Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 25, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | TopBuild Corp | |
Entity Central Index Key | 0001633931 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-36870 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-3096382 | |
Entity Address, Address Line One | 475 North Williamson Boulevard | |
Entity Address, City or Town | Daytona Beach | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 32114 | |
City Area Code | 386 | |
Local Phone Number | 304-2200 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | BLD | |
Security Exchange Name | NYSE | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 33,947,722 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 171,591 | $ 100,929 |
Receivables, net of an allowance for doubtful accounts of $5,423 and $3,676 at September 30, 2019, and December 31, 2018, respectively | 454,640 | 407,106 |
Inventories, net | 146,702 | 168,977 |
Prepaid expenses and other current assets | 16,457 | 27,685 |
Total current assets | 789,390 | 704,697 |
Right of use assets | 89,178 | |
Property and equipment, net | 175,274 | 167,961 |
Goodwill | 1,367,918 | 1,364,016 |
Other intangible assets, net | 185,844 | 199,387 |
Deferred tax assets, net | 11,758 | 13,176 |
Other assets | 4,760 | 5,294 |
Total assets | 2,624,122 | 2,454,531 |
Current liabilities: | ||
Accounts payable | 300,125 | 313,172 |
Current portion of long-term debt | 33,262 | 26,852 |
Accrued liabilities | 112,286 | 104,236 |
Short-term lease liabilities | 36,860 | |
Total current liabilities | 482,533 | 444,260 |
Long-term debt | 701,955 | 716,622 |
Deferred tax liabilities, net | 173,493 | 176,212 |
Long-term portion of insurance reserves | 44,405 | 43,434 |
Long-term lease liabilities | 55,362 | |
Other liabilities | 1,167 | 1,905 |
Total liabilities | 1,458,915 | 1,382,433 |
Commitments and contingencies | ||
Equity: | ||
Preferred stock, $0.01 par value: 10,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2019 and December 31, 2018 | ||
Common stock, $0.01 par value: 250,000,000 shares authorized; 38,865,055 shares issued and 33,951,988 outstanding at September 30, 2019, and 38,676,586 shares issued and 34,573,596 outstanding at December 31, 2018 | 388 | 387 |
Treasury stock, 4,913,067 shares at September 30, 2019, and 4,102,990 shares at December 31, 2018, at cost | (278,784) | (216,607) |
Additional paid-in capital | 856,726 | 846,451 |
Retained earnings | 586,877 | 441,867 |
Total equity | 1,165,207 | 1,072,098 |
Total liabilities and equity | $ 2,624,122 | $ 2,454,531 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 5,423 | $ 3,676 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares, issued | 0 | 0 |
Preferred stock, shares, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 38,865,055 | 38,676,586 |
Common stock, shares outstanding | 33,951,988 | 34,573,596 |
Treasury stock, shares at cost | 4,913,067 | 4,102,990 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net sales | $ 682,330 | $ 647,289 | $ 1,961,771 | $ 1,744,702 |
Cost of sales | 502,999 | 485,424 | 1,451,822 | 1,326,777 |
Gross profit | 179,331 | 161,865 | 509,949 | 417,925 |
Selling, general, and administrative expense | 98,886 | 95,648 | 296,846 | 274,134 |
Operating profit | 80,445 | 66,217 | 213,103 | 143,791 |
Other income (expense), net: | ||||
Interest expense | (9,507) | (9,381) | (28,740) | (19,026) |
Other, net | 653 | 178 | 1,512 | 292 |
Other expense, net | (8,854) | (9,203) | (27,228) | (18,734) |
Income before income taxes | 71,591 | 57,014 | 185,875 | 125,057 |
Income tax expense | (16,615) | (14,356) | (40,864) | (28,859) |
Net income | $ 54,976 | $ 42,658 | $ 145,011 | $ 96,198 |
Income per common share: | ||||
Basic (in dollars per share) | $ 1.63 | $ 1.22 | $ 4.27 | $ 2.74 |
Diluted (in dollars per share) | $ 1.60 | $ 1.19 | $ 4.20 | $ 2.69 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 33,790,857 | 35,091,388 | 33,977,464 | 35,084,694 |
Diluted (in shares) | 34,367,902 | 35,789,383 | 34,541,635 | 35,815,357 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Net Cash Provided by (Used in) Operating Activities: | ||
Net income | $ 145,011 | $ 96,198 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 39,005 | 27,133 |
Share-based compensation | 11,411 | 8,244 |
Loss on sale or abandonment of property and equipment | 885 | 764 |
Amortization of debt issuance costs | 1,169 | 812 |
Change in fair value of contingent consideration | (119) | (373) |
Provision for bad debt expense | 5,697 | 3,003 |
Loss from inventory obsolescence | 1,794 | 1,375 |
Deferred income taxes, net | (381) | (708) |
Change in certain assets and liabilities | ||
Receivables, net | (51,585) | (46,993) |
Inventories, net | 20,637 | (15,333) |
Prepaid expenses and other current assets | 10,003 | (5,560) |
Accounts payable | (12,529) | 17,768 |
Accrued liabilities | 10,758 | 10,304 |
Other, net | 1,023 | (601) |
Net cash provided by operating activities | 182,779 | 96,033 |
Cash Flows Provided by (Used in) Investing Activities: | ||
Purchases of property and equipment | (34,100) | (42,379) |
Acquisition of businesses, net of cash acquired of $15,756 in 2018 | (6,452) | (500,666) |
Proceeds from sale of property and equipment | 2,239 | 502 |
Other, net | 25 | 31 |
Net cash used in investing activities | (38,288) | (542,512) |
Cash Flows Provided by (Used in) Financing Activities: | ||
Proceeds from issuance of long-term debt | 9,998 | 520,104 |
Repayment of long-term debt | (19,424) | (13,097) |
Payment of debt issuance costs | (7,819) | |
Proceeds from revolving credit facility | 90,000 | |
Repayment of revolving credit facility | (90,000) | |
Taxes withheld and paid on employees' equity awards | (11,135) | (5,433) |
Repurchase of shares of common stock | (52,177) | (9,493) |
Payment of contingent consideration | (1,091) | (841) |
Net cash (used in) provided by financing activities | (73,829) | 483,421 |
Cash and Cash Equivalents | ||
Increase for the period | 70,662 | 36,942 |
Beginning of period | 100,929 | 56,521 |
End of period | 171,591 | 93,463 |
Supplemental disclosure of noncash activities: | ||
Leased assets obtained in exchange for new operating lease liabilities | 120,726 | |
Accruals for property and equipment | $ 102 | $ 546 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parentheticals) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |
Acquisition, cash acquired | $ 15,756 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Common Stock | Treasury Stock at Cost | Additional Paid-in Capital | Retained Earnings | Total |
Balance at Dec. 31, 2017 | $ 386 | $ (141,582) | $ 830,600 | $ 307,115 | $ 996,519 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 26,388 | 26,388 | |||
Share-based compensation | 2,402 | 2,402 | |||
Issuance of restricted share awards under long-term equity incentive plan | 1 | (1) | |||
Repurchase of shares pursuant to the settlement of ASR Agreement | (20,000) | 20,000 | |||
Shares withheld to pay taxes on employees' equity awards | (4,514) | (4,514) | |||
Balance at Mar. 31, 2018 | 387 | (161,582) | 848,487 | 333,503 | 1,020,795 |
Balance at Dec. 31, 2017 | 386 | (141,582) | 830,600 | 307,115 | 996,519 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 96,198 | ||||
Balance at Sep. 30, 2018 | 387 | (171,075) | 853,410 | 403,313 | 1,086,035 |
Balance at Mar. 31, 2018 | 387 | (161,582) | 848,487 | 333,503 | 1,020,795 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 27,152 | 27,152 | |||
Share-based compensation | 2,995 | 2,995 | |||
Shares withheld to pay taxes on employees' equity awards | (17) | (17) | |||
Balance at Jun. 30, 2018 | 387 | (161,582) | 851,465 | 360,655 | 1,050,925 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 42,658 | 42,658 | |||
Share-based compensation | 2,847 | 2,847 | |||
Repurchase of shares pursuant to Repurchase Program | (9,493) | (9,493) | |||
Shares withheld to pay taxes on employees' equity awards | (902) | (902) | |||
Balance at Sep. 30, 2018 | 387 | (171,075) | 853,410 | 403,313 | 1,086,035 |
Balance at Dec. 31, 2018 | 387 | (216,607) | 846,451 | 441,867 | 1,072,098 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 37,983 | 37,983 | |||
Share-based compensation | 2,972 | 2,972 | |||
Issuance of restricted share awards under long-term equity incentive plan | 1 | (1) | |||
Repurchase of shares pursuant to the settlement of ASR Agreement | (10,000) | 10,000 | |||
Repurchase of shares pursuant to Repurchase Program | (4,622) | (4,622) | |||
Shares withheld to pay taxes on employees' equity awards | (5,578) | (5,578) | |||
Balance at Mar. 31, 2019 | 388 | (231,229) | 853,844 | 479,850 | 1,102,853 |
Balance at Dec. 31, 2018 | 387 | (216,607) | 846,451 | 441,867 | 1,072,098 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 145,011 | ||||
Balance at Sep. 30, 2019 | 388 | (278,784) | 856,726 | 586,877 | 1,165,207 |
Balance at Mar. 31, 2019 | 388 | (231,229) | 853,844 | 479,850 | 1,102,853 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 52,051 | 52,051 | |||
Share-based compensation | 4,513 | 4,513 | |||
Repurchase of shares pursuant to Repurchase Program | (14,878) | (14,878) | |||
Shares withheld to pay taxes on employees' equity awards | (2,893) | (2,893) | |||
Balance at Jun. 30, 2019 | 388 | (246,107) | 855,464 | 531,901 | 1,141,646 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 54,976 | 54,976 | |||
Share-based compensation | 3,926 | 3,926 | |||
Repurchase of shares pursuant to Repurchase Program | (32,677) | (32,677) | |||
Shares withheld to pay taxes on employees' equity awards | (2,664) | (2,664) | |||
Balance at Sep. 30, 2019 | $ 388 | $ (278,784) | $ 856,726 | $ 586,877 | $ 1,165,207 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | |||||
Issuance of restricted share awards under long-term equity incentive plan (in shares) | 112,270 | 79,010 | ||||
Repurchase of shares pursuant to the settlement of ASR Agreement (in shares) | 176,327 | 13,657 | ||||
Repurchase of shares pursuant to Repurchase Program (in shares) | 364,074 | 196,885 | 72,791 | 142,780 | ||
Number of shares withheld to pay taxes on employees' equity awards (in shares) | 43,037 | 54,811 | 105,615 | 13,447 | 228 | 83,754 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
Basis of Presentation | |
Basis of Presentation | 1. BASIS OF PRESENTATION TopBuild is a Delaware corporation incorporated on June 30, 2015, and is listed on the NYSE under the ticker symbol “BLD.” We report our business in two segments: Installation and Distribution. Our Installation segment primarily installs insulation and other building products. Our Distribution segment primarily sells and distributes insulation and other building products. Our segments are based on our operating units, for which financial information is regularly evaluated by our chief operating decision maker. In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to state fairly our financial position as of September 30, 2019, our results of operations for the three and nine months ended September 30, 2019 and 2018, and cash flows for the nine months ended September 30, 2019 and 2018. The condensed consolidated balance sheet at December 31, 2018, was derived from our audited financial statements, but does not include all disclosures required by GAAP. These condensed consolidated financial statements and related notes should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual Report for the year ended December 31, 2018. |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies | |
Accounting Policies | 2. ACCOUNTING POLICIES Financial Statement Presentation. Our condensed consolidated financial statements have been developed in conformity with GAAP, which requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates. All intercompany transactions between TopBuild entities have been eliminated. Business Combinations. The purchase price for business combinations is allocated to the estimated fair values of acquired tangible and intangible assets, including goodwill, and liabilities assumed. These estimates include, but are not limited to, discount rates, projected future revenue growth, cost synergies and expected cash flows, customer attrition rates, useful lives and other prospective information. Additionally, we recognize customer relationships, trademarks and trade names, and non-competition agreements as identifiable intangible assets, which are recorded at fair value as of the transaction date. The fair value of these intangible assets is determined primarily using the income approach and using current industry information. Goodwill is recorded when consideration transferred exceeds the fair value of identifiable assets and liabilities. Measurement-period adjustments to assets acquired and liabilities assumed with a corresponding offset to goodwill are recorded in the period in which they occur, which may include up to one year from the acquisition date. Contingent consideration is recorded at fair value at the acquisition date. Share-based Compensation. Our share-based compensation program currently consists of RSAs and stock options. Share-based compensation expense is reported in selling, general, and administrative expense. We do not capitalize any compensation cost related to share-based compensation awards. The income tax benefits and deficiencies associated with share-based awards are reported as a component of income tax expense. Excess tax benefits and deficiencies are included in net cash provided by (used in) operating activities while shares withheld for tax-withholding are reported in financing activities under the caption “Taxes withheld and paid on employees’ equity awards” in our condensed consolidated statements of cash flows. Award forfeitures are accounted for in the period they occur. The following table details our award types and accounting policies: Award Type: Fair Value Determination Vesting Expense Expense Restricted Share Awards Service Condition Closing stock price on date of grant Ratably; 3 or 5 years Straight-line Fair value at grant date Performance Condition Closing stock price on date of grant Cliff; 3 years Straight-line; Evaluated quarterly; 0 - 200% of fair value at grant date depending on performance Market Condition Monte-Carlo Simulation Cliff; 3 years Straight-line; Fair value at grant date Stock Options† Black-Scholes Options Pricing Model Ratably; 3 or 5 years Straight-line Fair value at grant date † Stock options expire no later than 10 years after the grant date. ‡ Expense is reversed if award is forfeited prior to vesting. Revenue Recognition Revenue is disaggregated between our Installation and Distribution segments. A reconciliation of disaggregated revenue by segment is included in Note 6 – Segment Information. We recognize revenue for our Installation segment using the percentage of completion method of accounting with respect to each particular order within a given customer’s contract, based on the amount of material installed at that customer’s location and the associated labor costs, as compared to the total expected cost for the particular order. Revenue is recognized over time as the customer is able to receive and utilize the benefits provided by our services. Each contract contains one or more individual orders, which are based on services delivered. When a contract modification is made, typically the remaining goods or services are considered distinct and we recognize revenue for the modification as a separate performance obligation. When insulation and installation services are bundled in a contract, we combine these items into one performance obligation as the overall promise is to transfer the combined item. Revenue from our Distribution segment is recognized when title to products and risk of loss transfers to our customers. This represents the point in time when the customer is able to direct the use of and obtain substantially all the benefits from the product. The determination of when control is deemed transferred depends on the shipping terms that are agreed upon in the contract. At time of sale, we record estimated reductions to revenue for customer programs and incentive offerings, including special pricing and other volume-based incentives based on historical experience, which is continuously adjusted. The duration of our contracts with customers is relatively short, generally less than a 90 -day period, therefore there is not a significant financing component when considering the determination of the transaction price which gets allocated to the individual performance obligations, generally based on standalone selling prices. Additionally, we consider shipping costs charged to a customer as a fulfillment cost rather than a promised service and expense as incurred. Sales taxes, when incurred, are recorded as a liability and excluded from revenue on a net basis. We record a contract asset when we have satisfied our performance obligation prior to billing and a contract liability generally when a customer payment is received prior to the satisfaction of our performance obligation. The difference between the beginning and ending balances of our contract assets and liabilities primarily results from the timing of our performance and the customer’s payment. The following table represents our contract assets and contract liabilities with customers, in thousands: Included in Line Item on As of Condensed Consolidated September 30, December 31, Balance Sheets 2019 2018 Contract Assets: Receivables, unbilled Receivables, net $ 62,072 $ 61,339 Contract Liabilities: Deferred revenue Accrued liabilities $ 16,685 $ 19,963 Our contract liabilities are normally recognized to net sales in the immediately subsequent reporting period due to the generally short-term nature of our contracts with customers. Recently Adopted Accounting Pronouncements: Leases In February 2016 the FASB issued ASU 2016-02, “Leases.” This standard requires a lessee to recognize certain leases on its balance sheet. Effective January 1, 2019, we adopted ASU 2016-02 using the modified retrospective transition method with the optional transition relief provided in targeted improvements ASU 2018-11, which allows the new standard to be applied in financial year 2019. We elected certain practical expedients allowed under ASC 842 – Leases. As such, we did not reassess whether any existing contracts are or contain leases, the lease classification of existing leases, or the initial direct costs for any existing leases. In addition, we elected by class of underlying asset to not separate fixed non-lease components from the lease component. Further, for all leases with an initial term of 12 months or less, we elected not to record any right of use asset or lease liability. We declined the option to use hindsight in determining lease term, assessing likelihood that a lease purchase option will be exercised or in assessing impairment of right of use asset for all classes of assets. To initially measure our lease liability, we used our IBR at January 1, 2019 based on the remaining lease term for all existing leases. See Note 7 – Leases Recently Issued Accounting Pronouncements Not Yet Adopted: In June 2016 the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses”. This guidance introduces a current expected credit loss (CECL) model for the recognition of impairment losses on financial assets, including trade receivables. The CECL model replaces current GAAP’s incurred loss model. Under CECL, companies will record an allowance through current earnings for the expected credit loss for the life of the financial asset upon initial recognition of the financial asset. This update is effective for us at the beginning of 2020 with early adoption permitted at the beginning of 2019. We plan to adopt this standard on January 1, 2020 with a cumulative adjustment to our beginning retained earnings balance. We have begun our initial evaluation of financial assets subject to this guidance and are developing a new accounting policy for CECL recognition. We are still determining the impact to our financial position upon adoption. In January 2017 the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” The new standard simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. This update is effective for us beginning January 1, 2020. Early adoption is permitted, and the new standard will be applied on a prospective basis. We plan to adopt this standard on January 1, 2020, and we do not anticipate that the on our financial position and results of operations. In August 2018 the FASB issued ASU 2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” The new standard modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, including adjustments to Level 3 fair value measurement disclosures as well as the removal of disclosures around Level 1 and Level 2 transfers. This update is effective for us beginning January 1, 2020 with early adoption permitted. The amendments to the guidance will be applied on a prospective or retrospective basis, in accordance with the requirements |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Other Intangibles | |
Goodwill and Other Intangibles | 3. GOODWILL AND OTHER INTANGIBLES We have two reporting units which are also our operating and reporting segments: Installation and Distribution. Both reporting units contain goodwill. Assets acquired and liabilities assumed are assigned to the applicable reporting unit based on whether the acquired assets and liabilities relate to the operations of and determination of the fair value of such unit. Goodwill assigned to the reporting unit is the excess of the fair value of the acquired business over the fair value of the individual assets acquired and liabilities assumed for the reporting unit. The estimated fair values of the two reporting units substantially exceeded their respective carrying values based on the most recent annual impairment test which occurred in the fourth quarter of 2018. Changes in the carrying amount of goodwill for the nine months ended September 30, 2019, by segment, were as follows, in thousands: Gross Goodwill Gross Goodwill Accumulated Net Goodwill at at Impairment at December 31, 2018 Additions September 30, 2019 Losses September 30, 2019 Goodwill, by segment: Installation $ 1,679,654 $ 3,935 $ 1,683,589 $ (762,021) $ 921,568 Distribution 446,383 (33) 446,350 — 446,350 Total goodwill $ 2,126,037 $ 3,902 $ 2,129,939 $ (762,021) $ 1,367,918 Other intangible assets, net includes customer relationships, non-compete agreements, and trademarks / trade names. The following table sets forth our other intangible assets, in thousands: As of September 30, 2019 December 31, 2018 Gross definite-lived intangible assets $ 220,882 $ 218,882 Accumulated amortization (35,038) (19,495) Net definite-lived intangible assets 185,844 199,387 Indefinite-lived intangible assets not subject to amortization — — Other intangible assets, net $ 185,844 $ 199,387 The following table sets forth our amortization expense, in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Amortization expense $ 5,197 $ 5,242 $ 15,543 $ 10,536 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2019 | |
Long-Term Debt | |
Long-Term Debt | 4. LONG-TERM DEBT The following table reconciles the principal balances of our outstanding debt to our condensed consolidated balance sheets, in thousands: As of September 30, December 31, Principal debt balances: 2019 2018 Senior Notes $ 400,000 $ 400,000 Term loan 312,188 327,500 Equipment notes 30,341 24,455 Unamortized debt issuance costs (7,312) (8,481) Total debt, net of unamortized debt issuance costs 735,217 743,474 Less: current portion of long-term debt 33,262 26,852 Total long-term debt $ 701,955 $ 716,622 The following table sets forth our remaining principal payments for our outstanding debt balances as of September 30, 2019, in thousands: Payments Due by Period 2019 2020 2021 2022 2023 Thereafter Total Senior Notes $ — $ — $ — $ — $ — $ 400,000 $ 400,000 Term loan 6,563 26,250 30,625 248,750 — — 312,188 Equipment notes 1,728 7,082 7,366 7,661 5,345 1,159 30,341 Total $ 8,291 $ 33,332 $ 37,991 $ 256,411 $ 5,345 $ 401,159 $ 742,529 Amended Credit Agreement and Senior Secured Term Loan Facility On March 28, 2018, the Company executed an amendment to its credit agreement, which primarily facilitated the acquisition of USI by (i) extending until August 29, 2018, the period during which the Company could access the $100.0 million delayed draw term loan feature and (ii) providing that the Company could issue up to $500.0 million of Senior Notes in connection with its acquisition of USI. On May 1, 2018, the Company closed on its acquisition of USI. The acquisition was funded through net proceeds from the issuance of our Senior Notes on April 25, 2018 together with the net proceeds from the $100.0 million delayed draw term loan commitment accessed on May 1, 2018 under the Company’s Amended Credit Agreement. These funds were also used for the payment of related fees and expenses, as well as for general corporate purposes. The following table outlines the key terms of our Amended Credit Agreement (dollars in thousands): Senior secured term loan facility (original borrowing) (a) $ 250,000 Additional delayed draw term loan (b) $ 100,000 Additional term loan and/or revolver capacity available under incremental facility (c) $ 200,000 Revolving Facility $ 250,000 Sublimit for issuance of letters of credit under Revolving Facility (d) $ 100,000 Sublimit for swingline loans under Revolving Facility (d) $ 20,000 Interest rate as of September 30, 2019 3.36 % Scheduled maturity date 5/05/2022 (a) The Amended Credit Agreement provides for a term loan limit of $350.0 million; $250.0 million was drawn on May 5, 2017. (b) On May 1, 2018, the net proceeds from the $100.0 million delayed draw term loan were used to partially fund the USI acquisition. (c) Additional borrowing capacity is available under the incremental facility, subject to certain terms and conditions (including existing or new lenders providing commitments in respect of such additional borrowing capacity). (d) Use of the sublimits for the issuance of letters of credit and swingline loans reduces the availability under the Revolving Facility. Interest payable on borrowings under the Amended Credit Agreement is based on an applicable margin rate plus, at our option, either: ● A base rate determined by reference to the highest of either (i) the federal funds rate plus 0.50 percent, (ii) Bank of America’s “prime rate,” or (iii) the LIBOR rate for U.S. dollar deposits with a term of one month , plus 1.00 percent; or ● A LIBOR rate determined by reference to the costs of funds for deposits in U.S. dollars for the interest period relevant to such borrowings. The applicable margin rate is determined based on our Secured Leverage Ratio. In the case of base rate borrowings, the applicable margin rate ranges from 0.00 percent to 1.50 percent and in the case of LIBOR rate borrowings, the applicable margin ranges from 1.00 percent to 2.50 percent. Borrowings under the Amended Credit Agreement are prepayable at the Company’s option without premium or penalty. The Company is required to make prepayments with the net cash proceeds of certain asset sales and certain extraordinary receipts. Revolving Facility The Company has outstanding standby letters of credit that secure our financial obligations related to our workers’ compensation, general insurance, and auto liability programs. These standby letters of credit, as well as any outstanding amount borrowed under our Revolving Facility, reduce the availability under the Revolving Facility. The following table summarizes our availability under the Revolving Facility, in thousands: As of September 30, December 31, 2019 2018 Revolving Facility $ 250,000 $ 250,000 Less: standby letters of credit (61,382) (59,288) Availability under Revolving Facility $ 188,618 $ 190,712 We are required to pay commitment fees to the Lenders in respect of any unutilized commitments. The commitment fees range from 0.15 percent to 0.275 percent per annum, depending on our Secured Leverage Ratio. We must also pay customary fees on outstanding letters of credit. Senior Notes The Senior Notes are our senior unsecured obligations and bear interest at 5.625% per year, payable semiannually in arrears on May 1 and November 1 of each year, which began on November 1, 2018. The Senior Notes mature on May 1, 2026, unless redeemed early or repurchased. We have the right to redeem the Senior Notes under certain circumstances, and, if we undergo a change in control, we must make an offer to repurchase all of the Senior Notes then outstanding at a repurchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest (if any) to, but not including, the repurchase date. Equipment Notes During 2018, the Company executed $26.6 million of equipment notes for the purpose of financing the purchase of vehicles and equipment. During 2019, the company issued additional equipment notes for approximately $10.0 million in the nine months ended September 30, 2019. The Company’s equipment notes each have a five year maturity through 2024 and bear interest at fixed rates between 2.8% and 4.4%. Covenant Compliance The indenture governing our Senior Notes contains customary restrictive covenants that, among other things, generally limit our ability to incur additional debt and issue preferred stock; to create liens; to pay dividends, acquire shares of capital stock, make payments on subordinated debt or make investments; to place limitations on distributions from certain subsidiaries; to issue guarantees; to issue or sell the capital stock of certain subsidiaries; to sell assets; to enter into transactions with affiliates; and to effect mergers. The Senior Notes indenture also contains customary events of default, subject in certain cases to grace and cure periods. Generally, if an event of default occurs and is continuing, the trustee under the indenture or the holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding may declare the principal of, premium, if any, and accrued interest on all the Senior Notes immediately due and payable. The Senior Notes and related guarantees have not been registered under the Securities Act of 1933, and we are not required to register either the Senior Notes or the guarantees in the future. The Amended Credit Agreement contains certain covenants that limit, among other things, the ability of the Company to incur additional indebtedness or liens; to make certain investments or loans; to make certain restricted payments; to enter into consolidations, mergers, sales of material assets, and other fundamental changes; to transact with affiliates; to enter into agreements restricting the ability of subsidiaries to incur liens or pay dividends; or to make certain accounting changes. The Amended Credit Agreement contains customary affirmative covenants and events of default. The Amended Credit Agreement requires that we maintain a Net Leverage Ratio and minimum FCCR throughout the term of the agreement. The following table sets forth the maximum Net Leverage Ratios and minimum FCCR required: Quarter Ending Maximum Minimum June 30, 2018 through September 30, 2018 3.75:1.00 1.25:1.00 December 31, 2018 through September 30, 2019 3.50:1.00 1.25:1.00 September 30, 2019 and each fiscal quarter end thereafter 3.25:1.00 1.25:1.00 The following table outlines the key financial covenants effective for the period covered by this Quarterly Report: As of September 30, 2019 Maximum Net Leverage Ratio 3.25:1.00 Minimum FCCR 1.25:1.00 Compliance as of period end In Compliance |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | 5 FAIR VALUE MEASUREMENTS Fair Value on Recurring Basis The carrying values of cash and cash equivalents, receivables, net, and accounts payable are considered to be representative of their respective fair values due to the short-term nature of these instruments. We measure our contingent consideration liabilities related to business combinations at fair value. For more information see Note 12 –Business Combinations. Fair Value on Non-Recurring Basis Fair value measurements were applied to our long-term debt portfolio. During all periods presented, there were no transfers between fair value hierarchical levels. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2019 | |
Segment Information | |
Segment Information | 6. SEGMENT INFORMATION The following table sets forth our net sales and operating results by segment, in thousands: Three Months Ended September 30, 2019 2018 2019 2018 Net Sales Operating Profit (b) Our operations by segment were (a): Installation $ 498,390 $ 464,540 $ 69,846 $ 61,004 Distribution 220,947 212,948 23,406 19,229 Intercompany eliminations (37,007) (30,199) (5,935) (5,658) Total $ 682,330 $ 647,289 87,317 74,575 General corporate expense, net (c) (6,872) (8,358) Operating profit, as reported 80,445 66,217 Other expense, net (8,854) (9,203) Income before income taxes $ 71,591 $ 57,014 Nine Months Ended September 30, 2019 2018 2019 2018 Net Sales Operating Profit (b) Our operations by segment were (a): Installation $ 1,430,800 $ 1,223,357 $ 189,568 $ 139,969 Distribution 638,899 606,335 65,154 57,141 Intercompany eliminations (107,928) (84,990) (18,013) (15,382) Total $ 1,961,771 $ 1,744,702 236,709 181,728 General corporate expense, net (c) (23,606) (37,937) Operating profit, as reported 213,103 143,791 Other expense, net (27,228) (18,734) Income before income taxes $ 185,875 $ 125,057 (a) All of our operations are located in the U.S. (b) Segment operating profit includes an allocation of general corporate expenses attributable to the operating segments which is based on direct benefit or usage (such as salaries of corporate employees who directly support the segment). (c) General corporate expense, net includes expenses not specifically attributable to our segments for functions such as corporate human resources, finance, and legal, including salaries, benefits, and other related costs. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Leases | 7 LEASES We have operating leases for our installation branch locations, distribution centers, our Branch Support Center in Daytona Beach, Florida, vehicles and certain equipment. As of September 30, 2019, we did not have any finance leases. At the inception of a contract, we determine whether the contract is, or contains, a lease based on the unique facts and circumstances present. Our facilities operating leases have lease and non-lease fixed cost components, which we account for as one single lease component in calculating the present value of minimum lease payments. Variable lease and non-lease cost components are expensed as incurred and are primarily included in cost of sales on the accompanying unaudited condensed consolidated statement of operations. Operating lease payments are recognized as an expense in the unaudited condensed consolidated statements of operations on a straight-line basis over the lease term, including future option periods the Company reasonably expects to exercise, whereby an equal amount of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in later years. The difference between rent expense recognized and actual rental payments is typically represented as the spread between the ROU asset and lease liability. We recognize a ROU asset and a lease liability at the lease commencement date. Our leases may include options to extend or terminate the lease, which will be reflected in the calculation of the lease liability and corresponding ROU asset when it is reasonably certain that we will exercise that option. We do not recognize ROU assets and lease liabilities for short-term leases that have an initial lease term of 12 months or less. We recognize the lease payments associated with short-term leases as an expense on a straight-line basis over the lease term. The lease liability is initially measured as the present value of the unpaid lease payments as of the lease commencement date. The lease liability is discounted based on our IBR at the time of initial adoption of ASU 2016-02 for all exiting leases or upon a modification to the lease term and at the time of lease commencement for all future leases. Our IBR includes significant assumptions regarding our secured borrowing rates obtained on equipment note issuances and adjustments for differences in the remaining lease term, underlying assets and market conditions for companies with similar credit qualities as well as interest rate index fluctuations. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. The ROU asset is subsequently measured throughout the lease term as the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Certain vehicle lease agreements have residual value guarantees at the end of the lease which require us to return the asset with a specified percentage of the original or other calculated value. The components of lease expense were as follows and are primarily included in cost of sales on the accompanying unaudited condensed consolidated statement of operations, in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2019 2019 Operating lease cost $ 10,959 $ 34,396 Short-term lease cost 3,381 9,391 Variable lease cost 1,434 4,201 Sublease income (153) (461) Net lease cost $ 15,621 $ 47,527 Future minimum lease payments under non-cancellable operating leases as of September 30, 2019 were as follows, in thousands: Payments due by Period 2019 $ 10,933 2020 37,598 2021 24,367 2022 14,790 2023 6,956 2024 & Thereafter 8,284 Total future minimum lease payments 102,928 Less: imputed interest (10,706) Lease liability at September 30, 2019 $ 92,222 As of September 30, 2019, the weighted average remaining lease term was 3.4 years and the related lease liability was calculated using a weighted average discount rate of 4.3%. The amount below is included in the cash flows provided by (used in) operating activities section on the accompanying unaudited condensed consolidated statement of cash flows, in thousands: Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities $ (33,914) |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Taxes | |
Income Taxes | 8. INCOME TAXES Our effective tax rates were 23.2 percent and 22.0 percent for the three and nine months ended September 30, 2019, respectively. The effective tax rates for the three and nine months ended September 30, 2018, were 25.2 percent and 23.1 percent, respectively. The 2019 rates are lower due to the impact of discrete benefits related to share-based compensation and a favorable return to accrual adjustment when compared to prior year, partially offset by the impact of state tax rate changes. A tax benefit of $1.3 million and $5.1 million related to share-based compensation was recognized in our Condensed Consolidated Statements of Operations as a discrete item in income tax expense for the three and nine months ended September 30, 2019, respectively. At September 30, 2019, the net deferred tax liability of $161.7 million consisted of net long-term deferred tax assets of $11.8 million and net long-term deferred tax liabilities of $173.5 million. The change in the net deferred tax liability was primarily related to purchase accounting adjustments in connection with the acquisition of USI and related tax elections and a return to accrual adjustment for 2018 tax returns filed in 2019, partially offset by state tax rate changes. |
Income Per Share
Income Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Income Per Share | |
Income Per Share | 9. INCOME PER SHAR E Basic net income per share is calculated by dividing net income by the number of weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net income per share is calculated by adjusting the number of weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury stock method. Basic and diluted net income per share were computed as follows, in thousands, except share and per share amounts: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Net income - basic and diluted $ 54,976 $ 42,658 $ 145,011 $ 96,198 Weighted average number of common shares outstanding - basic 33,790,857 35,091,388 33,977,464 35,084,694 Dilutive effect of common stock equivalents: RSAs with service-based conditions 82,087 135,347 86,373 161,474 RSAs with market-based conditions 195,740 252,278 183,537 245,127 RSAs with performance-based conditions 82,750 23,875 63,329 7,958 Stock options 216,468 286,495 230,932 316,104 Weighted average number of common shares outstanding - diluted 34,367,902 35,789,383 34,541,635 35,815,357 Basic income per common share $ 1.63 $ 1.22 $ 4.27 $ 2.74 Diluted income per common share $ 1.60 $ 1.19 $ 4.20 $ 2.69 The following table summarizes shares excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Anti-dilutive common stock equivalents: RSAs with service-based conditions — 9,775 5,264 3,466 RSAs with market-based conditions — — 6,567 — RSAs with performance-based conditions — — — — Stock options 12,642 76,030 72,580 62,528 Total anti-dilutive common stock equivalents 12,642 85,805 84,411 65,994 |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Share-Based Compensation. | |
Share-Based Compensation | 10. SHARE-BASED COMPENSATION Effective July 1, 2015, our eligible employees commenced participation in the 2015 Long-Term Incentive Program. The 2015 Long-Term Incentive Program authorizes the Board to grant stock options, stock appreciation rights, restricted shares, restricted share units, performance awards, and dividend equivalents. All grants are made by issuing new shares and no more than 4.0 million shares of common stock may be issued under the 2015 Long-Term Incentive Program. As of September 30, 2019, we had 2.3 million shares remaining available for issuance under the 2015 Long-Term Incentive Program. Share-based compensation expense is included in selling, general, and administrative expense. The income tax effect associated with share-based compensation awards is included in income tax expense. The following table presents share-based compensation amounts recognized in our condensed consolidated statements of operations, in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Share-based compensation expense $ 3,926 $ 2,848 $ 11,411 $ 8,244 Income tax benefit realized $ 1,304 $ 545 $ 5,110 $ 3,140 The following table presents a summary of our share-based compensation activity for the nine months ended September 30, 2019, in thousands, except per share amounts: RSAs Stock Options Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Average Exercise Price Per Share Aggregate Balance December 31, 2018 499.2 $ 41.29 611.4 $ 13.10 $ 34.45 $ 8,685.8 Granted 249.1 $ 67.37 103.5 $ 21.16 $ 58.08 Converted/Exercised (310.0) $ 30.99 (273.8) $ 10.87 $ 28.14 $ 14,184.1 Forfeited (20.6) $ 58.32 (9.7) $ 20.28 $ 54.62 Expired (2.7) $ 14.44 $ 38.39 Balance September 30, 2019 417.7 $ 57.35 428.7 $ 16.30 $ 43.71 $ 22,603.3 Exercisable September 30, 2019 (a) 129.1 $ 13.96 $ 36.94 $ 7,678.4 (a) The weighted average remaining contractual term for vested stock options is approximately 6.9 years. We had unrecognized share-based compensation expense relating to unvested awards as shown in the following table, dollars in thousands: As of September 30, 2019 Unrecognized Compensation Expense Weighted Average Unrecognized compensation expense related to unvested awards: RSAs $ 10,319 1.2 years Stock options 1,910 1.0 years Total unrecognized compensation expense related to unvested awards $ 12,229 Our RSAs with performance-based conditions are evaluated on a quarterly basis with adjustments to compensation expense based on the likelihood of the performance target being achieved or exceeded. The following table shows the range of payouts and the related expense for our outstanding RSAs with performance-based conditions, in thousands: Payout Ranges and Related Expense RSAs with Performance-Based Conditions Grant Date Fair Value 0% 25% 100% 200% February 21, 2017 $ 1,839 $ — $ 460 $ 1,839 $ 3,678 February 19, 2018 $ 2,082 $ — $ 521 $ 2,082 $ 4,164 February 18, 2019 $ 2,510 $ — $ 628 $ 2,510 $ 5,020 During the first quarter of 2019, RSAs with performance-based conditions that were granted on February 22, 2016 vested based on cumulative three-year achievement of 88.6%. Total compensation expense recognized over the three-year performance period, net of forfeitures, was $1.7 million. The fair value of our RSAs with a market-based condition granted under the 2015 Long-Term Incentive Program was determined using a Monte Carlo simulation. The following are key inputs in the Monte Carlo analysis for awards granted in 2019 and 2018: 2019 2018 Measurement period (years) 2.87 2.87 Risk free interest rate 2.50 % 2.36 % Dividend yield 0.00 % 0.00 % Estimated fair value of market-based RSAs granted $ 80.74 $ 103.31 The fair values of stock options granted under the 2015 Long-Term Incentive Program were calculated using the Black-Scholes Options Pricing Model. The following table presents the assumptions used to estimate the fair values of stock options granted in 2019 and 2018: 2019 2018 Risk free interest rate 2.59 % 2.78 % Expected volatility, using historical return volatility and implied volatility 32.50 % 32.50 % Expected life (in years) 6.0 6.0 Dividend yield 0.00 % 0.00 % Estimated fair value of stock options granted $ 21.16 $ 27.44 |
Share Repurchase Program
Share Repurchase Program | 9 Months Ended |
Sep. 30, 2019 | |
Share Repurchase Program | |
Share Repurchase Program | 11. SHARE REPURCHASE PROGRAM On February 22, 2019, our Board authorized the 2019 Repurchase Program, pursuant to which the Company may purchase up to $200.0 million of our common stock. Share repurchases may be executed through various means including, without limitation, open market purchases, privately negotiated transactions, accelerated share repurchase transactions or otherwise. The 2019 Share Repurchase Program does not obligate the Company to purchase any shares and has no expiration date. Authorization for the 2019 Share Repurchase Program may be terminated, increased, or decreased by the Board at its discretion at any time. Effective November 7, 2018, under the 2017 Repurchase Program, we entered into the 2018 ASR Agreement. We paid JPMorgan Chase Bank, N.A. $50.0 million in exchange for an initial delivery of 796,925 shares of our common stock on November 8, 2018, representing an estimated 85 % of the total number of shares we expected to receive under the 2018 ASR Agreement, at the time we entered into the agreement. During the quarter ended March 31, 2019, we received an additional 176,327 shares of our common stock from JPMorgan Chase Bank, N.A., representing the final settlement of the 2018 ASR Agreement. We purchased a total of 973,252 shares of our common stock under the 2018 ASR Agreement at an average price per share of $51.37 . On May 5, 2017, under the 2017 Repurchase Program, we entered into the 2017 ASR Agreement. When the agreement became effective on July 5, 2017, we paid BofA $100.0 million in exchange for an initial delivery of 1.5 million shares of our common stock, representing an estimated 80 % of the total number of shares we expected to receive under the 2017 ASR Agreement, at the time we entered into the agreement. During the quarter ended March 31, 2018, we received an additional 13,657 shares of our common stock from BofA, representing the final settlement of the 2017 ASR Agreement. We purchased a total of 1,521,100 shares of our common stock under the 2017 ASR Agreement at an average price per share of $65.74 . The following table sets forth our share repurchases under the 2019 and 2017 Repurchase Programs during the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Number of shares repurchased 364,074 142,780 810,077 (b) 156,437 (a) Share repurchase cost (in thousands) $ 32,677 $ 9,493 $ 52,177 $ — (a) The nine months ended September 30, 2018 includes 13,657 shares we received as final settlement of our 2017 ASR Agreement. (b) The nine months ended September 30, 2019 includes 176,327 shares we received as final settlement of our 2018 ASR Agreement. |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations | |
Business Combinations | 12. BUSINESS COMBINATIONS As part of our strategy to supplement our organic growth and expand our access to additional markets and products, we completed three acquisitions during 2018 and one acquisition to date in 2019. Each acquisition was accounted for as a business combination under ASC 805, “Business Combinations.” There were no acquisition related costs for the three months ended September 30, 2019. Acquisition related costs for the nine months ended September 30, 2019, were $0.1 million. Acquisition related costs for the three and nine months ended September 30, 2018, were $0.6 million and $13.9 million, respectively. Acquisition costs are included in selling, general, and administrative expense in our condensed consolidated statements of operations. Acquisitions On January 10, 2018, we acquired ADO, a distributor of insulation accessories, located in Plymouth, Minnesota. The purchase price of approximately $23.0 million was funded by cash on hand of $22.2 million and contingent consideration of $0.8 million. On January 18, 2018, we acquired substantially all of the assets of Santa Rosa, a residential and commercial insulation company located in Miami, Florida. The purchase price of approximately $5.8 million was funded by cash on hand of $5.6 million and contingent consideration of $0.2 million. On May 1, 2018, we acquired USI, a leading distributor and installer of insulation in both residential and commercial construction markets. Our payment of $486.5 million, which included the purchase price of $475.0 million and adjustments for cash and working capital, was funded through net proceeds from the issuance on April 25, 2018, of the Senior Notes together with the net proceeds from the $100.0 million delayed draw term loan commitment under our Amended Credit Agreement. For additional information see Note 4 – Long-Term Debt On July 15, 2019, we acquired Viking, an insulation company located in Burbank, California. The purchase price of approximately $7.7 million was funded by cash on hand of $6.5 million and contingent consideration of $1.2 million. Revenue and net income since the respective 2018 acquisition dates included in our condensed consolidated statements of operations were as follows, in thousands: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Net Sales Net Income Net Sales Net Income ADO 7,181 58 20,057 129 Santa Rosa 2,377 338 6,919 939 USI 96,368 8,327 284,757 26,223 $ 105,926 $ 8,723 $ 311,733 $ 27,291 Pro Forma Results The following unaudited pro forma information has been prepared as if the 2018 acquisitions described above had taken place on January 1, 2017. The unaudited pro forma information is not necessarily indicative of the results that we would have achieved had the transactions actually taken place on January 1, 2017. Further, the pro forma information does not purport to be indicative of future financial operating results. The pro forma results for the three and nine months ended September 30, 2019 do not include any adjustments from our actual results as all 2018 acquisitions were wholly-owned for the entire period. Our pro forma results are presented below, in thousands: Unaudited Pro Forma for the Nine Months Ended September 30, 2019 2018 Net sales $ 1,961,771 $ 1,878,179 Net income $ 145,011 $ 105,410 The following table details the additional expense included in the unaudited pro forma net income as if the 2018 acquisitions described above had taken place on January 1, 2017. Our pro forma results are presented below, in thousands: Unaudited Pro Forma for the Nine Months Ended September 30, 2019 2018 Amortization of intangible assets $ — $ 5,039 Income tax expense (using 26.5% and 27.0% effective tax rate in 2019 and 2018, respectively) $ — $ 3,407 Purchase Price Allocations The estimated fair values of the assets acquired and liabilities assumed for the 2018 acquisitions, as well as the fair value of consideration transferred, are presented below as of September 30, 2019, in thousands: 2018 Acquisitions Completed During the Year Ended December 31, 2018 ADO Santa Rosa USI Total Estimated fair values: Cash $ 939 $ — $ 14,817 $ 15,756 Accounts receivable 3,434 1,433 61,445 66,312 Inventories 2,337 104 14,029 16,470 Prepaid and other assets 135 7 3,439 3,581 Property and equipment 951 522 33,126 34,599 Intangible assets 14,090 1,850 165,400 181,340 Goodwill 2,631 3,014 281,364 287,009 Accounts payable (908) (1,099) (17,927) (19,934) Accrued liabilities (609) — (34,686) (35,295) Deferred tax liability — — (34,469) (34,469) Net assets acquired $ 23,000 $ 5,831 $ 486,538 $ 515,369 2018 Acquisitions Completed During the Year Ended December 31, 2018 ADO Santa Rosa USI Total Fair value of consideration transferred: Cash $ 22,172 $ 5,831 $ 486,538 $ 514,541 Deferred consideration — — — — Contingent consideration 828 — — 828 Total consideration transferred $ 23,000 $ 5,831 $ 486,538 $ 515,369 Estimates of acquired intangible assets related to the 2018 acquisitions are as follows, as of September 30, 2019, dollars in thousands: Estimated Fair Value Weighted Average Estimated Useful Life (Years) 2018 Acquisitions: Customer relationships $ 168,820 12 Trademarks and trade names 11,260 9 Non-competition agreements 1,260 5 Total intangible assets for 2018 acquisitions $ 181,340 11 As third party or internal valuations are finalized, certain tax aspects of the foregoing transactions are completed, and customer post-closing reviews are concluded, adjustments may be made to the fair value of assets acquired, and in some cases total purchase price, through the end of each measurement period, generally one year following the applicable acquisition date. Various insignificant adjustments to the fair value of assets acquired, and in some cases total purchase price, have been made to certain business combinations since the respective dates of acquisition. Goodwill to be recognized in connection with these acquisitions is attributable to the synergies expected to be realized and improvements in the businesses after the acquisitions. Of the $287.0 million of goodwill recorded from the 2018 acquisitions, $33.2 million is expected to be deductible for income tax purposes. Contingent Consideration On February 27, 2017, we acquired substantially all of the assets of EcoFoam, a residential and light commercial insulation installation company with locations in Colorado Springs and Denver, Colorado. The purchase price of approximately $22.3 million was funded by cash on hand of $20.2 million and contingent consideration of $2.1 million. The contingent consideration arrangement requires additional consideration to be paid by TopBuild to the sellers of EcoFoam based on EcoFoam’s attainment of annual revenue targets over a three-year period. The total amount of undiscounted contingent consideration which TopBuild may be required to pay under the arrangement is $2.5 million. The fair value of $2.1 million contingent consideration recognized on the acquisition date was estimated by applying the income approach using discounted cash flows. That measure is based on significant Level 3 inputs not observable in the market. The significant assumption includes a discount rate of 9.5%. Changes in the fair value measurement each period reflect the passage of time as well as the impact of adjustments, if any, to the likelihood of achieving the specified targets. We made contingent payments of $0.8 million in the second quarters of 2019 and 2018. The acquisition of ADO included a contingent consideration arrangement that requires additional consideration to be paid by TopBuild to the sellers of ADO based on the achievement of certain EBITDA thresholds over a two-year period. The range of the undiscounted amounts TopBuild may be required to pay under the contingent consideration agreement is between zero and $1.0 million. The fair value of the contingent consideration recognized on the acquisition date of $0.8 million was estimated by applying the income approach using discounted cash flows. That measure is based on significant Level 3 inputs not observable in the market. The significant assumption includes a discount rate of 9.5%. Changes in the fair value measurement each period reflect the passage of time as well as the impact of adjustments, if any, to the likelihood of achieving the specified targets. The acquisition of Santa Rosa included a contingent consideration arrangement that required additional consideration to be paid by TopBuild based on the achievement of a gross revenue target for 2018. The range of undiscounted amounts TopBuild could be required to pay under the contingent consideration was between zero and $0.25 million, which also represents the fair value recognized on the acquisition date. In the first quarter of 2019, we paid $0.25 million in full and had no remaining contingent consideration obligation related to Santa Rosa as of March 31, 2019. Contingent consideration is recorded in the condensed consolidated balance sheets in accrued liabilities and other liabilities. Adjustments to the fair value of contingent consideration are reflected in selling, general, and administrative expense in the condensed consolidated statements of operations and are included in the acquisition related costs above. The following table presents the fair value of contingent consideration, in thousands: EcoFoam ADO Santa Rosa Date of Acquisition February 27, 2017 January 10, 2018 January 18, 2018 Fair value of contingent consideration recognized at acquisition date $ 2,110 $ 828 $ 250 Contingent consideration at December 31, 2018 $ 1,573 $ 343 $ 250 Additions — — — Change in fair value of contingent consideration during the nine months ended September 30, 2019 71 (220) — Payment of contingent consideration during the nine months ended September 30, 2019 (841) — (250) Liability balance for contingent consideration at September 30, 2019 $ 803 $ 123 $ — |
Closure Costs
Closure Costs | 9 Months Ended |
Sep. 30, 2019 | |
Closure Costs | |
Closure Costs | 13. CLOSURE COSTS We generally recognize expenses related to closures and position eliminations at the time of announcement or notification. Such costs include termination and other severance benefits, lease abandonment costs, and other transition costs. Closure costs are reflected in our condensed consolidated statements of operations as selling, general, and administrative expense. In our condensed consolidated balance sheets, accrued severance closure costs are reflected as accrued liabilities and accrued lease abandonment costs are reflected as short-term and long-term lease liabilities. In connection with the acquisition of USI, management performed an evaluation of the resources necessary to effectively operate the acquired business. During the second quarter of 2018, management committed to a plan to close the USI corporate office in St. Paul, Minnesota, and consolidate certain administrative functions to our Daytona Beach, Florida, Branch Support Center. As a result, the Company incurred The following table details our total estimated closure costs, by cost type, pertaining to the above closure and transition related to the USI acquisition (in thousands): Segment / Cost Type Closure Costs Liability at December 31, 2018 Closure Costs Incurred for the Nine Months Ended September 30, 2019 Cash Payments for the Nine Months Ended September 30, 2019 Non-Cash Adjustments for the Nine Months Ended September 30, 2019 Closure Costs Liability at September 30, 2019 Corporate: Severance $ 3,065 $ 239 $ (3,155) $ (119) $ 30 Lease abandonment 301 — (149) 229 381 Total Corporate: $ 3,366 $ 239 $ (3,304) $ 110 $ 411 The remaining accrued severance closure costs will be paid by the end of 2019. Non-cash adjustments in the table above relate to true-up of estimates to actual amounts. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Accrued Liabilities | |
Accrued Liabilities | 14. ACCRUED LIABILITIES The following table sets forth the components of accrued liabilities, in thousands: As of September 30, December 31, 2019 2018 Accrued liabilities: Salaries, wages, and commissions $ 34,205 $ 34,085 Insurance liabilities 25,483 25,212 Deferred revenue 16,685 19,963 Interest payable on long-term debt 9,593 3,951 Other 26,320 21,025 Total accrued liabilities $ 112,286 $ 104,236 See Note 2 – Accounting Policies |
Other Commitments and Contingen
Other Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Other Commitments and Contingencies | |
Other Commitments and Contingencies | 15. OTHER COMMITMENTS AND CONTINGENCIES Litigation Other Matters We occasionally use performance bonds to ensure completion of our work on certain larger customer contracts that can span multiple accounting periods. Performance bonds generally do not have stated expiration dates; rather, we are released from the bonds as the contractual performance is completed. Other types of bonds outstanding were principally license and insurance related. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies | |
Financial Statement Presentation | Financial Statement Presentation. Our condensed consolidated financial statements have been developed in conformity with GAAP, which requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates. All intercompany transactions between TopBuild entities have been eliminated. |
Business Combinations | Business Combinations. The purchase price for business combinations is allocated to the estimated fair values of acquired tangible and intangible assets, including goodwill, and liabilities assumed. These estimates include, but are not limited to, discount rates, projected future revenue growth, cost synergies and expected cash flows, customer attrition rates, useful lives and other prospective information. Additionally, we recognize customer relationships, trademarks and trade names, and non-competition agreements as identifiable intangible assets, which are recorded at fair value as of the transaction date. The fair value of these intangible assets is determined primarily using the income approach and using current industry information. Goodwill is recorded when consideration transferred exceeds the fair value of identifiable assets and liabilities. Measurement-period adjustments to assets acquired and liabilities assumed with a corresponding offset to goodwill are recorded in the period in which they occur, which may include up to one year from the acquisition date. Contingent consideration is recorded at fair value at the acquisition date. |
Share-based Compensation | Share-based Compensation. Our share-based compensation program currently consists of RSAs and stock options. Share-based compensation expense is reported in selling, general, and administrative expense. We do not capitalize any compensation cost related to share-based compensation awards. The income tax benefits and deficiencies associated with share-based awards are reported as a component of income tax expense. Excess tax benefits and deficiencies are included in net cash provided by (used in) operating activities while shares withheld for tax-withholding are reported in financing activities under the caption “Taxes withheld and paid on employees’ equity awards” in our condensed consolidated statements of cash flows. Award forfeitures are accounted for in the period they occur. The following table details our award types and accounting policies: Award Type: Fair Value Determination Vesting Expense Expense Restricted Share Awards Service Condition Closing stock price on date of grant Ratably; 3 or 5 years Straight-line Fair value at grant date Performance Condition Closing stock price on date of grant Cliff; 3 years Straight-line; Evaluated quarterly; 0 - 200% of fair value at grant date depending on performance Market Condition Monte-Carlo Simulation Cliff; 3 years Straight-line; Fair value at grant date Stock Options† Black-Scholes Options Pricing Model Ratably; 3 or 5 years Straight-line Fair value at grant date † Stock options expire no later than 10 years after the grant date. ‡ Expense is reversed if award is forfeited prior to vesting. |
Revenue Recognition | Revenue Recognition Revenue is disaggregated between our Installation and Distribution segments. A reconciliation of disaggregated revenue by segment is included in Note 6 – Segment Information. We recognize revenue for our Installation segment using the percentage of completion method of accounting with respect to each particular order within a given customer’s contract, based on the amount of material installed at that customer’s location and the associated labor costs, as compared to the total expected cost for the particular order. Revenue is recognized over time as the customer is able to receive and utilize the benefits provided by our services. Each contract contains one or more individual orders, which are based on services delivered. When a contract modification is made, typically the remaining goods or services are considered distinct and we recognize revenue for the modification as a separate performance obligation. When insulation and installation services are bundled in a contract, we combine these items into one performance obligation as the overall promise is to transfer the combined item. Revenue from our Distribution segment is recognized when title to products and risk of loss transfers to our customers. This represents the point in time when the customer is able to direct the use of and obtain substantially all the benefits from the product. The determination of when control is deemed transferred depends on the shipping terms that are agreed upon in the contract. At time of sale, we record estimated reductions to revenue for customer programs and incentive offerings, including special pricing and other volume-based incentives based on historical experience, which is continuously adjusted. The duration of our contracts with customers is relatively short, generally less than a 90 -day period, therefore there is not a significant financing component when considering the determination of the transaction price which gets allocated to the individual performance obligations, generally based on standalone selling prices. Additionally, we consider shipping costs charged to a customer as a fulfillment cost rather than a promised service and expense as incurred. Sales taxes, when incurred, are recorded as a liability and excluded from revenue on a net basis. We record a contract asset when we have satisfied our performance obligation prior to billing and a contract liability generally when a customer payment is received prior to the satisfaction of our performance obligation. The difference between the beginning and ending balances of our contract assets and liabilities primarily results from the timing of our performance and the customer’s payment. The following table represents our contract assets and contract liabilities with customers, in thousands: Included in Line Item on As of Condensed Consolidated September 30, December 31, Balance Sheets 2019 2018 Contract Assets: Receivables, unbilled Receivables, net $ 62,072 $ 61,339 Contract Liabilities: Deferred revenue Accrued liabilities $ 16,685 $ 19,963 Our contract liabilities are normally recognized to net sales in the immediately subsequent reporting period due to the generally short-term nature of our contracts with customers. |
Recently Adopted and Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements: Leases In February 2016 the FASB issued ASU 2016-02, “Leases.” This standard requires a lessee to recognize certain leases on its balance sheet. Effective January 1, 2019, we adopted ASU 2016-02 using the modified retrospective transition method with the optional transition relief provided in targeted improvements ASU 2018-11, which allows the new standard to be applied in financial year 2019. We elected certain practical expedients allowed under ASC 842 – Leases. As such, we did not reassess whether any existing contracts are or contain leases, the lease classification of existing leases, or the initial direct costs for any existing leases. In addition, we elected by class of underlying asset to not separate fixed non-lease components from the lease component. Further, for all leases with an initial term of 12 months or less, we elected not to record any right of use asset or lease liability. We declined the option to use hindsight in determining lease term, assessing likelihood that a lease purchase option will be exercised or in assessing impairment of right of use asset for all classes of assets. To initially measure our lease liability, we used our IBR at January 1, 2019 based on the remaining lease term for all existing leases. See Note 7 – Leases Recently Issued Accounting Pronouncements Not Yet Adopted: In June 2016 the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses”. This guidance introduces a current expected credit loss (CECL) model for the recognition of impairment losses on financial assets, including trade receivables. The CECL model replaces current GAAP’s incurred loss model. Under CECL, companies will record an allowance through current earnings for the expected credit loss for the life of the financial asset upon initial recognition of the financial asset. This update is effective for us at the beginning of 2020 with early adoption permitted at the beginning of 2019. We plan to adopt this standard on January 1, 2020 with a cumulative adjustment to our beginning retained earnings balance. We have begun our initial evaluation of financial assets subject to this guidance and are developing a new accounting policy for CECL recognition. We are still determining the impact to our financial position upon adoption. In January 2017 the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” The new standard simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. This update is effective for us beginning January 1, 2020. Early adoption is permitted, and the new standard will be applied on a prospective basis. We plan to adopt this standard on January 1, 2020, and we do not anticipate that the on our financial position and results of operations. In August 2018 the FASB issued ASU 2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” The new standard modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, including adjustments to Level 3 fair value measurement disclosures as well as the removal of disclosures around Level 1 and Level 2 transfers. This update is effective for us beginning January 1, 2020 with early adoption permitted. The amendments to the guidance will be applied on a prospective or retrospective basis, in accordance with the requirements |
Accounting Policies (Tables)
Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies | |
Summary of award types and accounting policies | The following table details our award types and accounting policies: Award Type: Fair Value Determination Vesting Expense Expense Restricted Share Awards Service Condition Closing stock price on date of grant Ratably; 3 or 5 years Straight-line Fair value at grant date Performance Condition Closing stock price on date of grant Cliff; 3 years Straight-line; Evaluated quarterly; 0 - 200% of fair value at grant date depending on performance Market Condition Monte-Carlo Simulation Cliff; 3 years Straight-line; Fair value at grant date Stock Options† Black-Scholes Options Pricing Model Ratably; 3 or 5 years Straight-line Fair value at grant date † Stock options expire no later than 10 years after the grant date. ‡ Expense is reversed if award is forfeited prior to vesting. |
Schedule of opening and closing balances of contract assets and contract liabilities with customers | The following table represents our contract assets and contract liabilities with customers, in thousands: Included in Line Item on As of Condensed Consolidated September 30, December 31, Balance Sheets 2019 2018 Contract Assets: Receivables, unbilled Receivables, net $ 62,072 $ 61,339 Contract Liabilities: Deferred revenue Accrued liabilities $ 16,685 $ 19,963 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Other Intangibles | |
Changes in the carrying amount of goodwill by segment | Changes in the carrying amount of goodwill for the nine months ended September 30, 2019, by segment, were as follows, in thousands: Gross Goodwill Gross Goodwill Accumulated Net Goodwill at at Impairment at December 31, 2018 Additions September 30, 2019 Losses September 30, 2019 Goodwill, by segment: Installation $ 1,679,654 $ 3,935 $ 1,683,589 $ (762,021) $ 921,568 Distribution 446,383 (33) 446,350 — 446,350 Total goodwill $ 2,126,037 $ 3,902 $ 2,129,939 $ (762,021) $ 1,367,918 |
Schedule of other intangible assets | The following table sets forth our other intangible assets, in thousands: As of September 30, 2019 December 31, 2018 Gross definite-lived intangible assets $ 220,882 $ 218,882 Accumulated amortization (35,038) (19,495) Net definite-lived intangible assets 185,844 199,387 Indefinite-lived intangible assets not subject to amortization — — Other intangible assets, net $ 185,844 $ 199,387 |
Schedule of amortization expense | The following table sets forth our amortization expense, in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Amortization expense $ 5,197 $ 5,242 $ 15,543 $ 10,536 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Long-Term Debt | |
Reconciliation of principal balance of outstanding debt | The following table reconciles the principal balances of our outstanding debt to our condensed consolidated balance sheets, in thousands: As of September 30, December 31, Principal debt balances: 2019 2018 Senior Notes $ 400,000 $ 400,000 Term loan 312,188 327,500 Equipment notes 30,341 24,455 Unamortized debt issuance costs (7,312) (8,481) Total debt, net of unamortized debt issuance costs 735,217 743,474 Less: current portion of long-term debt 33,262 26,852 Total long-term debt $ 701,955 $ 716,622 |
Schedule of remaining principal payments of debt | The following table sets forth our remaining principal payments for our outstanding debt balances as of September 30, 2019, in thousands: Payments Due by Period 2019 2020 2021 2022 2023 Thereafter Total Senior Notes $ — $ — $ — $ — $ — $ 400,000 $ 400,000 Term loan 6,563 26,250 30,625 248,750 — — 312,188 Equipment notes 1,728 7,082 7,366 7,661 5,345 1,159 30,341 Total $ 8,291 $ 33,332 $ 37,991 $ 256,411 $ 5,345 $ 401,159 $ 742,529 |
Summary of key terms of Amended Credit Agreement | The following table outlines the key terms of our Amended Credit Agreement (dollars in thousands): Senior secured term loan facility (original borrowing) (a) $ 250,000 Additional delayed draw term loan (b) $ 100,000 Additional term loan and/or revolver capacity available under incremental facility (c) $ 200,000 Revolving Facility $ 250,000 Sublimit for issuance of letters of credit under Revolving Facility (d) $ 100,000 Sublimit for swingline loans under Revolving Facility (d) $ 20,000 Interest rate as of September 30, 2019 3.36 % Scheduled maturity date 5/05/2022 (a) The Amended Credit Agreement provides for a term loan limit of $350.0 million; $250.0 million was drawn on May 5, 2017. (b) On May 1, 2018, the net proceeds from the $100.0 million delayed draw term loan were used to partially fund the USI acquisition. (c) Additional borrowing capacity is available under the incremental facility, subject to certain terms and conditions (including existing or new lenders providing commitments in respect of such additional borrowing capacity). (d) Use of the sublimits for the issuance of letters of credit and swingline loans reduces the availability under the Revolving Facility. |
Schedule of availability under the Revolving Facility | The following table summarizes our availability under the Revolving Facility, in thousands: As of September 30, December 31, 2019 2018 Revolving Facility $ 250,000 $ 250,000 Less: standby letters of credit (61,382) (59,288) Availability under Revolving Facility $ 188,618 $ 190,712 |
Schedule of maximum Net Leverage Ratios and minimum FCCR | The following table sets forth the maximum Net Leverage Ratios and minimum FCCR required: Quarter Ending Maximum Minimum June 30, 2018 through September 30, 2018 3.75:1.00 1.25:1.00 December 31, 2018 through September 30, 2019 3.50:1.00 1.25:1.00 September 30, 2019 and each fiscal quarter end thereafter 3.25:1.00 1.25:1.00 |
Schedule of the key financial covenants | The following table outlines the key financial covenants effective for the period covered by this Quarterly Report: As of September 30, 2019 Maximum Net Leverage Ratio 3.25:1.00 Minimum FCCR 1.25:1.00 Compliance as of period end In Compliance |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Information | |
Schedule of net sales and operating results by segment | The following table sets forth our net sales and operating results by segment, in thousands: Three Months Ended September 30, 2019 2018 2019 2018 Net Sales Operating Profit (b) Our operations by segment were (a): Installation $ 498,390 $ 464,540 $ 69,846 $ 61,004 Distribution 220,947 212,948 23,406 19,229 Intercompany eliminations (37,007) (30,199) (5,935) (5,658) Total $ 682,330 $ 647,289 87,317 74,575 General corporate expense, net (c) (6,872) (8,358) Operating profit, as reported 80,445 66,217 Other expense, net (8,854) (9,203) Income before income taxes $ 71,591 $ 57,014 Nine Months Ended September 30, 2019 2018 2019 2018 Net Sales Operating Profit (b) Our operations by segment were (a): Installation $ 1,430,800 $ 1,223,357 $ 189,568 $ 139,969 Distribution 638,899 606,335 65,154 57,141 Intercompany eliminations (107,928) (84,990) (18,013) (15,382) Total $ 1,961,771 $ 1,744,702 236,709 181,728 General corporate expense, net (c) (23,606) (37,937) Operating profit, as reported 213,103 143,791 Other expense, net (27,228) (18,734) Income before income taxes $ 185,875 $ 125,057 (a) All of our operations are located in the U.S. (b) Segment operating profit includes an allocation of general corporate expenses attributable to the operating segments which is based on direct benefit or usage (such as salaries of corporate employees who directly support the segment). (c) General corporate expense, net includes expenses not specifically attributable to our segments for functions such as corporate human resources, finance, and legal, including salaries, benefits, and other related costs. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Schedule of components of lease expense | The components of lease expense were as follows and are primarily included in cost of sales on the accompanying unaudited condensed consolidated statement of operations, in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2019 2019 Operating lease cost $ 10,959 $ 34,396 Short-term lease cost 3,381 9,391 Variable lease cost 1,434 4,201 Sublease income (153) (461) Net lease cost $ 15,621 $ 47,527 |
Schedule of future minimum lease payments | Future minimum lease payments under non-cancellable operating leases as of September 30, 2019 were as follows, in thousands: Payments due by Period 2019 $ 10,933 2020 37,598 2021 24,367 2022 14,790 2023 6,956 2024 & Thereafter 8,284 Total future minimum lease payments 102,928 Less: imputed interest (10,706) Lease liability at September 30, 2019 $ 92,222 |
Schedule of cash flow information | The amount below is included in the cash flows provided by (used in) operating activities section on the accompanying unaudited condensed consolidated statement of cash flows, in thousands: Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities $ (33,914) |
Income Per Share (Tables)
Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Income Per Share | |
Schedule of basic and diluted income per share | Basic and diluted net income per share were computed as follows, in thousands, except share and per share amounts: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Net income - basic and diluted $ 54,976 $ 42,658 $ 145,011 $ 96,198 Weighted average number of common shares outstanding - basic 33,790,857 35,091,388 33,977,464 35,084,694 Dilutive effect of common stock equivalents: RSAs with service-based conditions 82,087 135,347 86,373 161,474 RSAs with market-based conditions 195,740 252,278 183,537 245,127 RSAs with performance-based conditions 82,750 23,875 63,329 7,958 Stock options 216,468 286,495 230,932 316,104 Weighted average number of common shares outstanding - diluted 34,367,902 35,789,383 34,541,635 35,815,357 Basic income per common share $ 1.63 $ 1.22 $ 4.27 $ 2.74 Diluted income per common share $ 1.60 $ 1.19 $ 4.20 $ 2.69 |
Summary of shares excluded from the calculation of diluted income per share because their effect would have been anti-dilutive | The following table summarizes shares excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Anti-dilutive common stock equivalents: RSAs with service-based conditions — 9,775 5,264 3,466 RSAs with market-based conditions — — 6,567 — RSAs with performance-based conditions — — — — Stock options 12,642 76,030 72,580 62,528 Total anti-dilutive common stock equivalents 12,642 85,805 84,411 65,994 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-Based Compensation | |
Schedule of share-based compensation expense and related income tax benefit | The following table presents share-based compensation amounts recognized in our condensed consolidated statements of operations, in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Share-based compensation expense $ 3,926 $ 2,848 $ 11,411 $ 8,244 Income tax benefit realized $ 1,304 $ 545 $ 5,110 $ 3,140 |
Schedule of share-based compensation activity | The following table presents a summary of our share-based compensation activity for the nine months ended September 30, 2019, in thousands, except per share amounts: RSAs Stock Options Number of Shares Weighted Average Grant Date Fair Value Per Share Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Average Exercise Price Per Share Aggregate Balance December 31, 2018 499.2 $ 41.29 611.4 $ 13.10 $ 34.45 $ 8,685.8 Granted 249.1 $ 67.37 103.5 $ 21.16 $ 58.08 Converted/Exercised (310.0) $ 30.99 (273.8) $ 10.87 $ 28.14 $ 14,184.1 Forfeited (20.6) $ 58.32 (9.7) $ 20.28 $ 54.62 Expired (2.7) $ 14.44 $ 38.39 Balance September 30, 2019 417.7 $ 57.35 428.7 $ 16.30 $ 43.71 $ 22,603.3 Exercisable September 30, 2019 (a) 129.1 $ 13.96 $ 36.94 $ 7,678.4 (a) The weighted average remaining contractual term for vested stock options is approximately 6.9 years. |
Schedule of unrecognized share-based compensation expense relating to unvested awards | We had unrecognized share-based compensation expense relating to unvested awards as shown in the following table, dollars in thousands: As of September 30, 2019 Unrecognized Compensation Expense Weighted Average Unrecognized compensation expense related to unvested awards: RSAs $ 10,319 1.2 years Stock options 1,910 1.0 years Total unrecognized compensation expense related to unvested awards $ 12,229 |
Schedule of key inputs used to estimate the fair value of awards | The following are key inputs in the Monte Carlo analysis for awards granted in 2019 and 2018: 2019 2018 Measurement period (years) 2.87 2.87 Risk free interest rate 2.50 % 2.36 % Dividend yield 0.00 % 0.00 % Estimated fair value of market-based RSAs granted $ 80.74 $ 103.31 |
Schedule of assumptions used to estimate the fair values of options granted | The following table presents the assumptions used to estimate the fair values of stock options granted in 2019 and 2018: 2019 2018 Risk free interest rate 2.59 % 2.78 % Expected volatility, using historical return volatility and implied volatility 32.50 % 32.50 % Expected life (in years) 6.0 6.0 Dividend yield 0.00 % 0.00 % Estimated fair value of stock options granted $ 21.16 $ 27.44 |
Performance-based conditions | Restricted Stock Awards | |
Share-Based Compensation | |
Schedule of the range of payouts and the related expense for RSAs with performance-based conditions | The following table shows the range of payouts and the related expense for our outstanding RSAs with performance-based conditions, in thousands: Payout Ranges and Related Expense RSAs with Performance-Based Conditions Grant Date Fair Value 0% 25% 100% 200% February 21, 2017 $ 1,839 $ — $ 460 $ 1,839 $ 3,678 February 19, 2018 $ 2,082 $ — $ 521 $ 2,082 $ 4,164 February 18, 2019 $ 2,510 $ — $ 628 $ 2,510 $ 5,020 |
Share Repurchase Program (Table
Share Repurchase Program (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share Repurchase Program | |
Schedule of share repurchase program | The following table sets forth our share repurchases under the 2019 and 2017 Repurchase Programs during the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Number of shares repurchased 364,074 142,780 810,077 (b) 156,437 (a) Share repurchase cost (in thousands) $ 32,677 $ 9,493 $ 52,177 $ — (a) The nine months ended September 30, 2018 includes 13,657 shares we received as final settlement of our 2017 ASR Agreement. (b) The nine months ended September 30, 2019 includes 176,327 shares we received as final settlement of our 2018 ASR Agreement. |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations | |
Schedule of revenue and net income since acquisition date included in the Condensed Consolidated Statements of Operations | Revenue and net income since the respective 2018 acquisition dates included in our condensed consolidated statements of operations were as follows, in thousands: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Net Sales Net Income Net Sales Net Income ADO 7,181 58 20,057 129 Santa Rosa 2,377 338 6,919 939 USI 96,368 8,327 284,757 26,223 $ 105,926 $ 8,723 $ 311,733 $ 27,291 |
Schedule of pro forma results | Our pro forma results are presented below, in thousands: Unaudited Pro Forma for the Nine Months Ended September 30, 2019 2018 Net sales $ 1,961,771 $ 1,878,179 Net income $ 145,011 $ 105,410 |
Schedule of additional expense included in the pro forma operating profit and net income | Our pro forma results are presented below, in thousands: Unaudited Pro Forma for the Nine Months Ended September 30, 2019 2018 Amortization of intangible assets $ — $ 5,039 Income tax expense (using 26.5% and 27.0% effective tax rate in 2019 and 2018, respectively) $ — $ 3,407 |
Schedule of estimated fair values of the assets acquired and liabilities assumed, as well as the fair value of consideration transferred | The estimated fair values of the assets acquired and liabilities assumed for the 2018 acquisitions, as well as the fair value of consideration transferred, are presented below as of September 30, 2019, in thousands: 2018 Acquisitions Completed During the Year Ended December 31, 2018 ADO Santa Rosa USI Total Estimated fair values: Cash $ 939 $ — $ 14,817 $ 15,756 Accounts receivable 3,434 1,433 61,445 66,312 Inventories 2,337 104 14,029 16,470 Prepaid and other assets 135 7 3,439 3,581 Property and equipment 951 522 33,126 34,599 Intangible assets 14,090 1,850 165,400 181,340 Goodwill 2,631 3,014 281,364 287,009 Accounts payable (908) (1,099) (17,927) (19,934) Accrued liabilities (609) — (34,686) (35,295) Deferred tax liability — — (34,469) (34,469) Net assets acquired $ 23,000 $ 5,831 $ 486,538 $ 515,369 2018 Acquisitions Completed During the Year Ended December 31, 2018 ADO Santa Rosa USI Total Fair value of consideration transferred: Cash $ 22,172 $ 5,831 $ 486,538 $ 514,541 Deferred consideration — — — — Contingent consideration 828 — — 828 Total consideration transferred $ 23,000 $ 5,831 $ 486,538 $ 515,369 |
Schedule of estimates of acquired intangible assets related to the acquisitions | Estimates of acquired intangible assets related to the 2018 acquisitions are as follows, as of September 30, 2019, dollars in thousands: Estimated Fair Value Weighted Average Estimated Useful Life (Years) 2018 Acquisitions: Customer relationships $ 168,820 12 Trademarks and trade names 11,260 9 Non-competition agreements 1,260 5 Total intangible assets for 2018 acquisitions $ 181,340 11 |
Schedule of fair value of contingent consideration | The following table presents the fair value of contingent consideration, in thousands: EcoFoam ADO Santa Rosa Date of Acquisition February 27, 2017 January 10, 2018 January 18, 2018 Fair value of contingent consideration recognized at acquisition date $ 2,110 $ 828 $ 250 Contingent consideration at December 31, 2018 $ 1,573 $ 343 $ 250 Additions — — — Change in fair value of contingent consideration during the nine months ended September 30, 2019 71 (220) — Payment of contingent consideration during the nine months ended September 30, 2019 (841) — (250) Liability balance for contingent consideration at September 30, 2019 $ 803 $ 123 $ — |
Closure Costs (Tables)
Closure Costs (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Closure Costs Related to USI Acquisition | |
Closure Costs | |
Schedule of estimated closure costs by cost type | The following table details our total estimated closure costs, by cost type, pertaining to the above closure and transition related to the USI acquisition (in thousands): Segment / Cost Type Closure Costs Liability at December 31, 2018 Closure Costs Incurred for the Nine Months Ended September 30, 2019 Cash Payments for the Nine Months Ended September 30, 2019 Non-Cash Adjustments for the Nine Months Ended September 30, 2019 Closure Costs Liability at September 30, 2019 Corporate: Severance $ 3,065 $ 239 $ (3,155) $ (119) $ 30 Lease abandonment 301 — (149) 229 381 Total Corporate: $ 3,366 $ 239 $ (3,304) $ 110 $ 411 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accrued Liabilities | |
Schedule of components of accrued liabilities | The following table sets forth the components of accrued liabilities, in thousands: As of September 30, December 31, 2019 2018 Accrued liabilities: Salaries, wages, and commissions $ 34,205 $ 34,085 Insurance liabilities 25,483 25,212 Deferred revenue 16,685 19,963 Interest payable on long-term debt 9,593 3,951 Other 26,320 21,025 Total accrued liabilities $ 112,286 $ 104,236 |
Basis of Presentation (Details)
Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2019segment | |
Basis of Presentation | |
Number of reportable segments | 2 |
Accounting Policies - Share-Bas
Accounting Policies - Share-Based Compensation (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Stock Options | Minimum | |
Share-Based Compensation | |
Vesting period | 3 years |
Stock Options | Maximum | |
Share-Based Compensation | |
Vesting period | 5 years |
Expiration period | 10 years |
Service-based conditions | Restricted Stock Awards | Minimum | |
Share-Based Compensation | |
Vesting period | 3 years |
Service-based conditions | Restricted Stock Awards | Maximum | |
Share-Based Compensation | |
Vesting period | 5 years |
Performance-based conditions | Restricted Stock Awards | |
Share-Based Compensation | |
Vesting period | 3 years |
Performance-based conditions | Restricted Stock Awards | Minimum | |
Share-Based Compensation | |
Expense measurement, payout range (as percent) | 0.00% |
Performance-based conditions | Restricted Stock Awards | Maximum | |
Share-Based Compensation | |
Expense measurement, payout range (as percent) | 200.00% |
Market-based conditions | Restricted Stock Awards | |
Share-Based Compensation | |
Vesting period | 3 years |
Accounting Policies - Revenue R
Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Revenue Recognition | ||
Customer contract period | 90 days | |
Contract Liabilities | ||
Deferred revenue | $ 16,685 | $ 19,963 |
Receivables, net | ||
Contract Assets | ||
Receivables, unbilled | 62,072 | 61,339 |
Accrued liabilities | ||
Contract Liabilities | ||
Deferred revenue | $ 16,685 | $ 19,963 |
Accounting Policies - ASC 842,
Accounting Policies - ASC 842, Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 |
Recently Adopted Accounting Pronouncements | ||
Right of use assets | $ 89,178 | |
Lease liabilities | $ 92,222 | |
Accounting Standards Update 2016-02 | ||
Recently Adopted Accounting Pronouncements | ||
Cumulative adjustment to retained earnings on adoption of new accounting principle | $ 0 | |
Accounting Standards Update 2016-02 | Restatement Adjustment | ||
Recently Adopted Accounting Pronouncements | ||
Right of use assets | 99,100 | |
Lease liabilities | $ 101,600 |
Goodwill and Other Intangible_2
Goodwill and Other Intangibles - Goodwill (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019USD ($)item | Dec. 31, 2018USD ($) | |
Changes in the carrying amount of goodwill | ||
Number of reporting units | item | 2 | |
Gross Goodwill, at beginning of period | $ 2,126,037 | |
Additions | 3,902 | |
Gross Goodwill, at end of period | 2,129,939 | |
Accumulated Impairment Losses | (762,021) | |
Net Goodwill | 1,367,918 | $ 1,364,016 |
USI | ||
Changes in the carrying amount of goodwill | ||
Net Goodwill | 281,364 | |
Installation | ||
Changes in the carrying amount of goodwill | ||
Gross Goodwill, at beginning of period | 1,679,654 | |
Additions | 3,935 | |
Gross Goodwill, at end of period | 1,683,589 | |
Accumulated Impairment Losses | (762,021) | |
Net Goodwill | 921,568 | |
Distribution | ||
Changes in the carrying amount of goodwill | ||
Gross Goodwill, at beginning of period | 446,383 | |
Additions | (33) | |
Gross Goodwill, at end of period | 446,350 | |
Net Goodwill | $ 446,350 |
Goodwill and Other Intangible_3
Goodwill and Other Intangibles - Other intangible assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Other intangible assets | |||||
Gross Definite-lived intangible assets | $ 220,882 | $ 220,882 | $ 218,882 | ||
Accumulated Amortization | (35,038) | (35,038) | (19,495) | ||
Net definite-lived intangible assets | 185,844 | 185,844 | 199,387 | ||
Other intangible assets, net | 185,844 | 185,844 | $ 199,387 | ||
Amortization expense | $ 5,197 | $ 5,242 | $ 15,543 | $ 10,536 |
Long-Term Debt - Reconciliation
Long-Term Debt - Reconciliation (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Long-Term Debt | ||
Long-term debt | $ 742,529 | |
Unamortized debt issuance costs | (7,312) | $ (8,481) |
Total debt, net of unamortized debt issuance costs | 735,217 | 743,474 |
Less: current portion of long-term debt | 33,262 | 26,852 |
Total long-term debt | 701,955 | 716,622 |
Senior Notes | ||
Long-Term Debt | ||
Long-term debt | 400,000 | 400,000 |
Term Loan Facility | ||
Long-Term Debt | ||
Long-term debt | 312,188 | 327,500 |
Equipment Notes | ||
Long-Term Debt | ||
Long-term debt | $ 30,341 | $ 24,455 |
Long-Term Debt - Schedule of de
Long-Term Debt - Schedule of debt maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Schedule of Debt Maturity by Years: | ||
2019 | $ 8,291 | |
2020 | 33,332 | |
2021 | 37,991 | |
2022 | 256,411 | |
2023 | 5,345 | |
Thereafter | 401,159 | |
Total principal maturities | 742,529 | |
Senior Notes | ||
Schedule of Debt Maturity by Years: | ||
Thereafter | 400,000 | |
Total principal maturities | 400,000 | $ 400,000 |
Term Loan Facility | ||
Schedule of Debt Maturity by Years: | ||
2019 | 6,563 | |
2020 | 26,250 | |
2021 | 30,625 | |
2022 | 248,750 | |
Total principal maturities | 312,188 | 327,500 |
Equipment Notes | ||
Schedule of Debt Maturity by Years: | ||
2019 | 1,728 | |
2020 | 7,082 | |
2021 | 7,366 | |
2022 | 7,661 | |
2023 | 5,345 | |
Thereafter | 1,159 | |
Total principal maturities | $ 30,341 | $ 24,455 |
Long-Term Debt - Key Terms of C
Long-Term Debt - Key Terms of Credit Agreement (Details) - USD ($) $ in Thousands | May 01, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | Mar. 28, 2018 | May 05, 2017 |
Long-Term Debt | |||||
Amount outstanding | $ 742,529 | ||||
Term Loan Facility | |||||
Long-Term Debt | |||||
Amount outstanding | 312,188 | $ 327,500 | |||
Senior Notes | |||||
Long-Term Debt | |||||
Amount outstanding | 400,000 | 400,000 | |||
Equipment Notes | |||||
Long-Term Debt | |||||
Amount outstanding | 30,341 | 24,455 | |||
Equipment notes issued | $ 10,000 | 26,600 | |||
Debt term | 5 years | ||||
Equipment Notes | Minimum | |||||
Long-Term Debt | |||||
Interest rate | 2.80% | ||||
Equipment Notes | Maximum | |||||
Long-Term Debt | |||||
Interest rate | 4.40% | ||||
Revolving Facility | |||||
Long-Term Debt | |||||
Availability | $ 250,000 | $ 250,000 | |||
Amended Credit Agreement | |||||
Long-Term Debt | |||||
Maximum amount of senior notes that may be issued under the credit agreement | $ 500,000 | ||||
Additional term loan and/or revolver capacity available under incremental facility | $ 200,000 | ||||
Scheduled maturity date | May 5, 2022 | ||||
Amended Credit Agreement | Minimum | |||||
Long-Term Debt | |||||
Commitment fee (as a percent) | 0.15% | ||||
Amended Credit Agreement | Maximum | |||||
Long-Term Debt | |||||
Commitment fee (as a percent) | 0.275% | ||||
Amended Credit Agreement | Term Loan Facility | |||||
Long-Term Debt | |||||
Proceeds from delayed-draw term loan | $ 100,000 | ||||
Availability | $ 250,000 | ||||
Additional delayed draw term loan | 100,000 | $ 100,000 | |||
Maximum borrowing capacity including delayed draw feature | $ 350,000 | ||||
Amount outstanding | $ 250,000 | ||||
Amended Credit Agreement | Senior Notes | |||||
Long-Term Debt | |||||
Interest rate | 5.625% | ||||
Amended Credit Agreement | Senior Notes | Change in Control Scenario | |||||
Long-Term Debt | |||||
Redemption price as a percentage of principal | 101.00% | ||||
Amended Credit Agreement | Revolving Facility | |||||
Long-Term Debt | |||||
Availability | $ 250,000 | ||||
Sublimit for issuance of letters of credit under Revolving Facility* | 100,000 | ||||
Sublimit for swingline loans under Revolving Facility* | $ 20,000 | ||||
Interest rate | 3.36% | ||||
Amended Credit Agreement | Base Rate Borrowings | Minimum | |||||
Long-Term Debt | |||||
Applicable margin based on total leverage ratio | 0.00% | ||||
Amended Credit Agreement | Base Rate Borrowings | Maximum | |||||
Long-Term Debt | |||||
Applicable margin based on total leverage ratio | 1.50% | ||||
Amended Credit Agreement | LIBOR Rate Borrowings | Minimum | |||||
Long-Term Debt | |||||
Applicable margin based on total leverage ratio | 1.00% | ||||
Amended Credit Agreement | LIBOR Rate Borrowings | Maximum | |||||
Long-Term Debt | |||||
Applicable margin based on total leverage ratio | 2.50% | ||||
Federal Funds Rate | Amended Credit Agreement | Base Rate Borrowings | |||||
Long-Term Debt | |||||
Basis spread | 0.50% | ||||
LIBOR | Amended Credit Agreement | Base Rate Borrowings | |||||
Long-Term Debt | |||||
Basis spread | 1.00% | ||||
Maturity of the reference rate | 1 month |
Long-Term Debt - Other (Details
Long-Term Debt - Other (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Amended Credit Agreement | ||
Debt covenants | ||
Maximum Net Leverage Ratio | 3.25 | |
Minimum FCCR | 1.25 | |
Senior Notes | Event of Default Scenario | Amended Credit Agreement | ||
Debt covenants | ||
Minimum percentage of principal of debt holders to declare debt immediately due and payable | 25.00% | |
Revolving Facility | ||
Long-Term Debt | ||
Revolving Facility | $ 250,000 | $ 250,000 |
Less: standby letters of credit | (61,382) | (59,288) |
Availability under Revolving Facility | 188,618 | $ 190,712 |
Revolving Facility | Amended Credit Agreement | ||
Long-Term Debt | ||
Revolving Facility | $ 250,000 | |
Debt Covenants Term Period One | Amended Credit Agreement | ||
Debt covenants | ||
Maximum Net Leverage Ratio | 3.75 | |
Minimum FCCR | 1.25 | |
Debt Covenants Term Period Two | Amended Credit Agreement | ||
Debt covenants | ||
Maximum Net Leverage Ratio | 3.50 | |
Minimum FCCR | 1.25 | |
Debt Covenants Term Period Three | Amended Credit Agreement | ||
Debt covenants | ||
Maximum Net Leverage Ratio | 3.25 | |
Minimum FCCR | 1.25 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Fair Value on Non-Recurring Basis | |||||
Amount outstanding | $ 742,529 | $ 742,529 | |||
Amount of transfers of assets and liabilities measured on a recurring and non-recurring basis between Levels 1, 2 and 3 of the fair value hierarchy | 0 | $ 0 | 0 | $ 0 | |
Senior Notes | |||||
Fair Value on Non-Recurring Basis | |||||
Amount outstanding | 400,000 | 400,000 | $ 400,000 | ||
Fair Value on Non-Recurring Basis | Level 1 fair value measurement | Senior Notes | |||||
Fair Value on Non-Recurring Basis | |||||
Fair value | $ 419,000 | $ 419,000 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Segment information | ||||
Net sales | $ 682,330 | $ 647,289 | $ 1,961,771 | $ 1,744,702 |
Operating profit | 80,445 | 66,217 | 213,103 | 143,791 |
Other expense, net | (8,854) | (9,203) | (27,228) | (18,734) |
Income before income taxes | 71,591 | 57,014 | 185,875 | 125,057 |
Operating Segment | ||||
Segment information | ||||
Net sales | 682,330 | 647,289 | 1,961,771 | 1,744,702 |
Operating profit | 87,317 | 74,575 | 236,709 | 181,728 |
Operating Segment | Installation | ||||
Segment information | ||||
Net sales | 498,390 | 464,540 | 1,430,800 | 1,223,357 |
Operating profit | 69,846 | 61,004 | 189,568 | 139,969 |
Operating Segment | Distribution | ||||
Segment information | ||||
Net sales | 220,947 | 212,948 | 638,899 | 606,335 |
Operating profit | 23,406 | 19,229 | 65,154 | 57,141 |
Intercompany Eliminations | ||||
Segment information | ||||
Net sales | (37,007) | (30,199) | (107,928) | (84,990) |
Operating profit | (5,935) | (5,658) | (18,013) | (15,382) |
Corporate | ||||
Segment information | ||||
General corporate expense, net | $ (6,872) | $ (8,358) | $ (23,606) | $ (37,937) |
Leases - Components of lease ex
Leases - Components of lease expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Components of lease expense: | ||
Operating lease cost | $ 10,959 | $ 34,396 |
Short-term lease cost | 3,381 | 9,391 |
Variable lease cost | 1,434 | 4,201 |
Sublease income | (153) | (461) |
Net lease cost | $ 15,621 | $ 47,527 |
Leases - Future minimum lease p
Leases - Future minimum lease payments (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Future minimum lease payments under non-cancellable operating leases: | |
2019 | $ 10,933 |
2020 | 37,598 |
2021 | 24,367 |
2022 | 14,790 |
2023 | 6,956 |
2024 & Thereafter | 8,284 |
Total future minimum lease payments | 102,928 |
Less: imputed interest | (10,706) |
Lease liability at September 30, 2019 | $ 92,222 |
Leases - Cash flows and other (
Leases - Cash flows and other (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Leases | |
Weighted average remaining lease term | 3 years 4 months 24 days |
Weighted average discount rate (as a percent) | 4.30% |
Cash paid for amounts included in the measurement of lease liabilities | $ (33,914) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Income Taxes | |||||
Effective tax rate (as a percent) | 23.20% | 25.20% | 22.00% | 23.10% | |
Tax benefit related to share-based compensation | $ 1,304 | $ 545 | $ 5,110 | $ 3,140 | |
Net deferred tax liability | 161,700 | 161,700 | |||
Net long-term deferred tax assets | 11,758 | 11,758 | $ 13,176 | ||
Net long-term deferred tax liabilities | $ 173,493 | $ 173,493 | $ 176,212 |
Income Per Share - Calculation
Income Per Share - Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Net income - basic and diluted | $ 54,976 | $ 52,051 | $ 37,983 | $ 42,658 | $ 27,152 | $ 26,388 | $ 145,011 | $ 96,198 |
Weighted average number of common shares outstanding - basic | 33,790,857 | 35,091,388 | 33,977,464 | 35,084,694 | ||||
Dilutive effect of common stock equivalents: | ||||||||
Stock options | 216,468 | 286,495 | 230,932 | 316,104 | ||||
Weighted average number of common shares outstanding - diluted | 34,367,902 | 35,789,383 | 34,541,635 | 35,815,357 | ||||
Basic net income per common share | $ 1.63 | $ 1.22 | $ 4.27 | $ 2.74 | ||||
Diluted net income per common share | $ 1.60 | $ 1.19 | $ 4.20 | $ 2.69 | ||||
Service-based conditions | ||||||||
Dilutive effect of common stock equivalents: | ||||||||
Restricted stock awards | 82,087 | 135,347 | 86,373 | 161,474 | ||||
Market-based conditions | ||||||||
Dilutive effect of common stock equivalents: | ||||||||
Restricted stock awards | 195,740 | 252,278 | 183,537 | 245,127 | ||||
Performance-based conditions | ||||||||
Dilutive effect of common stock equivalents: | ||||||||
Restricted stock awards | 82,750 | 23,875 | 63,329 | 7,958 |
Income Per Share - Anti-dilutiv
Income Per Share - Anti-dilutive common stock equivalents (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Anti-dilutive common stock equivalents | ||||
Total anti-dilutive common stock equivalents | 12,642 | 85,805 | 84,411 | 65,994 |
Restricted Stock Awards | Service-based conditions | ||||
Anti-dilutive common stock equivalents | ||||
Total anti-dilutive common stock equivalents | 9,775 | 5,264 | 3,466 | |
Restricted Stock Awards | Market-based conditions | ||||
Anti-dilutive common stock equivalents | ||||
Total anti-dilutive common stock equivalents | 6,567 | |||
Stock Options | ||||
Anti-dilutive common stock equivalents | ||||
Total anti-dilutive common stock equivalents | 12,642 | 76,030 | 72,580 | 62,528 |
Share-Based Compensation - Expe
Share-Based Compensation - Expense (Details) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-Based Compensation | ||||
Share-based compensation expense | $ 3,926 | $ 2,848 | $ 11,411 | $ 8,244 |
Income tax benefit realized | $ 1,304 | $ 545 | $ 5,110 | $ 3,140 |
2015 Plan | ||||
Share-Based Compensation | ||||
Number of shares available | 2.3 | 2.3 | ||
2015 Plan | Maximum | ||||
Share-Based Compensation | ||||
Number of shares authorized | 4 | 4 |
Share-Based Compensation - Acti
Share-Based Compensation - Activity (Details) - USD ($) | Feb. 18, 2019 | Feb. 19, 2018 | Feb. 21, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Unrecognized share-based compensation expense | ||||||
Restricted stock awards, Unrecognized compensation expense | $ 10,319,000 | |||||
Restricted stock awards, Weighted average remaining vesting period | 1 year 2 months 12 days | |||||
Stock options, Unrecognized compensation expense | $ 1,910,000 | |||||
Stock options, Weighted average remaining vesting period | 1 year | |||||
Total unrecognized compensation expense related to unvested awards | $ 12,229,000 | |||||
Restricted Stock Awards | ||||||
Restricted Stock Awards, Number of Shares | ||||||
Balance at beginning of period (in shares) | 499,200 | |||||
Granted (in shares) | 249,100 | |||||
Converted/Exercised (in shares) | (310,000) | |||||
Forfeited (in shares) | (20,600) | |||||
Balance at end of period (in shares) | 417,700 | |||||
Restricted Stock Awards, Weighted Average Grant Date Fair Value Per Share | ||||||
Balance at beginning of period (in dollars per share) | $ 41.29 | |||||
Granted (in dollars per share) | 67.37 | |||||
Converted/Exercised (in dollars per share) | 30.99 | |||||
Forfeited (in dollars per share) | 58.32 | |||||
Balance at end of period (in dollars per share) | $ 57.35 | |||||
Assumptions used to estimate the fair values of the awards granted: | ||||||
Measurement period (years) | 2 years 10 months 13 days | 2 years 10 months 13 days | ||||
Risk free interest rate (as a percent) | 2.50% | 2.36% | ||||
Dividend yield (as a percent) | 0.00% | 0.00% | ||||
Estimated fair value of awards granted (in dollars per share) | $ 80.74 | $ 103.31 | ||||
Stock Options | ||||||
Stock Options, Number of Shares | ||||||
Balance at beginning of period (in shares) | 611,400 | |||||
Granted (in shares) | 103,500 | |||||
Converted/Exercised (in shares) | (273,800) | |||||
Forfeited (in shares) | (9,700) | |||||
Expired (in shares) | (2,700) | |||||
Balance at end of period (in shares) | 428,700 | |||||
Stock Options, Weighted Average Grant Date Fair Value Per Share | ||||||
Balance at beginning of period (in dollars per share) | $ 13.10 | |||||
Granted (in dollars per share) | 21.16 | |||||
Converted/Exercised (in dollars per share) | 10.87 | |||||
Forfeited (in dollars per share) | $ 20.28 | |||||
Expired (in dollars per share) | 14.44 | |||||
Balance at end of period (in dollars per share) | $ 16.30 | |||||
Stock Options, Weighted Average Exercise Price Per Share | ||||||
Balance at beginning of period (in dollars per share) | 34.45 | |||||
Granted (in dollars per share) | 58.08 | |||||
Converted/Exercised (in dollars per share) | 28.14 | |||||
Forfeited (in dollars per share) | 54.62 | |||||
Expired (in dollars per share) | 38.39 | |||||
Balance at end of period (in dollars per share) | $ 43.71 | |||||
Stock options, additional disclosures | ||||||
Aggregate intrinsic value | $ 22,603,300 | $ 8,685,800 | ||||
Converted/Exercised aggregate intrinsic value | $ 14,184,100 | |||||
Exercisable, Number of shares | 129,100 | |||||
Exercisable, Weighted Average Grant Date Fair Value Per Share | $ 13.96 | |||||
Exercisable Weighted Average Exercise Price Per Share | $ 36.94 | |||||
Exercisable, Aggregate Intrinsic Value | $ 7,678,400 | |||||
Weighted average remaining contractual term for vested stock options | 6 years 10 months 24 days | |||||
Assumptions used to estimate the fair values of the awards granted: | ||||||
Risk free interest rate (as a percent) | 2.59% | 2.78% | ||||
Expected volatility using historical return volatility and implied volatility (as a percent) | 32.50% | 32.50% | ||||
Expected life (in years) | 6 years | 6 years | ||||
Dividend yield (as a percent) | 0.00% | 0.00% | ||||
Estimated fair value of awards granted (in dollars per share) | $ 21.16 | $ 27.44 | ||||
Performance-based conditions | Restricted Stock Awards | ||||||
Restricted stock awards, additional disclosures | ||||||
Grant date fair value | $ 2,510,000 | $ 2,082,000 | $ 1,839,000 | |||
Performance-based conditions | Restricted Stock Awards | Payout Range-0% | ||||||
Restricted stock awards, additional disclosures | ||||||
Payout range (as a percent) | 0.00% | 0.00% | 0.00% | |||
Performance-based conditions | Restricted Stock Awards | Payout Range-25% | ||||||
Restricted stock awards, additional disclosures | ||||||
Payout range (as a percent) | 25.00% | 25.00% | 25.00% | |||
Related expenses | $ 628,000 | $ 521,000 | $ 460,000 | |||
Performance-based conditions | Restricted Stock Awards | Payout Range-100% | ||||||
Restricted stock awards, additional disclosures | ||||||
Payout range (as a percent) | 100.00% | 100.00% | 100.00% | |||
Related expenses | $ 2,510,000 | $ 2,082,000 | $ 1,839,000 | |||
Performance-based conditions | Restricted Stock Awards | Payout Range-200% | ||||||
Restricted stock awards, additional disclosures | ||||||
Payout range (as a percent) | 200.00% | 200.00% | 200.00% | |||
Related expenses | $ 5,020,000 | $ 4,164,000 | $ 3,678,000 | |||
Performance-based conditions | RSAs granted on February 22, 2016 | ||||||
Restricted stock awards, additional disclosures | ||||||
Cumulative period of achievement | 3 years | |||||
Cumulative achievement percentage | 88.60% | |||||
Total compensation expense recognized over the performance period, net of forfeitures | $ 1,700,000 |
Share Repurchase Program (Detai
Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 5 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | Mar. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | Feb. 22, 2019 | Nov. 07, 2018 | Jul. 05, 2017 | |
Number of shares repurchased (in shares) | 364,074 | 142,780 | 810,077 | 156,437 | ||||||
Share repurchase cost | $ 32,677 | $ 9,493 | $ 52,177 | |||||||
2017 ASR Agreement | ||||||||||
Number of shares repurchased (in shares) | 13,657 | 13,657 | 1,521,100 | |||||||
Average price per share (in dollars per share) | $ 65.74 | |||||||||
Initial number of shares delivered under ASR agreement (in shares) | 1,500,000 | |||||||||
Initial percentage of shares delivered under ASR agreement | 80.00% | |||||||||
Initial value of shares delivered under ASR agreement | $ 100,000 | |||||||||
2018 ASR Agreement | ||||||||||
Number of shares repurchased (in shares) | 973,252 | 176,327 | ||||||||
Average price per share (in dollars per share) | $ 51.37 | |||||||||
Initial number of shares delivered under ASR agreement (in shares) | 796,925 | |||||||||
Initial percentage of shares delivered under ASR agreement | 85.00% | |||||||||
Initial value of shares delivered under ASR agreement | $ 50,000 | |||||||||
Maximum | 2019 Share Repurchase Program | ||||||||||
Share repurchase program, authorized amount | $ 200,000 |
Business Combinations - Summary
Business Combinations - Summary and Pro Forma (Details) $ in Thousands | Jul. 15, 2019USD ($) | May 01, 2018USD ($) | Jan. 18, 2018USD ($) | Jan. 10, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)item | Sep. 30, 2018USD ($) | Dec. 31, 2018item |
Business Combinations | |||||||||
Number of acquisitions | item | 1 | 3 | |||||||
Acquisition related costs | $ 0 | $ 600 | $ 100 | $ 13,900 | |||||
Pro Forma Results | |||||||||
Net sales | 1,961,771 | 1,878,179 | |||||||
Net income | $ 145,011 | 105,410 | |||||||
Amortization of intangible assets | 5,039 | ||||||||
Income tax expense (using 26.5% and 27.0% effective tax rate in 2019 and 2018, respectively) | $ 3,407 | ||||||||
ETR (as a percent) | 26.50% | 27.00% | |||||||
Amended Credit Agreement | Term Loan Facility | |||||||||
Business Combinations | |||||||||
Proceeds from delayed-draw term loan | $ 100,000 | ||||||||
2018 Acquisitions | |||||||||
Business Combinations | |||||||||
Purchase price | $ 515,369 | ||||||||
Cash consideration | 514,541 | ||||||||
Contingent consideration | 828 | ||||||||
Revenue and Net Income Since Acquisition Date | |||||||||
Net Sales | 105,926 | 311,733 | |||||||
Net Income | 8,723 | 27,291 | |||||||
ADO | |||||||||
Business Combinations | |||||||||
Purchase price | $ 23,000 | 23,000 | |||||||
Cash consideration | 22,200 | 22,172 | |||||||
Contingent consideration | $ 800 | 828 | |||||||
Revenue and Net Income Since Acquisition Date | |||||||||
Net Sales | 7,181 | 20,057 | |||||||
Net Income | 58 | 129 | |||||||
Santa Rosa | |||||||||
Business Combinations | |||||||||
Purchase price | $ 5,800 | 5,831 | |||||||
Cash consideration | 5,600 | 5,831 | |||||||
Contingent consideration | $ 200 | ||||||||
Revenue and Net Income Since Acquisition Date | |||||||||
Net Sales | 2,377 | 6,919 | |||||||
Net Income | 338 | 939 | |||||||
USI | |||||||||
Business Combinations | |||||||||
Purchase price | 486,538 | ||||||||
Cash consideration | 486,500 | 486,538 | |||||||
Purchase price prior to measurement period adjustments | 475,000 | ||||||||
Revenue and Net Income Since Acquisition Date | |||||||||
Net Sales | 96,368 | 284,757 | |||||||
Net Income | $ 8,327 | $ 26,223 | |||||||
USI | Amended Credit Agreement | Term Loan Facility | |||||||||
Business Combinations | |||||||||
Proceeds from delayed-draw term loan | $ 100,000 | ||||||||
Viking | |||||||||
Business Combinations | |||||||||
Purchase price | $ 7,700 | ||||||||
Cash consideration | 6,500 | ||||||||
Contingent consideration | $ 1,200 |
Business Combinations - Purchas
Business Combinations - Purchase Price Allocation and Consideration (Details) - USD ($) $ in Thousands | May 01, 2018 | Jan. 18, 2018 | Jan. 10, 2018 | Feb. 27, 2017 | Sep. 30, 2019 | Dec. 31, 2018 |
Purchase Price Allocations | ||||||
Goodwill | $ 1,367,918 | $ 1,364,016 | ||||
2018 Acquisitions | ||||||
Purchase Price Allocations | ||||||
Cash | 15,756 | |||||
Accounts receivable | 66,312 | |||||
Inventories | 16,470 | |||||
Prepaid and other assets | 3,581 | |||||
Property and equipment | 34,599 | |||||
Intangible assets | 181,340 | |||||
Goodwill | 287,009 | |||||
Accounts payable | (19,934) | |||||
Accrued liabilities | (35,295) | |||||
Deferred tax liability | (34,469) | |||||
Net assets acquired | 515,369 | |||||
Fair value of consideration | ||||||
Cash | 514,541 | |||||
Contingent consideration | 828 | |||||
Total consideration transferred | 515,369 | |||||
ADO | ||||||
Purchase Price Allocations | ||||||
Cash | 939 | |||||
Accounts receivable | 3,434 | |||||
Inventories | 2,337 | |||||
Prepaid and other assets | 135 | |||||
Property and equipment | 951 | |||||
Intangible assets | 14,090 | |||||
Goodwill | 2,631 | |||||
Accounts payable | (908) | |||||
Accrued liabilities | (609) | |||||
Net assets acquired | 23,000 | |||||
Fair value of consideration | ||||||
Cash | $ 22,200 | 22,172 | ||||
Contingent consideration | 800 | 828 | ||||
Total consideration transferred | $ 23,000 | 23,000 | ||||
Santa Rosa | ||||||
Purchase Price Allocations | ||||||
Accounts receivable | 1,433 | |||||
Inventories | 104 | |||||
Prepaid and other assets | 7 | |||||
Property and equipment | 522 | |||||
Intangible assets | 1,850 | |||||
Goodwill | 3,014 | |||||
Accounts payable | (1,099) | |||||
Net assets acquired | 5,831 | |||||
Fair value of consideration | ||||||
Cash | $ 5,600 | 5,831 | ||||
Contingent consideration | 200 | |||||
Total consideration transferred | $ 5,800 | 5,831 | ||||
USI | ||||||
Purchase Price Allocations | ||||||
Cash | 14,817 | |||||
Accounts receivable | 61,445 | |||||
Inventories | 14,029 | |||||
Prepaid and other assets | 3,439 | |||||
Property and equipment | 33,126 | |||||
Intangible assets | 165,400 | |||||
Goodwill | 281,364 | |||||
Accounts payable | (17,927) | |||||
Accrued liabilities | (34,686) | |||||
Deferred tax liability | (34,469) | |||||
Net assets acquired | 486,538 | |||||
Fair value of consideration | ||||||
Cash | $ 486,500 | 486,538 | ||||
Total consideration transferred | $ 486,538 | |||||
EcoFoam | ||||||
Fair value of consideration | ||||||
Cash | $ 20,200 | |||||
Contingent consideration | 2,100 | |||||
Total consideration transferred | $ 22,300 |
Business Combinations - Intangi
Business Combinations - Intangibles (Details) - 2018 Acquisitions $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Estimates of acquired intangible assets | |
Estimated Fair Value | $ 181,340 |
Weighted Average Estimated Useful Life (Years) | 11 years |
Customer relationships | |
Estimates of acquired intangible assets | |
Estimated Fair Value | $ 168,820 |
Weighted Average Estimated Useful Life (Years) | 12 years |
Trademarks and trade names | |
Estimates of acquired intangible assets | |
Estimated Fair Value | $ 11,260 |
Weighted Average Estimated Useful Life (Years) | 9 years |
Non-Compete | |
Estimates of acquired intangible assets | |
Estimated Fair Value | $ 1,260 |
Weighted Average Estimated Useful Life (Years) | 5 years |
Business Combinations - Goodwil
Business Combinations - Goodwill (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Goodwill | $ 1,367,918 | $ 1,364,016 |
2018 Acquisitions | ||
Goodwill | 287,009 | |
Goodwill expected to be deducted for income tax purposes | 33,200 | |
USI | ||
Goodwill | $ 281,364 |
Business Combinations - Conting
Business Combinations - Contingent Consideration (Details) | Jul. 15, 2019USD ($) | Jan. 18, 2018USD ($) | Jan. 10, 2018USD ($) | Feb. 27, 2017USD ($) | Mar. 31, 2019USD ($) | Sep. 30, 2019USD ($)item | Jun. 30, 2019USD ($) |
EcoFoam | |||||||
Contingent Consideration | |||||||
Purchase price | $ 22,300,000 | ||||||
Cash consideration | 20,200,000 | ||||||
Contingent consideration | $ 2,100,000 | ||||||
Contingent consideration, payment period | 3 years | ||||||
Contingent consideration, high end of range | $ 2,500,000 | ||||||
EcoFoam | Level 3 | |||||||
Contingent Consideration | |||||||
Fair value of contingent consideration recognized at acquisition date | $ 2,110,000 | ||||||
Fair value of contingent consideration | |||||||
Contingent consideration at beginning of period | $ 1,573,000 | 1,573,000 | |||||
Change in fair value of contingent consideration | 71,000 | ||||||
Settlement of contingent consideration | (841,000) | ||||||
Liability balance for contingent consideration at end of period | $ 803,000 | ||||||
EcoFoam | Contingent Consideration | Level 3 | |||||||
Contingent Consideration | |||||||
Business Combination, Contingent Consideration, Liability, Measurement Input [Extensible List] | us-gaap:MeasurementInputDiscountRateMember | ||||||
Discount rate (as a percent) | 9.5 | ||||||
Fair value of contingent consideration recognized at acquisition date | $ 2,100,000 | ||||||
Fair value of contingent consideration | |||||||
Settlement of contingent consideration | $ (800,000) | ||||||
ADO | |||||||
Contingent Consideration | |||||||
Purchase price | $ 23,000,000 | $ 23,000,000 | |||||
Cash consideration | 22,200,000 | 22,172,000 | |||||
Contingent consideration | 800,000 | $ 828,000 | |||||
Contingent consideration, payment period | 2 years | ||||||
Contingent consideration, low end of range | $ 0 | ||||||
Contingent consideration, high end of range | 1,000,000 | ||||||
ADO | Level 3 | |||||||
Contingent Consideration | |||||||
Fair value of contingent consideration recognized at acquisition date | 828,000 | ||||||
Fair value of contingent consideration | |||||||
Contingent consideration at beginning of period | 343,000 | 343,000 | |||||
Change in fair value of contingent consideration | (220,000) | ||||||
Liability balance for contingent consideration at end of period | $ 123,000 | ||||||
ADO | Contingent Consideration | Level 3 | |||||||
Contingent Consideration | |||||||
Business Combination, Contingent Consideration, Liability, Measurement Input [Extensible List] | us-gaap:MeasurementInputDiscountRateMember | ||||||
Discount rate (as a percent) | item | 0.095 | ||||||
Fair value of contingent consideration recognized at acquisition date | $ 800,000 | ||||||
Santa Rosa | |||||||
Contingent Consideration | |||||||
Purchase price | $ 5,800,000 | $ 5,831,000 | |||||
Cash consideration | 5,600,000 | 5,831,000 | |||||
Contingent consideration | 200,000 | ||||||
Contingent consideration, low end of range | 0 | ||||||
Contingent consideration, high end of range | 250,000 | ||||||
Santa Rosa | Level 3 | |||||||
Contingent Consideration | |||||||
Fair value of contingent consideration recognized at acquisition date | $ 250,000 | ||||||
Fair value of contingent consideration | |||||||
Contingent consideration at beginning of period | 250,000 | 250,000 | |||||
Settlement of contingent consideration | $ (250,000) | ||||||
Santa Rosa | Contingent Consideration | Level 3 | |||||||
Fair value of contingent consideration | |||||||
Settlement of contingent consideration | (250,000) | ||||||
Liability balance for contingent consideration at end of period | $ 0 | ||||||
Viking | |||||||
Contingent Consideration | |||||||
Purchase price | $ 7,700,000 | ||||||
Cash consideration | 6,500,000 | ||||||
Contingent consideration | $ 1,200,000 |
Closure Costs (Details)
Closure Costs (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Closure Costs | ||
Closure costs, expected amount | $ 6,900 | |
Closure costs | 200 | $ 6,700 |
USI | ||
Closure Costs | ||
Closure Costs Liability, Beginning of Period | 3,366 | |
Closure Costs Incurred for the Period | 239 | |
Cash Payments for the Period | (3,304) | |
Non-cash adjustments for the period | 110 | |
Closure Costs Liability, Ending Balance | 411 | 3,366 |
USI | Severance | ||
Closure Costs | ||
Closure Costs Liability, Beginning of Period | 3,065 | |
Closure Costs Incurred for the Period | 239 | |
Cash Payments for the Period | (3,155) | |
Non-cash adjustments for the period | (119) | |
Closure Costs Liability, Ending Balance | 30 | 3,065 |
USI | Lease abandonment | ||
Closure Costs | ||
Closure Costs Liability, Beginning of Period | 301 | |
Cash Payments for the Period | (149) | |
Non-cash adjustments for the period | 229 | |
Closure Costs Liability, Ending Balance | $ 381 | $ 301 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Accrued Liabilities | ||
Salaries, wages, and commissions | $ 34,205 | $ 34,085 |
Insurance liabilities | 25,483 | 25,212 |
Deferred revenue | 16,685 | 19,963 |
Interest payable on long-term debt | 9,593 | 3,951 |
Other | 26,320 | 21,025 |
Total accrued liabilities | $ 112,286 | $ 104,236 |