(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (ZIP Code) | |
☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company | |||
Title of each class | Trading Symbol | Name of each exchange on which registered |
Page No. | |
PART I. FINANCIAL INFORMATION | |
ITEM 1. FINANCIAL STATEMENTS (Unaudited) | |
Condensed Consolidated Statements of Income Second Quarter and Six Months ended June 28, 2020 and June 30, 2019 | |
Condensed Consolidated Statements of Comprehensive Income Second Quarter and Six Months ended June 28, 2020 and June 30, 2019 | |
Condensed Consolidated Statements of Financial Position June 28, 2020 and December 31, 2019 | |
Condensed Consolidated Statements of Cash Flows Six Months ended June 28, 2020 and June 30, 2019 | |
Condensed Consolidated Statements of Shareholders' Equity Second Quarter and Six Months ended June 28, 2020 and June 30, 2019 | |
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 | |
Second Quarter Ended | Six Months Ended | |||||||||||||||
(thousands except per share data) | June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | ||||||||||||
NET SALES | $ | $ | $ | $ | ||||||||||||
Cost of goods sold | ||||||||||||||||
GROSS PROFIT | ||||||||||||||||
Operating Expenses: | ||||||||||||||||
Warehouse and delivery | ||||||||||||||||
Selling, general and administrative | ||||||||||||||||
Amortization of intangible assets | ||||||||||||||||
Total operating expenses | ||||||||||||||||
OPERATING INCOME | ||||||||||||||||
Interest expense, net | ||||||||||||||||
Income before income taxes | ||||||||||||||||
Income taxes | ||||||||||||||||
NET INCOME | $ | $ | $ | $ | ||||||||||||
BASIC NET INCOME PER COMMON SHARE | $ | $ | $ | $ | ||||||||||||
DILUTED NET INCOME PER COMMON SHARE | $ | $ | $ | $ | ||||||||||||
Weighted average shares outstanding – Basic | ||||||||||||||||
Weighted average shares outstanding – Diluted | ||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements. | ||||||||||||||||
Second Quarter Ended | Six Months Ended | |||||||||||||||
(thousands) | June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | ||||||||||||
NET INCOME | $ | $ | $ | $ | ||||||||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||
Unrealized gain (loss) of hedge derivatives | ( | ) | ( | ) | ( | ) | ||||||||||
Other | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
COMPREHENSIVE INCOME | $ | $ | $ | $ | ||||||||||||
As of | ||||||||
(thousands) | June 28, 2020 | December 31, 2019 | ||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Trade and other receivables, net | ||||||||
Inventories | ||||||||
Prepaid expenses and other | ||||||||
Total current assets | ||||||||
Property, plant and equipment, net | ||||||||
Operating lease right-of-use assets | ||||||||
Goodwill | ||||||||
Intangible assets, net | ||||||||
Deferred financing costs, net | ||||||||
Other non-current assets | ||||||||
TOTAL ASSETS | $ | $ | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Current maturities of long-term debt | $ | $ | ||||||
Current operating lease liabilities | ||||||||
Accounts payable | ||||||||
Accrued liabilities | ||||||||
Total current liabilities | ||||||||
Long-term debt, less current maturities, net | ||||||||
Long-term operating lease liabilities | ||||||||
Deferred tax liabilities, net | ||||||||
Other long-term liabilities | ||||||||
TOTAL LIABILITIES | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock | ||||||||
Additional paid-in-capital | ||||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
Retained earnings | ||||||||
TOTAL SHAREHOLDERS’ EQUITY | ||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
Six Months Ended | ||||||||
(thousands) | June 28, 2020 | June 30, 2019 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | ||||||||
Stock-based compensation expense | ||||||||
Amortization of convertible notes debt discount | ||||||||
Deferred income taxes | ( | ) | ||||||
Other | ( | ) | ||||||
Change in operating assets and liabilities, net of acquisitions of businesses: | ||||||||
Trade receivables | ( | ) | ( | ) | ||||
Inventories | ( | ) | ||||||
Prepaid expenses and other assets | ||||||||
Accounts payable, accrued liabilities and other | ||||||||
Net cash provided by operating activities | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Capital expenditures | ( | ) | ( | ) | ||||
Proceeds from sale of property, equipment and other investing activities | ||||||||
Business acquisitions, net of cash acquired | ( | ) | ( | ) | ||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Term debt repayments | ( | ) | ( | ) | ||||
Borrowings on revolver | ||||||||
Repayments on revolver | ( | ) | ( | ) | ||||
Stock repurchases under buyback program | ( | ) | ||||||
Cash dividends paid to shareholders | ( | ) | ||||||
Payments related to vesting of stock-based awards, net of shares tendered for taxes | ( | ) | ( | ) | ||||
Payment of deferred financing costs | ( | ) | ( | ) | ||||
Proceeds from exercise of stock options | ||||||||
Payment of contingent consideration from a business acquisition | ( | ) | ( | ) | ||||
Net cash used in financing activities | ( | ) | ( | ) | ||||
Increase (decrease) in cash and cash equivalents | ( | ) | ||||||
Cash and cash equivalents at beginning of year | ||||||||
Cash and cash equivalents at end of period | $ | $ | ||||||
Second Quarter Ended June 28, 2020 | |||||||||||||||||||||||
(thousands) | Common Stock | Additional Paid-in- Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total | ||||||||||||||||||
Balance March 29, 2020 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||
Dividends declared | — | — | — | ( | ) | ( | ) | ||||||||||||||||
Other comprehensive income, net of tax | — | — | — | ||||||||||||||||||||
Issuance of shares upon exercise of common stock options | — | — | — | ||||||||||||||||||||
Shares used to pay taxes on stock grants | ( | ) | — | — | — | ( | ) | ||||||||||||||||
Stock-based compensation expense | — | — | — | ||||||||||||||||||||
Balance June 28, 2020 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Six Months Ended June 28, 2020 | |||||||||||||||||||||||
(thousands) | Common Stock | Additional Paid-in- Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total | ||||||||||||||||||
Balance December 31, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||
Dividends declared | — | — | — | ( | ) | ( | ) | ||||||||||||||||
Other comprehensive loss, net of tax | — | — | ( | ) | ( | ) | |||||||||||||||||
Share repurchases under buyback program | ( | ) | — | ( | ) | — | — | — | ( | ) | ( | ) | |||||||||||
Issuance of shares upon exercise of common stock options | — | — | — | ||||||||||||||||||||
Shares used to pay taxes on stock grants | ( | ) | — | — | — | ( | ) | ||||||||||||||||
Stock-based compensation expense | — | — | — | ||||||||||||||||||||
Balance June 28, 2020 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Second Quarter Ended June 30, 2019 | |||||||||||||||||||||||
(thousands) | Common Stock | Additional Paid-in- Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total | ||||||||||||||||||
Balance March 31, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | ( | ) | — | ( | ) | ||||||||||||||||
Shares used to pay taxes on stock grants | ( | ) | — | — | — | ( | ) | ||||||||||||||||
Issuance of shares upon exercise of common stock options | — | — | — | ||||||||||||||||||||
Stock-based compensation expense | — | — | — | ||||||||||||||||||||
Balance June 30, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
PATRICK INDUSTRIES, INC. | |||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (cont.) | |||||||||||||||||||||||
Six Months Ended June 30, 2019 | |||||||||||||||||||||||
(thousands) | Common Stock | Additional Paid-in- Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total | ||||||||||||||||||
Balance December 31, 2018 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | ( | ) | — | ( | ) | ||||||||||||||||
Shares used to pay taxes on stock grants | ( | ) | — | — | — | ( | ) | ||||||||||||||||
Issuance of shares upon exercise of common stock options | — | — | — | ||||||||||||||||||||
Stock-based compensation expense | — | — | — | ||||||||||||||||||||
Balance June 30, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
1. | BASIS OF PRESENTATION |
2. | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
3. | REVENUE RECOGNITION |
Second Quarter Ended June 28, 2020 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total Reportable Segments | |||||||||
Market type: | ||||||||||||
Recreational Vehicle | $ | $ | $ | |||||||||
Manufactured Housing | ||||||||||||
Industrial | ||||||||||||
Marine | ||||||||||||
Total | $ | $ | $ | |||||||||
Six Months Ended June 28, 2020 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total Reportable Segments | |||||||||
Market type: | ||||||||||||
Recreational Vehicle | $ | $ | $ | |||||||||
Manufactured Housing | ||||||||||||
Industrial | ||||||||||||
Marine | ||||||||||||
Total | $ | $ | $ | |||||||||
Second Quarter Ended June 30, 2019 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total Reportable Segments | |||||||||
Market type: | ||||||||||||
Recreational Vehicle | $ | $ | $ | |||||||||
Manufactured Housing | ||||||||||||
Industrial | ||||||||||||
Marine | ||||||||||||
Total | $ | $ | $ | |||||||||
Six Months Ended June 30, 2019 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total Reportable Segments | |||||||||
Market type: | ||||||||||||
Recreational Vehicle | $ | $ | $ | |||||||||
Manufactured Housing | ||||||||||||
Industrial | ||||||||||||
Marine | ||||||||||||
Total | $ | $ | $ | |||||||||
4. | INVENTORIES |
(thousands) | June 28, 2020 | December 31, 2019 | ||||||
Raw materials | $ | $ | ||||||
Work in process | ||||||||
Finished goods | ||||||||
Less: reserve for inventory obsolescence | ( | ) | ( | ) | ||||
Total manufactured goods, net | ||||||||
Materials purchased for resale (distribution products) | ||||||||
Less: reserve for inventory obsolescence | ( | ) | ( | ) | ||||
Total materials purchased for resale (distribution products), net | ||||||||
Total inventories | $ | $ | ||||||
5. | GOODWILL AND INTANGIBLE ASSETS |
(thousands) | Manufacturing | Distribution | Total | |||||||||
Balance - December 31, 2019 | $ | $ | $ | |||||||||
Acquisitions | ||||||||||||
Adjustments to preliminary purchase price allocations | ( | ) | ||||||||||
Balance - June 28, 2020 | $ | $ | $ | |||||||||
(thousands) | June 28, 2020 | Weighted Average Useful Life (in years) | December 31, 2019 | Weighted Average Useful Life (in years) | ||||||||
Customer relationships | $ | $ | ||||||||||
Non-compete agreements | ||||||||||||
Patents | ||||||||||||
Trademarks | Indefinite | Indefinite | ||||||||||
Less: accumulated amortization | ( | ) | ( | ) | ||||||||
Intangible assets, net | $ | $ | ||||||||||
(thousands) | Manufacturing | Distribution | Total | |||||||||
Balance - December 31, 2019 | $ | $ | $ | |||||||||
Acquisitions | ||||||||||||
Amortization | ( | ) | ( | ) | ( | ) | ||||||
Impairment of intangible assets (1) | ( | ) | ( | ) | ( | ) | ||||||
Adjustments to preliminary purchase price allocations | ( | ) | ||||||||||
Balance - June 28, 2020 | $ | $ | $ | |||||||||
6. | ACQUISITIONS |
(thousands) | Trade receivables | Inventories | Property, plant and equipment | Prepaid expenses & other | Intangible assets | Goodwill | Less: Total liabilities | Less: Deferred tax liability, net | Total net assets acquired | ||||||||||||||||||
2020 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
2019 (1) | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Second Quarter Ended | Six Months Ended | |||||||||||||||
(thousands except per share data) | June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | ||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||
Net income | ||||||||||||||||
Basic net income per common share | ||||||||||||||||
Diluted net income per common share | ||||||||||||||||
7. | STOCK-BASED COMPENSATION |
8. | NET INCOME PER COMMON SHARE |
Second Quarter Ended | Six Months Ended | |||||||||||||||
(thousands except per share data) | June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | ||||||||||||
Net income for basic and diluted per share calculation | $ | $ | $ | $ | ||||||||||||
Weighted average common shares outstanding - basic | ||||||||||||||||
Effect of potentially dilutive securities | ||||||||||||||||
Weighted average common shares outstanding - diluted | ||||||||||||||||
Basic net income per common share | $ | $ | $ | $ | ||||||||||||
Diluted net income per common share | $ | $ | $ | $ | ||||||||||||
9. | DEBT |
(thousands) | June 28, 2020 | December 31, 2019 | ||||||
Long-term debt: | ||||||||
Revolver due 2024 | $ | $ | ||||||
Term loan due 2024 | ||||||||
7.5% senior notes due 2027 | ||||||||
1.0% convertible notes due 2023 | ||||||||
Total long-term debt | ||||||||
Less: convertible notes debt discount, net | ( | ) | ( | ) | ||||
Less: senior notes deferred financing costs, net | ( | ) | ( | ) | ||||
Less: current maturities of long-term debt | ( | ) | ( | ) | ||||
Less: term loan deferred financing costs, net | ( | ) | ( | ) | ||||
Total long-term debt, less current maturities, net | $ | $ | ||||||
10. | DERIVATIVE FINANCIAL INSTRUMENTS |
Fair value of derivative instruments | |||||||||
Derivatives accounted for as cash flow hedges | Balance sheet location | June 28, 2020 | December 31, 2019 | ||||||
Interest rate swaps | Other long-term liabilities | $ | $ | ||||||
11. | ACCUMULATED OTHER COMPREHENSIVE LOSS |
Second Quarter Ended June 28, 2020 | |||||||||||||||
(thousands) | Cash Flow Hedges | Other | Foreign Currency Items | Total | |||||||||||
Balance at March 29, 2020 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive income (loss) (net of tax (benefit) of ($158), $0 and $0) | ( | ) | |||||||||||||
Balance at June 28, 2020 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Six Months Ended June 28, 2020 | |||||||||||||||
(thousands) | Cash Flow Hedges | Other | Foreign Currency Items | Total | |||||||||||
Balance at December 31, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive loss (net of tax of $882, $0 and $0) | ( | ) | ( | ) | ( | ) | |||||||||
Balance at June 28, 2020 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Second Quarter Ended June 30, 2019 | |||||||||||||||
(thousands) | Cash Flow Hedges | Other | Foreign Currency Items | Total | |||||||||||
Balance at March 31, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive loss (net of tax of $659, $0 and $0) | ( | ) | ( | ) | ( | ) | |||||||||
Balance at June 30, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Six Months Ended June 30, 2019 | |||||||||||||||
(thousands) | Cash Flow Hedges | Other | Foreign Currency Items | Total | |||||||||||
Balance at December 31, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive loss (net of tax of $1,015, $0 and $0) | ( | ) | ( | ) | ( | ) | |||||||||
Balance at June 30, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
12. | LEASES |
Second Quarter Ended | |||||||
(thousands) | June 28, 2020 | June 30, 2019 | |||||
Operating lease cost | $ | $ | |||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||
Operating cash flows for operating leases | $ | $ | |||||
Right-of-use assets obtained in exchange for lease obligations: | |||||||
Operating leases | $ | $ | |||||
Six Months Ended | |||||||
(thousands) | June 28, 2020 | June 30, 2019 | |||||
Operating lease cost | $ | $ | |||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||
Operating cash flows for operating leases | $ | $ | |||||
Right-of-use assets obtained in exchange for lease obligations: | |||||||
Operating leases | $ | $ | |||||
(thousands, except lease term and discount rate) | June 28, 2020 | December 31, 2019 | |||||
Assets | |||||||
Operating lease right-of-use assets | $ | $ | |||||
Liabilities | |||||||
Operating lease liabilities, current portion | $ | $ | |||||
Long-term operating lease liabilities | |||||||
Total lease liabilities | $ | $ | |||||
Weighted average remaining lease term, operating leases (in years) | |||||
Weighted average discount rate, operating leases | % | % | |||
(thousands) | |||
2020 (excluding the six months ended June 28, 2020) | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total lease payments | |||
Less imputed interest | ( | ) | |
Total | $ | ||
13. | FAIR VALUE MEASUREMENTS |
14. | INCOME TAXES |
15. | SEGMENT INFORMATION |
Second Quarter Ended June 28, 2020 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total | |||||||||
Net outside sales | $ | $ | $ | |||||||||
Intersegment sales | ||||||||||||
Total sales | ||||||||||||
Operating income | ||||||||||||
Second Quarter Ended June 30, 2019 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total | |||||||||
Net outside sales | $ | $ | $ | |||||||||
Intersegment sales | ||||||||||||
Total sales | ||||||||||||
Operating income | ||||||||||||
Six Months Ended June 28, 2020 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total | |||||||||
Net outside sales | $ | $ | $ | |||||||||
Intersegment sales | ||||||||||||
Total sales | ||||||||||||
Operating income | ||||||||||||
Six Months Ended June 30, 2019 | ||||||||||||
(thousands) | Manufacturing | Distribution | Total | |||||||||
Net outside sales | $ | $ | $ | |||||||||
Intersegment sales | ||||||||||||
Total sales | ||||||||||||
Operating income | ||||||||||||
Second Quarter Ended | Six Months Ended | |||||||||||||||
(thousands) | June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | ||||||||||||
Operating income for reportable segments | $ | $ | $ | $ | ||||||||||||
Unallocated corporate expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Amortization | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Consolidated operating income | $ | $ | $ | $ | ||||||||||||
16. | STOCK REPURCHASE PROGRAMS |
17. | SUBSEQUENT EVENT |
Second Quarter Ended | Six Months Ended | |||||||||||
June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | |||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||
Cost of goods sold | 82.6 | 81.6 | 81.9 | 82.1 | ||||||||
Gross profit | 17.4 | 18.4 | 18.1 | 17.9 | ||||||||
Warehouse and delivery | 4.8 | 4.3 | 4.4 | 4.1 | ||||||||
Selling, general and administrative | 7.4 | 5.4 | 6.7 | 5.8 | ||||||||
Amortization of intangible assets | 2.3 | 1.3 | 1.9 | 1.4 | ||||||||
Operating income | 2.9 | 7.4 | 5.1 | 6.6 | ||||||||
Interest expense, net | 2.6 | 1.4 | 2.1 | 1.4 | ||||||||
Income taxes | 0.1 | 1.5 | 0.8 | 1.2 | ||||||||
Net income | 0.2 | 4.5 | 2.2 | 4.0 | ||||||||
Second Quarter Ended | Six Months Ended | |||||||||||||||
(thousands) | June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | ||||||||||||
Sales | ||||||||||||||||
Manufacturing | $ | 297,688 | $ | 442,606 | $ | 724,527 | $ | 876,010 | ||||||||
Distribution | 132,556 | 180,061 | 303,822 | 363,760 | ||||||||||||
Gross Profit | ||||||||||||||||
Manufacturing | 48,957 | 80,700 | 127,904 | 157,527 | ||||||||||||
Distribution | 23,192 | 30,800 | 52,388 | 59,773 | ||||||||||||
Operating Income | ||||||||||||||||
Manufacturing | 22,410 | 48,787 | 68,114 | 93,224 | ||||||||||||
Distribution | 6,938 | 10,800 | 16,906 | 19,091 | ||||||||||||
• | The term loan is due in consecutive quarterly installments in the following amounts: (i) through and including June 30, 2021, $1,250,000 and (ii) beginning September 30, 2021, and each quarter thereafter, $2,500,000, with the remaining balance due at maturity; |
• | The interest rates for borrowings under the revolver and the term loan are the Prime Rate or LIBOR |
Required | Actual | |||||
Maximum consolidated total leverage ratio (12-month period) | 4.00 | 2.31 | ||||
Minimum consolidated fixed charge coverage ratio (12-month period) | 1.50 | 5.65 | ||||
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1A. | RISK FACTORS |
• | Decreases in consumer confidence and disposable income and increases in unemployment could reduce demand for our products by our customers in all of our end markets. |
• | Tightening credit standards could negatively impact credit availability to consumers which could have an adverse effect on all of our end markets. |
• | Supply chain and shipping interruptions and constraints, volatility in demand for our products caused by sudden and significant changes in production levels by our customers or other restrictions affecting our business could adversely impact our planning and forecasting, our revenues and our operations. |
• | Disruptions in our manufacturing and supply arrangements caused by the loss or disruption of essential manufacturing and supply elements such as raw materials or other finished product components, transportation, workforce, or other manufacturing and distribution capabilities could result in our inability to meet our end market customer needs and achieve cost targets. |
• | Significant changes in the conditions in markets in which we manufacture, sell or distribute our products, including additional or expanded quarantines or "stay at home" orders, governmental or regulatory actions, closures or other restrictions that further limit or close our operating and manufacturing facilities, restrict our employees’ ability to travel or perform necessary business functions, restrict or prevent consumers from having access to our products, or otherwise prevent our suppliers or customers from sufficiently staffing operations, could adversely impact operations necessary for the production, distribution, sale, and support of our products. |
• | Failure of third parties on which we rely, including our customers, suppliers, distributors, commercial banks, and other external business partners, to meet their obligations to the Company or to timely meet those obligations, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties, may adversely impact our operations. |
• | Certain of our customers may experience financial difficulties, including bankruptcy or insolvency, as a result of the impact of COVID-19. If any of our customers suffer significant financial difficulties, they may be unable to pay amounts due to us timely or at all. Further, we may have to negotiate significant discounts and/or extended financing terms with these customers in such a situation. If we are unable to collect our accounts receivable as they come due, there may be a material adverse effect on our financial condition, results of operations and cash flows. |
• | If the Company is unable to maintain normal operations, or subsequently is unable to resume normal operations in a timely fashion, its cash flows could be adversely affected, making it difficult to maintain adequate liquidity or meet debt covenants. As a result, the Company may be required to pursue additional sources of financing to meet |
• | Disruptions to our operations related to COVID-19 as a result of absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who elect not to come to work due to the illness affecting others at our facilities, or due to quarantines. |
• | The COVID-19 pandemic has led to and could continue to lead to severe disruption and volatility in the United States and global capital markets, which could increase our cost of capital and adversely affect our ability to access the capital markets in the future. In addition, trading prices in the public equity markets, including prices of our common stock, have been highly volatile as a result of the COVID-19 pandemic. |
• | Sustained adverse impacts to the Company, certain suppliers, and customers may also affect the Company’s future valuation of certain assets and therefore may increase the likelihood of an impairment charge, write-off, or reserve associated with such assets, including goodwill, indefinite and finite-lived intangible assets, property and equipment, inventories, accounts receivable, tax assets, and other assets. |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) | |||||||||
March 30 - April 26, 2020 | — | $ | — | — | 43,515,568 | ||||||||
April 27 - May 31, 2020 | 2,383 | 43.43 | — | 43,515,568 | |||||||||
June 1 - June 28, 2020 | 143 | 62.37 | — | 43,515,568 | |||||||||
2,526 | — | ||||||||||||
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 | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |
PATRICK INDUSTRIES, INC. | ||
(Registrant) | ||
Date: August 6, 2020 | By: | /s/ Andy L. Nemeth |
Andy L. Nemeth | ||
President and Chief Executive Officer | ||
Date: August 6, 2020 | By: | /s/ John A. Forbes |
John A. Forbes | ||
Interim 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 6, 2020 | /s/ Andy L. Nemeth |
Andy L. Nemeth President and 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 6, 2020 | /s/ John A. Forbes |
John A. Forbes | ||
Interim Chief Financial Officer | ||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
| Income Statement [Abstract] | ||||
| NET SALES | $ 424,045 | $ 613,218 | $ 1,013,277 | $ 1,221,436 |
| Cost of goods sold | 350,324 | 500,557 | 830,075 | 1,002,227 |
| GROSS PROFIT | 73,721 | 112,661 | 183,202 | 219,209 |
| Operating Expenses: | ||||
| Warehouse and delivery | 20,209 | 26,270 | 44,941 | 50,311 |
| Selling, general and administrative | 31,628 | 32,894 | 67,497 | 70,586 |
| Amortization of intangible assets | 9,778 | 8,268 | 19,379 | 17,257 |
| Total operating expenses | 61,615 | 67,432 | 131,817 | 138,154 |
| OPERATING INCOME | 12,106 | 45,229 | 51,385 | 81,055 |
| Interest expense, net | 10,821 | 8,636 | 21,313 | 17,619 |
| Income before income taxes | 1,285 | 36,593 | 30,072 | 63,436 |
| Income taxes | 571 | 9,177 | 8,171 | 15,171 |
| NET INCOME | $ 714 | $ 27,416 | $ 21,901 | $ 48,265 |
| BASIC NET INCOME PER COMMON SHARE (in dollars per share) | $ 0.03 | $ 1.19 | $ 0.96 | $ 2.09 |
| DILUTED NET INCOME PER COMMON SHARE (in dollars per share) | $ 0.03 | $ 1.18 | $ 0.95 | $ 2.07 |
| Weighted average shares outstanding - Basic (in shares) | 22,667 | 23,102 | 22,840 | 23,071 |
| Weighted average shares outstanding - Diluted (in shares) | 22,932 | 23,316 | 23,098 | 23,282 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
| Statement of Other Comprehensive Income [Abstract] | ||||
| Net income | $ 714 | $ 27,416 | $ 21,901 | $ 48,265 |
| Other comprehensive (loss) income, net of tax: | ||||
| Unrealized gain (loss) of hedge derivatives | 464 | (1,931) | (2,542) | (2,985) |
| Other | (15) | (94) | (52) | (67) |
| Total other comprehensive income (loss) | 449 | (2,025) | (2,594) | (3,052) |
| COMPREHENSIVE INCOME | $ 1,163 | $ 25,391 | $ 19,307 | $ 45,213 |
BASIS OF PRESENTATION |
6 Months Ended | ||||||
|---|---|---|---|---|---|---|---|
Jun. 28, 2020 | |||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||
| BASIS OF PRESENTATION |
The accompanying unaudited condensed consolidated financial statements of Patrick Industries, Inc. (“Patrick”, the “Company”, "we", "our") contain all adjustments (consisting of normal recurring adjustments) that we believe are necessary to present fairly the Company’s financial position as of June 28, 2020 and December 31, 2019, and its results of operations and cash flows for the second quarter and six months ended June 28, 2020 and June 30, 2019. 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. Certain immaterial reclassifications have been made to the prior period presentation to conform to the current period presentation. For a description of significant accounting policies used by the Company in the preparation of its consolidated financial statements, please refer to Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The December 31, 2019 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 June 28, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020. The Company maintains its financial records on the basis of a fiscal year ending on December 31, with the fiscal quarters spanning approximately thirteen weeks. The first quarter ends on the Sunday closest to the end of the first thirteen-week period. The second and third quarters are thirteen weeks in duration and the fourth quarter is the remainder of the year. The second quarter of fiscal year 2020 ended on June 28, 2020 and the second quarter of fiscal year 2019 ended on June 30, 2019. In preparation of Patrick’s condensed consolidated financial statements as of and for the second quarter and six months ended June 28, 2020, management evaluated all subsequent events and 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 17 for more information.
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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
6 Months Ended | ||||||
|---|---|---|---|---|---|---|---|
Jun. 28, 2020 | |||||||
| Accounting Policies [Abstract] | |||||||
| RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
Goodwill Impairment In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". This ASU 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 Company adopted ASU 2017-04 on January 1, 2020 and the adoption did not have a material impact on the condensed consolidated financial statements. Credit Losses In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments”, which amends certain provisions of Accounting Standards Codification ("ASC") 326, “Financial Instruments-Credit Loss”. The ASU changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held to maturity debt securities, loans and other instruments, entities are required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. Additionally, entities are required to disclose more information with respect to credit quality indicators, including information used to track credit quality by year of origination for most financing receivables. The Company adopted ASU 2016-13 on January 1, 2020 and the adoption did not have a material impact on the condensed consolidated financial statements. Income Taxes In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes", a new standard to simplify the accounting for income taxes. The guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this standard on our consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)", a new standard providing final guidance to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. The guidance is effective upon issuance and generally can be applied through December 31, 2022. We are currently evaluating the impact of this standard on our consolidated financial statements.
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REVENUE RECOGNITION |
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| REVENUE RECOGNITION |
In the following table, revenue from contracts with customers, net of intersegment sales, is disaggregated by market type and by reportable segment, consistent with how the Company believes the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors:
Contract Liabilities Contract liabilities, representing upfront payments from customers received prior to satisfying performance obligations, were immaterial as of the beginning and end of all periods presented and changes in contract liabilities were immaterial during all periods presented.
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INVENTORIES |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORIES |
Inventories consist of the following:
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GOODWILL AND INTANGIBLE ASSETS |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GOODWILL AND INTANGIBLE ASSETS |
Changes in the carrying amount of goodwill for the six months ended June 28, 2020 by segment are as follows:
Intangible assets, net consist of the following as of June 28, 2020 and December 31, 2019:
Changes in the carrying value of intangible assets for the six months ended June 28, 2020 by segment are as follows:
(1) Certain immaterial operations permanently ceased activities during the second quarter of 2020. As a result, we recorded a $2.0 million pre-tax impairment of customer relationships and trademarks of these operations after determining the net carrying value of the assets was no longer recoverable. The impairment was calculated using our internal projections of discounted cash flows, which rely on Level 3 inputs in the fair value hierarchy based on the unobservable nature of the underlying data. The impairment was recorded in selling, general and administrative in our condensed consolidated statements of income for the second quarter and six months ended June 28, 2020. Valuation of Goodwill and Indefinite-Lived Intangibles We test goodwill and indefinite-lived intangible assets (trademarks) for impairment on an annual basis (as of September 30, 2019 for our most recent annual tests) and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. Our 2019 tests indicated that there was no impairment, as fair value exceeded carrying values, and we concluded that none of our reporting units or trademarks were at risk of failing the impairment test. Despite the excess fair value identified in our 2019 impairment tests, we assessed during the quarter and six months ended June 28, 2020 whether the impact of the COVID-19 pandemic on overall macroeconomic conditions and our operating income for the second quarter and six months ended June 28, 2020 indicated that at June 28, 2020 it was more likely than not that our goodwill and trademarks were impaired. We evaluated among other factors (i) the results of our 2019 impairment tests; (ii) our market capitalization at June 28, 2020 in relation to the carrying amount of shareholders’ equity at June 28, 2020 and to fair values determined during our 2019 impairment tests; (iii) the results of our operations during the second quarter and six months ended June 28, 2020 in relation to our projections; and (iv) our analysis of the impact on the fair values determined during our 2019 impairment tests using more recent projections and discount rates that account for various risks and uncertainties, including the duration and extent of impact to our business, related to the COVID-19 pandemic. Based on the results of our assessment, and other than immaterial impairments discussed above, we determined it was more likely than not that our goodwill and trademarks were not impaired as of June 28, 2020. However, we are unable to predict how long the COVID-19-related conditions will persist, what additional measures may be introduced by governments or private parties, or what effect any such additional measures may have on demand for our products or those of our customers in each of our end markets. As such, we may be required to perform quantitative impairment tests in future periods preceding our annual impairment test date, and the outcome of such tests could result in an impairment of our goodwill or our trademarks.
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ACQUISITIONS |
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| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACQUISITIONS |
General The Company did not make any acquisitions in the second quarter of 2020 and completed three acquisitions in the first six months of 2020 (the "2020 Acquisitions"). For the second quarter and six months ended June 28, 2020, net sales included in the Company's condensed consolidated statements of income related to the 2020 acquisitions were $3.3 million and $3.8 million, respectively. Acquisition-related costs incurred in the first six months of 2020 were immaterial. The Company made no acquisitions in the first six months of 2019. As of June 28, 2020, the aggregate fair value of the estimated contingent consideration payments was $7.8 million, $5.9 million of which is included in the line item "Accrued liabilities" and $1.9 million is included in “Other long-term liabilities” on the condensed consolidated statement of financial position. At December 31, 2019, the aggregate fair value of the estimated contingent consideration payments was $9.6 million, $2.0 million of which was included in the line item "Accrued liabilities" and $7.6 million was included in "Other long-term liabilities". The liabilities for contingent consideration expire at various dates through December 2023. The contingent consideration arrangements are subject to a maximum payment amount of up to $12.3 million in the aggregate. In the first six months of 2020, the Company made cash payments of $2.0 million related to contingent consideration arrangements, recording a corresponding reduction to accrued liabilities. 2020 Acquisitions Acquisitions completed in the first six months of 2020 include the previously announced acquisitions of Maple City Woodworking Corporation, a Goshen, Indiana-based manufacturer of hardwood cabinet doors and fascia for the recreational vehicle market, and SEI Manufacturing, Inc., a Cromwell, Indiana-based manufacturer of towers, T-Tops, hardtops, rails, gates and other aluminum exterior products for the marine market. The total cash consideration for the 2020 Acquisitions was $25.0 million. The preliminary purchase price allocations are subject to valuation activities being finalized, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its estimates. The 2020 Acquisitions are included in the Manufacturing segment. 2019 Acquisitions The Company completed three acquisitions in 2019 ( the "2019 Acquisitions"), including the previously announced acquisitions of Topline Counters, LLC, a Sumner, Washington-based designer and manufacturer of kitchen and bathroom countertops for residential and commercial markets, and G.G. Schmitt & Sons, Inc. ("G.G. Schmitt"), a Sarasota, Florida-based designer and manufacturer of customized hardware and structural components for the marine industry. The total cash consideration for the 2019 Acquisitions was $53.1 million, plus contingent consideration over a one-year period based on future performance in connection with the acquisition of G.G. Schmitt. The preliminary purchase price allocations are subject to valuation activities being finalized, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its estimates. Changes to preliminary purchase accounting estimates recorded in the second quarter and first six months of 2020 related to the 2019 Acquisitions were immaterial. The 2019 Acquisitions are included in the Manufacturing segment. The following table summarizes the fair values of the assets acquired and the liabilities assumed as of the date of acquisition for the 2020 Acquisitions and the 2019 Acquisitions:
(1) Total net assets acquired for the 2019 Acquisitions reflect the preliminary estimated liability of $2.6 million pertaining to the fair value of contingent consideration based on future performance relating to the acquisition of G.G. Schmitt. Pro Forma Information The following pro forma information for the second quarter and six months ended June 28, 2020 and June 30, 2019 assumes the 2020 Acquisitions and the 2019 Acquisitions occurred as of the beginning of the year immediately preceding each such acquisition. The pro forma information contains the actual operating results of the 2020 Acquisitions and 2019 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 incremental borrowings incurred in connection with each transaction. In addition, the pro forma information includes amortization expense, in the aggregate, related to intangible assets acquired in connection with the transactions of $0.2 million for the six months ended June 28, 2020 and $0.6 million and $1.2 million for the second quarter and six months ended June 30, 2019, respectively.
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STOCK-BASED COMPENSATION |
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Jun. 28, 2020 | |||||||
| Share-based Payment Arrangement [Abstract] | |||||||
| STOCK-BASED COMPENSATION |
The Company recorded expense of $2.0 million and $6.3 million for the second quarter and six months ended June 28, 2020, respectively, for its stock-based compensation plans in the condensed consolidated statements of income. Stock-based compensation expense for the second quarter and six months ended June 28, 2020 includes a reduction of expense due to certain forfeitures and adjustments in the amount of $2.4 million. For the second quarter and six months ended June 30, 2019, the Company recorded stock-based compensation expense of $4.3 million and $8.2 million, respectively. The Board approved various stock-based grants under the Company’s 2009 Omnibus Incentive Plan in the first six months of 2020 totaling 275,740 shares in the aggregate at an average fair value of $53.78 at grant date for a total fair value at grant date of $14.8 million. In addition, in the second quarter of 2020, the Board approved stock option grants representing 465,000 shares in the aggregate at an exercise price of $41.33 per share. The total cost to be expensed over the three-year vesting period will be $6.6 million, or $14.25 per share, with an underlying volatility of 42% under the Black Scholes option pricing model. As of June 28, 2020, there was approximately $30.3 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 19.9 months.
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NET INCOME PER COMMON SHARE |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NET INCOME PER COMMON SHARE |
Net income per common share calculated for the second quarter and six months of 2020 and 2019 is as follows:
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DEBT |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEBT |
A summary of total debt outstanding at June 28, 2020 and December 31, 2019 is as follows:
There were no material changes to any of our debt arrangements during the second quarter and six months ended June 28, 2020. Interest rates for borrowings under the revolver and term loan are the prime rate or LIBOR plus a margin. At June 28, 2020, all of the Company's borrowings under the revolver and term loan were under the LIBOR-based option. The interest rate for incremental borrowings at June 28, 2020 was LIBOR plus 1.5% (or 1.69%) for the LIBOR-based option. The fee payable on committed but unused portions of the revolver was 0.20% at June 28, 2020. |
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DERIVATIVE FINANCIAL INSTRUMENTS |
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Jun. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DERIVATIVE FINANCIAL INSTRUMENTS |
The Company's credit facility exposes the Company to risks associated with the variability in interest expense associated with fluctuations in LIBOR. To partially mitigate this risk, the Company has historically entered into interest rate swaps. As of June 28, 2020, the Company had a combined notional principal amount of $200.0 million of interest rate swap agreements, all of which are designated as cash flow hedges. These swap agreements effectively convert the interest expense associated with a portion of the Company's variable rate debt from variable interest rates to fixed interest rates and have maturities ranging from February 2022 to March 2022. The following table summarizes the fair value of derivative contracts included in the condensed consolidated statements of financial position (in thousands):
The interest rate swaps are comprised of over-the-counter derivatives, which are valued using models that primarily rely on observable inputs such as yield curves, which are classified as Level 2 in the fair value hierarchy. |
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ACCUMULATED OTHER COMPREHENSIVE LOSS |
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| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCUMULATED OTHER COMPREHENSIVE LOSS |
Accumulated other comprehensive loss includes unrealized gains and losses on derivatives that qualify as hedges of cash flows, cumulative foreign currency translation and other adjustments. The activity in accumulated other comprehensive loss during the second quarter and six months ended June 28, 2020 and June 30, 2019 was as follows:
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LEASES |
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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASES |
Lease expense, supplemental cash flow information, and other information related to leases were as follows:
Balance sheet information related to leases was as follows:
Maturities of lease liabilities were as follows at June 28, 2020:
Leases have remaining lease terms of one year to ten years.
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FAIR VALUE MEASUREMENTS |
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Jun. 28, 2020 | |||||||
| Fair Value Disclosures [Abstract] | |||||||
| FAIR VALUE MEASUREMENTS |
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INCOME TAXES |
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Jun. 28, 2020 | |||||||
| Income Tax Disclosure [Abstract] | |||||||
| INCOME TAXES |
The effective tax rate in the second quarter of 2020 and 2019 was 44.4% and 25.1%, respectively, and the effective tax rate for the comparable six month periods was 27.2% and 23.9%, respectively. The effective tax rate for the second quarter and six months of 2020 reflects the impact of $2.2 million of permanent tax differences due to certain Coronavirus Aid, Relief, and Economic Security Act payroll tax credits. In addition, the effective tax rate for the first six months of 2019 includes the impact of the recognition of excess tax benefits on share-based compensation that was recorded as a reduction to income tax expense upon realization in the amount of $0.9 million. Cash paid for income taxes for the second quarter and six months of 2020 was immaterial. The Company paid income taxes of $21.1 million and $22.6 million in the second quarter and six months of 2019, respectively.
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SEGMENT INFORMATION |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT INFORMATION |
The Company has two reportable segments, Manufacturing and Distribution, which are based on its method of internal reporting, which segregates its businesses based on the manner in which its chief operating decision maker allocates resources, evaluates financial results, and determines compensation. The tables below present 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.
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STOCK REPURCHASE PROGRAMS |
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Jun. 28, 2020 | |||||||
| Equity [Abstract] | |||||||
| STOCK REPURCHASE PROGRAM |
In March 2020, the Board approved a new stock repurchase program for up to $50 million of its common stock, including amounts remaining under previous authorizations. Approximately $43.5 million remains in the amount of the Company's common stock that may be acquired under the current stock repurchase program as of June 28, 2020. No stock repurchases were made in the second quarter of 2020. In the first six months 2020, the Company repurchased 456,155 shares of its common stock at an average price of $34.09 per share at an aggregate cost of $15.6 million. The Company did not repurchase any of its common stock in the second quarter and first six months of 2019.
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SUBSEQUENT EVENT |
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Jun. 28, 2020 | |||||||
| Subsequent Events [Abstract] | |||||||
| SUBSEQUENT EVENT |
In August 2020, the Company announced the completion of the acquisition of Inland Plywood Company (“Inland”), a supplier, laminator and wholesale distributor of treated, untreated, and laminated plywood, medium density overlay panels, and other specialty products, primarily serving the marine market as well as the recreational vehicle and industrial markets for a net initial purchase price of $46.0 million. Inland is headquartered in Pontiac, Michigan with an additional facility located in Cocoa, Florida. The acquisition of Inland includes the acquisition of working capital, machinery and equipment, and real estate.
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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recent Issued Accounting Pronouncements | Goodwill Impairment In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". This ASU 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 Company adopted ASU 2017-04 on January 1, 2020 and the adoption did not have a material impact on the condensed consolidated financial statements. Credit Losses In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments”, which amends certain provisions of Accounting Standards Codification ("ASC") 326, “Financial Instruments-Credit Loss”. The ASU changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held to maturity debt securities, loans and other instruments, entities are required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. Additionally, entities are required to disclose more information with respect to credit quality indicators, including information used to track credit quality by year of origination for most financing receivables. The Company adopted ASU 2016-13 on January 1, 2020 and the adoption did not have a material impact on the condensed consolidated financial statements. Income Taxes In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes", a new standard to simplify the accounting for income taxes. The guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this standard on our consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)", a new standard providing final guidance to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. The guidance is effective upon issuance and generally can be applied through December 31, 2022. We are currently evaluating the impact of this standard on our consolidated financial statements.
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| Revenue from Contract with Customer |
In the following table, revenue from contracts with customers, net of intersegment sales, is disaggregated by market type and by reportable segment, consistent with how the Company believes the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors:
Contract Liabilities Contract liabilities, representing upfront payments from customers received prior to satisfying performance obligations, were immaterial as of the beginning and end of all periods presented and changes in contract liabilities were immaterial during all periods presented.
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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 segment, consistent with how the Company believes the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors:
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INVENTORIES (Tables) |
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| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of inventory | Inventories consist of the following:
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GOODWILL AND INTANGIBLE ASSETS (Tables) |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of goodwill | Changes in the carrying amount of goodwill for the six months ended June 28, 2020 by segment are as follows:
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| Schedule of intangible assets, net | Intangible assets, net consist of the following as of June 28, 2020 and December 31, 2019:
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| Schedule of changes in intangible assets | Changes in the carrying value of intangible assets for the six months ended June 28, 2020 by segment are as follows:
(1) Certain immaterial operations permanently ceased activities during the second quarter of 2020. As a result, we recorded a $2.0 million pre-tax impairment of customer relationships and trademarks of these operations after determining the net carrying value of the assets was no longer recoverable. The impairment was calculated using our internal projections of discounted cash flows, which rely on Level 3 inputs in the fair value hierarchy based on the unobservable nature of the underlying data. The impairment was recorded in selling, general and administrative in our condensed consolidated statements of income for the second quarter and six months ended June 28, 2020.
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ACQUISITIONS (Tables) |
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Jun. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of assets acquired and liabilities assumed | The following table summarizes the fair values of the assets acquired and the liabilities assumed as of the date of acquisition for the 2020 Acquisitions and the 2019 Acquisitions:
(1) Total net assets acquired for the 2019 Acquisitions reflect the preliminary estimated liability of $2.6 million pertaining to the fair value of contingent consideration based on future performance relating to the acquisition of G.G. Schmitt.
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| Schedule of pro forma information | The pro forma information includes financing and interest expense charges based on incremental borrowings incurred in connection with each transaction. In addition, the pro forma information includes amortization expense, in the aggregate, related to intangible assets acquired in connection with the transactions of $0.2 million for the six months ended June 28, 2020 and $0.6 million and $1.2 million for the second quarter and six months ended June 30, 2019, respectively.
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NET INCOME PER COMMON SHARE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of earnings per share | Net income per common share calculated for the second quarter and six months of 2020 and 2019 is as follows:
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DEBT (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of total debt outstanding | A summary of total debt outstanding at June 28, 2020 and December 31, 2019 is as follows:
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DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of derivative liabilities at fair value | The following table summarizes the fair value of derivative contracts included in the condensed consolidated statements of financial position (in thousands):
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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accumulated other comprehensive income (Loss) | The activity in accumulated other comprehensive loss during the second quarter and six months ended June 28, 2020 and June 30, 2019 was as follows:
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LEASES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease expense, supplemental cash flow and other lease information | Lease expense, supplemental cash flow information, and other information related to leases were as follows:
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| Lease assets and liabilities | Balance sheet information related to leases was as follows:
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| Operating lease liability maturity | Maturities of lease liabilities were as follows at June 28, 2020:
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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 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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INVENTORIES (Details) - USD ($) $ in Thousands |
Jun. 28, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Inventory [Line Items] | ||
| Raw materials | $ 174,758 | $ 162,238 |
| Work in process | 14,143 | 14,272 |
| Finished goods | 27,617 | 28,446 |
| Total manufactured goods, net | 204,464 | 194,833 |
| Materials purchased for resale (distribution products) | 59,523 | 60,918 |
| Total materials purchased for resale (distribution products), net | 57,227 | 59,037 |
| Total inventories | 261,691 | 253,870 |
| Manufactured Goods | ||
| Inventory [Line Items] | ||
| Less: reserve for inventory obsolescence | (12,054) | (10,123) |
| Distributed Goods | ||
| Inventory [Line Items] | ||
| Less: reserve for inventory obsolescence | $ (2,296) | $ (1,881) |
GOODWILL AND INTANGIBLE ASSETS - Carrying Amount of Goodwill by Segment (Details) $ in Thousands |
6 Months Ended |
|---|---|
|
Jun. 28, 2020
USD ($)
| |
| Goodwill [Roll Forward] | |
| Balance - December 31, 2019 | $ 319,349 |
| Acquisitions | 6,008 |
| Adjustments to preliminary purchase price allocations | 1,121 |
| Balance - June 28, 2020 | 326,478 |
| Manufacturing | |
| Goodwill [Roll Forward] | |
| Balance - December 31, 2019 | 268,402 |
| Acquisitions | 6,008 |
| Adjustments to preliminary purchase price allocations | (603) |
| Balance - June 28, 2020 | 273,807 |
| Distribution | |
| Goodwill [Roll Forward] | |
| Balance - December 31, 2019 | 50,947 |
| Acquisitions | 0 |
| Adjustments to preliminary purchase price allocations | 1,724 |
| Balance - June 28, 2020 | $ 52,671 |
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
| Intangible Assets [Roll Forward] | ||||
| Balance - December 31, 2019 | $ 357,014 | |||
| Acquisitions | 9,220 | |||
| Amortization | $ (9,778) | $ (8,268) | (19,379) | $ (17,257) |
| Impairment of intangible assets | (2,000) | (1,950) | ||
| Adjustments to preliminary purchase price allocations | 0 | |||
| Balance - June 28, 2020 | 344,905 | 344,905 | ||
| Manufacturing | ||||
| Intangible Assets [Roll Forward] | ||||
| Balance - December 31, 2019 | 282,123 | |||
| Acquisitions | 9,220 | |||
| Amortization | (15,838) | |||
| Impairment of intangible assets | (119) | |||
| Adjustments to preliminary purchase price allocations | 138 | |||
| Balance - June 28, 2020 | 275,524 | 275,524 | ||
| Distribution | ||||
| Intangible Assets [Roll Forward] | ||||
| Balance - December 31, 2019 | 74,891 | |||
| Acquisitions | 0 | |||
| Amortization | (3,541) | |||
| Impairment of intangible assets | (1,831) | |||
| Adjustments to preliminary purchase price allocations | (138) | |||
| Balance - June 28, 2020 | $ 69,381 | $ 69,381 | ||
ACQUISITIONS - Fair Value of Assets Acquired, Summary (Details) - USD ($) $ in Thousands |
Jun. 28, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Business Acquisition [Line Items] | ||
| Goodwill | $ 326,478 | $ 319,349 |
| Contingent consideration liability | 7,800 | 9,600 |
| Acquired Entities | ||
| Business Acquisition [Line Items] | ||
| Trade receivables | 962 | 9,711 |
| Inventories | 1,883 | 6,012 |
| Property, plant and equipment | 7,913 | 5,380 |
| Prepaid expenses & other | 17 | 104 |
| Intangible assets | 9,220 | 17,765 |
| Goodwill | 6,008 | 25,205 |
| Less: Total liabilities | 1,005 | 6,512 |
| Less: Deferred tax liability, net | 0 | 1,922 |
| Total net assets acquired | $ 24,998 | 55,743 |
| G.G. Schmitt & Sons, Inc. | ||
| Business Acquisition [Line Items] | ||
| Contingent consideration liability | $ 2,600 |
ACQUISITIONS - Pro Forma Information Related to Acquisitions (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
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| Business Combinations [Abstract] | ||||
| Revenue | $ 424,045 | $ 636,454 | $ 1,018,631 | $ 1,267,907 |
| Net income | $ 714 | $ 28,949 | $ 22,480 | $ 51,140 |
| Basic net income per common share (in dollars per share) | $ 0.03 | $ 1.25 | $ 0.98 | $ 2.22 |
| Diluted net income per common share (in dollars per share) | $ 0.03 | $ 1.24 | $ 0.97 | $ 2.20 |
STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Share-based compensation expense | $ 2.0 | $ 4.3 | $ 6.3 | $ 8.2 |
| Share-based compensation expense, forfeitures and modifications | 2.4 | $ 2.4 | ||
| Granted shares (in shares) | 275,740 | |||
| Average fair value of shares granted (in dollars per share) | $ 53.78 | |||
| Fair value of shares granted, amount | $ 14.8 | |||
| Weighted average exercise price (in dollars per share) | $ 41.33 | |||
| Cost to be expensed | $ 6.6 | $ 6.6 | ||
| Cost to be expensed (in dollars per share) | $ 14.25 | $ 14.25 | ||
| Underlying volatility (percent) | 42.00% | |||
| Unrecognized compensation cost | $ 30.3 | $ 30.3 | ||
| Weighted average recognition period | 19 months 27 days | |||
| Stock Options | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Number of shares approved (in shares) | 465,000 | 465,000 | ||
| Vesting period | 3 years | |||
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 | ||
|---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
| Earnings Per Share [Abstract] | ||||
| Net income for basic and diluted per share calculation | $ 714 | $ 27,416 | $ 21,901 | $ 48,265 |
| Weighted average shares outstanding - basic (in shares) | 22,667 | 23,102 | 22,840 | 23,071 |
| Effect of potentially dilutive securities (in shares) | 265 | 214 | 258 | 211 |
| Weighted average common shares outstanding - diluted (in shares) | 22,932 | 23,316 | 23,098 | 23,282 |
| Basic net income per common share (in dollars per share) | $ 0.03 | $ 1.19 | $ 0.96 | $ 2.09 |
| Diluted net income per common share (in dollars per share) | $ 0.03 | $ 1.18 | $ 0.95 | $ 2.07 |
DEBT - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands |
Jun. 28, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Debt Instrument [Line Items] | ||
| Total long-term debt | $ 703,750 | $ 705,000 |
| Less: convertible notes debt discount, net | (19,755) | (23,260) |
| Less: current maturities of long-term debt | (5,000) | (5,000) |
| Less: term loan deferred financing costs, net | (492) | (542) |
| Total long-term debt, less current maturities, net | 673,138 | 670,354 |
| Revolver due 2024 | ||
| Debt Instrument [Line Items] | ||
| Total long-term debt | 135,000 | 135,000 |
| Term loan due 2024 | ||
| Debt Instrument [Line Items] | ||
| Total long-term debt | $ 96,250 | 97,500 |
| 1.0% convertible notes due 2023 | ||
| Debt Instrument [Line Items] | ||
| Stated interest rate | 1.00% | |
| Total long-term debt | $ 172,500 | 172,500 |
| 7.5% senior notes due 2027 | Senior Notes | ||
| Debt Instrument [Line Items] | ||
| Stated interest rate | 7.50% | |
| 7.5% senior notes due 2027 | $ 300,000 | 300,000 |
| Less: senior notes deferred financing costs, net | $ (5,365) | $ (5,844) |
DEBT - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
| Line of Credit Facility [Line Items] | ||||
| Interest paid | $ 15.6 | $ 6.3 | $ 18.2 | $ 12.8 |
| Revolving Credit Facility | ||||
| Line of Credit Facility [Line Items] | ||||
| Unused capacity, commitment fee percentage | 0.20% | |||
| Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | ||||
| Line of Credit Facility [Line Items] | ||||
| Debt instrument, basis spread on variable rate | 1.50% | |||
| Debt instrument, effective interest rate | 1.69% | 1.69% | ||
DERIVATIVE FINANCIAL INSTRUMENTS - Narrative (Details) $ in Millions |
Jun. 28, 2020
USD ($)
|
|---|---|
| Designated as Hedging Instrument | Interest Rate Swap | |
| Derivative [Line Items] | |
| Derivative amount | $ 200.0 |
DERIVATIVE FINANCIAL INSTRUMENTS - Derivative Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands |
Jun. 28, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Designated as Hedging Instrument | Interest Rate Swap | ||
| Derivative [Line Items] | ||
| Fair value of derivative instruments | $ 9,292 | $ 5,868 |
LEASES - Lease Expense, Supplemental Cash Flow and Other Lease Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
| Leases [Abstract] | ||||
| Operating lease cost | $ 8,399 | $ 7,901 | $ 16,568 | $ 15,688 |
| Cash paid for amounts included in the measurement of lease liabilities: | ||||
| Operating cash flows for operating leases | 8,279 | 6,875 | 16,362 | 13,599 |
| Right-of-use assets obtained in exchange for lease obligations: | ||||
| Operating leases | $ 5,474 | $ 8,668 | $ 17,902 | $ 9,245 |
LEASES - Lease Assets and Liabilities (Details) - USD ($) $ in Thousands |
Jun. 28, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Assets | ||
| Operating lease right-of-use assets | $ 96,065 | $ 93,546 |
| Liabilities | ||
| Operating lease liabilities, current portion | 28,567 | 27,694 |
| Long-term operating lease liabilities | 68,318 | 66,467 |
| Total lease liabilities | $ 96,885 | $ 94,161 |
| Weighted average remaining lease term, operating leases (in years) | 4 years 1 month 6 days | 4 years 2 months 12 days |
| Weighted average discount rate, operating leases | 3.70% | 3.70% |
LEASES - Operating Lease Liability Maturity (Details) - USD ($) $ in Thousands |
Jun. 28, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Leases [Abstract] | ||
| 2020 (excluding the six months ended June 28, 2020) | $ 16,235 | |
| 2021 | 28,873 | |
| 2022 | 22,920 | |
| 2023 | 17,072 | |
| 2024 | 11,341 | |
| Thereafter | 7,955 | |
| Total lease payments | 104,396 | |
| Less imputed interest | (7,511) | |
| Total lease liabilities | $ 96,885 | $ 94,161 |
LEASES - Narrative (Details) |
6 Months Ended |
|---|---|
Jun. 28, 2020 | |
| Minimum | |
| Lessee, Lease, Description [Line Items] | |
| Remaining lease term | 1 year |
| Maximum | |
| Lessee, Lease, Description [Line Items] | |
| Remaining lease term | 10 years |
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Millions |
Jun. 28, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Cash equivalents, fair value | $ 90.0 | $ 132.6 |
| Fair Value, Inputs, Level 2 | Senior Notes | 7.50% Senior Notes Due 2027 | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Fair value of senior notes | 306.2 | 320.3 |
| Fair Value, Inputs, Level 2 | 1.0% Convertible Notes Due 2023 | Convertible Senior Notes Due 2023 | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Fair value of convertible debt | $ 166.6 | $ 162.5 |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
| Income Tax Disclosure [Abstract] | ||||
| Effective income tax rate | 44.40% | 25.10% | 27.20% | 23.90% |
| Income tax impact on permanent tax | $ 2.2 | $ 2.2 | ||
| Excess tax benefit tax | $ 0.9 | |||
| Income taxes paid | $ 21.1 | $ 22.6 | ||
SEGMENT INFORMATION - Reconciliation of Segment Operating Income to Consolidated Operating Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
| Segment Reporting Information [Line Items] | ||||
| Operating income | $ 12,106 | $ 45,229 | $ 51,385 | $ 81,055 |
| Unallocated corporate expenses | (61,615) | (67,432) | (131,817) | (138,154) |
| Amortization | (9,778) | (8,268) | (19,379) | (17,257) |
| Operating Segments | ||||
| Segment Reporting Information [Line Items] | ||||
| Operating income | 29,348 | 59,587 | 85,020 | 112,315 |
| Segment Reconciling Items | ||||
| Segment Reporting Information [Line Items] | ||||
| Unallocated corporate expenses | (7,464) | (6,090) | (14,256) | (14,003) |
| Amortization | $ (9,778) | $ (8,268) | $ (19,379) | $ (17,257) |
STOCK REPURCHASE PROGRAMS - Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |
|---|---|---|---|
Jun. 28, 2020 |
Jun. 28, 2020 |
Mar. 29, 2020 |
|
| Equity [Abstract] | |||
| Authorized share repurchase program amount | $ 50,000,000 | ||
| Remaining authorized shares to be purchased amount | $ 43,500,000 | $ 43,500,000 | |
| Shares repurchased (in shares) | 0 | 456,155 | |
| Average cost per share repurchased (in dollars per share) | $ 34.09 | ||
| Cost to repurchase the company's common stock | $ 15,600,000 |
SUBSEQUENT EVENT (Details) - USD ($) $ in Millions |
1 Months Ended | 12 Months Ended |
|---|---|---|
Aug. 31, 2020 |
Dec. 31, 2019 |
|
| Subsequent Event [Line Items] | ||
| Net initial purchase price | $ 53.1 | |
| Inland Plywood Company | Subsequent Event | ||
| Subsequent Event [Line Items] | ||
| Net initial purchase price | $ 46.0 |