INDIANA | 35-1057796 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
107 WEST FRANKLIN STREET, P.O. Box 638, ELKHART, IN | 46515 |
(Address of principal executive offices) | (ZIP Code) |
Large accelerated filer [X] | Accelerated filer [ ] | Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ ] | Emerging growth company [ ] |
Page No. | |
PART I. FINANCIAL INFORMATION | |
ITEM 1. FINANCIAL STATEMENTS (Unaudited) | |
Condensed Consolidated Statements of Financial Position July 1, 2018 and December 31, 2017 | |
Condensed Consolidated Statements of Income Second Quarter and Six Months Ended July 1, 2018 and June 25, 2017 | |
Condensed Consolidated Statements of Cash Flows Six Months Ended July 1, 2018 and June 25, 2017 | |
Notes to 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 1A. RISK FACTORS | |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | |
ITEM 6. EXHIBITS | |
SIGNATURES |
As of | ||||||||
(thousands) | July 1, 2018 | Dec. 31, 2017 | ||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 104 | $ | 2,767 | ||||
Trade receivables, net | 131,691 | 77,784 | ||||||
Inventories | 235,127 | 175,270 | ||||||
Prepaid expenses and other | 17,766 | 18,132 | ||||||
Total current assets | 384,688 | 273,953 | ||||||
Property, plant and equipment, net | 158,515 | 118,486 | ||||||
Goodwill | 255,874 | 208,044 | ||||||
Intangible assets, net | 386,540 | 263,467 | ||||||
Deferred financing costs, net | 4,025 | 2,184 | ||||||
Other non-current assets | 478 | 510 | ||||||
TOTAL ASSETS | $ | 1,190,120 | $ | 866,644 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Current maturities of long-term debt | $ | 6,250 | $ | 15,766 | ||||
Accounts payable | 108,702 | 84,109 | ||||||
Accrued liabilities | 57,661 | 36,550 | ||||||
Total current liabilities | 172,613 | 136,425 | ||||||
Long-term debt, less current maturities, net | 576,298 | 338,111 | ||||||
Deferred tax liabilities, net | 21,342 | 13,640 | ||||||
Other long-term liabilities | 16,247 | 7,783 | ||||||
TOTAL LIABILITIES | 786,500 | 495,959 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock | 161,648 | 163,196 | ||||||
Additional paid-in-capital | 25,552 | 8,243 | ||||||
Accumulated other comprehensive income | 63 | 66 | ||||||
Retained earnings | 216,357 | 199,180 | ||||||
TOTAL SHAREHOLDERS’ EQUITY | 403,620 | 370,685 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,190,120 | $ | 866,644 |
Second Quarter Ended | Six Months Ended | |||||||||||||||
(thousands except per share data) | July 1, 2018 | June 25, 2017 | July 1, 2018 | June 25, 2017 | ||||||||||||
NET SALES | $ | 604,879 | $ | 407,145 | $ | 1,156,711 | $ | 752,572 | ||||||||
Cost of goods sold | 490,087 | 335,645 | 944,165 | 623,523 | ||||||||||||
GROSS PROFIT | 114,792 | 71,500 | 212,546 | 129,049 | ||||||||||||
Operating Expenses: | ||||||||||||||||
Warehouse and delivery | 18,723 | 11,083 | 35,751 | 21,426 | ||||||||||||
Selling, general and administrative | 33,874 | 21,893 | 65,715 | 40,999 | ||||||||||||
Amortization of intangible assets | 9,140 | 4,817 | 16,267 | 9,002 | ||||||||||||
Total operating expenses | 61,737 | 37,793 | 117,733 | 71,427 | ||||||||||||
OPERATING INCOME | 53,055 | 33,707 | 94,813 | 57,622 | ||||||||||||
Interest expense, net | 6,264 | 2,010 | 10,642 | 4,024 | ||||||||||||
Income before income taxes | 46,791 | 31,697 | 84,171 | 53,598 | ||||||||||||
Income taxes | 11,931 | 10,437 | 19,243 | 14,871 | ||||||||||||
NET INCOME | $ | 34,860 | $ | 21,260 | $ | 64,928 | $ | 38,727 | ||||||||
BASIC NET INCOME PER COMMON SHARE (1) | $ | 1.44 | $ | 0.86 | $ | 2.65 | $ | 1.63 | ||||||||
DILUTED NET INCOME PER COMMON SHARE (1) | $ | 1.42 | $ | 0.85 | $ | 2.62 | $ | 1.60 | ||||||||
Weighted average shares outstanding - Basic (1) | 24,202 | 24,600 | 24,472 | 23,759 | ||||||||||||
Weighted average shares outstanding - Diluted (1) | 24,515 | 24,990 | 24,812 | 24,185 | ||||||||||||
(1) Net income per common share and weighted average shares outstanding, on both a basic and diluted basis, for the second quarter and six months ended June 25, 2017, have been retroactively adjusted to reflect the impact of the three-for-two stock split paid on December 8, 2017. See accompanying Notes to Condensed Consolidated Financial Statements. |
Six Months Ended | ||||||||
(thousands) | July 1, 2018 | June 25, 2017 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | 64,928 | $ | 38,727 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 25,439 | 15,778 | ||||||
Stock-based compensation expense | 7,369 | 5,117 | ||||||
Amortization of convertible notes debt discount | 2,865 | — | ||||||
Deferred income taxes | (1,020 | ) | (1,655 | ) | ||||
Other non-cash items | (542 | ) | 340 | |||||
Change in operating assets and liabilities, net of acquisitions of businesses: | ||||||||
Trade receivables | (29,360 | ) | (52,899 | ) | ||||
Inventories | (9,578 | ) | (5,432 | ) | ||||
Prepaid expenses and other assets | 5,983 | 1,790 | ||||||
Accounts payable, accrued liabilities and other | 25,133 | 17,953 | ||||||
Net cash provided by operating activities | 91,217 | 19,719 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Capital expenditures | (14,067 | ) | (8,774 | ) | ||||
Business acquisitions | (264,436 | ) | (83,604 | ) | ||||
Other investing activities | 80 | 44 | ||||||
Net cash used in investing activities | (278,423 | ) | (92,334 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Term debt borrowings | 36,981 | — | ||||||
Term debt repayments | (5,191 | ) | (3,941 | ) | ||||
Borrowings on revolver | 782,858 | 226,810 | ||||||
Repayments on revolver | (725,355 | ) | (235,312 | ) | ||||
Stock repurchases under buyback program | (54,085 | ) | — | |||||
Proceeds from convertible notes offering | 172,500 | — | ||||||
Purchase of convertible notes hedges | (31,481 | ) | — | |||||
Proceeds from sale of warrants | 18,147 | — | ||||||
Payments related to vesting of stock-based awards, net of shares tendered for taxes | (2,588 | ) | (3,025 | ) | ||||
Proceeds from public offering of common stock, net of expenses | — | 93,312 | ||||||
Payment of deferred financing/debt issuance costs | (7,269 | ) | (995 | ) | ||||
Other financing activities | 26 | 923 | ||||||
Net cash provided by financing activities | 184,543 | 77,772 | ||||||
Increase (decrease) in cash and cash equivalents | (2,663 | ) | 5,157 | |||||
Cash and cash equivalents at beginning of year | 2,767 | 6,449 | ||||||
Cash and cash equivalents at end of period | $ | 104 | $ | 11,606 |
1. | BASIS OF PRESENTATION |
2. | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
3. | REVENUE RECOGNITION |
Second Quarter Ended July 1, 2018 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total Reportable Operating Segments | |||||||||
Market type: | ||||||||||||
Recreational Vehicle | $ | 291,783 | $ | 103,379 | $ | 395,162 | ||||||
Manufactured Housing | 43,663 | 26,671 | 70,334 | |||||||||
Industrial | 64,785 | 9,776 | 74,561 | |||||||||
Marine | 62,731 | 2,091 | 64,822 | |||||||||
Total | $ | 462,962 | $ | 141,917 | $ | 604,879 |
Six Months Ended July 1, 2018 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total Reportable Operating Segments | |||||||||
Market type: | ||||||||||||
Recreational Vehicle | $ | 585,008 | $ | 188,445 | $ | 773,453 | ||||||
Manufactured Housing | 82,978 | 49,612 | 132,590 | |||||||||
Industrial | 123,461 | 16,795 | 140,256 | |||||||||
Marine | 107,427 | 2,985 | 110,412 | |||||||||
Total | $ | 898,874 | $ | 257,837 | $ | 1,156,711 |
(thousands) | July 1, 2018 | At Adoption | |||||
Receivables, which are included in trade receivables, net | $ | 127,248 | $ | 75,926 | |||
Contract liabilities | 1,434 | 1,310 |
(thousands) | Contract Liabilities | |
Revenue recognized that was included in the contract liability balance at the beginning of the period | $(654) | |
Increases due to cash received, excluding amounts recognized as revenue during the period | 602 | |
Accrued customer deposits related to business combinations | 176 |
4. | INVENTORIES |
(thousands) | July 1, 2018 | Dec. 31, 2017 | ||||||
Raw materials | $ | 124,970 | $ | 96,846 | ||||
Work in process | 13,596 | 10,720 | ||||||
Finished goods | 28,179 | 22,936 | ||||||
Less: reserve for inventory obsolescence | (4,269 | ) | (3,087 | ) | ||||
Total manufactured goods, net | 162,476 | 127,415 | ||||||
Materials purchased for resale (distribution products) | 74,664 | 49,392 | ||||||
Less: reserve for inventory obsolescence | (2,013 | ) | (1,537 | ) | ||||
Total materials purchased for resale (distribution products), net | 72,651 | 47,855 | ||||||
Total inventories | $ | 235,127 | $ | 175,270 |
5. | GOODWILL AND INTANGIBLE ASSETS |
(thousands) | Manufacturing | Distribution | Total | |||||||||
Balance - December 31, 2017 | $ | 179,471 | $ | 28,573 | $ | 208,044 | ||||||
Acquisitions | 38,787 | 10,744 | 49,531 | |||||||||
Adjustment to prior year preliminary purchase price allocation | (1,722 | ) | 21 | (1,701 | ) | |||||||
Balance - July 1, 2018 | $ | 216,536 | $ | 39,338 | $ | 255,874 |
(thousands) | July 1, 2018 | Weighted Average Useful Life (in years) | Dec. 31, 2017 | Weighted Average Useful Life (in years) | ||||||||
Customer relationships | $ | 354,714 | 10.1 | $ | 239,053 | 10.2 | ||||||
Non-compete agreements | 20,816 | 4.6 | 15,564 | 4.2 | ||||||||
Trademarks | 78,875 | Indefinite | 60,448 | Indefinite | ||||||||
454,405 | 315,065 | |||||||||||
Less: accumulated amortization | (67,865 | ) | (51,598 | ) | ||||||||
Intangible assets, net | $ | 386,540 | $ | 263,467 |
(thousands) | Manufacturing | Distribution | Total | |||||||||
Balance - December 31, 2017 | $ | 220,540 | $ | 42,927 | $ | 263,467 | ||||||
Acquisitions | 101,085 | 36,200 | 137,285 | |||||||||
Amortization | (12,702 | ) | (3,565 | ) | (16,267 | ) | ||||||
Adjustment to prior year preliminary purchase price allocation | 2,070 | (15 | ) | 2,055 | ||||||||
Balance - July 1, 2018 | $ | 310,993 | $ | 75,547 | $ | 386,540 |
6. | ACQUISITIONS |
(thousands) | Trade receivables | Inventories | Property, plant and equipment | Prepaid expenses & other | Intangible assets | Goodwill | Less: Accounts payable and accrued liabilities | Less: Deferred tax liability | Total net assets acquired | ||||||||||||||||||
2018 | |||||||||||||||||||||||||||
MMC (1) | $ | 1,474 | $ | 2,324 | $ | 3,000 | $ | — | $ | 10,626 | $ | 4,618 | $ | 789 | $ | — | $ | 21,253 | |||||||||
AMC | 3,966 | 5,631 | 4,000 | 39 | 5,350 | 1,243 | 2,462 | — | 17,767 | ||||||||||||||||||
IMP (2) | 1,962 | 4,286 | 1,100 | 13 | 17,997 | 3,659 | 2,899 | — | 26,118 | ||||||||||||||||||
Collins | 2,964 | 9,922 | 1,125 | 19 | 22,000 | 6,644 | 2,667 | — | 40,007 | ||||||||||||||||||
Dehco | 4,680 | 16,802 | 14,175 | 2,101 | 14,200 | 4,100 | 2,824 | — | 53,234 | ||||||||||||||||||
Dowco | 4,592 | 4,410 | 5,910 | 1,869 | 34,379 | 10,557 | 3,991 | — | 57,726 | ||||||||||||||||||
MAC | 2,804 | 6,606 | 8,000 | 1,613 | 32,733 | 18,710 | 4,487 | 8,373 | 57,606 | ||||||||||||||||||
2018 Totals | $ | 22,442 | $ | 49,981 | $ | 37,310 | $ | 5,654 | $ | 137,285 | $ | 49,531 | $ | 20,119 | $ | 8,373 | $ | 273,711 | |||||||||
2017 | |||||||||||||||||||||||||||
Medallion | $ | 2,233 | $ | 2,605 | $ | 1,713 | $ | 118 | $ | 3,100 | $ | 1,342 | $ | 1,200 | $ | — | $ | 9,911 | |||||||||
LPE | 5,848 | 5,162 | 9,225 | 337 | 33,275 | 39,945 | 6,358 | 14,140 | 73,294 | ||||||||||||||||||
Wire Design | 615 | 437 | 555 | 21 | 5,590 | 4,052 | 491 | — | 10,779 | ||||||||||||||||||
Baymont (3) | — | 1,169 | 1,750 | — | 3,166 | 1,232 | 62 | — | 7,255 | ||||||||||||||||||
Indiana Transport | 6,379 | — | 3,550 | 1,309 | 31,375 | 19,293 | 3,116 | — | 58,790 | ||||||||||||||||||
LMI | 11,222 | 9,086 | 4,000 | 994 | 36,110 | 27,937 | 8,470 | — | 80,879 | ||||||||||||||||||
Nickell | 1,762 | 1,550 | 933 | — | 6,179 | 2,852 | 681 | — | 12,595 | ||||||||||||||||||
Other | — | 250 | 2,508 | — | — | 828 | 124 | — | 3,462 | ||||||||||||||||||
2017 Totals | $ | 28,059 | $ | 20,259 | $ | 24,234 | $ | 2,779 | $ | 118,795 | $ | 97,481 | $ | 20,502 | $ | 14,140 | $ | 256,965 |
Second Quarter Ended | Six Months Ended | |||||||||||||||
(thousands except per share data) | July 1, 2018 | June 25, 2017 | July 1, 2018 | June 25, 2017 | ||||||||||||
Revenue | $ | 632,153 | $ | 550,758 | $ | 1,258,668 | $ | 1,040,399 | ||||||||
Net income | 37,126 | 28,650 | 69,235 | 51,686 | ||||||||||||
Basic net income per common share | 1.53 | 1.16 | 2.83 | 2.18 | ||||||||||||
Diluted net income per common share | 1.51 | 1.15 | 2.79 | 2.14 |
7. | STOCK-BASED COMPENSATION |
8. | NET INCOME PER COMMON SHARE |
Second Quarter Ended | Six Months Ended | |||||||||||||||
(thousands except per share data) | July 1, 2018 | June 25, 2017 | July 1, 2018 | June 25, 2017 | ||||||||||||
Net income for basic and diluted per share calculation | $ | 34,860 | $ | 21,260 | $ | 64,928 | $ | 38,727 | ||||||||
Weighted average common shares outstanding - basic | 24,202 | 24,600 | 24,472 | 23,759 | ||||||||||||
Effect of potentially dilutive securities | 313 | 390 | 340 | 426 | ||||||||||||
Weighted average common shares outstanding - diluted | 24,515 | 24,990 | 24,812 | 24,185 | ||||||||||||
Basic net income per common share | $ | 1.44 | $ | 0.86 | $ | 2.65 | $ | 1.63 | ||||||||
Diluted net income per common share | $ | 1.42 | $ | 0.85 | $ | 2.62 | $ | 1.60 |
9. | DEBT |
(thousands) | July 1, 2018 | Dec. 31, 2017 | ||||||
Long-term debt: | ||||||||
Revolver | $ | 344,900 | $ | 287,397 | ||||
Term Loan | 98,750 | 66,960 | ||||||
Convertible Notes | 172,500 | — | ||||||
Total long-term debt | 616,150 | 354,357 | ||||||
Less: Convertible Notes debt discount | (33,105 | ) | — | |||||
Less: current maturities of long-term debt | (6,250 | ) | (15,766 | ) | ||||
Less: net deferred financing costs related to Term Loan | (497 | ) | (480 | ) | ||||
Total long-term debt, less current maturities, net | $ | 576,298 | $ | 338,111 |
• | The 2018 Term Loan will be repaid in consecutive quarterly installments on the last business day of each of March, June, September and December in the following amounts: (i) beginning June 30, 2018, through and |
• | The interest rates for borrowings under the 2018 Revolver and the 2018 Term Loan are the Base Rate plus the Applicable Margin or LIBOR plus the Applicable Margin, with a fee payable by the Company on unused but committed portions of the Revolver; |
• | The 2018 Revolver includes a sub-limit up to $10.0 million for same day advances (“Swing Line”) which shall bear interest based upon the Base Rate plus the Applicable Margin; |
• | Up to $10.0 million of the 2018 Revolver is available as a sub facility for the issuance of standby letters of credit, which are subject to certain expiration dates; |
• | The financial covenants include requirements as to a consolidated total leverage ratio and a consolidated fixed charge coverage ratio, and other covenants include limitations and restrictions concerning permitted acquisitions, investments, sales of assets, liens on assets, dividends and other payments; and |
• | Customary prepayment provisions, representations, warranties and covenants, and events of default. |
Required | Actual | |||||
Consolidated total leverage ratio (12-month period) | 3.00 | 2.22 | ||||
Consolidated fixed charge coverage ratio (12-month period) | 1.50 | 3.74 |
10. | DERIVATIVE FINANCIAL INSTRUMENTS |
11. | FAIR VALUE MEASUREMENTS |
12. | INCOME TAXES |
13. | SEGMENT INFORMATION |
Second Quarter Ended July 1, 2018 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total | |||||||||
Net outside sales | $ | 462,962 | $ | 141,917 | $ | 604,879 | ||||||
Intersegment sales | 9,912 | 1,075 | 10,987 | |||||||||
Total sales | 472,874 | 142,992 | 615,866 | |||||||||
Operating income | 64,989 | 10,196 | 75,185 |
Second Quarter Ended June 25, 2017 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total | |||||||||
Net outside sales | $ | 336,737 | $ | 70,408 | $ | 407,145 | ||||||
Intersegment sales | 7,421 | 652 | 8,073 | |||||||||
Total sales | 344,158 | 71,060 | 415,218 | |||||||||
Operating income | 41,191 | 4,468 | 45,659 |
Six Months Ended July 1, 2018 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total | |||||||||
Net outside sales | $ | 898,874 | $ | 257,837 | $ | 1,156,711 | ||||||
Intersegment sales | 19,282 | 1,743 | 21,025 | |||||||||
Total sales | 918,156 | 259,580 | 1,177,736 | |||||||||
Operating income | 117,912 | 17,486 | 135,398 |
Six Months Ended June 25, 2017 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total | |||||||||
Net outside sales | $ | 621,243 | $ | 131,329 | $ | 752,572 | ||||||
Intersegment sales | 14,405 | 1,252 | 15,657 | |||||||||
Total sales | 635,648 | 132,581 | 768,229 | |||||||||
Operating income | 72,260 | 8,178 | 80,438 |
Second Quarter Ended | Six Months Ended | |||||||||||||||
(thousands) | July 1, 2018 | June 25, 2017 | July 1, 2018 | June 25, 2017 | ||||||||||||
Operating income for reportable segments | $ | 75,185 | $ | 45,659 | $ | 135,398 | $ | 80,438 | ||||||||
Unallocated corporate expenses | (12,990 | ) | (7,135 | ) | (24,318 | ) | (13,814 | ) | ||||||||
Amortization | (9,140 | ) | (4,817 | ) | (16,267 | ) | (9,002 | ) | ||||||||
Consolidated operating income | $ | 53,055 | $ | 33,707 | $ | 94,813 | $ | 57,622 |
14. | STOCK REPURCHASE PROGRAMS |
15. | RELATED PARTY TRANSACTIONS |
• | Attractive industry demographic trends with younger buyers entering the market and baby boomers reaching retirement age; |
• | Readily available financing and improving consumer credit; |
• | New and innovative products coming to market; |
• | Increased strength in the overall economic environment, including lower unemployment rates, improving trends in wages, improving consumer confidence levels, and equity market conditions; and |
• | The value of the travel and leisure lifestyle related to spending quality time with families. |
• | Reduced multi-family housing capacity; |
• | Increasing prices of new, "stick-built" homes; and |
• | Improving credit and financing conditions. |
Second Quarter Ended | Six Months Ended | |||||||||||
July 1, 2018 | June 25, 2017 | July 1, 2018 | June 25, 2017 | |||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||
Cost of goods sold | 81.0 | 82.4 | 81.6 | 82.9 | ||||||||
Gross profit | 19.0 | 17.6 | 18.4 | 17.1 | ||||||||
Warehouse and delivery expenses | 3.1 | 2.7 | 3.1 | 2.8 | ||||||||
Selling, general and administrative expenses | 5.6 | 5.4 | 5.7 | 5.4 | ||||||||
Amortization of intangible assets | 1.5 | 1.2 | 1.4 | 1.2 | ||||||||
Operating income | 8.8 | 8.3 | 8.2 | 7.7 | ||||||||
Interest expense, net | 1.0 | 0.5 | 0.9 | 0.5 | ||||||||
Income taxes | 2.0 | 2.6 | 1.7 | 2.0 | ||||||||
Net income | 5.8 | 5.2 | 5.6 | 5.2 |
Second Quarter Ended | Six Months Ended | |||||||||||||||
(thousands) | July 1, 2018 | June 25, 2017 | July 1, 2018 | June 25, 2017 | ||||||||||||
Sales | ||||||||||||||||
Manufacturing | $ | 472,874 | $ | 344,158 | $ | 918,156 | $ | 635,648 | ||||||||
Distribution | 142,992 | 71,060 | 259,580 | 132,581 | ||||||||||||
Gross Profit | ||||||||||||||||
Manufacturing | 95,222 | 60,859 | 176,809 | 108,918 | ||||||||||||
Distribution | 23,820 | 11,325 | 41,694 | 21,808 | ||||||||||||
Operating Income | ||||||||||||||||
Manufacturing | 64,989 | 41,191 | 117,912 | 72,260 | ||||||||||||
Distribution | 10,196 | 4,468 | 17,486 | 8,178 |
Required | Actual | |||||
Consolidated total leverage ratio (12-month period) | 3.00 | 2.22 | ||||
Consolidated fixed charge coverage ratio (12-month period) | 1.50 | 3.74 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share (2) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3) | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program (3) | ||||||||||
April 2 - April 29, 2018 | 499,926 | $ | 56.07 | 499,600 | $ | 8,516,662 | ||||||||
April 30 - June 3, 2018 | 58,300 | 59.51 | 58,300 | 46,530,349 | ||||||||||
June 4 - July 1, 2018 | 157,156 | 58.27 | 156,700 | 37,399,642 | ||||||||||
715,382 | 714,600 |
ITEM 6. | EXHIBITS |
Exhibits (1) | Description |
31.1 | |
31.2 | |
32 | |
101 | Interactive Data Files. The following materials are filed electronically with this Quarterly Report on Form 10-Q: |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Schema Document | |
101.CAL | XBRL Taxonomy Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Label Linkbase Document | |
101.PRE | XBRL Taxonomy Presentation Linkbase Document |
PATRICK INDUSTRIES, INC. | ||
(Registrant) | ||
Date: August 9, 2018 | By: | /s/ Todd M. Cleveland |
Todd M. Cleveland | ||
Chief Executive Officer |
Date: August 9, 2018 | By: | /s/ Joshua A. Boone |
Joshua A. Boone | ||
Vice President-Finance and Chief Financial Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Patrick Industries, Inc. (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 9, 2018 | /s/ Todd M. Cleveland |
Todd M. Cleveland Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Patrick Industries, Inc. (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 9, 2018 | /s/ Joshua A. Boone |
Joshua A. Boone | ||
Vice President - Finance and Chief Financial Officer |
Document And Entity Information - shares |
6 Months Ended | |
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Jul. 01, 2018 |
Jul. 27, 2018 |
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Document And Entity Information | ||
Entity Registrant Name | PATRICK INDUSTRIES INC | |
Entity Central Index Key | 0000076605 | |
Trading Symbol | patk | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding (in shares) | 24,531,982 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 01, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
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Jul. 01, 2018
USD ($)
$ / shares
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Jun. 25, 2017
USD ($)
$ / shares
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Jul. 01, 2018
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$ / shares
shares
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Jun. 25, 2017
USD ($)
$ / shares
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Income Statement [Abstract] | ||||||||
NET SALES | $ 604,879 | $ 407,145 | $ 1,156,711 | $ 752,572 | ||||
Cost of goods sold | 490,087 | 335,645 | 944,165 | 623,523 | ||||
GROSS PROFIT | 114,792 | 71,500 | 212,546 | 129,049 | ||||
Operating Expenses: | ||||||||
Warehouse and delivery | 18,723 | 11,083 | 35,751 | 21,426 | ||||
Selling, general and administrative | 33,874 | 21,893 | 65,715 | 40,999 | ||||
Amortization of intangible assets | 9,140 | 4,817 | 16,267 | 9,002 | ||||
Total operating expenses | 61,737 | 37,793 | 117,733 | 71,427 | ||||
OPERATING INCOME | 53,055 | 33,707 | 94,813 | 57,622 | ||||
Interest expense, net | 6,264 | 2,010 | 10,642 | 4,024 | ||||
Income before income taxes | 46,791 | 31,697 | 84,171 | 53,598 | ||||
Income taxes | 11,931 | 10,437 | 19,243 | 14,871 | ||||
NET INCOME | $ 34,860 | $ 21,260 | $ 64,928 | $ 38,727 | ||||
BASIC NET INCOME PER COMMON SHARE (in dollars per share) | $ / shares | $ 1.44 | $ 0.86 | [1] | $ 2.65 | $ 1.63 | [1] | ||
DILUTED NET INCOME PER COMMON SHARE (in dollars per share) | $ / shares | $ 1.42 | $ 0.85 | [1] | $ 2.62 | $ 1.60 | [1] | ||
Weighted average shares outstanding - Basic (in shares) | shares | 24,202 | 24,600 | [1] | 24,472 | 23,759 | [1] | ||
Weighted average shares outstanding - Diluted (in shares) | shares | 24,515 | 24,990 | [1] | 24,812 | 24,185 | [1] | ||
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BASIS OF PRESENTATION |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||
BASIS OF PRESENTATION |
In the opinion of Patrick Industries, Inc. (“Patrick” or the “Company”), the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the Company’s financial position as of July 1, 2018 and December 31, 2017, and its results of operations and cash flows for the three and six months ended July 1, 2018 and June 25, 2017. Patrick’s unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules or regulations. For a description of significant accounting policies used by the Company in the preparation of its consolidated financial statements, please refer to Note 2 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The December 31, 2017 condensed consolidated statement of financial position data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Operating results for the second quarter and six months ended July 1, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018. The number of shares and per share amounts for the second quarter and six months ended June 25, 2017 have been retroactively adjusted to reflect the three-for-two stock split of the Company's common stock, which was effected in the form of a common stock dividend paid on December 8, 2017. In preparation of Patrick’s condensed consolidated financial statements as of and for the second quarter and six months ended July 1, 2018, management evaluated all material subsequent events or transactions that occurred after the balance sheet date through the date of issuance of the Form 10-Q that required recognition or disclosure in the condensed consolidated financial statements. See Note 14 for an event that occurred subsequent to the balance sheet date. |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
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Accounting Policies [Abstract] | |||||||
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard that will require that an entity recognize lease assets and lease liabilities on its balance sheet for leases in excess of one year that were previously classified as operating leases under U.S. GAAP. The standard also requires companies to disclose in the footnotes to the financial statements information about the amount, timing, and uncertainty for the payments made for the lease agreements. The standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2018 on a retroactive basis. Early adoption is permitted. In 2017, the Company established an implementation team to develop a plan to assess changes to processes and systems necessary to adopt the new standard. The Company continues to evaluate this standard and expects to complete its analysis in the fourth quarter of 2018. The adoption of this new accounting standard is expected to have a material impact on the reporting of lease assets and lease liabilities on the condensed consolidated statements of financial position related to lease arrangements and is not expected to have a material impact on the condensed consolidated statements of financial position as a whole or on the results of operations or cash flows. Stock Compensation In May 2017, the FASB issued a new accounting standard that provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting related to changes to such awards. The updated guidance is effective for interim and annual periods beginning after December 15, 2017 and early adoption is permitted. The Company adopted this new standard as of January 1, 2018 as required, and since it does not have a history of modifying share-based payment awards, has determined that the updated requirements did not have an impact on its condensed consolidated financial statements for the periods presented. Cash Flow Statement Classifications In August 2016, the FASB issued a new accounting standard related to the classification of certain cash receipts and cash payments in the statement of cash flows. This standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2017. The standard may be applied on a retrospective basis and early adoption is permitted. The Company adopted the new standard as of January 1, 2018 as required and has determined that its implementation did not have a material impact on its condensed consolidated statements of cash flows for the periods presented. Goodwill Impairment In January 2017, the FASB issued a new accounting standard that simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. The standard requires that the impairment loss be measured as the excess of the reporting unit's carrying amount over its fair value. It eliminates the second step that requires the impairment to be measured between the implied value of a reporting unit's goodwill and its carrying value. The standard is effective for annual and any interim impairment tests for periods beginning after December 15, 2019 and early adoption is permitted. The Company is currently evaluating the effect of adopting this new accounting standard and has not yet determined the impact that its implementation will have on its condensed consolidated financial statements. Definition of a Business In January 2017, the FASB issued a new accounting standard that clarifies the definition of a business with the objective of adding guidance to assist companies with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2017 and may be applied on a retrospective basis with early adoption permitted. The Company adopted this new standard as of January 1, 2018 as required and determined that its implementation did not have a material impact on the Company's condensed consolidated financial statements for the periods presented. |
REVENUE RECOGNITION |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION |
Effective January 1, 2018, the Company adopted FASB Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (commonly referred to as "Topic 606"), which requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive. The Company adopted Topic 606 using the modified retrospective method and applied it to those contracts which were not completed as of the adoption date. The adoption of the new revenue standard did not have a material impact on the Company’s consolidated financial position, results of operations, or revenues as of the adoption date. Revenue Recognition Revenues are recognized when or as control of the promised goods or services transfers to the Company's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The transaction price for contracts may include forms of variable consideration, including reductions to the transaction price for volume discounts and rebates. To the extent a contract is deemed to have multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation using the standalone selling price of each distinct good or service in the contract. Disaggregation of Revenue In the following table, revenue from contracts with customers, net of intersegment sales, is disaggregated by market type and by reportable operating segments:
Description of Products and Services The Company is a major manufacturer of component products and a distributor of building products and materials serving original equipment manufacturers (“OEMs”). The following is a description of the principal activities, by reportable segments, from which the Company generates its revenue. See Note 13 for more detailed information about the Company's reportable operating segments. Manufacturing The Company’s Manufacturing segment revenue is primarily derived from the sale of laminated products that are utilized to produce furniture, shelving, walls, countertops, and cabinet products, cabinet doors, fiberglass bath fixtures and tile systems, hardwood furniture, vinyl printing, solid surface, granite, and quartz countertop fabrication, recreational vehicle painting, fabricated aluminum products, fiberglass and plastic components, softwoods lumber, custom cabinetry, polymer-based flooring, electrical systems components, and other products. Manufacturing segment revenue is recognized when control of the products transfers to the customer which is the point when the customer gains the ability to direct the use of and obtain substantially all of the remaining benefits from the asset, which is generally upon delivery of goods. In limited circumstances, where the products are customer specific with no alternative use to the Company and the Company has a legally enforceable right to payment for performance to date with a reasonable margin, revenue is recognized over the contract term based on the cost-to-cost method. The Company uses this measure of progress because it best depicts the transfer of value to the customer and correlates with the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods to the customer. However, revenue recognized based on cost-to-cost method does not constitute a material amount of total Manufacturing segment revenue and consolidated net sales. Distribution The Company’s Distribution segment revenue is primarily derived from the resale of pre-finished wall and ceiling panels, drywall and drywall finishing products, appliances, electronics and audio systems components, wiring, electrical and plumbing products, fiber reinforced polyester products, cement siding, interior passage doors, roofing products, laminate and ceramic flooring, shower doors, furniture, fireplaces and surrounds, interior and exterior lighting products, and other miscellaneous products. The Company acts as a principal in such arrangements because it controls the promised goods before delivery to the customer. Distribution segment revenue from product sales is recognized on a gross basis upon delivery of goods at which point control transfers to the customer. The Distribution segment also generates revenue by providing marketing services for other manufacturers in exchange for agreed upon commissions. The commission revenue is recognized in the amount of expected commissions to be collected from the manufacturer upon delivery of goods to the customer. The overall commission business is not material to the Company’s consolidated net sales. Significant Judgments and Practical Expedients Applied Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. Sales and other taxes collected concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are not recognized as separate performance obligations to which a portion of revenue would otherwise be allocated. The Company records freight billed to customers in net sales. The corresponding costs incurred for shipping and handling related to these customer billed freight costs are recorded as costs to fulfill the contract and are included in warehouse and delivery expenses. The Company’s contracts across each of its businesses typically do not result in situations where there is a time period greater than one year between performance under the contract and collection of the related consideration. The Company elected the practical expedient under Topic 606 related to significant financing components, where the Company expects, at contract inception, that the period between the entity’s transfer of a promised good or service to a customer and the customer’s payment for that good or service will be one year or less. The Company also applies the practical expedient in Topic 606 related to costs to obtain a contract and recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the incurred costs that the Company otherwise would have capitalized is one year or less. These costs are included in selling, general and administrative expenses. Contract Balances The Company typically invoices the customer after shipment of the promised goods, at which time it has an unconditional right to payment. In limited circumstances, the Company may receive upfront payments from customers prior to satisfaction of a performance obligation in both the manufacturing and distribution businesses, in which case a contract liability is recorded. Contract liabilities are not material to the consolidated financial statements. The following table provides information about contract balances:
Significant changes in the contract liabilities balance during the six months ended July 1, 2018 are as follows:
Transaction Price Allocated to the Remaining Performance Obligation The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The Company does not have material contracts that have original expected durations of more than one year. |
INVENTORIES |
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INVENTORIES |
Inventories are stated at the lower of cost (First-In, First-Out (FIFO) Method) and net realizable value and consist of the following classes:
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GOODWILL AND INTANGIBLE ASSETS |
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GOODWILL AND INTANGIBLE ASSETS |
The Company acquired intangible assets in various acquisitions in 2017 and through the first six months of 2018 that were determined to be business combinations. The goodwill recognized is expected to be deductible for income tax purposes for each of the 2018 and 2017 acquisitions with the exception of the acquisitions of Marine Accessories Corporation and Leisure Product Enterprises, LLC in 2018 and 2017, respectively. See Note 6 for further details. Goodwill and intangible assets are allocated to the Company’s reporting units at the date they are initially recorded. Goodwill and indefinite-lived intangible assets are not amortized but are subject to an impairment test based on their estimated fair value performed annually in the fourth quarter (or under certain circumstances more frequently as warranted). Goodwill impairment testing is performed at the reporting unit level, one level below the business segment. Finite-lived intangible assets that meet certain criteria continue to be amortized over their useful lives and are also subject to an impairment test based on estimated undiscounted cash flows when impairment indicators exist. The Company assesses finite-lived intangible assets for impairment if events or changes in circumstances indicate that the carrying value may exceed the fair value. No impairment was recognized during the first six months ended July 1, 2018 and June 25, 2017 related to goodwill, indefinite-lived intangible assets or finite-lived intangible assets. Goodwill Changes in the carrying amount of goodwill for the six months ended July 1, 2018 by segment are as follows:
Intangible Assets Intangible assets are comprised of customer relationships, non-compete agreements and trademarks. Customer relationships and non-compete agreements represent finite-lived intangible assets that have been recorded in the Manufacturing and Distribution segments along with related amortization expense. As of July 1, 2018, the remaining intangible assets balance of $386.5 million is comprised of $78.9 million of trademarks which have an indefinite life, and therefore, no amortization expense has been recorded, and $307.6 million pertaining to customer relationships and non-compete agreements which are being amortized over periods ranging from three to 19 years. For the finite-lived intangible assets attributable to the 2018 acquisitions, the useful life pertaining to non-compete agreements was three years for Aluminum Metals Company, LLC and five years for Metal Moulding Corporation, Indiana Marine Products, Collins & Company, Inc., Dehco, Inc., Dowco, Inc., and Marine Accessories Corporation. The useful life pertaining to customer relationships for all of the 2018 acquisitions is anticipated to be 10 years. Amortization expense for the Company’s intangible assets in the aggregate was $16.3 million and $9.0 million for the six months ended July 1, 2018 and June 25, 2017, respectively. Intangible assets, net consist of the following as of July 1, 2018 and December 31, 2017:
Changes in the carrying value of intangible assets for the six months ended July 1, 2018 by segment are as follows:
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ACQUISITIONS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS |
General The Company completed seven acquisitions involving 11 companies in the first six months of 2018 and seven acquisitions involving 13 companies in 2017, including two acquisitions in the first six months of 2017. Each of the acquisitions was funded through borrowings under the Company’s credit facility in effect at the time of acquisition. Assets acquired and liabilities assumed in the individual acquisitions were recorded on the Company’s condensed consolidated statements of financial position at their estimated fair values as of the respective dates of acquisition. In general, the acquisitions described below provided the opportunity for the Company to either establish a new presence in a particular market and/or expand its product offerings in an existing market and increase its market share and per unit content. For each acquisition, the excess of the purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which represents the value of leveraging the Company’s existing purchasing, manufacturing, sales, and systems resources with the organizational talent and expertise of the acquired companies’ respective management teams to maximize efficiencies, revenue impact, market share growth, and net income. The goodwill recognized is expected to be deductible for income tax purposes for each of the 2018 acquisitions with the exception of Marine Accessories Corporation. The goodwill recognized is expected to be deductible for income tax purposes for each of the 2017 acquisitions with the exception of Leisure Product Enterprises, LLC for which goodwill is expected to be partially deductible for income tax purposes. Intangible asset values were estimated using income based valuation methodologies. See Note 5 for information regarding the amortization periods assigned to finite-lived intangible assets. For the second quarter ended July 1, 2018, revenue and operating income of approximately $65.0 million and $7.2 million, respectively, were included in the Company's condensed consolidated statements of income relating to the 11 businesses acquired in the first six months of 2018. The first six months of 2018 included revenue and operating income of approximately $77.6 million and $8.5 million, respectively, related to these acquisitions. Acquisition-related costs in the aggregate associated with the businesses acquired in the first six months of 2018 were immaterial. For the second quarter ended June 25, 2017, revenue and operating income of approximately $18.1 million and $2.0 million was included in the Company’s condensed consolidated statements of income relating to the four businesses acquired in the first six months of 2017. The first six months of 2017 included revenue and operating income of approximately $18.4 million and $2.0 million, respectively, related to these acquisitions. Acquisition-related costs in the aggregate associated with the businesses acquired in the first six months of 2017 were immaterial. Contingent Consideration In connection with certain 2018 and 2017 acquisitions as noted below, if certain financial targets for the acquired businesses are achieved, the Company will be required to pay additional cash consideration. The Company has recorded a liability for the fair value of the contingent consideration related to each of these acquisitions as part of the initial purchase price based on the present value of the expected future cash flows and the probability of future payments. As required, the liability for the contingent consideration associated with each of these acquisitions will be measured quarterly at fair value and the Company could record adjustments in future periods. The aggregate fair value of the estimated contingent consideration payments was $13.3 million, which is included in the line item “Other long-term liabilities” on the condensed consolidated statement of financial position as of July 1, 2018. The liability for continent consideration expires at various dates through December 2023. The contingent consideration arrangements are subject to a maximum payment amount of up to $19.8 million in the aggregate. 2018 Acquisitions Metal Moulding Corporation (“MMC”) In February 2018, the Company completed the acquisition of the business and certain assets of Madison, Tennessee-based MMC, a manufacturer of custom metal fabricated products, primarily for the marine market, including hinges, arm rests, brackets, panels and trim, as well as plastic products including boxes, inlay tables, steps, and related components, for a net initial purchase price of $19.9 million, plus subsequent contingent consideration over a one-year period based on future performance. The Company recorded a preliminary fair value estimate of the contingent consideration of $1.4 million, which is included in the line item “Other long-term liabilities” on the condensed consolidated statement of financial position as of July 1, 2018. The results of operations for MMC are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition. The preliminary purchase price allocation is subject to final review and approval, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its fair value estimates. Aluminum Metals Company, LLC (“AMC”) In February 2018, the Company completed the acquisition of the business and certain assets of Elkhart, Indiana-based AMC, a manufacturer and distributor of aluminum products including coil, fabricated sheets and extrusions, in addition to roofing products, primarily for the recreational vehicle (“RV”), industrial, and marine markets, for a net purchase price of $17.8 million. The results of operations for AMC are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition. The preliminary purchase price allocation is subject to final review and approval, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its fair value estimates. IMP Holdings, LLC d/b/a Indiana Marine Products (“IMP”) In March 2018, the Company completed the acquisition of the business and certain assets of Angola, Indiana-based IMP, a manufacturer and distributor of fully-assembled helm assemblies, including electrical wiring harnesses, dash panels, instrumentation and gauges, and other products primarily for the marine market, for a net initial purchase price of $18.2 million, plus subsequent contingent consideration payments over a three-year period based on future performance. The Company recorded a preliminary fair value estimate of the contingent consideration of $7.9 million, which is included in the line item “Other long-term liabilities” on the condensed consolidated statement of financial position as of July 1, 2018. The results of operations for IMP are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition. The preliminary purchase price allocation is subject to final review and approval, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its fair value estimates. Collins & Company, Inc. (“Collins”) In March 2018, the Company completed the acquisition of the business and certain assets of Bristol, Indiana-based Collins, a distributor of appliances, trim products, fuel systems, flooring, tile, and other related building materials primarily to the RV market as well as the housing and industrial markets, for a net purchase price of $40.0 million. The results of operations for Collins are included in the Company’s condensed consolidated financial statements and the Distribution operating segment from the date of acquisition. The preliminary purchase price allocation is subject to final review and approval, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its fair value estimates. Dehco, Inc. (“Dehco”) In April 2018, the Company completed the acquisition of Dehco, a distributor and manufacturer of flooring, kitchen and bath products, adhesives and sealants, electronics, appliances and accessories, LP tanks, and other related building materials, primarily for the RV market as well as the manufactured housing (“MH”), marine and other industrial markets, for a net purchase price of $53.2 million. Dehco has operating facilities in Indiana, Oregon, Pennsylvania and Alabama. The results of operations for Dehco are included in the Company’s condensed consolidated financial statements and the Manufacturing and Distribution operating segments from the date of acquisition. The preliminary purchase price allocation is subject to final review and approval, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its fair value estimates. Dowco, Inc. (“Dowco”) In May 2018, the Company completed the acquisition of Dowco, a designer and manufacturer of custom designed boat covers and bimini tops, full boat enclosures, mounting hardware, and other accessories and components for the marine market, for a net purchase price of $57.7 million. Dowco has operating facilities in Wisconsin, Missouri, Indiana, and Minnesota. The results of operations for Dowco are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition. The preliminary purchase price allocation is subject to final review and approval, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its fair value estimates. Marine Accessories Corporation (“MAC”) In June 2018, the Company completed the acquisition of Maryville, Tennessee-based MAC, a manufacturer, distributor and aftermarket supplier of custom tower and canvas products and other related accessories to OEMs, dealers, retailers and distributors within the marine market, as well as direct to consumers, for a net purchase price of $57.6 million. The results of operations for MAC are included in the Company’s condensed consolidated financial statements and the Manufacturing and Distribution operating segments from the date of acquisition. The preliminary purchase price allocation is subject to final review and approval, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its fair value estimates. 2017 Acquisitions Medallion Plastics, Inc. (“Medallion”) In March 2017, the Company acquired the business and certain assets of Elkhart, Indiana-based Medallion, a designer, engineer and manufacturer of custom thermoformed products and components which include dash and trim panels and fender skirts for the RV market, and complete interior packages, bumper covers, hoods, and trims for the automotive, specialty transportation and other industrial markets, for a net purchase price of $9.9 million. The results of operations for Medallion are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition. Leisure Product Enterprises, LLC (“LPE”) In April 2017, the Company acquired 100% of the membership interests of LPE for a net purchase price of $73.3 million. LPE is comprised of three complementary manufacturing companies primarily serving the marine and industrial markets: Marine Electrical Products, located in Lebanon, Missouri, supplies marine OEMs with fully-assembled boat dash and helm assemblies, including electrical wire harnesses as well as custom parts and assemblies for the industrial, commercial, and off-road vehicle markets; Florida Marine Tanks, located in Henderson, North Carolina, supplies aluminum fuel and holding tanks for marine and industrial customers; and Marine Concepts/Design Concepts, with facilities located in Sarasota, Florida and Cape Coral, Florida, designs, engineers and manufactures CNC plugs, open and closed composite molds, and CNC molds for fiberglass boat manufacturers. The results of operations for LPE are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition. The purchase price allocation and all required purchase accounting adjustments were finalized in the first quarter of 2018, and resulted in changes from previously reported estimated amounts as of December 31, 2017 that include a $0.6 million decrease to goodwill and $0.9 million increase to intangible assets, the net of which was offset by a $0.3 million increase to the deferred tax liability. There was no material impact to the condensed consolidated statement of income related to these changes in the first quarter of 2018. Indiana Technologies, Inc. d/b/a Wire Design (“Wire Design”) In July 2017, the Company acquired the business and certain assets of Elkhart, Indiana-based Wire Design, a manufacturer of wire harnesses for the RV, marine and industrial markets, for a net purchase price of $10.8 million. The results of operations for Wire Design are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition. The purchase price allocation and all required purchase accounting adjustments were finalized in the first quarter of 2018, and resulted in changes from previously reported estimated amounts as of December 31, 2017 that include a $0.2 million decrease to goodwill with a corresponding $0.2 million increase to intangible assets. There was no material impact to the condensed consolidated statement of income related to these changes in the first quarter of 2018. Baymont, Inc. (“Baymont”) In September 2017, the Company acquired the business and certain assets of Baymont, a manufacturer and supplier of fiberglass showers, tubs, and tile systems for the MH and industrial markets, for a net initial purchase price of $3.3 million, plus subsequent contingent consideration payments over a six-year period based on future performance. The Company recorded a preliminary fair value estimate of the contingent consideration of $5.1 million at the date of acquisition, which was included in the line item “Other long-term liabilities” on the condensed consolidated statement of financial position as of December 31, 2017. In the first six months of 2018, the fair value estimate of the contingent consideration was adjusted by $1.1 million to $4.0 million. Baymont has operating facilities located in Golden, Mississippi and Belmont, Mississippi. The results of operations for Baymont are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition. The preliminary purchase price allocation is subject to final review and approval, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its fair value estimates. In the first six months of 2018, changes from previously reported estimated amounts as of December 31, 2017 include a $2.0 million decrease to goodwill and a $0.9 million increase to other intangible assets, the net of which corresponded to the adjustment noted above to the fair value estimate of the contingent liability. Indiana Transport, Inc. (“Indiana Transport”) In November 2017, the Company acquired the business and certain assets of Elkhart, Indiana-based Indiana Transport, a transportation and logistics service provider primarily to OEMs and dealers in the RV market, for a net purchase price of $58.8 million. The results of operations for Indiana Transport are included in the Company’s condensed consolidated financial statements and the Distribution operating segment from the date of acquisition. The preliminary purchase price allocation is subject to final review and approval, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its fair value estimates. In the first six months of 2018, changes from previously reported estimated amounts as of December 31, 2017 include a $0.6 million increase to accounts payable and accrued liabilities. LMI, Inc. and Related Companies (collectively, “LMI”) In November 2017, the Company acquired LMI, a designer, fabricator, and installer of specialty glass, mirror, bath and closet building products to residential housing and commercial high-rise builders, general contractors, retailers, and RV manufacturers in the U.S., for a net purchase price of $80.9 million. LMI is headquartered in Ontario, California and operates six manufacturing and distribution centers in California and Nevada and an additional manufacturing facility in China. The results of operations for LMI are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition. The preliminary purchase price allocation is subject to final review and approval, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its fair value estimates. In the first six months of 2018, changes from previously reported estimated amounts as of December 31, 2017 include a $1.4 million increase to goodwill. Nickell Moulding Company, Inc. (“Nickell”) In December 2017, the Company acquired the business and certain assets of Elkhart, Indiana-based Nickell, a manufacturer of hardwood and wrapped mouldings and trim, custom wood frames, and door components for the RV, retail and hospitality, MH, and other markets, for a net purchase price of $12.6 million. The results of operations for Nickell are included in the Company’s condensed consolidated financial statements and the Manufacturing operating segment from the date of acquisition. The preliminary purchase price allocation is subject to final review and approval, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its fair value estimates. In the first six months of 2018, changes from previously reported estimated amounts as of December 31, 2017 include a $0.2 million decrease to trade receivables, a $0.4 million decrease to goodwill, and a $0.4 million increase to inventories, the net of which was partially offset by a $0.5 million decrease to accounts payable and accrued liabilities. The following table summarizes the fair values of the assets acquired and the liabilities assumed as of the date of the acquisition. The purchase price allocation in each acquisition is final except as noted in the discussions above:
(1) Total net assets acquired for MMC include the preliminary estimated liability of $1.4 million pertaining to the fair value of the contingent consideration based on future performance. The actual net cash paid for the MMC acquisition of $19.9 million is included in “Cash Flows from Investing Activities - Business Acquisitions” on the condensed consolidated statement of cash flows for the six months ended July 1, 2018. (2) Total net assets acquired for IMP include the preliminary estimated liability of $7.9 million pertaining to the fair value of the contingent consideration based on future performance. The actual net cash paid for the IMP acquisition of $18.2 million is included in “Cash Flows from Investing Activities - Business Acquisitions” on the condensed consolidated statement of cash flows for the six months ended July 1, 2018. (3) Total net assets acquired for Baymont include the preliminary estimated liability of $4.0 million pertaining to the fair value of the contingent consideration based on future performance. The actual net cash paid for the Baymont acquisition of $3.3 million is included in “Cash Flows from Investing Activities - Business Acquisitions” on the consolidated statement of cash flows for the year ended December 31, 2017. Pro Forma Information The following pro forma information for the second quarter and six months ended July 1, 2018 and June 25, 2017 assumes the MMC, AMC, IMP, Collins, Dehco, Dowco, and MAC acquisitions (which were acquired in 2018) and the Medallion, LPE, Wire Design, Baymont, Indiana Transport, LMI, and Nickell acquisitions (which were acquired in 2017) occurred as of the beginning of the year immediately preceding each such acquisition. The pro forma information contains the actual operating results of the 2018 and 2017 acquisitions combined with the results prior to their respective acquisition dates, adjusted to reflect the pro forma impact of the acquisitions occurring as of the beginning of the year immediately preceding each such acquisition. The pro forma information includes financing and interest expense charges based on the actual incremental borrowings incurred in connection with each transaction as if it occurred as of the beginning of the year immediately preceding each such acquisition. In addition, the pro forma information includes amortization expense, in the aggregate, related to intangible assets acquired in connection with the transactions of $1.1 million and $3.8 million for the second quarter and six months ended July 1, 2018, respectively, and $5.1 million and $10.7 million for the second quarter and six months ended June 25, 2017, respectively.
The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time, nor is it intended to be a projection of future results. |
STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||
STOCK-BASED COMPENSATION |
The Company accounts for stock-based compensation in accordance with fair value recognition provisions. The Company recorded compensation expense of $3.7 million and $2.7 million for the second quarters ended July 1, 2018 and June 25, 2017, respectively, for its stock-based compensation plans on the condensed consolidated statements of income. For the first six months of 2018 and 2017, the Company recorded $7.4 million and $5.1 million, respectively. The Company estimates the fair value of (i) all stock grants as of the grant date using the closing price per share of the Company’s common stock on such date, and (ii) all stock option and stock appreciation rights awards as of the grant date by applying the Black-Scholes option pricing model. For full year 2017, the Board of Directors (the “Board”) approved various share grants under the Company’s 2009 Omnibus Incentive Plan (the “Plan”) totaling 233,654 shares in the aggregate, of which grants of 167,504 shares were approved in the first six months of 2017. On January 17, 2017, the Board approved the grant of 340,110 stock options and the grant of 340,128 stock appreciation rights. The Board approved various share grants under the Plan in the first six months of 2018 totaling 181,808 shares in the aggregate. As of July 1, 2018, there was approximately $27.5 million of total unrecognized compensation cost related to stock-based compensation arrangements granted under incentive plans. That cost is expected to be recognized over a weighted-average period of 23.9 months. |
NET INCOME PER COMMON SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME PER COMMON SHARE |
Basic net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding, plus the dilutive effect of stock options, stock appreciation rights, and restricted stock units (collectively “Common Stock Equivalents”). The dilutive effect of Common Stock Equivalents is calculated under the treasury stock method using the average market price for the period. Certain Common Stock Equivalents were not included in the computation of diluted net income per common share because the exercise prices of those Common Stock Equivalents were greater than the average market price of the common shares. Income per common share is calculated for the second quarter and six months periods as follows:
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DEBT |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT |
A summary of total debt outstanding at July 1, 2018 and December 31, 2017 is as follows:
2015 Credit Facility Prior to June 5, 2018, the Company's credit facility was established under its credit agreement, dated April 28, 2015, with Wells Fargo Bank, National Association (“Wells Fargo”), as Administrative Agent and a lender, and the lenders party thereto, as amended (the “2015 Credit Agreement”). The 2015 Credit Agreement consisted of a $417.3 million revolving credit loan (the “2015 Revolver”) and up to an $82.7 million term loan (the “2015 Term Loan” and, together with the Revolver, the “2015 Credit Facility”). The 2015 Credit Facility had a maturity date of March 17, 2022 and was replaced by the 2018 Credit Facility (as defined herein). 2018 Credit Facility The Company entered into a Second Amended and Restated Credit Agreement, dated as of June 5, 2018, (the “2018 Credit Agreement”) by and among the Company, the Lenders party thereto, and Wells Fargo, as Administrative Agent. The 2018 Credit Agreement amended and restated the Company’s 2015 Credit Agreement. The 2018 Credit Facility is comprised of an $800 million revolving credit loan (the “2018 Revolver”) and a $100 million term loan (the “2018 Term Loan” and, together with the 2018 Revolver, the “2018 Credit Facility”). The March 17, 2022 maturity date for borrowings under the 2018 Credit Agreement remained unchanged from the 2015 Credit Agreement. The 2018 Credit Agreement continues to be secured by substantially all personal property assets of the Company and any domestic subsidiary guarantors. The 2018 Credit Agreement includes certain definitions, terms and reporting requirements and includes the following additional provisions:
At July 1, 2018, the Company had $98.8 million outstanding under the 2018 Term Loan under the LIBOR-based option, and borrowings outstanding under the 2018 Revolver of: (i) $340.5 million under the LIBOR-based option and (ii) $4.4 million under the Base Rate-based option. The interest rate for borrowings at July 1, 2018 was the Prime Rate plus 0.75% (or 5.75%), or LIBOR plus 1.75% (or 3.8125%). At December 31, 2017, the Company had $67.0 million outstanding under the 2015 Term Loan under the LIBOR-based option, and borrowings outstanding under the 2015 Revolver of: (i) $281.0 million under the LIBOR-based option and (ii) $6.4 million under the Base Rate-based option. The interest rate for borrowings at December 31, 2017 was the Prime Rate plus 0.50% (or 5.00%), or LIBOR plus 1.50% (or 3.1250%). The fee payable on committed but unused portions of the 2018 Revolver and the 2015 Revolver, respectively, was 0.225% at July 1, 2018 and 0.20% December 31, 2017. Pursuant to the 2018 Credit Agreement, the financial covenants include: (a) a required maximum consolidated total leverage ratio, measured on a quarter-end basis, not to exceed 3.00:1.00 for the 12-month period ending on such quarter-end; and (b) a required minimum consolidated fixed charge coverage ratio, measured on a quarter-end basis, of at least 1.50:1.00 for the 12-month period ending on such quarter-end. The consolidated total leverage ratio is the ratio for any period of consolidated total indebtedness (as measured as of the second day following the end of the immediately preceding fiscal quarter) to consolidated adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”). Consolidated total indebtedness for any period is the sum of: (i) total debt outstanding under the 2018 Revolver, the 2018 Term Loan and the Convertible Notes (as defined herein); (ii) capital leases and letters of credit outstanding; and (iii) deferred payment obligations. The consolidated fixed charge coverage ratio for any period is the ratio of consolidated EBITDA less restricted payments, taxes paid and capital expenditures as defined under the 2018 Credit Agreement to consolidated fixed charges. Consolidated fixed charges for any period is the sum of cash interest expense related to the 2018 Term Loan, 2018 Revolver and the Convertibles Notes, and scheduled principal payments on outstanding indebtedness under the 2018 Term Loan. As of and for the July 1, 2018 reporting date, the Company was in compliance with both of these financial debt covenants as required under the terms of the 2018 Credit Agreement. The required maximum consolidated total leverage ratio and the required minimum consolidated fixed charge coverage ratio compared to the actual amounts as of July 1, 2018 and for the fiscal period then ended are as follows:
Total cash interest paid for the second quarter and first six months of 2018 was $2.7 million and $5.6 million, respectively. For the comparable 2017 periods, cash interest paid was $1.8 million and $3.5 million, respectively. Convertible Senior Notes In January 2018, the Company issued $172.5 million aggregate principal amount of 1.00% Convertible Senior Notes due 2023 (the “Convertible Notes”). The total debt discount at closing of $36.0 million represented (1) the difference between the principal amount of the Convertible Notes upon issuance less the present value of the future cash flows of the Convertible Notes or $31.9 million plus (2) the debt discount portion of the issuance costs of $4.1 million. The unamortized portion of the total debt discount is being amortized to interest expense over the life of the Convertible Notes beginning in the first quarter of 2018. The unamortized portion of the debt discount as of July 1, 2018 was $33.1 million. The net proceeds from the issuance of the Convertible Notes were approximately $167.5 million, after deducting the initial purchasers’ discounts and commissions and offering expenses payable by the Company, but before deducting the net cost of the Convertible Note Hedge Transactions and the Warrant Transactions (each as defined herein) described in Note 10. The Convertible Notes are senior unsecured obligations of the Company and pay interest semi-annually in arrears on February 1 and August 1 of each year at an annual rate of 1.00% beginning August 1, 2018. The Convertible Notes will mature on February 1, 2023 unless earlier repurchased or converted in accordance with their terms. The Convertible Notes are convertible by the noteholders, in certain circumstances and subject to certain conditions, into cash, shares of common stock of the Company, or a combination thereof, at the Company’s election. The initial conversion rate for the Convertible Notes is 11.3785 shares of the Company's common stock per $1,000 principal amount of the Convertible Notes (or 1,962,790 shares in the aggregate) and is equal to an initial conversion price of approximately $87.89 per share. If an event of default on the Convertible Notes occurs, the principal amount of the Convertible Notes, plus accrued and unpaid interest (including additional interest, if any) may be declared immediately due and payable, subject to certain conditions. The net proceeds were used to pay the net cost of the Convertible Hedge Transactions and the Warrant Transactions and to reduce borrowings under the 2015 Revolver. |
DERIVATIVE FINANCIAL INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||
DERIVATIVE FINANCIAL INSTRUMENTS |
Convertible Note Hedge Transactions and Warrant Transactions In January 2018, in connection with the Convertible Notes offering, the Company entered into privately negotiated convertible note hedge transactions (together, the “Convertible Note Hedge Transactions”) with each of Bank of America, N.A. and Wells Fargo Bank, National Association (together, the “Hedge Counterparties”). Pursuant to the Convertible Note Hedge Transactions, the Company acquired options to purchase the same number of shares of the Company's common stock (or 1,962,790 shares) initially underlying the Convertibles Notes at an initial strike price equal to the initial strike price of the Convertible Notes of approximately $87.89 per share, subject to customary anti-dilution adjustments. The options on the Convertible Notes expire on February 1, 2023, subject to earlier exercise. At the same time, the Company also entered into separate, privately negotiated warrant transactions (the “Warrant Transactions”) with each of the Hedge Counterparties, pursuant to which the Company sold warrants to purchase the same number of shares of the Company’s common stock (or 1,962,790 shares) underlying the Convertible Notes, at an initial strike price of approximately $113.93 per share, subject to customary anti-dilution adjustments. The warrants have a final expiration date of September 20, 2023. The Company paid $31.5 million associated with the cost of the Convertible Note Hedge Transactions and received proceeds of $18.1 million related to the Warrant Transactions. The Convertible Note Hedge Transactions are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Convertible Notes. However, the Warrant Transactions, could separately have a dilutive effect on the Company's common stock to the extent that the market price per share of the common stock exceeds the strike price of the warrants. |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||
FAIR VALUE MEASUREMENTS |
The carrying amounts of cash and cash equivalents, trade receivables, and accounts payable approximated fair value as of July 1, 2018 and December 31, 2017 because of the relatively short maturities of these financial instruments. The carrying amounts of the 2018 Term Loan and the 2018 Revolver and of the 2015 Term Loan and the 2015 Revolver, approximated fair value as of July 1, 2018 and December 31, 2017, respectively, based upon terms and conditions available to the Company at those dates in comparison to the terms and conditions of its outstanding debt. The fair value of the Convertible Notes was approximately $163.0 million as of July 1, 2018. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||
INCOME TAXES |
The effective tax rate in the second quarter of 2018 and 2017 was 25.5% and 32.9%, respectively, and the effective tax rate for the comparable six months periods was 22.9% and 27.7%, respectively The effective tax rate for the periods presented includes the impact of the recognition of excess tax benefits on share-based compensation of $0.1 million and $0.9 million that was recorded as a reduction to income tax expense upon realization in the second quarter of 2018 and 2017, respectively, and $2.2 million and $4.6 million for the comparable six months periods, respectively. The Company paid income taxes of $15.4 million and $19.2 million in the second quarter of 2018 and 2017, respectively, and $15.4 million and $19.5 million in the first six months of 2018 and 2017, respectively. |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION |
The Company has determined that its reportable segments are those based on its method of internal reporting, which segregates its businesses by product category and production/distribution process. A description of the Company’s reportable segments is as follows: Manufacturing – This segment includes the following: laminated products that are utilized to produce furniture, shelving, walls, countertops, and cabinet products, cabinet doors, fiberglass bath fixtures and tile systems, hardwood furniture, vinyl printing, solid surface, granite, and quartz countertop fabrication, RV painting, fabricated aluminum products, fiberglass and plastic components, softwoods lumber, custom cabinetry, polymer-based flooring, electrical systems components including instrument and dash panels, and other products. Patrick’s major manufactured products also include wrapped vinyl, paper and hardwood profile mouldings, interior passage doors, slide-out trim and fascia, thermoformed shower surrounds, specialty bath and closet building products, fiberglass and plastic helm systems and components products, wiring and wire harnesses, boat covers, towers and tops, aluminum fuel tanks, CNC molds and composite parts, and slotwall panels and components. The Manufacturing segment contributed approximately 78% and 83% of the Company’s net sales for the first six months ended July 1, 2018 and June 25, 2017, respectively. Distribution – The Company distributes pre-finished wall and ceiling panels, drywall and drywall finishing products, electronics and audio systems components, wiring, electrical and plumbing products, appliances, fiber reinforced polyester products, cement siding, raw and processed lumber, interior passage doors, roofing products, laminate and ceramic flooring, shower doors, furniture, fireplaces and surrounds, interior and exterior lighting products, and other miscellaneous products, in addition to providing transportation and logistics services. The Distribution segment contributed approximately 22% and 17% of the Company’s net sales for the first six months ended July 1, 2018 and June 25, 2017, respectively. The tables below present unaudited information about the sales and operating income of those segments.
The following table presents a reconciliation of segment operating income to consolidated operating income:
Unallocated corporate expenses include corporate general and administrative expenses comprised of wages, insurance, taxes, supplies, travel and entertainment, professional fees and other. |
STOCK REPURCHASE PROGRAMS |
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Equity [Abstract] | |||||||
STOCK REPURCHASE PROGRAM |
In January 2018, the Board approved a new stock repurchase program that authorized the repurchase of up to $50.0 million of the Company's common stock over a 24-month period (the “2018 Repurchase Plan”) to replace the repurchase plan the Board previously approved in January 2016 that had expired in January 2018. In May 2018, the Board approved an increase in the amount of the Company's common stock that may be acquired over the next 24 months under the current stock repurchase program to $50.0 million, which included the $8.5 million remaining under the original $50.0 million authorization announced in January 2018. In the first six months of 2018, the Company repurchased 935,695 shares under the 2018 Repurchase Plan at an average price of $57.80 per share for a total cost of $54.1 million. Year-to-date through July 27, 2018, the Company repurchased 979,830 shares at an average price of $57.73 per share for a total cost of $56.6 million. Common Stock The Company’s common stock does not have a stated par value. As a result, repurchases of common stock have been reflected, using an average cost method, as a reduction of common stock, additional paid-in-capital, and retained earnings on the Company’s condensed consolidated statements of financial position. |
RELATED PARTY TRANSACTIONS |
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Related Party Transactions [Abstract] | |||||||
RELATED PARTY TRANSACTIONS |
In the first six months of 2018, the Company entered into transactions with companies affiliated with two of its independent Board members. The Company purchased approximately $0.6 million of corrugated packaging materials from Welch Packaging Group, an independently owned company established by M. Scott Welch who serves as its President and CEO. The Company also sold approximately $0.3 million of RV component products to DNA Enterprises, Inc. ("DNA"). Walter E. Wells' son serves as the President of DNA. |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Policies) |
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Accounting Policies [Abstract] | |
Recent Issued Accounting Pronouncements | Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard that will require that an entity recognize lease assets and lease liabilities on its balance sheet for leases in excess of one year that were previously classified as operating leases under U.S. GAAP. The standard also requires companies to disclose in the footnotes to the financial statements information about the amount, timing, and uncertainty for the payments made for the lease agreements. The standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2018 on a retroactive basis. Early adoption is permitted. In 2017, the Company established an implementation team to develop a plan to assess changes to processes and systems necessary to adopt the new standard. The Company continues to evaluate this standard and expects to complete its analysis in the fourth quarter of 2018. The adoption of this new accounting standard is expected to have a material impact on the reporting of lease assets and lease liabilities on the condensed consolidated statements of financial position related to lease arrangements and is not expected to have a material impact on the condensed consolidated statements of financial position as a whole or on the results of operations or cash flows. Stock Compensation In May 2017, the FASB issued a new accounting standard that provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting related to changes to such awards. The updated guidance is effective for interim and annual periods beginning after December 15, 2017 and early adoption is permitted. The Company adopted this new standard as of January 1, 2018 as required, and since it does not have a history of modifying share-based payment awards, has determined that the updated requirements did not have an impact on its condensed consolidated financial statements for the periods presented. Cash Flow Statement Classifications In August 2016, the FASB issued a new accounting standard related to the classification of certain cash receipts and cash payments in the statement of cash flows. This standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2017. The standard may be applied on a retrospective basis and early adoption is permitted. The Company adopted the new standard as of January 1, 2018 as required and has determined that its implementation did not have a material impact on its condensed consolidated statements of cash flows for the periods presented. Goodwill Impairment In January 2017, the FASB issued a new accounting standard that simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. The standard requires that the impairment loss be measured as the excess of the reporting unit's carrying amount over its fair value. It eliminates the second step that requires the impairment to be measured between the implied value of a reporting unit's goodwill and its carrying value. The standard is effective for annual and any interim impairment tests for periods beginning after December 15, 2019 and early adoption is permitted. The Company is currently evaluating the effect of adopting this new accounting standard and has not yet determined the impact that its implementation will have on its condensed consolidated financial statements. Definition of a Business In January 2017, the FASB issued a new accounting standard that clarifies the definition of a business with the objective of adding guidance to assist companies with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2017 and may be applied on a retrospective basis with early adoption permitted. The Company adopted this new standard as of January 1, 2018 as required and determined that its implementation did not have a material impact on the Company's condensed consolidated financial statements for the periods presented. |
REVENUE RECOGNITION (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue | In the following table, revenue from contracts with customers, net of intersegment sales, is disaggregated by market type and by reportable operating segments:
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Schedule of Contract Assets and Liabilities | The following table provides information about contract balances:
Significant changes in the contract liabilities balance during the six months ended July 1, 2018 are as follows:
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INVENTORIES (Tables) |
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Schedule of Inventory | Inventories are stated at the lower of cost (First-In, First-Out (FIFO) Method) and net realizable value and consist of the following classes:
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GOODWILL AND INTANGIBLE ASSETS (Tables) |
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Schedule of goodwill | Changes in the carrying amount of goodwill for the six months ended July 1, 2018 by segment are as follows:
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Schedule of intangible assets, net | Intangible assets, net consist of the following as of July 1, 2018 and December 31, 2017:
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Schedule of changes in intangible assets | Changes in the carrying value of intangible assets for the six months ended July 1, 2018 by segment are as follows:
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ACQUISITIONS (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets acquired and liabilities assumed | The purchase price allocation in each acquisition is final except as noted in the discussions above:
(1) Total net assets acquired for MMC include the preliminary estimated liability of $1.4 million pertaining to the fair value of the contingent consideration based on future performance. The actual net cash paid for the MMC acquisition of $19.9 million is included in “Cash Flows from Investing Activities - Business Acquisitions” on the condensed consolidated statement of cash flows for the six months ended July 1, 2018. (2) Total net assets acquired for IMP include the preliminary estimated liability of $7.9 million pertaining to the fair value of the contingent consideration based on future performance. The actual net cash paid for the IMP acquisition of $18.2 million is included in “Cash Flows from Investing Activities - Business Acquisitions” on the condensed consolidated statement of cash flows for the six months ended July 1, 2018. (3) Total net assets acquired for Baymont include the preliminary estimated liability of $4.0 million pertaining to the fair value of the contingent consideration based on future performance. The actual net cash paid for the Baymont acquisition of $3.3 million is included in “Cash Flows from Investing Activities - Business Acquisitions” on the consolidated statement of cash flows for the year ended December 31, 2017. |
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Schedule of pro forma information |
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NET INCOME PER COMMON SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share | Income per common share is calculated for the second quarter and six months periods as follows:
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DEBT (Tables) |
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Jul. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of total debt outstanding | A summary of total debt outstanding at July 1, 2018 and December 31, 2017 is as follows:
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Schedule of required financial covenants | As of and for the July 1, 2018 reporting date, the Company was in compliance with both of these financial debt covenants as required under the terms of the 2018 Credit Agreement. The required maximum consolidated total leverage ratio and the required minimum consolidated fixed charge coverage ratio compared to the actual amounts as of July 1, 2018 and for the fiscal period then ended are as follows:
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SEGMENT INFORMATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment reporting information | The tables below present unaudited information about the sales and operating income of those segments.
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Summary of the reconciliation of segment operations | The following table presents a reconciliation of segment operating income to consolidated operating income:
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BASIS OF PRESENTATION (Details) |
Dec. 08, 2017 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Stock split conversion ratio | 1.5 |
REVENUE RECOGNITION - Schedule of Contract Assets and Liabilities (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jul. 01, 2018 |
Jan. 01, 2018 |
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Revenue from Contract with Customer [Abstract] | ||
Receivables, which are included in trade receivables, net | $ 127,248 | $ 75,926 |
Contract liabilities | 1,434 | $ 1,310 |
Contract Liabilities | ||
Revenue recognized that was included in the contract liability balance at the beginning of the period | (654) | |
Increases due to cash received, excluding amounts recognized as revenue during the period | 602 | |
Accrued customer deposits related to business combinations | $ 176 |
INVENTORIES (Details) - USD ($) $ in Thousands |
Jul. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory [Line Items] | ||
Raw materials | $ 124,970 | $ 96,846 |
Work in process | 13,596 | 10,720 |
Finished goods | 28,179 | 22,936 |
Total manufactured goods, net | 162,476 | 127,415 |
Materials purchased for resale (distribution products) | 74,664 | 49,392 |
Total materials purchased for resale (distribution products), net | 72,651 | 47,855 |
Total inventories | 235,127 | 175,270 |
Manufactured Goods [Member] | ||
Inventory [Line Items] | ||
Less: reserve for inventory obsolescence | (4,269) | (3,087) |
Distributed Goods [Member] | ||
Inventory [Line Items] | ||
Less: reserve for inventory obsolescence | $ (2,013) | $ (1,537) |
GOODWILL AND INTANGIBLE ASSETS - Carrying Amount of Goodwill by Segment (Details) $ in Thousands |
6 Months Ended |
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Jul. 01, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Balance - December 31, 2017 | $ 208,044 |
Acquisitions | 49,531 |
Adjustment to prior year preliminary purchase price allocation | (1,701) |
Balance - July 1, 2018 | 255,874 |
Manufacturing [Member] | |
Goodwill [Roll Forward] | |
Balance - December 31, 2017 | 179,471 |
Acquisitions | 38,787 |
Adjustment to prior year preliminary purchase price allocation | (1,722) |
Balance - July 1, 2018 | 216,536 |
Distribution [Member] | |
Goodwill [Roll Forward] | |
Balance - December 31, 2017 | 28,573 |
Acquisitions | 10,744 |
Adjustment to prior year preliminary purchase price allocation | 21 |
Balance - July 1, 2018 | $ 39,338 |
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets, Net, by Major Class (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jul. 01, 2018 |
Dec. 31, 2017 |
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Intangible Assets [Line Items] | ||
Total other intangible assets, net, excluding accumulated amortization | $ 454,405 | $ 315,065 |
Less: accumulated amortization | (67,865) | (51,598) |
Intangible assets, net | 386,540 | 263,467 |
Customer Relationships [Member] | ||
Intangible Assets [Line Items] | ||
Finite-lived intangible assets | $ 354,714 | $ 239,053 |
Intangible assets, weighted average useful life | 10 years 37 days | 10 years 2 months 12 days |
Noncompete Agreements [Member] | ||
Intangible Assets [Line Items] | ||
Finite-lived intangible assets | $ 20,816 | $ 15,564 |
Intangible assets, weighted average useful life | 4 years 219 days | 4 years 73 days |
Trademarks [Member] | ||
Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | $ 78,875 | $ 60,448 |
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jun. 25, 2017 |
Jul. 01, 2018 |
Jun. 25, 2017 |
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Intangible Assets [Roll Forward] | ||||
Balance - December 31, 2017 | $ 263,467 | |||
Acquisitions | 137,285 | |||
Amortization | $ (9,140) | $ (4,817) | (16,267) | $ (9,002) |
Adjustment to prior year preliminary purchase price allocation | 2,055 | |||
Balance - July 1, 2018 | 386,540 | 386,540 | ||
Manufacturing [Member] | ||||
Intangible Assets [Roll Forward] | ||||
Balance - December 31, 2017 | 220,540 | |||
Acquisitions | 101,085 | |||
Amortization | (12,702) | |||
Adjustment to prior year preliminary purchase price allocation | 2,070 | |||
Balance - July 1, 2018 | 310,993 | 310,993 | ||
Distribution [Member] | ||||
Intangible Assets [Roll Forward] | ||||
Balance - December 31, 2017 | 42,927 | |||
Acquisitions | 36,200 | |||
Amortization | (3,565) | |||
Adjustment to prior year preliminary purchase price allocation | (15) | |||
Balance - July 1, 2018 | $ 75,547 | $ 75,547 |
ACQUISITIONS - Pro Forma Information Related to Acquisitions (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jun. 25, 2017 |
Jul. 01, 2018 |
Jun. 25, 2017 |
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Business Combinations [Abstract] | ||||
Revenue | $ 632,153 | $ 550,758 | $ 1,258,668 | $ 1,040,399 |
Net income | $ 37,126 | $ 28,650 | $ 69,235 | $ 51,686 |
Basic net income per common share (in dollars per share) | $ 1.53 | $ 1.16 | $ 2.83 | $ 2.18 |
Diluted net income per common share (in dollars per share) | $ 1.51 | $ 1.15 | $ 2.79 | $ 2.14 |
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 01, 2018 |
Jun. 25, 2017 |
Jul. 01, 2018 |
Jun. 25, 2017 |
Dec. 31, 2017 |
Jan. 17, 2017 |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation expense | $ 3.7 | $ 2.7 | $ 7.4 | $ 5.1 | ||
Unrecognized compensation cost | $ 27.5 | $ 27.5 | ||||
Weighted average recognition period | 23 months 27 days | |||||
The 2009 Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares approved (in shares) | 181,808 | 181,808 | 233,654 | |||
Granted shares (in shares) | 167,504 | |||||
The 2009 Plan [Member] | Employee Stock Option [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares approved (in shares) | 340,110 | |||||
The 2009 Plan [Member] | Stock Appreciation Rights (SARs) [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares approved (in shares) | 340,128 |
NET INCOME PER COMMON SHARE - Income Per Share Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jul. 01, 2018 |
Jun. 25, 2017 |
Jul. 01, 2018 |
Jun. 25, 2017 |
|||||
Earnings Per Share [Abstract] | ||||||||
Net income for basic and diluted per share calculation | $ 34,860 | $ 21,260 | $ 64,928 | $ 38,727 | ||||
Weighted average shares outstanding - basic (in shares) | 24,202 | 24,600 | [1] | 24,472 | 23,759 | [1] | ||
Effect of potentially dilutive securities (in shares) | 313 | 390 | 340 | 426 | ||||
Weighted average common shares outstanding - diluted (in shares) | 24,515 | 24,990 | [1] | 24,812 | 24,185 | [1] | ||
Basic net income per common share (in dollars per share) | $ 1.44 | $ 0.86 | [1] | $ 2.65 | $ 1.63 | [1] | ||
Diluted net income per common share (in dollars per share) | $ 1.42 | $ 0.85 | [1] | $ 2.62 | $ 1.60 | [1] | ||
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DEBT - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands |
Jul. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Total long-term debt | $ 616,150 | $ 354,357 |
Less: Convertible Notes debt discount | (33,105) | 0 |
Less: current maturities of long-term debt | (6,250) | (15,766) |
Less: net deferred financing costs related to Term Loan | (497) | (480) |
Total long-term debt, less current maturities, net | 576,298 | 338,111 |
Line of Credit [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 344,900 | 287,397 |
Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 98,750 | 66,960 |
Convertible Debt [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 172,500 | $ 0 |
DEBT - Schedule of Financial Ratio Covenants (Details) |
6 Months Ended |
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Jul. 01, 2018 | |
Debt Disclosure [Abstract] | |
Consolidated total leverage ratio, required | 3.00 |
Consolidated leverage ratio, actual | 222.00% |
Consolidated fixed charge coverage ratio, required | 1.50 |
Consolidated fixed charge coverage ratio, actual | 374.00% |
DERIVATIVE FINANCIAL INSTRUMENTS (Details) $ / shares in Units, $ in Thousands |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2018
USD ($)
shares
$ / shares
|
Jul. 01, 2018
USD ($)
|
Jun. 25, 2017
USD ($)
|
Jan. 01, 2018
shares
|
|
Derivative [Line Items] | ||||
Proceeds from sale of warrants | $ | $ 18,100 | $ 18,147 | $ 0 | |
Convertible Senior Notes Due 2023 [Member] | Convertible Debt [Member] | ||||
Derivative [Line Items] | ||||
Debt conversion shares issued if converted (in shares) | shares | 1,962,790 | |||
Debt conversion price (in dollars per share) | $ / shares | $ 87.89 | |||
Shares issued under warrant (in shares) | shares | 1,962,790 | |||
Warrant Transactions [Member] | Convertible Debt [Member] | ||||
Derivative [Line Items] | ||||
Initial warrant strike price (in dollars per share) | $ / shares | $ 113.93 | |||
Designated as Hedging Instrument [Member] | Convertible Debt Contract [Member] | ||||
Derivative [Line Items] | ||||
Payments for derivatives | $ | $ 31,500 |
FAIR VALUE MEASUREMENTS - Narrative (Details) $ in Millions |
Jul. 01, 2018
USD ($)
|
---|---|
Convertible Debt [Member] | Convertible Senior Notes Due 2023 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value of convertible debt | $ 163.0 |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jun. 25, 2017 |
Jul. 01, 2018 |
Jun. 25, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 25.50% | 32.90% | 22.90% | 27.70% |
Excess tax benefit tax | $ 0.1 | $ 0.9 | $ 2.2 | $ 4.6 |
Income taxes paid | $ 15.4 | $ 19.2 | $ 15.4 | $ 19.5 |
SEGMENT INFORMATION - Narrative (Details) - Sales Revenue, Goods, Net [Member] - Product Concentration Risk [Member] |
6 Months Ended | |
---|---|---|
Jul. 01, 2018 |
Jun. 25, 2017 |
|
Manufacturing [Member] | ||
Segment Reporting Information [Line Items] | ||
Concentration risk, percentage | 78.00% | 83.00% |
Distribution [Member] | ||
Segment Reporting Information [Line Items] | ||
Concentration risk, percentage | 22.00% | 17.00% |
SEGMENT INFORMATION - Reconciliation of Segment Operating Income to Consolidated Operating Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2018 |
Jun. 25, 2017 |
Jul. 01, 2018 |
Jun. 25, 2017 |
|
Segment Reporting Information [Line Items] | ||||
Operating Income | $ 53,055 | $ 33,707 | $ 94,813 | $ 57,622 |
Unallocated corporate expenses | (61,737) | (37,793) | (117,733) | (71,427) |
Amortization | (9,140) | (4,817) | (16,267) | (9,002) |
Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Operating Income | 75,185 | 45,659 | 135,398 | 80,438 |
Segment Reconciling Items [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Unallocated corporate expenses | (12,990) | (7,135) | (24,318) | (13,814) |
Amortization | $ (9,140) | $ (4,817) | $ (16,267) | $ (9,002) |
STOCK REPURCHASE PROGRAMS - Narrative (Details) - 2018 Stock Repurchase Plan [Member] - USD ($) |
1 Months Ended | 6 Months Ended | 7 Months Ended | ||
---|---|---|---|---|---|
May 31, 2018 |
Jan. 31, 2018 |
Jul. 01, 2018 |
Jul. 27, 2018 |
Jan. 01, 2018 |
|
Share Repurchase Program [Line Items] | |||||
Stock repurchase program, authorized amount | $ 50,000,000.0 | $ 50,000,000 | |||
Stock repurchase program, period in force | 24 months | 24 months | |||
Remaining authorized shares to be purchased amount | $ 8,500,000.0 | ||||
Shares repurchased (in shares) | 935,695 | ||||
Average cost per share repurchased (in dollars per share) | $ 57.80 | ||||
Shares repurchased amount | $ 54,100,000 | ||||
Subsequent Event [Member] | |||||
Share Repurchase Program [Line Items] | |||||
Shares repurchased (in shares) | 979,830 | ||||
Average cost per share repurchased (in dollars per share) | $ 57.73 | ||||
Shares repurchased amount | $ 56,600,000 |
RELATED PARTY TRANSACTIONS (Details) $ in Millions |
6 Months Ended |
---|---|
Jul. 01, 2018
USD ($)
employee
| |
Board Member [Member] | |
Related Party Transaction [Line Items] | |
Number of independent board members with transactions with the Company | employee | 2 |
Welch Packaging Group [Member] | |
Related Party Transaction [Line Items] | |
Purchases from related parties | $ 0.6 |
DNA Enterprise Inc [Member] | |
Related Party Transaction [Line Items] | |
Revenue from related parties | $ 0.3 |
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