Accrued rebates | 12,810 | 11,649 |
Other miscellaneous accrued liabilities | 8,242 | 9,442 |
Total accrued liabilities | $ 115,647 | $ 115,693 |
Debt and deferred financing costs - Schedule of Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 913,209 | $ 900,021 |
Less: current portion debt | (12,510) | (12,510) |
Total long-term debt | 900,699 | 887,511 |
ABL Credit Agreement | Revolver | ||
Debt Instrument [Line Items] | ||
Debt issuance costs and original issuance discount | 2,685 | |
Total debt | 17,315 | 0 |
Senior Notes | Term Loan | ||
Debt Instrument [Line Items] | ||
Debt issuance costs and original issuance discount | 5,630 | 6,889 |
Total debt | 402,982 | 407,978 |
Senior Notes | Senior Secured Notes | ||
Debt Instrument [Line Items] | ||
Debt issuance costs and original issuance discount | 7,088 | 7,957 |
Total debt | $ 492,912 | $ 492,043 |
Debt and deferred financing costs - Scheduled Maturities of Long-term Debt (Details) $ in Thousands |
Jun. 30, 2021
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
2021 | $ 6,255 |
2022 | 12,510 |
2023 | 389,847 |
2024 | 0 |
2025 | 520,000 |
Total | 928,612 |
Term Loan | |
Debt Instrument [Line Items] | |
2021 | 6,255 |
2022 | 12,510 |
2023 | 389,847 |
2024 | 0 |
2025 | 0 |
Total | 408,612 |
Notes | |
Debt Instrument [Line Items] | |
2021 | 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
2025 | 500,000 |
Total | 500,000 |
Revolver | |
Debt Instrument [Line Items] | |
2021 | 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
2025 | 20,000 |
Total | $ 20,000 |
Derivatives and hedging - Narrative (Details) - Interest Rate Swap - USD ($) |
Mar. 30, 2020 |
Feb. 09, 2017 |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|---|
Derivative [Line Items] | ||||
Derivative liability, notional amount | $ 400,000,000 | $ 400,000,000 | ||
Derivative asset, notional amount | $ 0 | $ 0 | ||
Not Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Derivative liability, notional amount | $ 400,000,000 | |||
Derivative, term of contract | 30 months | 3 years | ||
Derivative asset, notional amount | $ 525,000,000 | |||
Not Designated as Hedging Instrument | LIBOR | ||||
Derivative [Line Items] | ||||
Derivative, fixed interest rate to pay interest | 1.08% | 1.52% | ||
Derivative, floating interest rate received (minimum) | 1.00% |
Derivatives and hedging - Schedule of Fair Values of Derivative Assets and Liabilities in Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Derivative Assets | ||
Fair Value | $ 0 | $ 0 |
Less: Legally enforceable master netting agreements | 0 | 0 |
Total derivatives, net | 0 | 0 |
Derivative Liabilities | ||
Fair Value | 367 | 572 |
Less: Legally enforceable master netting agreements | 0 | 0 |
Total derivatives, net | 367 | 572 |
Interest rate swaps | ||
Derivative Assets | ||
Notional Amount | 0 | 0 |
Fair Value | 0 | 0 |
Derivative Liabilities | ||
Notional Amount | 400,000 | 400,000 |
Fair Value | $ 367 | $ 572 |
Derivatives and hedging - Schedule of Effect of Derivative Instruments on Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Derivatives not designated as hedges | Interest rate swaps | Interest expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on derivatives not designated as hedges included in interest expense | $ 61 | $ (174) | $ 204 | $ (921) |
Leases (Details) |
Jun. 30, 2021
renewal_option
|
---|---|
Lessee, Lease, Description [Line Items] | |
Initial term of finance leases | 25 years |
Number of renewal options of finance leases | 1 |
Renewal term of finance leases | 10 years |
Renewal term of operating leases (up to) | 10 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining term of operating leases | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining term of operating leases | 25 years |
Commitments and contingencies (Details) |
6 Months Ended | ||
---|---|---|---|
Apr. 30, 2021
claim
|
Jun. 30, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
|
Threatened Litigation | Merger-Related Litigation | |||
Loss Contingencies [Line Items] | |||
Number of cases voluntarily dismissed by the plaintiff | claim | 3 | ||
LTIP | |||
Loss Contingencies [Line Items] | |||
Amount accrued for long-term incentive plan | $ 0 | ||
Payments for long-term incentive plan | $ 0 | ||
Lone Star | Affiliated Entities | |||
Loss Contingencies [Line Items] | |||
Certain covered tax benefits paid by related party, percentage | 85.00% | ||
Accrued liabilities related to tax receivable agreement | $ 64,200,000 | $ 64,200,000 | |
Payments of TRA agreement | $ 0 |
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2021 |
Mar. 31, 2021 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Earnings Per Share [Abstract] | ||||||
Net income | $ 36,065 | $ 18,676 | $ 27,115 | $ (14,066) | $ 54,741 | $ 13,049 |
Less: Earnings allocated to unvested restricted stock awards | 0 | 22 | 0 | 12 | ||
Earnings available to common shareholders | $ 36,065 | $ 27,093 | $ 54,741 | $ 13,037 | ||
Common stock: | ||||||
Weighted average basic shares outstanding (in shares) | 66,687 | 65,093 | 66,463 | 64,948 | ||
Effect of dilutive securities (in shares) | 2,824 | 2,098 | 3,012 | 2,510 | ||
Weighted average diluted shares outstanding (in shares) | 69,511 | 67,191 | 69,475 | 67,458 | ||
Basic earnings per share: | ||||||
Net income (in dollars per share) | $ 0.54 | $ 0.42 | $ 0.82 | $ 0.20 | ||
Diluted earnings per share: | ||||||
Net income (in dollars per share) | $ 0.52 | $ 0.40 | $ 0.79 | $ 0.19 |
Earnings per share - Narrative (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Stock Options and Restricted Shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 1,031,685 | 154 | 758,409 |
Income taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 12,065 | $ 7,455 | $ 16,564 | $ 7,533 |
Related party transactions (Details) - Affiliated Entities - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
|
CP&P | ||
Related Party Transaction [Line Items] | ||
Sales of products to related party | $ 0.4 | $ 0.9 |
Purchased goods and services from related party | $ 0.1 | $ 0.6 |
Lone Star | ||
Related Party Transaction [Line Items] | ||
Payment of certain covered tax benefits buy the Company, percentage | 85.00% | |
Master Builders Solutions US, LLC | ||
Related Party Transaction [Line Items] | ||
Purchased goods and services from related party | $ 0.4 |
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