Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Oct. 26, 2021 | |
Cover page. | ||
Entity Registrant Name | TopBuild Corp | |
Entity Central Index Key | 0001633931 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-36870 | |
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 $0.01 per share | |
Trading Symbol | BLD | |
Security Exchange Name | NYSE | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 32,925,108 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 327,906 | $ 330,007 |
Receivables, net of an allowance for credit losses of $8,856 at September 30, 2021, and $6,926 at December 31, 2020 | 516,941 | 427,340 |
Inventories, net | 202,018 | 161,369 |
Prepaid expenses and other current assets | 21,240 | 17,689 |
Total current assets | 1,068,105 | 936,405 |
Right of use assets | 104,047 | 83,490 |
Property and equipment, net | 203,530 | 180,053 |
Goodwill | 1,496,737 | 1,410,685 |
Other intangible assets, net | 234,872 | 190,605 |
Deferred tax assets, net | 2,751 | 2,728 |
Other assets | 10,646 | 11,317 |
Total assets | 3,120,688 | 2,815,283 |
Current liabilities: | ||
Accounts payable | 382,932 | 331,710 |
Current portion of long-term debt | 23,557 | 23,326 |
Accrued liabilities | 141,261 | 107,949 |
Short-term lease liabilities | 37,048 | 33,492 |
Total current liabilities | 584,798 | 496,477 |
Long-term debt | 675,567 | 683,396 |
Deferred tax liabilities, net | 166,240 | 168,568 |
Long-term portion of insurance reserves | 47,775 | 50,657 |
Long-term lease liabilities | 71,290 | 53,749 |
Other liabilities | 13,307 | 13,642 |
Total liabilities | 1,558,977 | 1,466,489 |
Commitments and contingencies | ||
Equity: | ||
Preferred stock, $0.01 par value: 10,000,000 shares authorized; 0 shares issued and outstanding | ||
Common stock, $0.01 par value: 250,000,000 shares authorized; 39,119,507 shares issued and 32,925,383 outstanding at September 30, 2021, and 39,029,913 shares issued and 33,018,925 outstanding at December 31, 2020 | 391 | 389 |
Treasury stock, 6,194,124 shares at September 30, 2021, and 6,010,988 shares at December 31, 2020, at cost | (422,225) | (386,669) |
Additional paid-in capital | 861,228 | 858,414 |
Retained earnings | 1,122,317 | 876,660 |
Total equity | 1,561,711 | 1,348,794 |
Total liabilities and equity | $ 3,120,688 | $ 2,815,283 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 8,856 | $ 6,926 |
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 | 39,119,507 | 39,029,913 |
Common stock, shares outstanding | 32,925,383 | 33,018,925 |
Treasury stock, shares at cost | 6,194,124 | 6,010,988 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net sales | $ 845,757 | $ 697,223 | $ 2,422,810 | $ 1,996,551 |
Cost of sales | 595,466 | 498,895 | 1,731,581 | 1,448,210 |
Gross profit | 250,291 | 198,328 | 691,229 | 548,341 |
Selling, general, and administrative expense | 116,485 | 96,805 | 333,252 | 296,372 |
Operating profit | 133,806 | 101,523 | 357,977 | 251,969 |
Other income (expense), net: | ||||
Interest expense | (5,503) | (7,692) | (18,210) | (24,711) |
Loss on extinguishment of debt | (13,862) | (233) | ||
Other, net | 66 | 86 | 210 | 648 |
Other expense, net | (5,437) | (7,606) | (31,862) | (24,296) |
Income before income taxes | 128,369 | 93,917 | 326,115 | 227,673 |
Income tax expense | (32,934) | (23,921) | (80,457) | (51,407) |
Net income | $ 95,435 | $ 69,996 | $ 245,658 | $ 176,266 |
Net income per common share: | ||||
Basic | $ 2.91 | $ 2.13 | $ 7.49 | $ 5.35 |
Diluted | $ 2.88 | $ 2.11 | $ 7.41 | $ 5.29 |
Weighted average shares outstanding: | ||||
Basic | 32,763,311 | 32,847,652 | 32,818,145 | 32,960,969 |
Diluted | 33,088,680 | 33,210,545 | 33,155,995 | 33,337,259 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash Flows Provided by (Used in) Operating Activities: | ||
Net income | $ 245,658 | $ 176,266 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 51,005 | 47,527 |
Share-based compensation | 8,375 | 12,159 |
Loss on extinguishment of debt | 13,862 | 233 |
Loss on sale or abandonment of property and equipment | 1,410 | 290 |
Amortization of debt issuance costs | 1,352 | 1,103 |
Provision for bad debt expense | 5,215 | 5,625 |
Loss from inventory obsolescence | 1,667 | 1,908 |
Deferred income taxes, net | (1,661) | (709) |
Change in certain assets and liabilities | ||
Receivables, net | (62,257) | (13,645) |
Inventories, net | (30,115) | 4,759 |
Prepaid expenses and other current assets | (2,984) | (14,989) |
Accounts payable | 47,907 | 2,152 |
Accrued liabilities | 30,397 | 33,436 |
Payment of contingent consideration | (22) | (413) |
Other, net | (304) | 21 |
Net cash provided by operating activities | 309,505 | 255,723 |
Cash Flows Provided by (Used in) Investing Activities: | ||
Purchases of property and equipment | (42,320) | (27,206) |
Acquisition of businesses | (205,028) | (21,450) |
Proceeds from sale of property and equipment | 298 | 2,332 |
Net cash used in investing activities | (247,050) | (46,324) |
Cash Flows Provided by (Used in) Financing Activities: | ||
Proceeds from issuance of long-term debt | 411,250 | 300,000 |
Repayment of long-term debt | (427,563) | (319,168) |
Payment of debt issuance costs | (6,500) | (2,280) |
Taxes withheld and paid on employees' equity awards | (11,511) | (14,781) |
Exercise of stock options | 5,952 | 1,438 |
Repurchase of shares of common stock | (35,556) | (43,149) |
Payment of contingent consideration | (628) | (928) |
Net cash used in financing activities | (64,556) | (78,868) |
Cash and Cash Equivalents | ||
(Decrease) increase for the period | (2,101) | 130,531 |
Beginning of period | 330,007 | 184,807 |
End of period | 327,906 | 315,338 |
Supplemental disclosure of noncash activities: | ||
Leased assets obtained in exchange for new operating lease liabilities | 51,190 | 27,098 |
Accruals for property and equipment | $ 580 | $ 278 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Cumulative Effect, Period of Adoption, AdjustmentRetained Earnings | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Treasury Stock at Cost | Additional Paid-in Capital | Retained Earnings | Total |
Balance at Dec. 31, 2019 | $ (3,225) | $ (3,225) | $ 388 | $ (330,018) | $ 849,657 | $ 632,862 | $ 1,152,889 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 50,771 | 50,771 | |||||
Share-based compensation | 3,908 | 3,908 | |||||
Issuance of restricted share awards under long-term equity incentive plan | 1 | (1) | |||||
Repurchase of shares pursuant to the settlement of ASR Agreement | (7,500) | 7,500 | |||||
Repurchase of shares | (14,127) | (14,127) | |||||
Shares withheld to pay taxes on employees' equity awards | (10,399) | (10,399) | |||||
Balance at Mar. 31, 2020 | 389 | (351,645) | 850,665 | 680,408 | 1,179,817 | ||
Balance at Dec. 31, 2019 | $ (3,225) | $ (3,225) | 388 | (330,018) | 849,657 | 632,862 | 1,152,889 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 176,266 | ||||||
Balance at Sep. 30, 2020 | 389 | (380,667) | 855,972 | 805,900 | 1,281,594 | ||
Balance at Mar. 31, 2020 | 389 | (351,645) | 850,665 | 680,408 | 1,179,817 | ||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 55,496 | 55,496 | |||||
Share-based compensation | 5,130 | 5,130 | |||||
Repurchase of shares | (20,025) | (20,025) | |||||
Shares withheld to pay taxes on employees' equity awards | (2,766) | (2,766) | |||||
Balance at Jun. 30, 2020 | 389 | (371,670) | 853,029 | 735,904 | 1,217,652 | ||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 69,996 | 69,996 | |||||
Share-based compensation | 3,121 | 3,121 | |||||
Repurchase of shares | (8,997) | (8,997) | |||||
Shares withheld to pay taxes on employees' equity awards | (1,616) | (1,616) | |||||
Shares issued upon exercise of stock options | 1,438 | 1,438 | |||||
Balance at Sep. 30, 2020 | 389 | (380,667) | 855,972 | 805,900 | 1,281,594 | ||
Balance at Dec. 31, 2020 | 389 | (386,669) | 858,414 | 876,660 | 1,348,794 | ||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 59,842 | 59,842 | |||||
Share-based compensation | 3,111 | 3,111 | |||||
Issuance of restricted share awards under long-term equity incentive plan | 1 | (1) | |||||
Repurchase of shares | (9,856) | (9,856) | |||||
Shares withheld to pay taxes on employees' equity awards | (11,480) | (11,480) | |||||
Shares issued upon exercise of stock options | 5,952 | 5,952 | |||||
Balance at Mar. 31, 2021 | 390 | (396,525) | 855,996 | 936,502 | 1,396,363 | ||
Balance at Dec. 31, 2020 | 389 | (386,669) | 858,414 | 876,660 | 1,348,794 | ||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 245,658 | ||||||
Balance at Sep. 30, 2021 | 391 | (422,225) | 861,228 | 1,122,317 | 1,561,711 | ||
Balance at Mar. 31, 2021 | 390 | (396,525) | 855,996 | 936,502 | 1,396,363 | ||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 90,380 | 90,380 | |||||
Share-based compensation | 2,266 | 2,266 | |||||
Repurchase of shares | (14,182) | (14,182) | |||||
Shares withheld to pay taxes on employees' equity awards | (11) | (11) | |||||
Balance at Jun. 30, 2021 | 390 | (410,707) | 858,251 | 1,026,882 | 1,474,816 | ||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 95,435 | 95,435 | |||||
Share-based compensation | 2,998 | 2,998 | |||||
Issuance of restricted share awards under long-term equity incentive plan | 1 | (1) | |||||
Repurchase of shares | (11,518) | (11,518) | |||||
Shares withheld to pay taxes on employees' equity awards | (20) | (20) | |||||
Balance at Sep. 30, 2021 | $ 391 | $ (422,225) | $ 861,228 | $ 1,122,317 | $ 1,561,711 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
Issuance of restricted share awards under long-term equity incentive plan (in shares) | 897 | 30,284 | 63,780 | |||
Repurchase of shares pursuant to the settlement of ASR Agreement (in shares) | 73,455 | |||||
Repurchase of shares (in shares) | 60,105 | 73,747 | 49,284 | 57,810 | 262,889 | 188,100 |
Number of shares withheld to pay taxes on employees' equity awards (in shares) | 100 | 50 | 43,290 | 6,402 | 38,379 | 97,144 |
Shares issued upon exercise of stock options (in shares) | 51,915 | 19,242 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2021 | |
Basis of Presentation | |
Basis of Presentation | 1. BASIS OF PRESENTATION TopBuild was formed 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. We believe 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, 2021, our results of operations for the three and nine months ended September 30, 2021 and 2020, and cash flows for the nine months ended September 30, 2021 and 2020. The condensed consolidated balance sheet at December 31, 2020, 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, 2020, as filed with the SEC on February 23, 2021. |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
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 periods. Actual results could differ materially from these estimates. All significant intercompany transactions between TopBuild entities have been eliminated. Recently Adopted Accounting Pronouncements Income Taxes In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes Credit Losses In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments The following table summarizes additional ASUs which were adopted, but did not have a material impact on our accounting policies or our consolidated financial statements and related disclosures: ASU Description Period Adopted Method ASU 2021-01 Reference Rate Reform 01/01/21 Prospective ASU 2017-04 Simplifying the Test for Goodwill Impairment 01/01/20 Prospective ASU 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement 01/01/20 Prospective |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2021 | |
Revenue Recognition | |
Revenue Recognition | 3. REVENUE RECOGNITION Revenue is disaggregated between our Installation and Distribution segments and further Three Months Ended September 30, 2021 2020 Installation Distribution Elims Total Installation Distribution Elims Total Residential $ 501,494 $ 206,951 $ (36,018) $ 672,427 $ 390,101 $ 186,408 $ (30,821) $ 545,688 Commercial 111,406 69,447 (7,523) 173,330 102,105 57,705 (8,275) 151,535 Net sales $ 612,900 $ 276,398 $ (43,541) $ 845,757 $ 492,206 $ 244,113 $ (39,096) $ 697,223 Nine Months Ended September 30, 2021 2020 Installation Distribution Elims Total Installation Distribution Elims Total Residential $ 1,405,837 $ 602,059 $ (106,076) $ 1,901,820 $ 1,134,350 $ 512,479 $ (88,875) $ 1,557,954 Commercial 345,441 199,304 (23,755) 520,990 300,298 162,193 (23,894) 438,597 Net sales $ 1,751,278 $ 801,363 $ (129,831) $ 2,422,810 $ 1,434,648 $ 674,672 $ (112,769) $ 1,996,551 The following tables present our revenues disaggregated by product (in thousands): Three Months Ended September 30, 2021 2020 Installation Distribution Elims Total Installation Distribution Elims Total Insulation and accessories $ 487,798 $ 219,441 $ (36,406) $ 670,833 $ 379,958 $ 200,210 $ (31,816) $ 548,352 Glass and windows 46,096 — — 46,096 41,912 — — 41,912 Gutters 23,057 40,555 (6,422) 57,190 21,336 28,616 (5,482) 44,470 All other 55,949 16,402 (713) 71,638 49,000 15,287 (1,798) 62,489 Net sales $ 612,900 $ 276,398 $ (43,541) $ 845,757 $ 492,206 $ 244,113 $ (39,096) $ 697,223 Nine Months Ended September 30, 2021 2020 Installation Distribution Elims Total Installation Distribution Elims Total Insulation and accessories $ 1,383,472 $ 651,192 $ (108,125) $ 1,926,539 $ 1,110,952 $ 556,018 $ (91,422) $ 1,575,548 Glass and windows 136,309 — — 136,309 122,603 — — 122,603 Gutters 64,831 103,244 (17,992) 150,083 61,843 74,585 (16,557) 119,871 All other 166,666 46,927 (3,714) 209,879 139,250 44,069 (4,790) 178,529 Net sales $ 1,751,278 $ 801,363 $ (129,831) $ 2,422,810 $ 1,434,648 $ 674,672 $ (112,769) $ 1,996,551 The following table represents our contract assets and contract liabilities with customers, in thousands: Included in Line Item on As of Condensed September 30, December 31, Balance Sheets 2021 2020 Contract Assets: Receivables, unbilled Receivables, net $ 71,564 $ 48,839 Contract Liabilities: Deferred revenue Accrued liabilities $ 12,767 $ 6,542 The increase in contract assets as of September 30, 2021 is primarily driven by an increase in organic sales as well as sales from our acquisitions during the nine months ended September 30, 2021. The aggregate amount remaining on uncompleted performance obligations was $303.9 million as of September 30, 2021. We expect to satisfy the performance obligations and recognize revenue on substantially all of these uncompleted contracts over the next 18 months . Certain customer contracts contain provisions whereby customers are entitled to withhold an agreed upon percentage of the total contract value until the customer’s project is satisfactorily complete. This amount held back is referred to as retainage and is a common practice in the construction industry. Retainage receivables are classified as a component of accounts receivable. |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Other Intangibles | |
Goodwill and Other Intangibles | 4. 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. In the fourth quarter of 2020, we performed an annual assessment on our goodwill resulting in no impairment. Changes in the carrying amount of goodwill for the nine months ended September 30, 2021 by segment, were as follows, in thousands: Accumulated Gross Goodwill Gross Goodwill Impairment Net Goodwill December 31, 2020 Additions September 30, 2021 Losses September 30, 2021 Goodwill, by segment: Installation $ 1,726,356 $ 79,762 $ 1,806,118 $ (762,021) $ 1,044,097 Distribution 446,350 6,290 452,640 — 452,640 Total goodwill $ 2,172,706 $ 86,052 $ 2,258,758 $ (762,021) $ 1,496,737 See Note 13 – Business Combinations 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, December 31, 2021 2020 Gross definite-lived intangible assets $ 317,442 $ 252,751 Accumulated amortization (82,570) (62,146) Net definite-lived intangible assets 234,872 190,605 The following table sets forth our amortization expense, in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Amortization expense $ 7,082 $ 5,382 $ 20,424 $ 16,012 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2021 | |
Long-Term Debt | |
Long-Term Debt | 5. 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, 2021 2020 3.625% Senior Notes $ 400,000 $ — 5.625% Senior Notes — 400,000 Term loan 292,500 288,750 Equipment notes 19,194 25,451 Unamortized debt issuance costs (12,570) (7,479) Total debt, net of unamortized debt issuance costs 699,124 706,722 Less: current portion of long-term debt 23,557 23,326 Total long-term debt $ 675,567 $ 683,396 The following table sets forth our remaining principal payments for our outstanding debt balances as of September 30, 2021, in thousands: Payments Due by Period 2021 2022 2023 2024 2025 Thereafter Total 3.625% Senior Notes $ — $ — $ — $ — $ — $ 400,000 $ 400,000 Term loan 3,750 15,000 20,625 22,500 28,125 202,500 292,500 Equipment notes 2,109 8,640 6,325 2,120 — — 19,194 Total $ 5,859 $ 23,640 $ 26,950 $ 24,620 $ 28,125 $ 602,500 $ 711,694 Amendment to Original Credit Agreement and Senior Secured Term Loan Facility On March 8, 2021, the Company entered into an Amendment to our Original Credit Agreement (as so amended, the Amended Credit Agreement). The Amended Credit Agreement provides for a term loan facility in an aggregate principal amount of $300.0 million, all of which was drawn on March 8, 2021 and a Revolving Facility with an aggregate borrowing capacity of $450.0 million, including a $100.0 million letter of credit sublimit and up to a $35.0 million swingline sublimit. The maturity date for the loans under the Amended Credit Agreement was extended from March 2025 to March 2026, the floor for base rate loans has been reduced from 1.5% to 1.0%, and the floor for Eurodollar rate loans has been reduced from 0.5% to 0.0%. Additional provisions have also been made for the eventual replacement of LIBOR with another alternate benchmark rate. The following table outlines the key terms of our Amended Credit Agreement (dollars in thousands): Senior secured term loan facility $ 300,000 Additional term loan and/or revolver capacity available under incremental facility (a) $ 300,000 Revolving Facility $ 450,000 Sublimit for issuance of letters of credit under Revolving Facility (b) $ 100,000 Sublimit for swingline loans under Revolving Facility (b) $ 35,000 Interest rate as of September 30, 2021 1.08 % Scheduled maturity date 3/20/2026 (a) 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). (b) 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) BofA’s “prime rate,” and (iii) the LIBOR rate for U.S. dollar deposits with a term of one month , plus 1.00 percent; or ● A LIBOR rate (or a comparable successor rate) determined by reference to the costs of funds for deposits in U.S. dollars for the interest period relevant to such borrowings, subject to a floor of 0% . The Amended Credit Agreement contemplates future amendment by the Company and the agent to provide for the replacement of LIBOR with another alternate benchmark rate, giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such alternative benchmarks, including any related mathematical or other applicable adjustments. 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 1.00 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, 2021 2020 Revolving Facility $ 450,000 $ 450,000 Less: standby letters of credit (68,111) (60,382) Availability under Revolving Facility $ 381,889 $ 389,618 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 On March 15, 2021, the Company completed a private offering of $400.0 million aggregate principal amount of 3.625% Senior Notes due 2029. The Company used the proceeds from the issuance of the 3.625% Senior Notes, together with cash on hand, to redeem 100% of its $400.0 million aggregate principal amount of 5.625% Senior Notes due 2026. The 3.625% Senior Notes are our senior unsecured obligations and bear interest at 3.625% per year, payable semiannually in arrears on March 15 and September 15 of each year, which begins on September 15, 2021. The 3.625% Senior Notes mature on March 15, 2029, unless redeemed early or repurchased. 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. The Company may redeem the Notes, in whole or in part, at any time on or after March 15, 2024 at the redemption prices specified in the Notes. The Company may also redeem all or part of the Notes at any time prior to March 15, 2024 at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus the Applicable Premium (as defined in the Indenture), as of, and accrued and unpaid interest to, the redemption date. Additionally, the Company may redeem up to 40% of the aggregate principal amount of the Notes prior to March 15, 2024 with the net cash proceeds of certain sales of its capital stock at 103.625% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to the date of redemption only if, after the redemption, at least 60% of the aggregate principal amount of the Notes originally issued remains outstanding. Equipment Notes As of December 31, 2020, the company has issued $41.6 million of equipment notes for the purpose of financing the purchase of vehicles and equipment. No equipment notes were issued during the nine months ended September 30, 2021. The Company’s equipment notes each have a five year term maturing from 2023 to 2024 and bear interest at fixed rates between 2.8% and 4.4% . Covenant Compliance The indenture governing our 3.625% Senior Notes contains restrictive covenants that, among other things, generally limit the ability of the Company and certain of its subsidiaries (subject to certain exceptions) to (i) create liens, (ii) pay dividends, acquire shares of capital stock and make payments on subordinated debt, (iii) place limitations on distributions from certain subsidiaries, (iv) issue or sell the capital stock of certain subsidiaries, (v) sell assets, (vi) enter into transactions with affiliates and (vii) effect mergers. The indenture provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others: nonpayment of principal or interest; breach of covenants or other agreements in the indenture; defaults in failure to pay certain other indebtedness; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs and is continuing under the indenture, the trustee or the holders of at least 30% in aggregate principal amount of the 3.625% Senior Notes then outstanding may declare the principal of, premium, if any, and accrued interest on all the 3.625% Senior Notes immediately due and payable. The 3.625% Senior Notes and related guarantees have not been registered under the Securities Act of 1933, and we are not required to register either the 3.625% 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 Interest Coverage Ratio throughout the term of the agreement. The following table outlines the key financial covenants effective for the period covered by this Quarterly Report: As of September 30, 2021 Maximum Net Leverage Ratio 3.50:1.00 Minimum Interest Coverage Ratio 3.00:1.00 Compliance as of period end In Compliance |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | 6 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 13 – Business Combinations. Fair Value on Non-Recurring Basis Fair value measurements were applied to our long-term debt portfolio. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2021 | |
Segment Information | |
Segment Information | 7. SEGMENT INFORMATION The following tables set forth our net sales and operating results by segment, in thousands: Three Months Ended September 30, 2021 2020 2021 2020 Net Sales Operating Profit (b) Our operations by segment were (a): Installation $ 612,900 $ 492,206 $ 105,046 $ 83,142 Distribution 276,398 244,113 47,162 32,787 Intercompany eliminations (43,541) (39,096) (7,590) (6,374) Total $ 845,757 $ 697,223 144,618 109,555 General corporate expense, net (c) (10,812) (8,032) Operating profit, as reported 133,806 101,523 Other expense, net (5,437) (7,606) Income before income taxes $ 128,369 $ 93,917 Nine Months Ended September 30, 2021 2020 2021 2020 Net Sales Operating Profit (b) Our operations by segment were (a): Installation $ 1,751,278 $ 1,434,648 $ 277,748 $ 213,136 Distribution 801,363 674,672 125,403 81,612 Intercompany eliminations (129,831) (112,769) (21,050) (18,169) Total $ 2,422,810 $ 1,996,551 382,101 276,579 General corporate expense, net (c) (24,124) (24,610) Operating profit, as reported 357,977 251,969 Other expense, net (31,862) (24,296) Income before income taxes $ 326,115 $ 227,673 (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, 2021 | |
Leases | |
Leases | 8 LEASES We have operating leases for our installation branch locations, distribution centers, our Branch Support Center in Daytona Beach, Florida, vehicles and certain equipment. In addition, we lease certain operating facilities from related parties, primarily former owners (and in certain cases, current management personnel) of companies acquired. These related party leases are immaterial to our consolidated statements of operations. As of September 30, 2021, we did not have any finance leases. The components of lease expense were as follows and are primarily included in cost of sales on the accompanying unaudited condensed consolidated statements of operations, in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Operating lease cost (a) $ 12,684 $ 11,475 $ 37,131 $ 35,842 Short-term lease cost 3,922 3,209 11,120 9,086 Sublease income (235) (42) (656) (153) Net lease cost $ 16,371 $ 14,642 $ 47,595 $ 44,775 (a) Includes variable cost components of $1,982 and $1,316 in the three months ended September 30, 2021 and 2020, respectively, and $5,487 and $4,090 of variable cost components in the nine months ended September 30, 2021 and 2020, respectively. Future minimum lease payments under non-cancellable operating leases as of September 30, 2021 were as follows, in thousands: Payments due by Period 2021 $ 10,800 2022 37,401 2023 26,561 2024 18,785 2025 12,919 2026 & Thereafter 8,633 Total future minimum lease payments 115,099 Less: imputed interest (6,761) Lease liability at September 30, 2021 $ 108,338 As of September 30, 2021, the weighted average remaining lease term was 3.7 years and the related lease liability was calculated using a weighted average discount rate of 3.3%. The amount below is included in the cash flows provided by (used in) operating activities section on the accompanying unaudited condensed consolidated statements of cash flows, in thousands: Nine Months Ended September 30, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities $ (32,110) $ (31,862) |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Taxes | |
Income Taxes | 9. INCOME TAXES Our effective tax rates were 25.7 percent and 24.7 percent for the three and nine months ended September 30, 2021, respectively. The effective tax rates for the three and nine months ended September 30, 2020, were 25.5 percent and 22.6 percent, respectively. The higher 2021 tax rate for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was due to permanent items including share-based compensation partially offset by state tax adjustments and a favorable return to accrual adjustment. A tax expense of $0.1 million and a tax benefit of $3.2 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, 2021, respectively. |
Income Per Share
Income Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Income Per Share | |
Income Per Share | 10. 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: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income (in thousands) - basic and diluted $ 95,435 $ 69,996 $ 245,658 $ 176,266 Weighted average number of common shares outstanding - basic 32,763,311 32,847,652 32,818,145 32,960,969 Dilutive effect of common stock equivalents: RSAs with service-based conditions 15,058 42,317 22,044 53,719 RSAs with market-based conditions 115,105 159,985 126,769 145,835 RSAs with performance-based conditions 73,597 49,065 60,595 38,719 Stock options 121,609 111,526 128,442 138,017 Weighted average number of common shares outstanding - diluted 33,088,680 33,210,545 33,155,995 33,337,259 Basic net income per common share $ 2.91 $ 2.13 $ 7.49 $ 5.35 Diluted net income per common share $ 2.88 $ 2.11 $ 7.41 $ 5.29 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, 2021 2020 2021 2020 Anti-dilutive common stock equivalents: RSAs with service-based conditions 176 — 1,607 4,184 RSAs with market-based conditions 11,065 — 9,235 2,780 RSAs with performance-based conditions — — — — Stock options 24,066 26,556 19,966 39,998 Total anti-dilutive common stock equivalents 35,307 26,556 30,808 46,962 |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2021 | |
Share-Based Compensation. | |
Share-Based Compensation | 11. SHARE-BASED COMPENSATION Effective July 1, 2015, our eligible employees commenced participation in the 2015 LTIP. The 2015 LTIP 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 LTIP. As of September 30, 2021, we had 2.0 million shares remaining available for issuance under the 2015 LTIP. 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, 2021 2020 2021 2020 Share-based compensation expense $ 2,998 $ 3,121 $ 8,375 $ 12,159 Income tax (expense) benefit $ (130) $ 838 $ 3,190 $ 7,734 The following table presents a summary of our share-based compensation activity for the nine months ended September 30, 2021, 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, 2020 324.8 $ 87.79 239.7 $ 24.33 $ 68.86 $ 27,612.1 Granted 61.0 $ 245.67 24.1 $ 89.59 $ 214.58 Converted/Exercised (143.6) $ 81.34 (51.9) $ 21.97 $ 61.30 $ 7,039.9 Forfeited/Expired (9.0) $ 89.62 — $ — $ — Balance September 30, 2021 233.2 $ 113.52 211.9 $ 32.33 $ 87.28 $ 25,129.7 Exercisable September 30, 2021 (a) 115.7 $ 20.97 $ 57.86 $ 17,000.8 (a) The weighted average remaining contractual term for vested stock options is approximately 6.0 years. Unrecognized share-based compensation expense related to unvested awards is shown in the following table, dollars in thousands: As of September 30, 2021 Unrecognized Compensation Expense Weighted Average RSAs $ 10,196 1.0 Stock options 1,639 1.1 Total unrecognized compensation expense related to unvested awards $ 11,835 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 18, 2019 $ 2,196 $ — $ 549 $ 2,196 $ 4,392 February 17, 2020 $ 2,687 $ — $ 672 $ 2,687 $ 5,374 February 16, 2021 $ 2,564 $ — $ 641 $ 2,564 $ 5,128 During the first quarter of 2021, RSAs with performance-based conditions that were granted on February 19, 2018 vested based on cumulative three-year three-year The fair value of our RSAs with a market-based condition granted under the 2015 LTIP was determined using a Monte Carlo simulation. The following are key inputs in the Monte Carlo analysis for awards granted in 2021 and 2020: 2021 2020 Measurement period (years) 2.87 2.88 Risk free interest rate 0.22 % 1.40 % Dividend yield 0.00 % 0.00 % Estimated fair value of market-based RSAs at grant date $ 298.66 $ 158.24 The fair values of stock options granted under the 2015 LTIP 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 2021 and 2020: 2021 2020 Risk free interest rate 0.76 % 1.53 % Expected volatility, using historical return volatility and implied volatility 43.29 % 31.50 % Expected life (in years) 6.0 6.0 Dividend yield 0.00 % 0.00 % Estimated fair value of stock options at grant date $ 89.59 $ 39.49 |
Share Repurchase Program
Share Repurchase Program | 9 Months Ended |
Sep. 30, 2021 | |
Share Repurchase Program | |
Share Repurchase Program | 12. SHARE REPURCHASE PROGRAM On July 26, 2021, our Board authorized the 2021 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 open market purchases, privately negotiated transactions, accelerated share repurchase transactions, or other available means. The 2021 Repurchase Program does not obligate the Company to purchase any shares and has no expiration date. Authorization for the 2021 Repurchase Program may be terminated, increased, or decreased by the Board at its discretion at any time. As of September 30, 2021, the Company has $200.0 million remaining. 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 open market purchases, privately negotiated transactions, accelerated share repurchase transactions, or other available means. The 2019 Repurchase Program does not obligate the Company to purchase any shares and has no expiration date. Authorization for the 2019 Repurchase Program may be terminated, increased, or decreased by the Board at its discretion at any time. As of September 30, 2021, the Company has approximately $4.4 million remaining under the 2019 Repurchase Program. Effective November 4, 2019, under the 2019 Repurchase program, we entered into the 2019 ASR Agreement. We paid BofA $50.0 million in exchange for an initial delivery of 392,501 shares of our common stock on November 5, 2019, representing an estimated 85% of the total number of shares we expected to receive under the 2019 ASR Agreement, at the time we entered into the agreement. During the quarter ended March 31, 2020, we received an additional 73,455 shares of our common stock from BofA representing the final settlement of the 2019 ASR agreement. We purchased a total of 465,956 shares of our common stock under the 2019 ASR Agreement at an average price per share of $107.31. The following table sets forth our share repurchases under the 2019 Repurchase Program during the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Number of shares repurchased 60,105 57,810 183,136 582,254 (a) Share repurchase cost (in thousands) $ 11,518 $ 8,997 $ 35,556 $ 43,149 (a) The nine months ended September 30, 2020 includes 73,455 shares we received as final settlement of our 2019 ASR Agreement. |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2021 | |
Business Combinations | |
Business Combinations | 13. BUSINESS COMBINATIONS We continue to acquire businesses as part of our ongoing strategy to grow our company and expand our market share. Each acquisition has been accounted for as a business combination under ASC 805, “Business Combinations.” Acquisition related costs for the three months ended September 30, 2021 and 2020 were $2.7 million and $0.2 million, respectively. Acquisition related costs for the nine months ended September 30, 2021 and 2020 were $3.4 million and $0.4 million, respectively. Acquisition related costs are included in selling, general, and administrative expense in our condensed consolidated statements of operations. The tables below provide a summary of businesses acquired in 2021 including, for significant acquisitions, the net sales and net income (loss) incurred for the three and nine months ended September 30, 2021: Three Months Ended Nine Months Ended September 30, 2021 September 30, 2021 2021 Acquisitions Date Cash Paid Contingent Consideration Total Purchase Price Goodwill Acquired Net Sales Net Income Net Sales Net Income (Loss) LCR 1/20/2021 $ 53,667 $ — $ 53,667 $ 19,453 $ 12,962 $ 26 33,519 (590) ABS 4/5/2021 124,416 — 124,416 55,625 36,921 3,031 73,644 4,699 All others Various 26,946 1,200 28,146 11,997 6,304 330 10,907 796 Total $ 205,029 $ 1,200 $ 206,229 $ 87,075 $ 56,187 $ 3,387 $ 118,070 $ 4,905 Pro Forma Results The following unaudited pro forma information has been prepared as if the 2021 acquisitions described above had taken place on January 1, 2020, and as if the 2020 acquisitions had taken place on January 1, 2019. 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, 2020, and January 1, 2019, as applicable. Further, the unaudited pro forma information does not purport to be indicative of future financial operating results. Our unaudited pro forma results are presented below, in thousands: Unaudited Pro Forma for the Unaudited Pro Forma for the Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net sales $ 847,093 $ 770,888 $ 2,475,604 $ 2,211,936 Net income $ 95,612 $ 74,580 $ 247,940 $ 187,055 The following table details the additional expense included in the unaudited pro forma operating income as if the 2021 acquisitions described above had taken place on January 1, 2020, and as if the 2020 acquisitions had taken place on January 1, 2019. Our unaudited pro forma results are presented below, in thousands: Unaudited Pro Forma for the Unaudited Pro Forma for the Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Depreciation & amortization $ 39 $ 3,227 $ 2,197 $ 9,819 Income tax expense (using 26% effective tax rate) $ 62 $ 1,683 $ 876 $ 4,008 Purchase Price Allocations The estimated fair values of the assets acquired and liabilities assumed for the 2021 acquisitions approximated the following as of September 30, 2021, in thousands: 2021 Acquisitions LCR ABS All Others Total Estimated fair values: Accounts receivable 16,041 14,184 2,236 32,461 Inventories 806 8,441 2,955 12,202 Prepaid and other assets 83 370 113 566 Property and equipment 3,730 7,321 2,458 13,509 ROU asset 518 8,843 2,914 12,275 Intangible assets 16,040 38,670 9,581 64,291 Goodwill 19,453 55,625 11,997 87,075 Accounts payable (2,105) — (1,275) (3,380) Lease liabilities (518) (8,843) (2,914) (12,275) All other liabilities (381) (195) 81 (495) Net assets acquired $ 53,667 $ 124,416 $ 28,146 $ 206,229 Estimates of acquired intangible assets related to the 2021 acquisitions are as follows, as of September 30, 2021, dollars in thousands: Estimated Fair Value Weighted Average Estimated Useful Life (Years) 2021 Acquisitions Customer relationships $ 58,901 12 Trademarks and trade names 5,390 10 Total intangible assets acquired $ 64,291 12 The table below provides a summary as of September 30, 2021 for businesses acquired during the nine months ended September 30, 2020: 2020 Acquisitions Date Cash Paid Contingent Consideration Total Purchase Price Goodwill Acquired Cooper 2/20/2020 $ 10,500 $ 1,000 $ 11,500 $ 5,700 Hunter 2/24/2020 9,100 — 9,100 5,300 Total $ 19,600 $ 1,000 $ 20,600 $ 11,000 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. Contingent Consideration The acquisition of Viking included a contingent consideration arrangement that requires additional consideration to be paid by TopBuild based on the achievement of annual gross revenue targets over a three-year period ending July 15, 2022. The range of undiscounted amounts TopBuild may be required to pay under the contingent consideration agreement is between zero and $1.5 million. The fair value of the contingent consideration recognized on the acquisition date of $1.2 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 10.0% . 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 a contingent payment of $0.5 million during the nine months ended September 30, 2021. The acquisition of Cooper includes a contingent consideration arrangement that requires additional consideration to be paid by TopBuild based on the achievement of annual gross revenue targets over a two-year period ending February 20, 2022. The range of undiscounted amounts TopBuild may be required to pay under the contingent consideration agreement is between zero and $1.0 million, which also represents the fair value recognized on the acquisition date. 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 a contingent payment of $0.2 million during the nine months ended September 30, 2021 and the remaining liability for contingent consideration has been released with no further payments anticipated. The acquisition of Valley includes a contingent consideration arrangement that requires additional consideration to be paid by TopBuild based on the achievement of annual gross revenue targets over a two-year period ending August 23, 2023. The range of undiscounted amounts TopBuild may be required to pay under the contingent consideration agreement is between zero and $1.2 million, which also represents the fair value recognized on the acquisition date. 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. Payments of contingent consideration are classified as either financing or operating activities on our condensed consolidated statement of cash flows in accordance with ASC 230-10-45. The following table presents the fair value of contingent consideration, in thousands: Viking Cooper Valley Date of Acquisition July 15, 2019 February 20, 2020 August 23, 2021 Fair value of contingent consideration recognized at acquisition date $ 1,243 $ 1,000 $ 1,200 Contingent consideration at December 31, 2020 $ 910 $ 1,000 $ — Additions during the nine months ended September 30, 2021 — — 1,200 Change in fair value of contingent consideration during the nine months ended September 30, 2021 56 (850) — Payment of contingent consideration during the nine months ended September 30, 2021 (500) (150) — Liability balance for contingent consideration at September 30, 2021 $ 466 $ — $ 1,200 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 2020 Accrued liabilities: Salaries, wages, and commissions $ 56,480 $ 34,584 Insurance liabilities 22,203 22,007 Employee tax-related liabilities 12,680 12,603 Deferred revenue 12,768 6,542 Sales & property taxes 8,787 6,939 Customer rebates 6,348 6,191 Interest payable on long-term debt 823 3,924 Other 21,172 15,159 Total accrued liabilities $ 141,261 $ 107,949 See Note 3 – Revenue Recognition |
Other Commitments and Contingen
Other Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Other Commitments and Contingencies | |
Other Commitments and Contingencies | 15. OTHER COMMITMENTS AND CONTINGENCIES Litigation Other Matters We also maintain indemnification agreements with our directors and officers that may require us to indemnify them against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by applicable law. 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. We also have bonds outstanding for license and insurance. The following table summarizes our outstanding performance, licensing, insurance and other bonds, in thousands: As of September 30, December 31, 2021 2020 Outstanding bonds: Performance bonds $ 129,829 $ 102,534 Licensing, insurance, and other bonds 21,477 27,633 Total bonds $ 151,306 $ 130,167 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events | |
Subsequent Events | 16. SUBSEQUENT EVENTS On October 6, 2021, we acquired CBP a residential insulation and distribution business servicing customers in the Bakersfield, Modesto and Fresno California area. The acquisition was accounted for as a business combination under ASC 805, “Business Combinations.” The purchase price of approximately $19.3 million was funded by cash on hand. During the measurement period, we expect to receive additional detailed information to complete the purchase price allocation. On October 7, 2021, we entered into Amendment No. 2 to our credit agreement, which among other things, (i) extends the maturity date of both the revolving and term loan facilities under the Amended Credit Agreement to October 7, 2026, (ii) re-advances to us $7.5 million as part of the term loan under the Amended Credit Agreement and resets the amortization schedule, (iii) increases the commitments available under the revolving facility from $450.0 million to $500.0 million, and (iv) provides for a new $300.0 million delayed draw term loan facility. On October 14, 2021, we completed our $500 million 4.125% Senior Notes, which bears interest at 4.125%, is payable semiannually in arrears on February 15 and August 15 of each year beginning on August 15, 2022, and matures on February 15, 2032. On October 15, 2021, we acquired DI, a leading North American specialty distributor and custom fabricator of mechanical insulation and related accessories to the industrial and commercial end-markets. The acquisition was accounted for as a business combination under ASC 805, “Business Combinations.” The purchase price of approximately $1.0 billion was funded by cash on hand and the net proceeds from the new delayed draw term loan and our $500.0 million 4.125% Senior Notes. During the measurement period, we expect to receive additional detailed information to complete the purchase price allocation. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
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 periods. Actual results could differ materially from these estimates. All significant intercompany transactions between TopBuild entities have been eliminated. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Income Taxes In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes Credit Losses In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments The following table summarizes additional ASUs which were adopted, but did not have a material impact on our accounting policies or our consolidated financial statements and related disclosures: ASU Description Period Adopted Method ASU 2021-01 Reference Rate Reform 01/01/21 Prospective ASU 2017-04 Simplifying the Test for Goodwill Impairment 01/01/20 Prospective ASU 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement 01/01/20 Prospective |
Accounting Policies (Tables)
Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies | |
Summary of additional ASUs adopted in fiscal year | ASU Description Period Adopted Method ASU 2021-01 Reference Rate Reform 01/01/21 Prospective ASU 2017-04 Simplifying the Test for Goodwill Impairment 01/01/20 Prospective ASU 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement 01/01/20 Prospective |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Revenue Recognition | |
Schedule of revenues disaggregated by market and product | Three Months Ended September 30, 2021 2020 Installation Distribution Elims Total Installation Distribution Elims Total Residential $ 501,494 $ 206,951 $ (36,018) $ 672,427 $ 390,101 $ 186,408 $ (30,821) $ 545,688 Commercial 111,406 69,447 (7,523) 173,330 102,105 57,705 (8,275) 151,535 Net sales $ 612,900 $ 276,398 $ (43,541) $ 845,757 $ 492,206 $ 244,113 $ (39,096) $ 697,223 Nine Months Ended September 30, 2021 2020 Installation Distribution Elims Total Installation Distribution Elims Total Residential $ 1,405,837 $ 602,059 $ (106,076) $ 1,901,820 $ 1,134,350 $ 512,479 $ (88,875) $ 1,557,954 Commercial 345,441 199,304 (23,755) 520,990 300,298 162,193 (23,894) 438,597 Net sales $ 1,751,278 $ 801,363 $ (129,831) $ 2,422,810 $ 1,434,648 $ 674,672 $ (112,769) $ 1,996,551 The following tables present our revenues disaggregated by product (in thousands): Three Months Ended September 30, 2021 2020 Installation Distribution Elims Total Installation Distribution Elims Total Insulation and accessories $ 487,798 $ 219,441 $ (36,406) $ 670,833 $ 379,958 $ 200,210 $ (31,816) $ 548,352 Glass and windows 46,096 — — 46,096 41,912 — — 41,912 Gutters 23,057 40,555 (6,422) 57,190 21,336 28,616 (5,482) 44,470 All other 55,949 16,402 (713) 71,638 49,000 15,287 (1,798) 62,489 Net sales $ 612,900 $ 276,398 $ (43,541) $ 845,757 $ 492,206 $ 244,113 $ (39,096) $ 697,223 Nine Months Ended September 30, 2021 2020 Installation Distribution Elims Total Installation Distribution Elims Total Insulation and accessories $ 1,383,472 $ 651,192 $ (108,125) $ 1,926,539 $ 1,110,952 $ 556,018 $ (91,422) $ 1,575,548 Glass and windows 136,309 — — 136,309 122,603 — — 122,603 Gutters 64,831 103,244 (17,992) 150,083 61,843 74,585 (16,557) 119,871 All other 166,666 46,927 (3,714) 209,879 139,250 44,069 (4,790) 178,529 Net sales $ 1,751,278 $ 801,363 $ (129,831) $ 2,422,810 $ 1,434,648 $ 674,672 $ (112,769) $ 1,996,551 |
Schedule 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 September 30, December 31, Balance Sheets 2021 2020 Contract Assets: Receivables, unbilled Receivables, net $ 71,564 $ 48,839 Contract Liabilities: Deferred revenue Accrued liabilities $ 12,767 $ 6,542 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 by segment, were as follows, in thousands: Accumulated Gross Goodwill Gross Goodwill Impairment Net Goodwill December 31, 2020 Additions September 30, 2021 Losses September 30, 2021 Goodwill, by segment: Installation $ 1,726,356 $ 79,762 $ 1,806,118 $ (762,021) $ 1,044,097 Distribution 446,350 6,290 452,640 — 452,640 Total goodwill $ 2,172,706 $ 86,052 $ 2,258,758 $ (762,021) $ 1,496,737 |
Schedule of other intangible assets | 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, December 31, 2021 2020 Gross definite-lived intangible assets $ 317,442 $ 252,751 Accumulated amortization (82,570) (62,146) Net definite-lived intangible assets 234,872 190,605 |
Schedule of amortization expense | The following table sets forth our amortization expense, in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Amortization expense $ 7,082 $ 5,382 $ 20,424 $ 16,012 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 2020 3.625% Senior Notes $ 400,000 $ — 5.625% Senior Notes — 400,000 Term loan 292,500 288,750 Equipment notes 19,194 25,451 Unamortized debt issuance costs (12,570) (7,479) Total debt, net of unamortized debt issuance costs 699,124 706,722 Less: current portion of long-term debt 23,557 23,326 Total long-term debt $ 675,567 $ 683,396 |
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, 2021, in thousands: Payments Due by Period 2021 2022 2023 2024 2025 Thereafter Total 3.625% Senior Notes $ — $ — $ — $ — $ — $ 400,000 $ 400,000 Term loan 3,750 15,000 20,625 22,500 28,125 202,500 292,500 Equipment notes 2,109 8,640 6,325 2,120 — — 19,194 Total $ 5,859 $ 23,640 $ 26,950 $ 24,620 $ 28,125 $ 602,500 $ 711,694 |
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 $ 300,000 Additional term loan and/or revolver capacity available under incremental facility (a) $ 300,000 Revolving Facility $ 450,000 Sublimit for issuance of letters of credit under Revolving Facility (b) $ 100,000 Sublimit for swingline loans under Revolving Facility (b) $ 35,000 Interest rate as of September 30, 2021 1.08 % Scheduled maturity date 3/20/2026 (a) 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). (b) 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, 2021 2020 Revolving Facility $ 450,000 $ 450,000 Less: standby letters of credit (68,111) (60,382) Availability under Revolving Facility $ 381,889 $ 389,618 |
Schedule of the key financial covenants | As of September 30, 2021 Maximum Net Leverage Ratio 3.50:1.00 Minimum Interest Coverage Ratio 3.00:1.00 Compliance as of period end In Compliance |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Information | |
Schedule of net sales and operating results by segment | The following tables set forth our net sales and operating results by segment, in thousands: Three Months Ended September 30, 2021 2020 2021 2020 Net Sales Operating Profit (b) Our operations by segment were (a): Installation $ 612,900 $ 492,206 $ 105,046 $ 83,142 Distribution 276,398 244,113 47,162 32,787 Intercompany eliminations (43,541) (39,096) (7,590) (6,374) Total $ 845,757 $ 697,223 144,618 109,555 General corporate expense, net (c) (10,812) (8,032) Operating profit, as reported 133,806 101,523 Other expense, net (5,437) (7,606) Income before income taxes $ 128,369 $ 93,917 Nine Months Ended September 30, 2021 2020 2021 2020 Net Sales Operating Profit (b) Our operations by segment were (a): Installation $ 1,751,278 $ 1,434,648 $ 277,748 $ 213,136 Distribution 801,363 674,672 125,403 81,612 Intercompany eliminations (129,831) (112,769) (21,050) (18,169) Total $ 2,422,810 $ 1,996,551 382,101 276,579 General corporate expense, net (c) (24,124) (24,610) Operating profit, as reported 357,977 251,969 Other expense, net (31,862) (24,296) Income before income taxes $ 326,115 $ 227,673 (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, 2021 | |
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 statements of operations, in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Operating lease cost (a) $ 12,684 $ 11,475 $ 37,131 $ 35,842 Short-term lease cost 3,922 3,209 11,120 9,086 Sublease income (235) (42) (656) (153) Net lease cost $ 16,371 $ 14,642 $ 47,595 $ 44,775 (a) Includes variable cost components of $1,982 and $1,316 in the three months ended September 30, 2021 and 2020, respectively, and $5,487 and $4,090 of variable cost components in the nine months ended September 30, 2021 and 2020, respectively. |
Schedule of future minimum lease payments | Future minimum lease payments under non-cancellable operating leases as of September 30, 2021 were as follows, in thousands: Payments due by Period 2021 $ 10,800 2022 37,401 2023 26,561 2024 18,785 2025 12,919 2026 & Thereafter 8,633 Total future minimum lease payments 115,099 Less: imputed interest (6,761) Lease liability at September 30, 2021 $ 108,338 |
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 statements of cash flows, in thousands: Nine Months Ended September 30, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities $ (32,110) $ (31,862) |
Income Per Share (Tables)
Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Income Per Share | |
Schedule of basic and diluted income per share | Basic and diluted net income per share were computed as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income (in thousands) - basic and diluted $ 95,435 $ 69,996 $ 245,658 $ 176,266 Weighted average number of common shares outstanding - basic 32,763,311 32,847,652 32,818,145 32,960,969 Dilutive effect of common stock equivalents: RSAs with service-based conditions 15,058 42,317 22,044 53,719 RSAs with market-based conditions 115,105 159,985 126,769 145,835 RSAs with performance-based conditions 73,597 49,065 60,595 38,719 Stock options 121,609 111,526 128,442 138,017 Weighted average number of common shares outstanding - diluted 33,088,680 33,210,545 33,155,995 33,337,259 Basic net income per common share $ 2.91 $ 2.13 $ 7.49 $ 5.35 Diluted net income per common share $ 2.88 $ 2.11 $ 7.41 $ 5.29 |
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, 2021 2020 2021 2020 Anti-dilutive common stock equivalents: RSAs with service-based conditions 176 — 1,607 4,184 RSAs with market-based conditions 11,065 — 9,235 2,780 RSAs with performance-based conditions — — — — Stock options 24,066 26,556 19,966 39,998 Total anti-dilutive common stock equivalents 35,307 26,556 30,808 46,962 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share-Based Compensation | |
Schedule of share-based compensation expense and related income tax benefit | Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Share-based compensation expense $ 2,998 $ 3,121 $ 8,375 $ 12,159 Income tax (expense) benefit $ (130) $ 838 $ 3,190 $ 7,734 |
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, 2021, 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, 2020 324.8 $ 87.79 239.7 $ 24.33 $ 68.86 $ 27,612.1 Granted 61.0 $ 245.67 24.1 $ 89.59 $ 214.58 Converted/Exercised (143.6) $ 81.34 (51.9) $ 21.97 $ 61.30 $ 7,039.9 Forfeited/Expired (9.0) $ 89.62 — $ — $ — Balance September 30, 2021 233.2 $ 113.52 211.9 $ 32.33 $ 87.28 $ 25,129.7 Exercisable September 30, 2021 (a) 115.7 $ 20.97 $ 57.86 $ 17,000.8 (a) The weighted average remaining contractual term for vested stock options is approximately 6.0 years. |
Schedule of unrecognized share-based compensation expense relating to unvested awards | Unrecognized share-based compensation expense related to unvested awards is shown in the following table, dollars in thousands: As of September 30, 2021 Unrecognized Compensation Expense Weighted Average RSAs $ 10,196 1.0 Stock options 1,639 1.1 Total unrecognized compensation expense related to unvested awards $ 11,835 |
Schedule of key inputs used to estimate the fair value of awards | 2021 2020 Measurement period (years) 2.87 2.88 Risk free interest rate 0.22 % 1.40 % Dividend yield 0.00 % 0.00 % Estimated fair value of market-based RSAs at grant date $ 298.66 $ 158.24 |
Schedule of assumptions used to estimate the fair values of options granted | 2021 2020 Risk free interest rate 0.76 % 1.53 % Expected volatility, using historical return volatility and implied volatility 43.29 % 31.50 % Expected life (in years) 6.0 6.0 Dividend yield 0.00 % 0.00 % Estimated fair value of stock options at grant date $ 89.59 $ 39.49 |
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 | Payout Ranges and Related Expense RSAs with Performance-Based Conditions Grant Date Fair Value 0% 25% 100% 200% February 18, 2019 $ 2,196 $ — $ 549 $ 2,196 $ 4,392 February 17, 2020 $ 2,687 $ — $ 672 $ 2,687 $ 5,374 February 16, 2021 $ 2,564 $ — $ 641 $ 2,564 $ 5,128 |
Share Repurchase Program (Table
Share Repurchase Program (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share Repurchase Program | |
Schedule of share repurchase program | The following table sets forth our share repurchases under the 2019 Repurchase Program during the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Number of shares repurchased 60,105 57,810 183,136 582,254 (a) Share repurchase cost (in thousands) $ 11,518 $ 8,997 $ 35,556 $ 43,149 (a) The nine months ended September 30, 2020 includes 73,455 shares we received as final settlement of our 2019 ASR Agreement. |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Business Combinations | |
Summary of businesses acquired | The estimated fair values of the assets acquired and liabilities assumed for the 2021 acquisitions approximated the following as of September 30, 2021, in thousands: 2021 Acquisitions LCR ABS All Others Total Estimated fair values: Accounts receivable 16,041 14,184 2,236 32,461 Inventories 806 8,441 2,955 12,202 Prepaid and other assets 83 370 113 566 Property and equipment 3,730 7,321 2,458 13,509 ROU asset 518 8,843 2,914 12,275 Intangible assets 16,040 38,670 9,581 64,291 Goodwill 19,453 55,625 11,997 87,075 Accounts payable (2,105) — (1,275) (3,380) Lease liabilities (518) (8,843) (2,914) (12,275) All other liabilities (381) (195) 81 (495) Net assets acquired $ 53,667 $ 124,416 $ 28,146 $ 206,229 |
Schedule of fair value of contingent consideration | Viking Cooper Valley Date of Acquisition July 15, 2019 February 20, 2020 August 23, 2021 Fair value of contingent consideration recognized at acquisition date $ 1,243 $ 1,000 $ 1,200 Contingent consideration at December 31, 2020 $ 910 $ 1,000 $ — Additions during the nine months ended September 30, 2021 — — 1,200 Change in fair value of contingent consideration during the nine months ended September 30, 2021 56 (850) — Payment of contingent consideration during the nine months ended September 30, 2021 (500) (150) — Liability balance for contingent consideration at September 30, 2021 $ 466 $ — $ 1,200 |
Schedule of pro forma results | Unaudited Pro Forma for the Unaudited Pro Forma for the Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net sales $ 847,093 $ 770,888 $ 2,475,604 $ 2,211,936 Net income $ 95,612 $ 74,580 $ 247,940 $ 187,055 |
2021 Acquisitions | |
Business Combinations | |
Summary of businesses acquired | The tables below provide a summary of businesses acquired in 2021 including, for significant acquisitions, the net sales and net income (loss) incurred for the three and nine months ended September 30, 2021: Three Months Ended Nine Months Ended September 30, 2021 September 30, 2021 2021 Acquisitions Date Cash Paid Contingent Consideration Total Purchase Price Goodwill Acquired Net Sales Net Income Net Sales Net Income (Loss) LCR 1/20/2021 $ 53,667 $ — $ 53,667 $ 19,453 $ 12,962 $ 26 33,519 (590) ABS 4/5/2021 124,416 — 124,416 55,625 36,921 3,031 73,644 4,699 All others Various 26,946 1,200 28,146 11,997 6,304 330 10,907 796 Total $ 205,029 $ 1,200 $ 206,229 $ 87,075 $ 56,187 $ 3,387 $ 118,070 $ 4,905 |
Schedule of estimates of acquired intangible assets related to the acquisitions | Estimates of acquired intangible assets related to the 2021 acquisitions are as follows, as of September 30, 2021, dollars in thousands: Estimated Fair Value Weighted Average Estimated Useful Life (Years) 2021 Acquisitions Customer relationships $ 58,901 12 Trademarks and trade names 5,390 10 Total intangible assets acquired $ 64,291 12 |
Schedule of additional expense included in the pro forma operating profit and net income | Unaudited Pro Forma for the Unaudited Pro Forma for the Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Depreciation & amortization $ 39 $ 3,227 $ 2,197 $ 9,819 Income tax expense (using 26% effective tax rate) $ 62 $ 1,683 $ 876 $ 4,008 |
2020 Acquisitions | |
Business Combinations | |
Summary of businesses acquired | The table below provides a summary as of September 30, 2021 for businesses acquired during the nine months ended September 30, 2020: 2020 Acquisitions Date Cash Paid Contingent Consideration Total Purchase Price Goodwill Acquired Cooper 2/20/2020 $ 10,500 $ 1,000 $ 11,500 $ 5,700 Hunter 2/24/2020 9,100 — 9,100 5,300 Total $ 19,600 $ 1,000 $ 20,600 $ 11,000 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 2020 Accrued liabilities: Salaries, wages, and commissions $ 56,480 $ 34,584 Insurance liabilities 22,203 22,007 Employee tax-related liabilities 12,680 12,603 Deferred revenue 12,768 6,542 Sales & property taxes 8,787 6,939 Customer rebates 6,348 6,191 Interest payable on long-term debt 823 3,924 Other 21,172 15,159 Total accrued liabilities $ 141,261 $ 107,949 |
Other Commitments and Conting_2
Other Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Other Commitments and Contingencies | |
Summary of outstanding bonds | The following table summarizes our outstanding performance, licensing, insurance and other bonds, in thousands: As of September 30, December 31, 2021 2020 Outstanding bonds: Performance bonds $ 129,829 $ 102,534 Licensing, insurance, and other bonds 21,477 27,633 Total bonds $ 151,306 $ 130,167 |
Basis of Presentation (Details)
Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2021segment | |
Basis of Presentation | |
Number of reportable segments | 2 |
Accounting Policies - Recently
Accounting Policies - Recently Adopted Accounting Pronouncements (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Recently Adopted Accounting Pronouncements | |||
Retained earnings | $ (1,122,317) | $ (876,660) | |
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2016-13 | |||
Recently Adopted Accounting Pronouncements | |||
Retained earnings | $ 3,200 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue Recognition | ||||
Net sales | $ 845,757 | $ 697,223 | $ 2,422,810 | $ 1,996,551 |
Insulation and accessories | ||||
Revenue Recognition | ||||
Net sales | 670,833 | 548,352 | 1,926,539 | 1,575,548 |
Glass and windows | ||||
Revenue Recognition | ||||
Net sales | 46,096 | 41,912 | 136,309 | 122,603 |
Gutters | ||||
Revenue Recognition | ||||
Net sales | 57,190 | 44,470 | 150,083 | 119,871 |
All other | ||||
Revenue Recognition | ||||
Net sales | 71,638 | 62,489 | 209,879 | 178,529 |
Residential | ||||
Revenue Recognition | ||||
Net sales | 672,427 | 545,688 | 1,901,820 | 1,557,954 |
Commercial | ||||
Revenue Recognition | ||||
Net sales | 173,330 | 151,535 | 520,990 | 438,597 |
Operating Segment | Installation | ||||
Revenue Recognition | ||||
Net sales | 612,900 | 492,206 | 1,751,278 | 1,434,648 |
Operating Segment | Installation | Insulation and accessories | ||||
Revenue Recognition | ||||
Net sales | 487,798 | 379,958 | 1,383,472 | 1,110,952 |
Operating Segment | Installation | Glass and windows | ||||
Revenue Recognition | ||||
Net sales | 46,096 | 41,912 | 136,309 | 122,603 |
Operating Segment | Installation | Gutters | ||||
Revenue Recognition | ||||
Net sales | 23,057 | 21,336 | 64,831 | 61,843 |
Operating Segment | Installation | All other | ||||
Revenue Recognition | ||||
Net sales | 55,949 | 49,000 | 166,666 | 139,250 |
Operating Segment | Installation | Residential | ||||
Revenue Recognition | ||||
Net sales | 501,494 | 390,101 | 1,405,837 | 1,134,350 |
Operating Segment | Installation | Commercial | ||||
Revenue Recognition | ||||
Net sales | 111,406 | 102,105 | 345,441 | 300,298 |
Operating Segment | Distribution | ||||
Revenue Recognition | ||||
Net sales | 276,398 | 244,113 | 801,363 | 674,672 |
Operating Segment | Distribution | Insulation and accessories | ||||
Revenue Recognition | ||||
Net sales | 219,441 | 200,210 | 651,192 | 556,018 |
Operating Segment | Distribution | Gutters | ||||
Revenue Recognition | ||||
Net sales | 40,555 | 28,616 | 103,244 | 74,585 |
Operating Segment | Distribution | All other | ||||
Revenue Recognition | ||||
Net sales | 16,402 | 15,287 | 46,927 | 44,069 |
Operating Segment | Distribution | Residential | ||||
Revenue Recognition | ||||
Net sales | 206,951 | 186,408 | 602,059 | 512,479 |
Operating Segment | Distribution | Commercial | ||||
Revenue Recognition | ||||
Net sales | 69,447 | 57,705 | 199,304 | 162,193 |
Intercompany Eliminations and Other Adjustments | ||||
Revenue Recognition | ||||
Net sales | (43,541) | (39,096) | (129,831) | (112,769) |
Intercompany Eliminations and Other Adjustments | Insulation and accessories | ||||
Revenue Recognition | ||||
Net sales | (36,406) | (31,816) | (108,125) | (91,422) |
Intercompany Eliminations and Other Adjustments | Gutters | ||||
Revenue Recognition | ||||
Net sales | (6,422) | (5,482) | (17,992) | (16,557) |
Intercompany Eliminations and Other Adjustments | All other | ||||
Revenue Recognition | ||||
Net sales | (713) | (1,798) | (3,714) | (4,790) |
Intercompany Eliminations and Other Adjustments | Residential | ||||
Revenue Recognition | ||||
Net sales | (36,018) | (30,821) | (106,076) | (88,875) |
Intercompany Eliminations and Other Adjustments | Commercial | ||||
Revenue Recognition | ||||
Net sales | $ (7,523) | $ (8,275) | $ (23,755) | $ (23,894) |
Revenue Recognition - Other (De
Revenue Recognition - Other (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Contract Liabilities | ||
Deferred revenue | $ 12,768 | $ 6,542 |
Uncompleted Performance Obligations | ||
Amount remaining on uncompleted performance obligations | $ 303,900 | |
Expected timing of satisfaction of performance obligations | over the next 18 months | |
Receivables, net | ||
Contract Assets | ||
Receivables, unbilled | $ 71,564 | 48,839 |
Accrued liabilities | ||
Contract Liabilities | ||
Deferred revenue | $ 12,767 | $ 6,542 |
Goodwill and Other Intangible_2
Goodwill and Other Intangibles - Goodwill (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Dec. 31, 2020USD ($) | Sep. 30, 2021USD ($)item | |
Changes in the carrying amount of goodwill | ||
Number of reporting units | item | 2 | |
Impairment of goodwill | $ 0 | |
Gross Goodwill, at beginning of period | $ 2,172,706 | |
Additions | 86,052 | |
Gross Goodwill, at end of period | 2,172,706 | 2,258,758 |
Accumulated Impairment Losses | (762,021) | |
Net Goodwill | 1,410,685 | 1,496,737 |
Installation | ||
Changes in the carrying amount of goodwill | ||
Gross Goodwill, at beginning of period | 1,726,356 | |
Additions | 79,762 | |
Gross Goodwill, at end of period | 1,726,356 | 1,806,118 |
Accumulated Impairment Losses | (762,021) | |
Net Goodwill | 1,044,097 | |
Distribution | ||
Changes in the carrying amount of goodwill | ||
Gross Goodwill, at beginning of period | 446,350 | |
Additions | 6,290 | |
Gross Goodwill, at end of period | $ 446,350 | 452,640 |
Net Goodwill | $ 452,640 |
Goodwill and Other Intangible_3
Goodwill and Other Intangibles - Other intangible assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Other intangible assets | |||||
Gross Definite-lived intangible assets | $ 317,442 | $ 317,442 | $ 252,751 | ||
Accumulated Amortization | (82,570) | (82,570) | (62,146) | ||
Net definite-lived intangible assets | 234,872 | 234,872 | $ 190,605 | ||
Amortization expense | $ 7,082 | $ 5,382 | $ 20,424 | $ 16,012 |
Long-Term Debt - Reconciliation
Long-Term Debt - Reconciliation (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Long-Term Debt | ||
Long-term debt | $ 711,694 | |
Unamortized debt issuance costs | (12,570) | $ (7,479) |
Total debt, net of unamortized debt issuance costs | 699,124 | 706,722 |
Less: current portion of long-term debt | 23,557 | 23,326 |
Total long-term debt | $ 675,567 | $ 683,396 |
3.625% Senior Notes | ||
Long-Term Debt | ||
Interest rate (as a percent) | 3.625% | |
Long-term debt | $ 400,000 | |
5.625% Senior Notes | ||
Long-Term Debt | ||
Interest rate (as a percent) | 5.625% | |
Long-term debt | $ 400,000 | |
Term Loan Facility | ||
Long-Term Debt | ||
Long-term debt | 292,500 | 288,750 |
Equipment Notes | ||
Long-Term Debt | ||
Long-term debt | $ 19,194 | $ 25,451 |
Long-Term Debt - Schedule of de
Long-Term Debt - Schedule of debt maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Schedule of Debt Maturity by Years: | ||
2021 | $ 5,859 | |
2022 | 23,640 | |
2023 | 26,950 | |
2024 | 24,620 | |
2025 | 28,125 | |
Thereafter | 602,500 | |
Total principal maturities | 711,694 | |
3.625% Senior Notes | ||
Schedule of Debt Maturity by Years: | ||
Thereafter | 400,000 | |
Total principal maturities | 400,000 | |
Term Loan Facility | ||
Schedule of Debt Maturity by Years: | ||
2021 | 3,750 | |
2022 | 15,000 | |
2023 | 20,625 | |
2024 | 22,500 | |
2025 | 28,125 | |
Thereafter | 202,500 | |
Total principal maturities | 292,500 | $ 288,750 |
Equipment Notes | ||
Schedule of Debt Maturity by Years: | ||
2021 | 2,109 | |
2022 | 8,640 | |
2023 | 6,325 | |
2024 | 2,120 | |
Total principal maturities | $ 19,194 | $ 25,451 |
Long-Term Debt - Key Terms of C
Long-Term Debt - Key Terms of Credit Agreement (Details) - USD ($) $ in Thousands | Mar. 15, 2021 | Mar. 08, 2021 | Mar. 07, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Long-Term Debt | |||||
Amount outstanding | $ 711,694 | ||||
Debt Instrument Redemption Option One | Prior to March 15, 2024 | |||||
Long-Term Debt | |||||
Redemption price as a percentage of principal | 100.00% | ||||
Debt Instrument Redemption Option Two | Prior to March 15, 2024 | |||||
Long-Term Debt | |||||
Redemption price as a percentage of principal | 103.625% | ||||
Debt instrument, conditional redemption, threshold percentage of aggregate principal amount originally issued remains outstanding | 60.00% | ||||
Debt Instrument Redemption Option Two | Maximum | Prior to March 15, 2024 | |||||
Long-Term Debt | |||||
Redemption price, percentage of principal amount redeemed | 40.00% | ||||
Revolving credit facility | |||||
Long-Term Debt | |||||
Availability | $ 450,000 | $ 450,000 | |||
Term Loan Facility | |||||
Long-Term Debt | |||||
Amount outstanding | 292,500 | 288,750 | |||
Equipment Notes | |||||
Long-Term Debt | |||||
Principal amount of debt | 41,600 | ||||
Amount outstanding | 19,194 | $ 25,451 | |||
Equipment notes issued | $ 0 | ||||
Debt term | 5 years | ||||
Equipment Notes | Minimum | |||||
Long-Term Debt | |||||
Interest rate (as a percent) | 2.80% | ||||
Equipment Notes | Maximum | |||||
Long-Term Debt | |||||
Interest rate (as a percent) | 4.40% | ||||
Amended Credit Agreement | |||||
Long-Term Debt | |||||
Additional term loan and/or revolver capacity available under incremental facility | $ 300,000 | ||||
Scheduled maturity date | Mar. 20, 2026 | ||||
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 | Base Rate | |||||
Long-Term Debt | |||||
Debt instrument, floor rate | 1.00% | 1.50% | |||
Amended Credit Agreement | Eurodollar | |||||
Long-Term Debt | |||||
Debt instrument, floor rate | 0.00% | 0.50% | |||
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 | 1.00% | ||||
Amended Credit Agreement | Base Rate Borrowings | Federal Funds Rate | |||||
Long-Term Debt | |||||
Basis spread | 0.50% | ||||
Amended Credit Agreement | Base Rate Borrowings | LIBOR | |||||
Long-Term Debt | |||||
Basis spread | 1.00% | ||||
Maturity of the reference rate | 1 month | ||||
Amended Credit Agreement | LIBOR Rate Borrowings | |||||
Long-Term Debt | |||||
Interest rate floor (as a percent) | 0.00% | ||||
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% | ||||
Amended Credit Agreement | Revolving credit facility | |||||
Long-Term Debt | |||||
Availability | $ 450,000 | $ 450,000 | |||
Sublimit for issuance of letters of credit under Revolving Facility* | 100,000 | 100,000 | |||
Sublimit for swingline loans under Revolving Facility* | 35,000 | $ 35,000 | |||
Interest rate | 1.08% | ||||
Amended Credit Agreement | Term Loan Facility | |||||
Long-Term Debt | |||||
Availability | $ 300,000 | $ 300,000 | |||
Amended Credit Agreement | Senior Notes | Change in Control Scenario | |||||
Long-Term Debt | |||||
Redemption price as a percentage of principal | 101.00% | ||||
3.625% Senior Notes | |||||
Long-Term Debt | |||||
Interest rate (as a percent) | 3.625% | ||||
Amount outstanding | $ 400,000 | ||||
3.625% Senior Notes | Senior Notes | |||||
Long-Term Debt | |||||
Interest rate (as a percent) | 3.625% | 3.625% | |||
Principal amount of debt | $ 400,000 | ||||
5.625% Senior Notes | Senior Notes | |||||
Long-Term Debt | |||||
Interest rate (as a percent) | 5.625% | ||||
Principal amount of debt | $ 400,000 | ||||
Redemption price, percentage of principal amount redeemed | 100.00% |
Long-Term Debt - Other (Details
Long-Term Debt - Other (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2021 | Mar. 15, 2021 | Mar. 08, 2021 | Dec. 31, 2020 | |
Debt covenants | ||||
Maximum Net Leverage Ratio | 3.50 | |||
Minimum Interest Coverage Ratio | 3 | |||
3.625% Senior Notes | ||||
Debt covenants | ||||
Interest rate (as a percent) | 3.625% | |||
3.625% Senior Notes | Senior Notes | ||||
Debt covenants | ||||
Interest rate (as a percent) | 3.625% | 3.625% | ||
Amended Credit Agreement | Senior Notes | Event of Default Scenario | ||||
Debt covenants | ||||
Minimum percentage of principal of debt holders to declare debt immediately due and payable | 30.00% | |||
Revolving credit facility | ||||
Long-Term Debt | ||||
Revolving Facility | $ 450,000 | $ 450,000 | ||
Less: standby letters of credit | (68,111) | (60,382) | ||
Availability under Revolving Facility | 381,889 | $ 389,618 | ||
Revolving credit facility | Amended Credit Agreement | ||||
Long-Term Debt | ||||
Revolving Facility | $ 450,000 | $ 450,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Fair Value on Non-Recurring Basis | |
Amount outstanding | $ 711,694 |
3.625% Senior Notes | |
Fair Value on Non-Recurring Basis | |
Interest rate (as a percent) | 3.625% |
Amount outstanding | $ 400,000 |
3.625% Senior Notes | Fair Value on Non-Recurring Basis | Level 1 fair value measurement | |
Fair Value on Non-Recurring Basis | |
Fair value | $ 404,000 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment information | ||||
Net sales | $ 845,757 | $ 697,223 | $ 2,422,810 | $ 1,996,551 |
Operating profit | 133,806 | 101,523 | 357,977 | 251,969 |
Other expense, net | (5,437) | (7,606) | (31,862) | (24,296) |
Income before income taxes | 128,369 | 93,917 | 326,115 | 227,673 |
Gutters | ||||
Segment information | ||||
Net sales | 57,190 | 44,470 | 150,083 | 119,871 |
Operating Segment | ||||
Segment information | ||||
Operating profit | 144,618 | 109,555 | 382,101 | 276,579 |
Operating Segment | Installation | ||||
Segment information | ||||
Net sales | 612,900 | 492,206 | 1,751,278 | 1,434,648 |
Operating profit | 105,046 | 83,142 | 277,748 | 213,136 |
Operating Segment | Installation | Gutters | ||||
Segment information | ||||
Net sales | 23,057 | 21,336 | 64,831 | 61,843 |
Operating Segment | Distribution | ||||
Segment information | ||||
Net sales | 276,398 | 244,113 | 801,363 | 674,672 |
Operating profit | 47,162 | 32,787 | 125,403 | 81,612 |
Operating Segment | Distribution | Gutters | ||||
Segment information | ||||
Net sales | 40,555 | 28,616 | 103,244 | 74,585 |
Intercompany Eliminations and Other Adjustments | ||||
Segment information | ||||
Net sales | (43,541) | (39,096) | (129,831) | (112,769) |
Intercompany Eliminations and Other Adjustments | Gutters | ||||
Segment information | ||||
Net sales | (6,422) | (5,482) | (17,992) | (16,557) |
Intercompany Eliminations | ||||
Segment information | ||||
Net sales | (43,541) | (39,096) | (129,831) | (112,769) |
Operating profit | (7,590) | (6,374) | (21,050) | (18,169) |
Corporate | ||||
Segment information | ||||
General corporate expense, net | $ (10,812) | $ (8,032) | $ (24,124) | $ (24,610) |
Leases - Components of lease ex
Leases - Components of lease expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Components of lease expense: | ||||
Operating lease cost | $ 12,684 | $ 11,475 | $ 37,131 | $ 35,842 |
Short-term lease cost | 3,922 | 3,209 | 11,120 | 9,086 |
Sublease income | (235) | (42) | (656) | (153) |
Net lease cost | 16,371 | 14,642 | 47,595 | 44,775 |
Variable lease cost | $ 1,982 | $ 1,316 | $ 5,487 | $ 4,090 |
Leases - Future minimum lease p
Leases - Future minimum lease payments (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Future minimum lease payments under non-cancellable operating leases: | |
2021 | $ 10,800 |
2022 | 37,401 |
2023 | 26,561 |
2024 | 18,785 |
2025 | 12,919 |
2026 & Thereafter | 8,633 |
Total future minimum lease payments | 115,099 |
Less: imputed interest | (6,761) |
Lease liability at September 30, 2021 | $ 108,338 |
Leases - Cash flows and other (
Leases - Cash flows and other (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Leases | ||
Weighted average remaining lease term | 3 years 8 months 12 days | |
Weighted average discount rate (as a percent) | 3.30% | |
Cash paid for amounts included in the measurement of lease liabilities | $ (32,110) | $ (31,862) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Taxes | ||||
Effective tax rate (as a percent) | 25.70% | 25.50% | 24.70% | 22.60% |
Tax (expense) benefit related to share-based compensation | $ (130) | $ 838 | $ 3,190 | $ 7,734 |
Income Per Share - Calculation
Income Per Share - Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Net income - basic and diluted | $ 95,435 | $ 90,380 | $ 59,842 | $ 69,996 | $ 55,496 | $ 50,771 | $ 245,658 | $ 176,266 |
Weighted average number of common shares outstanding - basic | 32,763,311 | 32,847,652 | 32,818,145 | 32,960,969 | ||||
Dilutive effect of common stock equivalents: | ||||||||
Stock options | 121,609 | 111,526 | 128,442 | 138,017 | ||||
Weighted average number of common shares outstanding - diluted | 33,088,680 | 33,210,545 | 33,155,995 | 33,337,259 | ||||
Basic net income per common share | $ 2.91 | $ 2.13 | $ 7.49 | $ 5.35 | ||||
Diluted net income per common share | $ 2.88 | $ 2.11 | $ 7.41 | $ 5.29 | ||||
Service-based conditions | ||||||||
Dilutive effect of common stock equivalents: | ||||||||
Restricted stock awards | 15,058 | 42,317 | 22,044 | 53,719 | ||||
Market-based conditions | ||||||||
Dilutive effect of common stock equivalents: | ||||||||
Restricted stock awards | 115,105 | 159,985 | 126,769 | 145,835 | ||||
Performance-based conditions | ||||||||
Dilutive effect of common stock equivalents: | ||||||||
Restricted stock awards | 73,597 | 49,065 | 60,595 | 38,719 |
Income Per Share - Anti-dilutiv
Income Per Share - Anti-dilutive common stock equivalents (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Anti-dilutive common stock equivalents | ||||
Total anti-dilutive common stock equivalents | 35,307 | 26,556 | 30,808 | 46,962 |
Restricted Stock Awards | Service-based conditions | ||||
Anti-dilutive common stock equivalents | ||||
Total anti-dilutive common stock equivalents | 176 | 1,607 | 4,184 | |
Restricted Stock Awards | Market-based conditions | ||||
Anti-dilutive common stock equivalents | ||||
Total anti-dilutive common stock equivalents | 11,065 | 9,235 | 2,780 | |
Stock Options | ||||
Anti-dilutive common stock equivalents | ||||
Total anti-dilutive common stock equivalents | 24,066 | 26,556 | 19,966 | 39,998 |
Share-Based Compensation - Expe
Share-Based Compensation - Expense (Details) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-Based Compensation | ||||
Share-based compensation expense | $ 2,998 | $ 3,121 | $ 8,375 | $ 12,159 |
Income tax (expense) benefit | $ (130) | $ 838 | $ 3,190 | $ 7,734 |
2015 Plan | ||||
Share-Based Compensation | ||||
Number of shares available | 2 | 2 | ||
2015 Plan | Maximum | ||||
Share-Based Compensation | ||||
Number of shares authorized | 4 | 4 |
Share-Based Compensation - Acti
Share-Based Compensation - Activity (Details) - USD ($) | Feb. 16, 2021 | Feb. 17, 2020 | Feb. 18, 2019 | Mar. 31, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Stock Options, Number of Shares | ||||||||
Converted/Exercised (in shares) | (51,915) | (19,242) | ||||||
Stock options, additional disclosures | ||||||||
Weighted average remaining contractual term for vested stock options | 6 years | |||||||
Unrecognized share-based compensation expense | ||||||||
Restricted stock awards, Unrecognized compensation expense | $ 10,196,000 | |||||||
Restricted stock awards, Weighted average remaining vesting period | 1 year | |||||||
Stock options, Unrecognized compensation expense | $ 1,639,000 | |||||||
Stock options, Weighted average remaining vesting period | 1 year 1 month 6 days | |||||||
Total unrecognized compensation expense related to unvested awards | $ 11,835,000 | |||||||
Restricted Stock Awards | ||||||||
Restricted Stock Awards, Number of Shares | ||||||||
Balance at beginning of period (in shares) | 324,800 | 324,800 | ||||||
Granted (in shares) | 61,000 | |||||||
Converted/Exercised (in shares) | (143,600) | |||||||
Forfeited/Expired (in shares) | (9,000) | |||||||
Balance at end of period (in shares) | 233,200 | |||||||
Restricted Stock Awards, Weighted Average Grant Date Fair Value Per Share | ||||||||
Balance at beginning of period (in dollars per share) | $ 87.79 | $ 87.79 | ||||||
Granted (in dollars per share) | 245.67 | |||||||
Converted/Exercised (in dollars per share) | 81.34 | |||||||
Forfeited/Expired (in dollars per share) | 89.62 | |||||||
Balance at end of period (in dollars per share) | $ 113.52 | |||||||
Assumptions used to estimate the fair values of the awards granted: | ||||||||
Measurement period (years) | 2 years 10 months 13 days | 2 years 10 months 17 days | ||||||
Risk free interest rate (as a percent) | 0.22% | 1.40% | ||||||
Dividend yield (as a percent) | 0.00% | 0.00% | ||||||
Estimated fair value of market-based RSAs at grant date (in dollars per share) | $ 298.66 | $ 158.24 | ||||||
Restricted Stock Awards | Performance-based conditions | ||||||||
Restricted stock awards, additional disclosures | ||||||||
Grant date fair value | $ 2,564,000 | $ 2,687,000 | $ 2,196,000 | |||||
Restricted Stock Awards | Performance-based conditions | Payout Range-0% | ||||||||
Restricted stock awards, additional disclosures | ||||||||
Payout range (as a percent) | 0.00% | 0.00% | 0.00% | |||||
Restricted Stock Awards | Performance-based conditions | Payout Range-25% | ||||||||
Restricted stock awards, additional disclosures | ||||||||
Payout range (as a percent) | 25.00% | 25.00% | 25.00% | |||||
Related expenses | $ 641,000 | $ 672,000 | $ 549,000 | |||||
Restricted Stock Awards | Performance-based conditions | Payout Range-100% | ||||||||
Restricted stock awards, additional disclosures | ||||||||
Payout range (as a percent) | 100.00% | 100.00% | 100.00% | |||||
Related expenses | $ 2,564,000 | $ 2,687,000 | $ 2,196,000 | |||||
Restricted Stock Awards | Performance-based conditions | Payout Range-200% | ||||||||
Restricted stock awards, additional disclosures | ||||||||
Payout range (as a percent) | 200.00% | 200.00% | 200.00% | |||||
Related expenses | $ 5,128,000 | $ 5,374,000 | $ 4,392,000 | |||||
RSAs granted February 19, 2018 | Performance-based conditions | ||||||||
Restricted stock awards, additional disclosures | ||||||||
Cumulative period of achievement | 3 years | |||||||
Cumulative achievement percentage | 200.00% | |||||||
Total compensation expense recognized over the performance period, net of forfeitures | $ 3,700,000 | |||||||
Stock Options | ||||||||
Stock Options, Number of Shares | ||||||||
Balance at beginning of period (in shares) | 239,700 | 239,700 | ||||||
Granted (in shares) | 24,100 | |||||||
Converted/Exercised (in shares) | (51,900) | |||||||
Balance at end of period (in shares) | 211,900 | |||||||
Stock Options, Weighted Average Grant Date Fair Value Per Share | ||||||||
Balance at beginning of period (in dollars per share) | $ 24.33 | $ 24.33 | ||||||
Granted (in dollars per share) | 89.59 | |||||||
Converted/Exercised (in dollars per share) | 21.97 | |||||||
Balance at end of period (in dollars per share) | 32.33 | |||||||
Stock Options, Weighted Average Exercise Price Per Share | ||||||||
Balance at beginning of period (in dollars per share) | $ 68.86 | 68.86 | ||||||
Granted (in dollars per share) | 214.58 | |||||||
Converted/Exercised (in dollars per share) | 61.30 | |||||||
Balance at end of period (in dollars per share) | $ 87.28 | |||||||
Stock options, additional disclosures | ||||||||
Aggregate intrinsic value | $ 25,129,700 | $ 27,612,100 | ||||||
Converted/Exercised aggregate intrinsic value | $ 7,039,900 | |||||||
Exercisable, Number of shares | 115,700 | |||||||
Exercisable, Weighted Average Grant Date Fair Value Per Share | $ 20.97 | |||||||
Exercisable Weighted Average Exercise Price Per Share | $ 57.86 | |||||||
Exercisable, Aggregate Intrinsic Value | $ 17,000,800 | |||||||
Assumptions used to estimate the fair values of the awards granted: | ||||||||
Risk free interest rate (as a percent) | 0.76% | 1.53% | ||||||
Expected volatility using historical return volatility and implied volatility (as a percent) | 43.29% | 31.50% | ||||||
Expected life (in years) | 6 years | 6 years | ||||||
Dividend yield (as a percent) | 0.00% | 0.00% | ||||||
Estimated fair value of market-based RSAs at grant date (in dollars per share) | $ 89.59 | $ 39.49 |
Share Repurchase Program (Detai
Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 23 Months Ended | ||||||
Sep. 30, 2021 | Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Jul. 26, 2021 | Nov. 05, 2019 | Feb. 22, 2019 | |
Share Repurchase Program | |||||||||
Number of shares repurchased (in shares) | 60,105 | 57,810 | 183,136 | 582,254 | |||||
Share repurchase cost | $ 11,518 | $ 8,997 | $ 35,556 | $ 43,149 | |||||
2019 Share Repurchase Program | |||||||||
Share Repurchase Program | |||||||||
Amount remaining under repurchase program | 4,400 | 4,400 | $ 4,400 | ||||||
2021 Share Repurchase Program | |||||||||
Share Repurchase Program | |||||||||
Amount remaining under repurchase program | $ 200,000 | $ 200,000 | $ 200,000 | ||||||
2019 ASR Agreement | |||||||||
Share Repurchase Program | |||||||||
Initial number of shares delivered under ASR agreement (in shares) | 392,501 | ||||||||
Initial percentage of shares delivered under ASR agreement | 85.00% | ||||||||
Initial value of shares delivered under ASR agreement | $ 50,000 | ||||||||
Number of shares repurchased (in shares) | 73,455 | 73,455 | 465,956 | ||||||
Average price per share (in dollars per share) | $ 107.31 | ||||||||
Maximum | 2019 Share Repurchase Program | |||||||||
Share Repurchase Program | |||||||||
Share repurchase program, authorized amount | $ 200,000 | ||||||||
Maximum | 2021 Share Repurchase Program | |||||||||
Share Repurchase Program | |||||||||
Share repurchase program, authorized amount | $ 200,000 |
Business Combinations - Summary
Business Combinations - Summary (Details) - USD ($) $ in Thousands | Apr. 05, 2021 | Jan. 20, 2021 | Feb. 24, 2020 | Feb. 20, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Business Combinations | |||||||||
Acquisition related costs | $ 2,700 | $ 200 | $ 3,400 | $ 400 | |||||
Pro Forma Results | |||||||||
Net sales | 847,093 | 770,888 | 2,475,604 | 2,211,936 | |||||
Net income (loss) | 95,612 | 74,580 | 247,940 | 187,055 | |||||
Depreciation & amortization | 39 | 3,227 | 2,197 | 9,819 | |||||
Income tax expense (using 26% effective tax rate) | 62 | 1,683 | $ 876 | 4,008 | |||||
ETR (as a percent) | 26.00% | ||||||||
Estimated fair values | |||||||||
Goodwill | 1,496,737 | $ 1,496,737 | $ 1,410,685 | ||||||
2021 Acquisitions | |||||||||
Summary | |||||||||
Cash Paid | 205,029 | ||||||||
Contingent Consideration | 1,200 | ||||||||
Total Purchase Price | 206,229 | ||||||||
Goodwill Acquired | 87,075 | ||||||||
Net Sales | 56,187 | 118,070 | |||||||
Net income | 3,387 | 4,905 | |||||||
Goodwill expected to be deducted for income tax purposes | 87,100 | 87,100 | |||||||
Estimated fair values | |||||||||
Accounts receivable | 32,461 | 32,461 | |||||||
Inventories | 12,202 | 12,202 | |||||||
Prepaid and other assets | 566 | 566 | |||||||
Property and equipment | 13,509 | 13,509 | |||||||
ROU assets | 12,275 | 12,275 | |||||||
Intangible assets | 64,291 | 64,291 | |||||||
Goodwill | 87,075 | 87,075 | |||||||
Accounts payable | (3,380) | (3,380) | |||||||
Lease liabilities | (12,275) | (12,275) | |||||||
All other liabilities | (495) | (495) | |||||||
Net assets acquired | 206,229 | 206,229 | |||||||
LCR Contractors | |||||||||
Summary | |||||||||
Cash Paid | $ 53,667 | ||||||||
Total Purchase Price | 53,667 | ||||||||
Goodwill Acquired | $ 19,453 | ||||||||
Net Sales | 12,962 | 33,519 | |||||||
Net income | 26 | (590) | |||||||
Estimated fair values | |||||||||
Accounts receivable | 16,041 | 16,041 | |||||||
Inventories | 806 | 806 | |||||||
Prepaid and other assets | 83 | 83 | |||||||
Property and equipment | 3,730 | 3,730 | |||||||
ROU assets | 518 | 518 | |||||||
Intangible assets | 16,040 | 16,040 | |||||||
Goodwill | 19,453 | 19,453 | |||||||
Accounts payable | (2,105) | (2,105) | |||||||
Lease liabilities | (518) | (518) | |||||||
All other liabilities | (381) | (381) | |||||||
Net assets acquired | 53,667 | 53,667 | |||||||
ABS | |||||||||
Summary | |||||||||
Cash Paid | $ 124,416 | ||||||||
Total Purchase Price | 124,416 | ||||||||
Goodwill Acquired | $ 55,625 | ||||||||
Net Sales | 36,921 | 73,644 | |||||||
Net income | 3,031 | 4,699 | |||||||
Estimated fair values | |||||||||
Accounts receivable | 14,184 | 14,184 | |||||||
Inventories | 8,441 | 8,441 | |||||||
Prepaid and other assets | 370 | 370 | |||||||
Property and equipment | 7,321 | 7,321 | |||||||
ROU assets | 8,843 | 8,843 | |||||||
Intangible assets | 38,670 | 38,670 | |||||||
Goodwill | 55,625 | 55,625 | |||||||
Lease liabilities | (8,843) | (8,843) | |||||||
All other liabilities | (195) | (195) | |||||||
Net assets acquired | 124,416 | 124,416 | |||||||
All others | |||||||||
Summary | |||||||||
Cash Paid | 26,946 | ||||||||
Contingent Consideration | 1,200 | ||||||||
Total Purchase Price | 28,146 | ||||||||
Goodwill Acquired | 11,997 | ||||||||
Net Sales | 6,304 | 10,907 | |||||||
Net income | 330 | 796 | |||||||
Estimated fair values | |||||||||
Accounts receivable | 2,236 | 2,236 | |||||||
Inventories | 2,955 | 2,955 | |||||||
Prepaid and other assets | 113 | 113 | |||||||
Property and equipment | 2,458 | 2,458 | |||||||
ROU assets | 2,914 | 2,914 | |||||||
Intangible assets | 9,581 | 9,581 | |||||||
Goodwill | 11,997 | 11,997 | |||||||
Accounts payable | (1,275) | (1,275) | |||||||
Lease liabilities | (2,914) | (2,914) | |||||||
All other liabilities | 81 | 81 | |||||||
Net assets acquired | $ 28,146 | $ 28,146 | |||||||
2020 Acquisitions | |||||||||
Summary | |||||||||
Cash Paid | 19,600 | ||||||||
Contingent Consideration | 1,000 | ||||||||
Total Purchase Price | 20,600 | ||||||||
Goodwill Acquired | $ 11,000 | ||||||||
Goodwill expected to be deducted for income tax purposes | $ 11,000 | $ 11,000 | |||||||
Cooper Glass | |||||||||
Summary | |||||||||
Cash Paid | $ 10,500 | ||||||||
Contingent Consideration | 1,000 | ||||||||
Total Purchase Price | 11,500 | ||||||||
Goodwill Acquired | $ 5,700 | ||||||||
Hunter | |||||||||
Summary | |||||||||
Cash Paid | $ 9,100 | ||||||||
Total Purchase Price | 9,100 | ||||||||
Goodwill Acquired | $ 5,300 |
Business Combinations - Intangi
Business Combinations - Intangibles (Details) - 2021 Acquisitions $ in Thousands | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Estimates of acquired intangible assets | |
Estimated Fair Value | $ 64,291 |
Weighted Average Estimated Useful Life (Years) | 12 years |
Customer relationships | |
Estimates of acquired intangible assets | |
Estimated Fair Value | $ 58,901 |
Weighted Average Estimated Useful Life (Years) | 12 years |
Trademarks and trade names | |
Estimates of acquired intangible assets | |
Estimated Fair Value | $ 5,390 |
Weighted Average Estimated Useful Life (Years) | 10 years |
Business Combinations - Conting
Business Combinations - Contingent Consideration (Details) $ in Thousands | Aug. 23, 2021USD ($) | Feb. 20, 2020USD ($) | Jul. 15, 2019USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) |
Contingent Consideration | |||||
Payment of contingent consideration | $ 22 | $ 413 | |||
Viking | |||||
Contingent Consideration | |||||
Contingent consideration, payment period | 3 years | ||||
Contingent consideration, low end of range | 0 | ||||
Contingent consideration, high end of range | 1,500 | ||||
Fair value of contingent consideration recognized at acquisition date | $ 1,243 | ||||
Fair value of contingent consideration | |||||
Contingent consideration at beginning of period | 910 | ||||
Change in fair value of contingent consideration | 56 | ||||
Payment of contingent consideration | (500) | ||||
Liability balance for contingent consideration at end of period | $ 466 | ||||
Viking | Contingent Consideration | Level 3 | |||||
Contingent Consideration | |||||
Fair value of contingent consideration recognized at acquisition date | $ 1,200 | ||||
Business Combination, Contingent Consideration, Liability, Measurement Input [Extensible List] | us-gaap:MeasurementInputDiscountRateMember | ||||
Discount rate (as a percent) | 0.100 | ||||
Fair value of contingent consideration | |||||
Payment of contingent consideration | $ (500) | ||||
Cooper Glass | |||||
Contingent Consideration | |||||
Contingent consideration, payment period | 2 years | ||||
Contingent consideration, low end of range | 0 | ||||
Contingent consideration, high end of range | 1,000 | ||||
Fair value of contingent consideration recognized at acquisition date | $ 1,000 | ||||
Fair value of contingent consideration | |||||
Contingent consideration at beginning of period | 1,000 | ||||
Change in fair value of contingent consideration | (850) | ||||
Payment of contingent consideration | (150) | ||||
Cooper Glass | Contingent Consideration | |||||
Fair value of contingent consideration | |||||
Payment of contingent consideration | 200 | ||||
Valley | |||||
Contingent Consideration | |||||
Contingent consideration, payment period | 2 years | ||||
Contingent consideration, low end of range | 0 | ||||
Contingent consideration, high end of range | 1,200 | ||||
Fair value of contingent consideration recognized at acquisition date | $ 1,200 | ||||
Fair value of contingent consideration | |||||
Additions | 1,200 | ||||
Liability balance for contingent consideration at end of period | $ 1,200 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Accrued Liabilities. | ||
Salaries, wages, and commissions | $ 56,480 | $ 34,584 |
Insurance liabilities | 22,203 | 22,007 |
Employee tax-related liabilities | 12,680 | 12,603 |
Deferred revenue | 12,768 | 6,542 |
Sales & property taxes | 8,787 | 6,939 |
Customer rebates | 6,348 | 6,191 |
Interest payable on long-term debt | 823 | 3,924 |
Other | 21,172 | 15,159 |
Total accrued liabilities | $ 141,261 | $ 107,949 |
Other Commitments and Conting_3
Other Commitments and Contingencies (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Outstanding Bonds | ||
Performance bonds | $ 129,829 | $ 102,534 |
Licensing, insurance, and other bonds | 21,477 | 27,633 |
Total bonds | $ 151,306 | $ 130,167 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Oct. 15, 2021 | Oct. 07, 2021 | Oct. 06, 2021 | Sep. 30, 2021 | Oct. 14, 2021 | Mar. 08, 2021 | Dec. 31, 2020 |
Revolving credit facility | |||||||
Subsequent Events | |||||||
Availability | $ 450,000 | $ 450,000 | |||||
Amended Credit Agreement | |||||||
Subsequent Events | |||||||
Maturity date | Mar. 20, 2026 | ||||||
Amended Credit Agreement | Revolving credit facility | |||||||
Subsequent Events | |||||||
Availability | $ 450,000 | $ 450,000 | |||||
Amended Credit Agreement | Term Loan Facility | |||||||
Subsequent Events | |||||||
Availability | $ 300,000 | $ 300,000 | |||||
Subsequent Event | CBP | |||||||
Subsequent Events | |||||||
Purchase price | $ 19,300 | ||||||
Subsequent Event | DI | |||||||
Subsequent Events | |||||||
Purchase price | $ 1,000,000 | ||||||
Subsequent Event | Amendment No. 2 to Credit Agreement | |||||||
Subsequent Events | |||||||
Maturity date | Oct. 7, 2026 | ||||||
Delayed draw term loan | $ 300,000 | ||||||
Subsequent Event | Amendment No. 2 to Credit Agreement | Revolving credit facility | |||||||
Subsequent Events | |||||||
Availability | 500,000 | ||||||
Subsequent Event | Amendment No. 2 to Credit Agreement | Term Loan Facility | |||||||
Subsequent Events | |||||||
Advances | $ 7,500 | ||||||
Subsequent Event | 4.125% Senior Notes | |||||||
Subsequent Events | |||||||
Principal amount of debt | $ 500,000 | ||||||
Interest rate (as a percent) | 4.125% |