Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 27, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Forterra, Inc. | |
Entity Central Index Key | 0001678463 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 65,112,843 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 330,876 | $ 291,858 |
Cost of goods sold | 272,134 | 250,053 |
Gross profit | 58,742 | 41,805 |
Selling, general & administrative expenses | (54,240) | (51,391) |
Impairment and exit charges | (824) | (231) |
Other operating income, net | 330 | 579 |
Operating expenses | (54,734) | (51,043) |
Income (loss) from operations | 4,008 | (9,238) |
Other income (expense) | ||
Interest expense | (20,745) | (24,665) |
Loss on extinguishment of debt | (50) | 0 |
Earnings from equity method investee | 2,799 | 1,567 |
Loss before income taxes | (13,988) | (32,336) |
Income tax (expense) benefit | (78) | 7,297 |
Net loss | $ (14,066) | $ (25,039) |
Loss per share: | ||
Basic and diluted (in shares) | $ (0.22) | $ (0.39) |
Weighted average common shares outstanding: | ||
Basic and diluted (in dollars per share) | 64,804 | 64,004 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (14,066) | $ (25,039) |
Change in other postretirement benefit plans, net of tax | (681) | 373 |
Foreign currency translation adjustment | (5,699) | 1,508 |
Comprehensive loss | $ (20,446) | $ (23,158) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 182,411 | $ 34,800 |
Receivables, net | 228,631 | 205,801 |
Inventories | 259,273 | 238,483 |
Prepaid expenses | 12,041 | 11,021 |
Other current assets | 14,024 | 8,890 |
Total current assets | 696,380 | 498,995 |
Non-current assets | ||
Property, plant and equipment, net | 464,165 | 475,575 |
Operating lease right-of-use assets | 58,763 | 60,253 |
Goodwill | 507,681 | 508,826 |
Intangible assets, net | 132,252 | 142,674 |
Investment in equity method investee | 51,232 | 50,034 |
Other long-term assets | 2,147 | 3,701 |
Total assets | 1,912,620 | 1,740,058 |
Current liabilities | ||
Trade payables | 125,321 | 102,426 |
Accrued liabilities | 77,384 | 88,839 |
Deferred revenue | 11,769 | 9,527 |
Current portion of long-term debt | 12,510 | 12,510 |
Current portion of tax receivable agreement | 13,145 | 13,145 |
Total current liabilities | 240,129 | 226,447 |
Non-current liabilities | ||
Long-term debt | 1,258,150 | 1,085,793 |
Long-term finance lease liabilities | 137,261 | 137,365 |
Long-term operating lease liabilities | 53,416 | 54,411 |
Deferred tax liabilities | 34,899 | 28,929 |
Other long-term liabilities | 21,334 | 21,906 |
Long-term tax receivable agreement | 64,240 | 64,240 |
Total liabilities | 1,809,429 | 1,619,091 |
Commitments and Contingencies (Note 14) | ||
Equity | ||
Common stock, $0.001 par value, 190,000 shares authorized; 65,077 and 64,741 shares issued and outstanding | 19 | 19 |
Additional paid-in-capital | 247,042 | 244,372 |
Accumulated other comprehensive loss | (13,443) | (7,063) |
Retained deficit | (130,427) | (116,361) |
Total shareholder's equity | 103,191 | 120,967 |
Total liabilities and shareholders' equity | $ 1,912,620 | $ 1,740,058 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common shares, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common shares, authorized (in shares) | 190,000,000 | 190,000,000 |
Common shares, issued (in shares) | 65,077,000 | 64,741,000 |
Common shares, outstanding (in shares) | 65,077,000 | 64,741,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in-Capital | Accumulated Other Comprehensive Income (Loss) | Retained Deficit |
Beginning Balance (in shares) at Dec. 31, 2018 | 64,205,604 | ||||
Beginning Balance at Dec. 31, 2018 | $ 108,222 | $ 18 | $ 234,931 | $ (10,740) | $ (115,987) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cumulative effect of accounting changes, net of tax | 6,957 | 6,957 | |||
Share-based compensation expense | 1,529 | 1,529 | |||
Stock-based plan activity (in shares) | 57,106 | ||||
Stock-based plan activity | (26) | (26) | |||
Comprehensive loss: | |||||
Net loss | (25,039) | (25,039) | |||
Change in other postretirement benefit plans, net of tax | 373 | 373 | |||
Foreign currency translation adjustment | 1,508 | 1,508 | |||
Ending Balance (in shares) at Mar. 31, 2019 | 64,262,710 | ||||
Ending Balance at Mar. 31, 2019 | $ 93,524 | $ 18 | 236,434 | (8,859) | (134,069) |
Beginning Balance (in shares) at Dec. 31, 2019 | 64,741,000 | 64,740,667 | |||
Beginning Balance at Dec. 31, 2019 | $ 120,967 | $ 19 | 244,372 | (7,063) | (116,361) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share-based compensation expense | 2,864 | 2,864 | |||
Stock-based plan activity (in shares) | 336,752 | ||||
Stock-based plan activity | (194) | (194) | |||
Comprehensive loss: | |||||
Net loss | (14,066) | (14,066) | |||
Change in other postretirement benefit plans, net of tax | (681) | (681) | |||
Foreign currency translation adjustment | $ (5,699) | (5,699) | |||
Ending Balance (in shares) at Mar. 31, 2020 | 65,077,000 | 65,077,419 | |||
Ending Balance at Mar. 31, 2020 | $ 103,191 | $ 19 | $ 247,042 | $ (13,443) | $ (130,427) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (14,066) | $ (25,039) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation & amortization expense | 22,501 | 24,392 |
(Gain) / loss on disposal of property, plant and equipment | 36 | (53) |
Loss on extinguishment of debt | 50 | 0 |
Amortization of debt discount and issuance costs | 1,871 | 1,999 |
Stock-based compensation expense | 2,864 | 1,529 |
Earnings from equity method investee | (2,799) | (1,567) |
Distributions from equity method investee | 1,600 | 1,500 |
Unrealized loss on derivative instruments, net | 746 | 2,092 |
Unrealized foreign currency loss / (gain), net | 335 | (260) |
Provision (recoveries) for doubtful accounts | (132) | 487 |
Deferred taxes | 5,970 | (5,927) |
Other non-cash items | 1,106 | 387 |
Change in assets and liabilities: | ||
Receivables, net | (23,371) | (8,145) |
Inventories | (21,842) | (20,100) |
Other current assets | (6,572) | (2,860) |
Accounts payable and accrued liabilities | 11,406 | (12,447) |
Other assets & liabilities | 1,072 | 57 |
NET CASH USED IN OPERATING ACTIVITIES | (19,225) | (43,955) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property, plant and equipment, and intangible assets | (4,278) | (22,949) |
Proceeds from sale of fixed assets | 0 | 174 |
NET CASH USED IN INVESTING ACTIVITIES | (4,278) | (22,775) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payments on term loans | (8,071) | (3,128) |
Proceeds from revolver | 180,000 | 42,000 |
Other financing activities | (341) | (183) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 171,588 | 38,689 |
Effect of exchange rate changes on cash | (474) | 423 |
Net change in cash and cash equivalents | 147,611 | (27,618) |
Cash and cash equivalents, beginning of period | 34,800 | 35,793 |
Cash and cash equivalents, end of period | 182,411 | 8,175 |
SUPPLEMENTAL DISCLOSURES: | ||
Cash interest paid | 17,138 | 18,987 |
Income taxes paid (refunds received), net | $ (99) | $ 1,209 |
Description of the business
Description of the business | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the business | Description of the business Forterra, Inc. (“Forterra” or the ‘‘Company’’) is involved in the manufacturing, sale and distribution of building products in the United States (“U.S.”) and Eastern Canada. Forterra’s primary products are concrete drainage pipe, precast concrete structures, and water transmission pipe used in drinking and wastewater systems. These products are used in the infrastructure, residential and non-residential sectors of the construction industry. |
Summary of significant accounti
Summary of significant accounting policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies | Summary of significant accounting policies General The Company's condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and include the accounts and results of operations of the Company and its consolidated subsidiaries. All intercompany transactions have been eliminated in consolidation. The condensed consolidated balance sheets and the condensed consolidated statements of operations, comprehensive income (loss), cash flows and equity for the periods presented herein reflect all adjustments that are of a normal recurring nature and are necessary for a fair statement of the results of the periods shown. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The results of operations for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. Seasonal changes and other conditions can affect the sales volumes of the Company's products. The financial results for any interim period do not necessarily indicate the expected results for the year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2019 as provided in Forterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 27, 2020 (the “2019 10-K”). The Company has continued to follow the accounting policies set forth in those financial statements, except as supplemented and documented below. Certain prior year numbers were reclassified to conform with current year presentation. Such reclassification had no impact on the previously reported results of operations. Use of estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the reporting date, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. The more significant estimates made by management relate to fair value estimates for assets and liabilities acquired in business combinations; estimates for accrued liabilities for environmental cleanup, bodily injury and insurance claims; estimates for commitments and contingencies; and estimates for the realizability of deferred tax assets, the tax receivable agreement obligation, inventory reserves, allowance for doubtful accounts and impairment of goodwill and long-lived assets. Concentration of Credit Risk The Company had an individual customer within its Water Pipe & Products segment that accounted for approximately 18% and 14% of the Company's total net sales for the three months ended March 31, 2020 and 2019, respectively, and receivables at March 31, 2020 and December 31, 2019 representing 18% and 13% of the Company's total receivables, net, respectively. Credit Losses Trade accounts receivable. The allowance for doubtful accounts is based on the Company’s assessment of the collectibility of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The Company's exposure to credit losses may increase if one or more of its customers are adversely affected by changes in laws or other government recommendations or mandates, economic pressures or uncertainty associated with local or global economic recessions, disruption or other impacts associated with the coronavirus disease 2019 ("COVID-19") pandemic, or other customer-specific factors. Although the Company has historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade receivables as customers are impacted by the COVID-19 pandemic. Recent Accounting Guidance Adopted In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard replaces the incurred loss impairment methodology under current U.S. GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. The Company adopted this ASU on January 1, 2020 using a modified retrospective approach, which did not have a material impact on the Company's condensed consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in the ASU provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to reference rate reform. The guidance was effective upon issuance and generally can be applied through December 31, 2022. The effects of this standard on the Company's condensed consolidated financial statements are not expected to be material. Recent Accounting Guidance Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) . The new guidance simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. For public companies, the amendments in this ASU are effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Early adoption is permitted in interim or annual periods with any adjustments reflected as of the beginning of the annual period that includes that interim period. Additionally, entities that elect early adoption must adopt all the amendments in the same period. Amendments are to be applied prospectively, except for certain amendments that are to be applied either retrospectively or with a modified retrospective approach through a cumulative effect adjustment recorded to retained earnings. The effects of this standard on the Company's condensed consolidated financial statements are not expected to be material. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions On March 1, 2019, the Company acquired certain assets of Texas limited liability companies Houston Buckner Precast, LLC, Buckner Precast, LLC, Montgomery 18905 E. Industrial, LLC, and 1763 Old Denton Road, LLC (altogether "Buckner") for consideration of $11.8 million in cash, inclusive of a working capital adjustment. The acquired Buckner assets did not meet the definition of a business and, as such, the transaction was accounted for as an asset acquisition pursuant to the guidance in subsection 805-50 of ASC 805, Business Combinations. The assets operate as part of the Company’s Drainage Pipe & Products segment. |
Receivables, net
Receivables, net | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Receivables, net | Receivables, net Receivables consist of the following (in thousands) : March 31, December 31, 2020 2019 Trade receivables $ 198,358 $ 178,698 Amounts billed but not yet paid under retainage provisions 3,711 3,093 Other receivables 28,385 26,078 Total receivables 230,454 207,869 Less: Allowance for doubtful accounts (1,823 ) (2,068 ) Receivables, net $ 228,631 $ 205,801 |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following (in thousands) : March 31, December 31, 2020 2019 Finished goods $ 176,908 $ 161,440 Raw materials 81,774 76,237 Work in process 591 806 Total inventories $ 259,273 $ 238,483 |
Investment in equity method inv
Investment in equity method investee | 3 Months Ended |
Mar. 31, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in equity method investee | Investment in equity method investee The Company owns 50% of the Common Unit voting shares of Concrete Pipe & Precast LLC ("CP&P") and consequently, has recorded its investment in the Common Unit voting shares in accordance with ASC 323, Investments – Equity Method and Joint Ventures , under the equity method of accounting. The Company's investment in the joint venture was $51.2 million at March 31, 2020 , which is included within the Drainage Pipe & Products segment. At March 31, 2020 , the difference between the amount at which the Company's investment is carried and the amount of the Company's share of the underlying equity in net assets of CP&P was approximately $13.0 million . The basis difference is primarily attributed to the value of land and equity method goodwill associated with the investment. The following reflects the Company's distribution and earnings in the equity investment (in thousands) : Three months ended March 31, 2020 2019 Distribution received from CP&P $ (1,600 ) $ (1,500 ) Share of earnings in CP&P 2,816 1,585 Amortization of excess fair value of investment (18 ) (18 ) Selected financial data for CP&P on a 100% basis is as follows ( in thousands ): Three months ended March 31, 2020 2019 Net sales $ 34,758 $ 28,249 Gross profit 10,537 7,954 Income from operations 5,620 3,180 Net income 5,557 3,117 |
Property, plant and equipment,
Property, plant and equipment, net | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment, net | Property, plant and equipment, net Property, plant and equipment, net, consist of the following (in thousands) : March 31, December 31, 2020 2019 Machinery and equipment $ 408,063 $ 398,127 Land, buildings and improvements 240,894 240,403 Other equipment 8,666 8,660 Construction-in-progress 18,630 29,157 Total property, plant and equipment 676,253 676,347 Less: accumulated depreciation (212,088 ) (200,772 ) Property, plant and equipment, net $ 464,165 $ 475,575 Depreciation expense totaled $12.2 million for the three months ended March 31, 2020 , and $12.8 million for the three months ended March 31, 2019 , which is included in cost of goods sold and selling, general and administrative expenses in the condensed consolidated statements of operations. |
Goodwill and other intangible a
Goodwill and other intangible assets, net | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and other intangible assets, net | Goodwill and other intangible assets, net The Company has recorded goodwill in connection with its acquisition of businesses. The following table summarizes the changes in goodwill by operating segment for the three months ended March 31, 2020 ( in thousands ): Drainage Pipe & Products Water Pipe & Products Total Balance at December 31, 2019 $ 190,466 $ 318,360 $ 508,826 Foreign currency and other adjustments (1,145 ) — (1,145 ) Balance at March 31, 2020 $ 189,321 $ 318,360 $ 507,681 Intangible assets other than goodwill at March 31, 2020 and December 31, 2019 included the following ( in thousands ): Net carrying value as of March 31, 2020 Net carrying value as of December 31, 2019 Customer relationships $ 93,277 $ 100,869 Trade names 18,453 19,626 Patents 7,012 7,673 Non-compete agreements 7,186 8,070 Developed technology 5,887 5,980 Other 437 456 Total intangible assets $ 132,252 $ 142,674 Amortization expense totaled $10.3 million for the three months ended March 31, 2020 , and $11.6 million for the three months ended March 31, 2019 , which is included in selling, general and administrative expenses in the condensed consolidated statements of operations. All of the Company's intangible assets are amortizable. |
Fair value measurement
Fair value measurement | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value measurement | Fair value measurement The Company's financial instruments consist primarily of cash and cash equivalents, trade and other receivables, derivative instruments, accounts payable, long-term debt, operating and finance lease liabilities, accrued liabilities and the tax receivable agreement obligation. The carrying value of the Company's trade receivables, other receivables, trade payables, the asset-based revolver and accrued liabilities approximates fair value due to their short-term maturity or other terms related to these financial instruments. The Company may adjust the carrying amount of certain non-financial assets to fair value on a non-recurring basis when they are impaired. The estimated carrying amount and fair value of the Company’s financial instruments measured and recorded at fair value on a recurring basis are as follows for the dates indicated (in thousands) : Fair value measurements at March 31, 2020 using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Fair Value March 31, 2020 Liabilities: Derivative liability $ — $ 488 $ — $ 488 Fair value measurements at December 31, 2019 using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value December 31, 2019 Assets: Derivative asset $ — $ 258 $ — $ 258 Liabilities and assets classified as level 2 which are recorded at fair value are valued using observable market inputs. The fair values of derivative assets and liabilities are determined using quantitative models that utilize multiple market inputs including interest rates and exchange rates to generate continuous yield or pricing curves and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services. The fair values of derivative assets and liabilities include adjustments for market liquidity, counter-party credit quality, and other instrument-specific factors, where appropriate. In addition, the Company incorporates within its fair value measurements a valuation adjustment to reflect the credit risk associated with the net position. Positions are netted by counter-parties, and fair value for net long exposures is adjusted for counter-party credit risk while the fair value for net short exposures is adjusted for the Company’s own credit risk. The estimated carrying amount and fair value of the Company’s financial instruments and liabilities for which fair value is only disclosed is as follows (in thousands) : Fair value measurements at March 31, 2020 using Carrying Amount March 31, 2020 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value March 31, 2020 Liabilities: Term Loan $ 1,091,949 $ — $ 926,343 $ — $ 926,343 Tax receivable agreement payable 77,385 — — 48,505 48,505 Fair value measurements at December 31, 2019 using Carrying Amount December 31, 2019 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value December 31, 2019 Liabilities: Term Loan $ 1,098,303 $ — $ 1,102,295 $ — $ 1,102,295 Tax receivable agreement payable 77,385 — — 47,625 47,625 The fair value of debt is valued using a market approach based on indicative quoted prices for the Company's debt instruments traded in over-the-counter markets and, therefore, is classified as Level 2 within the fair value hierarchy. See Note 11, Debt and deferred financing costs, for a further discussion of Company debt. The determination of the fair value of the Company's tax receivable agreement payable was determined using a discounted cash flow methodology with level 3 inputs as defined by ASC 820, Fair Value Measurements and Disclosures . The determination of fair value required significant judgment, including estimates of the timing and amounts of various tax attributes. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. Actual results could differ from these estimates. See Note 14, Commitments and contingencies, for a further discussion of the Company's tax receivable agreement. |
Accrued liabilities
Accrued liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued liabilities | Accrued liabilities Accrued liabilities consist of the following (in thousands) : March 31, December 31, 2020 2019 Accrued payroll and employee benefits $ 24,496 $ 32,815 Short-term finance leases 16,395 16,542 Short-term operating leases 8,605 8,784 Accrued taxes 6,770 5,354 Warranty 5,412 5,536 Accrued rebates 5,724 9,895 Environmental obligation 731 718 Other miscellaneous accrued liabilities 9,251 9,195 Total accrued liabilities $ 77,384 $ 88,839 |
Debt and deferred financing cos
Debt and deferred financing costs | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt and deferred financing costs | Debt and deferred financing costs The Company’s debt consisted of the following (in thousands) : March 31, December 31, 2020 2019 Term Loan, net of debt issuance costs and original issuance discount of $23,281 and $25,055, respectively $ 1,091,949 $ 1,098,303 Revolver, net of debt issuance costs of $1,289 178,711 — Total debt $ 1,270,660 $ 1,098,303 Less: current portion debt (12,510 ) (12,510 ) Total long-term debt $ 1,258,150 $ 1,085,793 Forterra has a $300 million asset based revolving credit facility for working capital and general corporate purposes (“Revolver”) and a $1.1 billion senior term loan facility (“Term Loan”). The Term Loan provided for a $1.25 billion senior secured term loan. Subject to the conditions set forth in the term loan agreement, the Term Loan may be increased by (i) up to the greater of $285.0 million and 1.0 x consolidated EBITDA (defined below) of Forterra and its restricted subsidiaries for the four quarters most recently ended prior to such incurrence plus (ii) the aggregate amount of any voluntary prepayments, plus (iii) an additional amount, provided certain financial tests are met. The Term Loan matures on October 25, 2023 and is subject to quarterly amortization equal to 0.25% of the initial principal amount. Interest accrues on outstanding borrowings thereunder at a rate equal to LIBOR (with a floor of 1.0% ) or an alternate base rate, in each case plus a margin of 3.00% or 2.00% , respectively. The weighted average interest rates for the Term Loan were 4.7% and 5.5% for the three months ended March 31, 2020 and March 31, 2019 , respectively. During the three months ended March 31, 2020, the Company repurchased $5.0 million of the Term Loan before its maturity at a market value of $4.9 million . Consequently, the Company wrote off a proportionate share of debt issuance costs of $0.1 million and recognized a net loss of $0.1 million on the early extinguishment of debt which was included in the condensed consolidated statements of operations. Outstanding borrowings under the Term Loan are guaranteed by Forterra and each of its direct and indirect material wholly-owned domestic subsidiaries except certain excluded subsidiaries (the "Guarantors"). The Term Loan is secured by substantially all of the assets of Forterra, the borrower and the Guarantors; provided that the obligations under the Term Loan are not secured by any liens on more than 65% of the voting stock of the Canadian subsidiaries or assets of the Canadian subsidiaries. The Term Loan contains customary representations and warranties, and affirmative and negative covenants, that, among other things, restrict the ability of Forterra and its restricted subsidiaries to incur additional debt, incur or permit liens on assets, make investments and acquisitions, consolidate or merge with any other company, engage in asset sales and pay dividends and make distributions. The Term Loan does not contain any financial covenants. Obligations under the Term Loan may be accelerated upon certain customary events of default (subject to grace periods, as appropriate). The Revolver provides for an aggregate principal amount of up to $300.0 million , with up to $280.0 million to be made available to the U.S. borrowers and up to $20.0 million to be made available to the Canadian borrowers (the allocation may be modified periodically at the Company's request). Subject to the conditions set forth in the revolving credit agreement related to the Revolver (the "Revolving Credit Agreement"), the Revolver may be increased by up to the greater of (i) $100.0 million and (ii) such amount as would not cause the aggregate borrowing base to be exceeded by more than $50.0 million . Borrowings under the Revolver may not exceed a borrowing base equal to the sum of (i) 100% of eligible cash, (ii) 85% of eligible accounts receivable and (iii) the lesser of (a) 75% of eligible inventory and (b) 85% of the orderly liquidation value of eligible inventory, with the U.S. and Canadian borrowings being subject to separate borrowing base limitations. The advance rates for accounts receivable and inventory are subject to increase by 2.5% during certain periods. As of March 31, 2020 , the Revolver had $180.0 million outstanding borrowings, and the weighted average interest rate was 2.06% for borrowings during the period. As of December 31, 2019, there were no outstanding borrowings under the Revolver. The Revolver matures on October 25, 2021. The Revolver also provides for the issuance of letters of credit of up to an agreed sublimit. Interest accrues on outstanding borrowings at a rate equal to LIBOR or CDOR plus a margin ranging from 1.25% to 1.75% per annum, or at an alternate base rate, Canadian prime rate or Canadian base rate plus a margin ranging from 0.25% to 0.75% per annum, in each case, based upon the average excess availability under the Revolver for the most recently completed calendar quarter. The obligations of the borrowers under the Revolver are guaranteed by Forterra and its direct and indirect wholly-owned restricted subsidiaries other than certain excluded subsidiaries; provided that the obligations of the U.S. borrowers are not guaranteed by the Canadian subsidiaries. The Revolver is secured by substantially all of the assets of the borrowers; provided that the obligations of the U.S. borrowers are not secured by any liens on more than 65% of the voting stock of the Canadian subsidiaries or assets of the Canadian subsidiaries. In addition, Forterra pays a facility fee of between 20.0 and 32.5 basis points per annum based upon the utilization of the total Revolver. Availability under the Revolver, based on draws, outstanding letters of credit of $15.4 million , as well as allowable borrowing base as of March 31, 2020 , was $72.1 million . The Revolver and the Term Loan contain customary representations and warranties, and affirmative and negative covenants, including representations, warranties, and covenants that, among other things, restrict the ability of Forterra and its restricted subsidiaries to incur additional debt, incur or permit liens on assets, make investments and acquisitions, consolidate or merge with any other company, engage in asset sales and pay dividends and make distributions. The Revolver contains a financial covenant restricting Forterra from allowing its fixed charge coverage ratio to drop below 1.00 :1.00 during a compliance period, which is triggered when the availability under the Revolver falls below a threshold set forth in the Revolving Credit Agreement. Obligations under the Revolver and the Term Loan may be accelerated upon certain customary events of default (subject to grace periods, as appropriate). The fixed charge coverage ratio is the ratio of consolidated earnings before interest, depreciation, and amortization (“EBITDA’’) less cash payments for capital expenditures and income taxes to consolidated fixed charges (interest expense plus scheduled payments of principal on indebtedness). As of March 31, 2020 , the Company was in compliance with all applicable covenants under the Revolver and the Term Loan. As of March 31, 2020 , scheduled maturities of long-term debt were as follows (in thousands): Total Term Loan Revolver 2020 $ 9,383 $ 9,383 $ — 2021 192,510 12,510 180,000 2022 12,510 12,510 — 2023 1,080,827 1,080,827 — $ 1,295,230 $ 1,115,230 $ 180,000 |
Derivatives and hedging
Derivatives and hedging | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and hedging | Derivatives and hedging The Company uses derivatives to manage selected foreign exchange and interest rate exposures. The Company does not use derivative instruments for speculative trading purposes, and cash flows from derivative instruments are included in net cash provided by (used in) operating activities in the condensed consolidated statements of cash flows. On March 30 , 2020, Forterra entered into an interest rate swap transaction with a notional value of $400 million . Under the terms of the swap transaction, Forterra agreed to pay a fixed rate of interest of 1.08% and receive floating rate of interest indexed to one-month LIBOR, subject to a minimum of 1.00% , with monthly settlement terms with the swap counterparty. The swap has a 30 -month term and expires on September 30, 2022. The interest rate swap is not designated as a cash flow hedge, therefore all changes in the fair value of the instrument are captured as a component of interest expense in the statements of operations. Accordingly, cash flows from the monthly interest rate swap settlements are included in net cash provided by (used in) operating activities in the condensed consolidated statements of cash flows. On February 9, 2017, Forterra entered into interest rate swap transactions with a combined notional value of $525 million . Under the terms of the swap transactions, Forterra agreed to pay a fixed rate of interest of 1.52% and receive floating rate interest indexed to one-month LIBOR with monthly settlement terms with the swap counterparties. The swaps were not designated as cash flow hedges, had a three -year term, and expired on March 31, 2020. The Company elects to present all derivative assets and derivative liabilities on a net basis on its condensed consolidated balance sheets when a legally enforceable International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement exists. An ISDA Master Agreement is an agreement between two counterparties, which may have multiple derivative transactions with each other governed by such agreement, and such ISDA Master Agreement generally provides for the net settlement of all or a specified group of these derivative transactions, through a single payment, in a single currency, in the event of a default on, or affecting any, one derivative transaction or a termination event affecting all, or a specified group of, derivative transactions. At March 31, 2020 and December 31, 2019, the Company’s derivative instruments fall under an ISDA master netting agreement. The following table presents the fair values of derivative assets and liabilities in the condensed consolidated balance sheets (in thousands) : March 31, 2020 Derivative Assets Derivative Liabilities Notional Amount Fair Value Notional Amount Fair Value Interest rate swaps $ — $ — $ 400,000 $ 488 Total derivatives, gross — 488 Less: Legally enforceable master netting agreements — — Total derivatives, net $ — $ 488 December 31, 2019 Derivative Assets Derivative Liabilities Notional Amount Fair Value Notional Amount Fair Value Interest rate swaps $ 525,000 $ 258 $ — $ — Total derivatives, gross 258 — Less: Legally enforceable master netting agreements — — Total derivatives, net $ 258 $ — The following table presents the effect of derivative instruments on the condensed consolidated statements of operations (in thousands) : Three months ended March 31, 2020 2019 Derivatives not designated as hedges Interest rate swaps Loss on derivatives not designated as hedges included in interest expense (746 ) (2,092 ) |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company leases land and buildings, office spaces, vehicles, machinery and equipment under various lease agreements. A large portion of the Company’s leases were the result of the 2016 sale and leaseback of land and buildings related to certain production facilities. These leases have an initial term of 25 years , followed by one optional renewal term of approximately ten years that may be exercised at the Company’s discretion. These leases, with the exception of certain land leases, are classified as finance leases. The Company’s operating leases are mainly comprised of land and buildings, office spaces, vehicles, machinery and equipment leases, and have remaining terms of one to 25 years , some of which include options to extend the leases for up to 10 years . We determine if an arrangement is a lease at inception. Leases with an initial term of less than 12 months are not recorded on the balance sheet. Operating leases are included in operating lease right-of-use, or ROU, assets, accrued liabilities, and long-term operating lease liabilities in the condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, accrued liabilities, and long-term finance lease liabilities in the condensed consolidated balance sheets. |
Leases | Leases The Company leases land and buildings, office spaces, vehicles, machinery and equipment under various lease agreements. A large portion of the Company’s leases were the result of the 2016 sale and leaseback of land and buildings related to certain production facilities. These leases have an initial term of 25 years , followed by one optional renewal term of approximately ten years that may be exercised at the Company’s discretion. These leases, with the exception of certain land leases, are classified as finance leases. The Company’s operating leases are mainly comprised of land and buildings, office spaces, vehicles, machinery and equipment leases, and have remaining terms of one to 25 years , some of which include options to extend the leases for up to 10 years . We determine if an arrangement is a lease at inception. Leases with an initial term of less than 12 months are not recorded on the balance sheet. Operating leases are included in operating lease right-of-use, or ROU, assets, accrued liabilities, and long-term operating lease liabilities in the condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, accrued liabilities, and long-term finance lease liabilities in the condensed consolidated balance sheets. |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies Legal matters The Company is involved in legal proceedings and litigation in the ordinary course of business. In the opinion of management, the outcome of such matters will not have a material adverse effect on the Company’s condensed consolidated financial position, results of operations, or liquidity. Other than routine litigation incidental to the Company's business and those matters described below, there are no material legal proceedings to which the Company is a party or to which any of the Company’s properties are subject. Earnout Dispute On March 13, 2015, through an indirect wholly owned subsidiary, Lone Star Fund IX (U.S.), L.P. (which is referred to, along with its affiliates and associates, but excluding Forterra and other companies that it owns as a result of its investment activity, as "Lone Star") acquired the building products business of HeidelbergCement AG, ("HC"), in the United States and Eastern Canada, (the "Acquisition"). The Acquisition purchase agreement included an earnout, which provided for the payment of contingent consideration of up to $100.0 million , if and to the extent the 2015 financial results of the businesses acquired by Lone Star in the Acquisition, including the Company and HC's former building products business in the United Kingdom, exceeded a specified Adjusted EBITDA target for fiscal year 2015, as calculated pursuant to the terms of the purchase agreement. If such Adjusted EBITDA calculation exceeded the specified target, LSF9 Concrete Holdings Ltd. ("LSF9") and, as a result of the internal reorganization transaction effected prior to the Company's initial public offering ("IPO"), the Company would be required to pay the U.S. affiliate of HC an amount equal to a multiple of such excess Adjusted EBITDA, with any payment capped at $100.0 million . In April 2016, the Company provided an earnout statement to affiliates of HC demonstrating that no payment was required. On June 13, 2016, HC provided notification that it disputed, among other things, the Company’s calculation of Adjusted EBITDA under the purchase agreement and asserting that a payment should be made in the amount of $100.0 million . The Company does not believe HC’s position has merit and is vigorously opposing HC's assertions. On October 5, 2016, affiliates of HC filed a lawsuit in the Delaware Court of Chancery seeking specific performance and claiming access to the Company's books, records, and personnel; seeking a declaratory judgment concerning the scope of the neutral accounting expert’s authority; and in the alternative, claiming a breach of contract and seeking the $100.0 million and other damages (the "Delaware Action"). On December 8, 2017, the court granted the defendants' Motion to Dismiss the First Amended Complaint in the Delaware Action, finding that the earnout dispute should be heard before a neutral accounting arbitrator as set forth in the purchase agreement and that any claims that were required to be brought as indemnification claims under the purchase agreement were time-barred by the contractual limitations period. Following the dismissal of the Delaware Action, the Company and HC jointly engaged a neutral accounting expert to act as an arbitrator in the dispute as required by the purchase agreement. After briefing certain preliminary matters for the arbitrator and the production of additional documents, the parties began briefing the issues on the merits for the neutral accounting arbitrator, which was completed in April 2020. The arbitrator will have an opportunity to ask written questions of both parties, and a final hearing on the dispute is currently scheduled to be held on June 23 and 24, 2020, subject to any potential delays caused by the COVID-19 pandemic, with a written decision from the neutral accounting arbitrator expected within 60 days thereafter. As of March 31, 2020 , no liability for this contingency has been accrued as payment of any earnout is not considered probable. However, the outcome of this matter is uncertain, and no assurance can be given to the ultimate outcome of the resulting proceedings. If the Company is unsuccessful in resolving the dispute, it could recognize a material charge to its earnings. Securities Action and Derivative Actions Beginning on August 14, 2017, four plaintiffs filed putative class action complaints in the United States District Court for the Eastern District of New York against various defendants. On July 27, 2018, an order was entered consolidating the lawsuits into a single action (the "Securities Action") and transferring the venue of the case from the Eastern District of New York to the Northern District of Texas. Pursuant to an agreed scheduling order, plaintiffs in the Securities Action filed their Consolidated Amended Complaint on November 30, 2018. The Securities Action is brought by two plaintiffs individually and on behalf of all persons that purchased or otherwise acquired the Company's common stock issued pursuant to and/or traceable to the IPO and is brought against the Company, certain of its current and former officers and directors, Lone Star and certain of its affiliates, and certain banks that acted as underwriters of the IPO (collectively, the “Securities Defendants”). The Securities Action generally alleges that the Company's registration statement on Form S-1 filed in connection with the IPO (the "Registration Statement") contained false or misleading statements and/or omissions of material facts. Specifically, plaintiffs allege the Registration Statement (1) made false and/or misleading statements about the Company's ability to generate organic growth through cross-selling initiatives amongst the Company's various businesses while failing to disclose that the Company had not adequately integrated acquisitions, had not begun rolling out its cross-selling initiative, and that its businesses were submitting competing bids against one another, and (2) made false or misleading statements regarding the existence of certain accounting practices and alleged material weaknesses in the Company's internal controls over financial reporting, including the existence of and accounting for bill and hold transactions, the lack of sufficient accounting personnel, the lack of effective internal controls to ensure costs were properly and accurately accrued, resulting in misstated costs and profits in the Company's 2016 financial statements, and the making of inventory accounting entries without adequate substantiation or documentation. The Securities Action asserts claims under Section 11 and Section 15 of the Securities Act of 1933, as amended, (the "Securities Act") and seeks (1) class certification under the Federal Rules of Civil Procedure, (2) damages suffered by plaintiffs and other class members, (3) prejudgment and post-judgment interest, (4) reasonable counsel fees and expert fees, and other costs and expenses reasonably incurred, and (5) other relief the court deems appropriate. On February 15, 2019, the Securities Defendants filed a Motion to Dismiss all claims in the case based on plaintiffs' failure to state a claim. Briefing on the motion to dismiss was completed on May 1, 2019, and the court has not yet ruled on the motion. A mediation of the Securities Action occurred in August 2019. On November 4, 2019, the parties to the Securities Action entered into a settlement agreement that is intended to fully and finally resolve all claims in the Securities Action. On January 4, 2020, the court issued an order granting preliminary approval for the settlement and providing for notice. Approval of the settlement in the Securities Action is set for final hearing on July 21, 2020, but approval cannot be guaranteed. The terms of the settlement are expected to be paid by the Company's insurance. On July 31, 2018, a putative shareholder derivative complaint captioned Maloney v. Bradley, et al., was filed in the United States District Court for the Northern District of Texas, alleging that certain of the Company’s current and former directors and officers had breached their fiduciary duties, committed constructive fraud, wasted corporate assets, and that certain of them had been unjustly enriched (the "Maloney Texas Action"). On July 30, 2019, the court in the Maloney Texas Action granted the defendants' motion to dismiss on the grounds that the case should have been brought in Delaware according to the Company's Amended and Restated Certificate of Incorporation. On September 23, 2019, the same plaintiff filed a putative shareholder derivative complaint captioned Maloney v. Bradley, et al. in the United States District Court for the District of Delaware, naming as defendants certain of the Company’s current and former directors and officers (the "Maloney Delaware Action"). The complaint alleges the defendants violated Sections 14A and 20(A) of the Securities and Exchange Act of 1934, as amended, breached their fiduciary duties, and wasted corporate assets, and also asserts unjust enrichment claims against certain defendants. The complaint seeks, on behalf of the Company, unspecified damages, an order directing the return of certain payments to the defendants and imposing a constructive trust thereon, certain injunctive relief, reasonable costs and attorneys' fees, and punitive damages. On January 15, 2019, a putative shareholder derivative complaint captioned Lee v. Bradley, et al., was filed in the United States District Court for the District of Delaware, naming as defendants certain of the Company’s current and former directors and officers (the "Lee Action"). The complaint alleges the defendants violated Section 14A of the Securities and Exchange Act of1934, as amended, and related rules by failing to make certain disclosures in the Company's proxy solicitation in advance of the 2017 Annual Meeting of Stockholders, and that defendants breached their fiduciary duties, wasted corporate assets, and committed constructive fraud. The complaint also asserts unjust enrichment claims against certain defendants. The complaint seeks, on behalf of the Company, unspecified damages, an order directing the return of certain payments to the defendants, certain injunctive relief, and reasonable costs and attorneys' fees. On April 18, 2019, the court entered an agreed stipulation staying the Lee Action until the court in the Securities Action rules on the motion to dismiss in that case. On December 11, 2019, the court in the Lee Action entered a Stipulation and Order consolidating the Lee Action and the Maloney Delaware Action into a single case (the "Consolidated Lee Action"), and providing a schedule for filing of an amended complaint and motions to dismiss, which has been further extended by agreement of the parties given the impacts of the COVID-19 pandemic. The Company and other defendants are vigorously defending the Consolidated Lee Action. Given the stage of the proceedings, the Company cannot reasonably estimate at this time the possible loss or range of loss, if any, that may arise from the Consolidated Lee Action. Long-term Incentive Plan Following the Acquisition, Lone Star implemented a cash-based long term incentive plan (the “LTIP”) which entitles the participants in the LTIP to a potential cash payout upon a monetization event as defined by the LTIP. Potential monetization events include the sale, transfer or otherwise disposition of all or a portion of the Company or successor entities of LSF9, an initial public offering where Lone Star reduces its ownership interest in the Company or successor entities of LSF9, or through certain cash distribution as defined in the LTIP. Before the payout of any cash the LTIP requires Lone Star realize in cash the full return of their investment plus a specified internal rate of return, which is calculated by comparing the return to Lone Star over the timeline of its investment in the Company and certain successor entities of LSF9. As of March 31, 2020 , no such monetization events that meet the required return for an LTIP payment have occurred, and therefore no amounts were accrued in the accompanying condensed consolidated balance sheets. While no payments have occurred thus far, payments under the LTIP could be significant depending upon future monetization events. The timing and amount of such payments are unknown and are dependent upon future monetization events and market conditions that are outside of the control of the Company or the participants of the plan. Subsequent to the IPO, Forterra became directly liable for any payment obligations triggered under the LTIP, but LSF9 or one of its affiliates will remain obligated to make payments to the Company in amounts equal to any payment obligations triggered under the LTIP as and when such payment obligations are triggered. Leases The Company leases certain property and equipment for various periods under non-cancelable operating and finance leases. Tax receivable agreement The Company has a tax receivable agreement (the "TRA") with Lone Star that provides for, among other things, the payment by the Company to Lone Star of 85% of the amount of certain covered tax benefits, which may reduce the actual liability for certain taxes that the Company might otherwise be required to pay. The tax benefits subject to the TRA include: (i) all depreciation and amortization deductions, and any offset to taxable income and gain or increase to taxable loss, resulting from the tax basis that the Company had in its assets as of the time of the consummation of the IPO, (ii) the utilization of the Company's and its subsidiaries’ net operating losses and tax credits, if any, attributable to periods prior to the IPO, (iii) deductions in respect of payments made, funded or reimbursed by an initial party to the tax receivable agreement (other than the Company or one of its subsidiaries) or an affiliate thereof to participants under the LTIP, (iv) deductions in respect of transaction expenses attributable to the acquisition of USP Holdings, Inc. and (v) certain other tax benefits attributable to payments made under the tax receivable agreement. For purposes of the TRA, the aggregate reduction in income tax payable by the Company will be computed by comparing the Company's actual income tax liability with its hypothetical liability had it not been able to utilize the related tax benefits. The agreement will remain in effect for the period of time in which any such related tax benefits remain. The Company accounts for potential payments under the TRA as a contingent liability, with amounts accrued when considered probable and reasonably estimable. The liability recorded by the Company for the TRA at March 31, 2020 and December 31, 2019 was $77.4 million and $77.4 million , respectively. The timing and amount of future tax benefits associated with the TRA are subject to change, and additional payments may be required which could be materially different from the current accrued liability. The Company anticipates that it will have sufficient taxable income in future periods to realize the full value of the obligation recorded. Future tax receivable agreement payments related to the tax basis of assets at the time of the IPO will be recorded as a reduction to the liability and will be recorded as a financing activity in the consolidated statement of cash flows. During the three months ended March 31, 2020 , no payments were made on the TRA to Lone Star. |
Earnings per share
Earnings per share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per share | Earnings per share Basic earnings per share ( “ EPS ” ) is calculated by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Potentially dilutive securities include employee stock options and shares of restricted stock. Diluted EPS reflects the assumed exercise, vesting or conversion of all dilutive securities. The calculations of the basic and diluted EPS for the three months ended March 31, 2020 and 2019 are presented below (in thousands, except per share amounts) : For the three months ended March 31, 2020 2019 Net loss $ (14,066 ) $ (25,039 ) Less: Earnings allocated to unvested restricted stock awards — — Earnings (loss) allocated to common shareholders $ (14,066 ) $ (25,039 ) Common stock: Weighted average basic shares outstanding 64,804 64,004 Effect of dilutive securities — — Weighted average diluted shares outstanding 64,804 64,004 Basic earnings (loss) per share: Net loss $ (0.22 ) $ (0.39 ) Diluted earnings (loss) per share: Net loss $ (0.22 ) $ (0.39 ) As detailed further below, potential dilutive shares of common stock were anti-dilutive as a result of the Company's net loss for the three months ended March 31, 2020 and March 31, 2019. As a result, basic weighted average shares were used in the calculations of basic earnings per share and diluted earnings per share for those periods. The number of stock options and restricted shares that were excluded from the computation of diluted earnings per share because their inclusion would result in an anti-dilutive effect on per share amounts for the three months ended March 31, 2020 and March 31, 2019 were 233,736 and 3,322,403 , respectively. |
Income taxes
Income taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The Company recorded income tax expense of $0.1 million and income tax benefit of $7.3 million for the three months ended March 31, 2020 and March 31, 2019 , respectively. The income tax expense for the three months ended March 31, 2020 differs from the expense computed at the federal statutory rate primarily due to the unfavorable federal and state valuation allowance. The income tax benefit for the three months ended March 31, 2019 differs from the benefit computed at the federal statutory rate primarily due to the state benefit on the current period loss. The Company evaluates the recoverability of its deferred tax assets quarterly to determine if valuation allowances are required or should be adjusted. The Company assesses whether valuation allowances should be established against deferred tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than not” criterion. The analysis used in determining the valuation allowance involves considerable judgment and assumptions. The Company's history of pretax losses limits its ability to rely on projections of future pretax income, therefore, realization of deferred tax assets is based primarily on reversal of taxable temporary differences. After consideration of all evidence, including the analysis of the reversal pattern of the taxable and deductible temporary differences in the future, the Company increased the federal and state valuation allowance by $3.5 million for the three months ended March 31, 2020. The Company's quarterly provision for income taxes has historically been calculated using the annual effective rate method, which applies an estimated annual effective tax rate to pre-tax income or loss. However, when the result of the expected annual effective tax rate is not deemed reliable and distorts the income tax provision for an interim period, the Company calculates the income tax provision or benefit using the actual year-to-date effective tax rate (the "discrete method"), which results in an income tax provision or benefit based solely on the year-to-date pre-tax income or loss as adjusted for permanent differences on a pro rata basis. The Company has recorded its interim income tax provision using the discrete method, as allowed under ASC 740-270, Accounting for Income Taxes - Interim Reporting for the three months ended March 31, 2020. On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), that, among other things, increased the net interest expense deduction limit from 30% to 50% of adjusted taxable income for tax years beginning January 1, 2019 and 2020, and changed the depreciable life of the qualified improvement property from 39 years to 15 years, thereby making it eligible for 100% bonus depreciation, which the Company intends to claim. The Company also plans to take advantage of deferral of the employer portion of the social security taxes that would otherwise be due in 2020, but will be delayed with 50% due by December 31, 2021 and the remaining 50% by December 31, 2022. |
Segment reporting
Segment reporting | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment reporting | Segment reporting Segment information is presented in accordance with ASC 280, Segment Reporting , which establishes standards for reporting information about operating segments. It also establishes standards for related disclosures about products and geographic areas. Operating segments are defined as components of an enterprise that engage in business activities that earn revenues, incur expenses and prepare separate financial information that is evaluated regularly by the Company’s chief operating decision maker ( “ CODM ” ) in order to allocate resources and assess performance. The Company's Chief Executive Officer is its CODM. The Corporate and Other segment includes expenses related to certain executive salaries, interest costs related to the Company's credit agreements, acquisition-related costs, and other corporate costs that are not directly attributable to the Company's operating segments. The Company's segments follow the same accounting policies as the Company. Net sales from the major products sold to external customers include drainage pipe and precast products and concrete and steel water transmission pipe. The Company’s three geographic areas consist of the United States, Canada, and Mexico for which it reports net sales, fixed assets and total assets. For purposes of evaluating segment profit, the CODM reviews EBITDA as a basis for making the decisions to allocate resources and assess performance. The following tables set forth the disaggregation of revenue earned from contracts with customers based on the Company's reportable segments as well as other financial information attributable to the Company's reportable segments for the three months ended March 31, 2020 and 2019 (in thousands) : For the three months ended March 31, 2020 2019 Net sales: Drainage Pipe & Products $ 170,234 $ 163,734 Water Pipe & Products 160,642 128,124 Corporate and Other — — Total $ 330,876 $ 291,858 Depreciation and amortization: Drainage Pipe & Products $ 8,245 $ 9,202 Water Pipe & Products 13,879 14,875 Corporate and Other 377 315 Total $ 22,501 $ 24,392 Segment EBITDA and reconciliation to income (loss) before income taxes: Drainage Pipe & Products $ 26,052 $ 25,066 Water Pipe & Products 22,873 8,741 Corporate and Other (19,667 ) (17,086 ) Less: Interest expense (20,745 ) (24,665 ) Depreciation and amortization (22,501 ) (24,392 ) Income (loss) before income taxes $ (13,988 ) $ (32,336 ) Capital expenditures: Drainage Pipe & Products $ 3,030 $ 7,929 Water Pipe & Products 1,181 2,277 Corporate and Other 139 1,768 Total $ 4,350 $ 11,974 March 31, December 31, 2020 2019 Total assets: Drainage Pipe & Products $ 825,998 $ 819,373 Water Pipe & Products 880,077 862,542 Corporate and Other 206,545 58,143 Total $ 1,912,620 $ 1,740,058 The Company has an investment in an equity method investee included in the Drainage Pipe & Products segment for which earnings from equity method investee were $2.8 million and $1.6 million for the three months ended March 31, 2020 and March 31, 2019 , respectively, and with the following balances (in thousands) : March 31, December 31, 2020 2019 Investment in equity method investee $ 51,232 $ 50,034 Disaggregated revenue by geographic location is provided in the tables below. The Company has operations in the United States, Canada and Mexico. The economic characteristics of the Company's customers do not significantly vary across geographic locations or product lines. The Company has both revenues and long-lived assets in each country; and those assets and revenues are recorded within geographic location as follows (in thousands) : Property, plant, and equipment, net: March 31, December 31, 2020 2019 United States $ 415,142 $ 422,486 Canada 39,883 43,754 Mexico 9,140 9,335 $ 464,165 $ 475,575 Net sales: For the three months ended March 31, 2020 2019 United States $ 315,380 $ 276,737 Canada 13,486 13,100 Mexico 2,010 2,021 $ 330,876 $ 291,858 |
Related party transactions
Related party transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related party transactions | Related party transactions Tax receivable agreement The Company has a TRA with Lone Star that provides for, among other things, the payment by the Company to Lone Star of 85% of the amount of certain covered tax benefits, which may reduce the actual liability for certain taxes that the Company might otherwise be required to pay. See Note 14, Commitments and contingencies, for additional information on the tax receivable agreement. CP&P The Company sold certain goods and services to its joint venture, CP&P, including spare parts for repairs, and property rentals. For the three months ended March 31, 2020 , Forterra sold $0.5 million of product to CP&P and purchased goods and services from CP&P for an amount of $0.1 million . For the three months ended March 31, 2019, Forterra sold $5 thousand of product to CP&P and purchased $126 thousand of goods and services from CP&P. |
Subsequent event
Subsequent event | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent event | Subsequent Event In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy and financial markets. In view of the rapidly changing business environment, unprecedented market volatility and heightened degree of uncertainty resulting from the COVID-19 pandemic and its impacts, the Company is currently unable to fully determine the pandemic's future impact on its business. However, the Company is monitoring the progression of the pandemic and its potential effect on our financial position, results of operations, and cash flows. |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The Company's condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and include the accounts and results of operations of the Company and its consolidated subsidiaries. |
Consolidation | All intercompany transactions have been eliminated in consolidation. |
Reclassifications | Certain prior year numbers were reclassified to conform with current year presentation. Such reclassification had no impact on the previously reported results of operations. |
Use of Estimates | Use of estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the reporting date, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. The more significant estimates made by management relate to fair value estimates for assets and liabilities acquired in business combinations; estimates for accrued liabilities for environmental cleanup, bodily injury and insurance claims; estimates for commitments and contingencies; and estimates for the realizability of deferred tax assets, the tax receivable agreement obligation, inventory reserves, allowance for doubtful accounts and impairment of goodwill and long-lived assets. |
Credit Losses | Credit Losses Trade accounts receivable. The allowance for doubtful accounts is based on the Company’s assessment of the collectibility of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The Company's exposure to credit losses may increase if one or more of its customers are adversely affected by changes in laws or other government recommendations or mandates, economic pressures or uncertainty associated with local or global economic recessions, disruption or other impacts associated with the coronavirus disease 2019 ("COVID-19") pandemic, or other customer-specific factors. Although the Company has historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade receivables as customers are impacted by the COVID-19 pandemic. |
Recent Accounting Guidance Adopted and Not Yet Adopted | Recent Accounting Guidance Adopted In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard replaces the incurred loss impairment methodology under current U.S. GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. The Company adopted this ASU on January 1, 2020 using a modified retrospective approach, which did not have a material impact on the Company's condensed consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in the ASU provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to reference rate reform. The guidance was effective upon issuance and generally can be applied through December 31, 2022. The effects of this standard on the Company's condensed consolidated financial statements are not expected to be material. Recent Accounting Guidance Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) . The new guidance simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. For public companies, the amendments in this ASU are effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Early adoption is permitted in interim or annual periods with any adjustments reflected as of the beginning of the annual period that includes that interim period. Additionally, entities that elect early adoption must adopt all the amendments in the same period. Amendments are to be applied prospectively, except for certain amendments that are to be applied either retrospectively or with a modified retrospective approach through a cumulative effect adjustment recorded to retained earnings. The effects of this standard on the Company's condensed consolidated financial statements are not expected to be material. |
Receivables, net (Tables)
Receivables, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Schedule of receivables, net and allowance for doubtful accounts | Receivables consist of the following (in thousands) : March 31, December 31, 2020 2019 Trade receivables $ 198,358 $ 178,698 Amounts billed but not yet paid under retainage provisions 3,711 3,093 Other receivables 28,385 26,078 Total receivables 230,454 207,869 Less: Allowance for doubtful accounts (1,823 ) (2,068 ) Receivables, net $ 228,631 $ 205,801 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consist of the following (in thousands) : March 31, December 31, 2020 2019 Finished goods $ 176,908 $ 161,440 Raw materials 81,774 76,237 Work in process 591 806 Total inventories $ 259,273 $ 238,483 |
Investment in equity method i_2
Investment in equity method investee (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Company's distribution and earnings and selected financial data from equity investment | The following reflects the Company's distribution and earnings in the equity investment (in thousands) : Three months ended March 31, 2020 2019 Distribution received from CP&P $ (1,600 ) $ (1,500 ) Share of earnings in CP&P 2,816 1,585 Amortization of excess fair value of investment (18 ) (18 ) Selected financial data for CP&P on a 100% basis is as follows ( in thousands ): Three months ended March 31, 2020 2019 Net sales $ 34,758 $ 28,249 Gross profit 10,537 7,954 Income from operations 5,620 3,180 Net income 5,557 3,117 |
Property, plant and equipment_2
Property, plant and equipment, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment, net | Property, plant and equipment, net, consist of the following (in thousands) : March 31, December 31, 2020 2019 Machinery and equipment $ 408,063 $ 398,127 Land, buildings and improvements 240,894 240,403 Other equipment 8,666 8,660 Construction-in-progress 18,630 29,157 Total property, plant and equipment 676,253 676,347 Less: accumulated depreciation (212,088 ) (200,772 ) Property, plant and equipment, net $ 464,165 $ 475,575 |
Goodwill and other intangible_2
Goodwill and other intangible assets, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill by operating segment | The following table summarizes the changes in goodwill by operating segment for the three months ended March 31, 2020 ( in thousands ): Drainage Pipe & Products Water Pipe & Products Total Balance at December 31, 2019 $ 190,466 $ 318,360 $ 508,826 Foreign currency and other adjustments (1,145 ) — (1,145 ) Balance at March 31, 2020 $ 189,321 $ 318,360 $ 507,681 |
Schedule of intangible assets | Intangible assets other than goodwill at March 31, 2020 and December 31, 2019 included the following ( in thousands ): Net carrying value as of March 31, 2020 Net carrying value as of December 31, 2019 Customer relationships $ 93,277 $ 100,869 Trade names 18,453 19,626 Patents 7,012 7,673 Non-compete agreements 7,186 8,070 Developed technology 5,887 5,980 Other 437 456 Total intangible assets $ 132,252 $ 142,674 |
Fair value measurement (Tables)
Fair value measurement (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of estimated carrying amount and fair value of financial instruments measured and recorded at fair value on recurring basis | The estimated carrying amount and fair value of the Company’s financial instruments measured and recorded at fair value on a recurring basis are as follows for the dates indicated (in thousands) : Fair value measurements at March 31, 2020 using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Fair Value March 31, 2020 Liabilities: Derivative liability $ — $ 488 $ — $ 488 Fair value measurements at December 31, 2019 using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value December 31, 2019 Assets: Derivative asset $ — $ 258 $ — $ 258 |
Schedule of carrying and fair value amounts for financial instruments | The estimated carrying amount and fair value of the Company’s financial instruments and liabilities for which fair value is only disclosed is as follows (in thousands) : Fair value measurements at March 31, 2020 using Carrying Amount March 31, 2020 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value March 31, 2020 Liabilities: Term Loan $ 1,091,949 $ — $ 926,343 $ — $ 926,343 Tax receivable agreement payable 77,385 — — 48,505 48,505 Fair value measurements at December 31, 2019 using Carrying Amount December 31, 2019 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value December 31, 2019 Liabilities: Term Loan $ 1,098,303 $ — $ 1,102,295 $ — $ 1,102,295 Tax receivable agreement payable 77,385 — — 47,625 47,625 |
Accrued liabilities (Tables)
Accrued liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands) : March 31, December 31, 2020 2019 Accrued payroll and employee benefits $ 24,496 $ 32,815 Short-term finance leases 16,395 16,542 Short-term operating leases 8,605 8,784 Accrued taxes 6,770 5,354 Warranty 5,412 5,536 Accrued rebates 5,724 9,895 Environmental obligation 731 718 Other miscellaneous accrued liabilities 9,251 9,195 Total accrued liabilities $ 77,384 $ 88,839 |
Debt and deferred financing c_2
Debt and deferred financing costs (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The Company’s debt consisted of the following (in thousands) : March 31, December 31, 2020 2019 Term Loan, net of debt issuance costs and original issuance discount of $23,281 and $25,055, respectively $ 1,091,949 $ 1,098,303 Revolver, net of debt issuance costs of $1,289 178,711 — Total debt $ 1,270,660 $ 1,098,303 Less: current portion debt (12,510 ) (12,510 ) Total long-term debt $ 1,258,150 $ 1,085,793 |
Schedule of maturities of long-term debt | As of March 31, 2020 , scheduled maturities of long-term debt were as follows (in thousands): Total Term Loan Revolver 2020 $ 9,383 $ 9,383 $ — 2021 192,510 12,510 180,000 2022 12,510 12,510 — 2023 1,080,827 1,080,827 — $ 1,295,230 $ 1,115,230 $ 180,000 |
Derivatives and hedging (Tables
Derivatives and hedging (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair values of derivative assets and liabilities in condensed consolidated balance sheets | The following table presents the fair values of derivative assets and liabilities in the condensed consolidated balance sheets (in thousands) : March 31, 2020 Derivative Assets Derivative Liabilities Notional Amount Fair Value Notional Amount Fair Value Interest rate swaps $ — $ — $ 400,000 $ 488 Total derivatives, gross — 488 Less: Legally enforceable master netting agreements — — Total derivatives, net $ — $ 488 December 31, 2019 Derivative Assets Derivative Liabilities Notional Amount Fair Value Notional Amount Fair Value Interest rate swaps $ 525,000 $ 258 $ — $ — Total derivatives, gross 258 — Less: Legally enforceable master netting agreements — — Total derivatives, net $ 258 $ — |
Schedule of effect of derivative instruments on the condensed consolidated statements of operations | The following table presents the effect of derivative instruments on the condensed consolidated statements of operations (in thousands) : Three months ended March 31, 2020 2019 Derivatives not designated as hedges Interest rate swaps Loss on derivatives not designated as hedges included in interest expense (746 ) (2,092 ) |
Earnings per share (Tables)
Earnings per share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of calculations of basic and diluted earnings per share | The calculations of the basic and diluted EPS for the three months ended March 31, 2020 and 2019 are presented below (in thousands, except per share amounts) : For the three months ended March 31, 2020 2019 Net loss $ (14,066 ) $ (25,039 ) Less: Earnings allocated to unvested restricted stock awards — — Earnings (loss) allocated to common shareholders $ (14,066 ) $ (25,039 ) Common stock: Weighted average basic shares outstanding 64,804 64,004 Effect of dilutive securities — — Weighted average diluted shares outstanding 64,804 64,004 Basic earnings (loss) per share: Net loss $ (0.22 ) $ (0.39 ) Diluted earnings (loss) per share: Net loss $ (0.22 ) $ (0.39 ) |
Segment reporting (Tables)
Segment reporting (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of disaggregation of revenue earned from contracts with customers based on reportable segments as well as other financial information attributable to reportable segments | The following tables set forth the disaggregation of revenue earned from contracts with customers based on the Company's reportable segments as well as other financial information attributable to the Company's reportable segments for the three months ended March 31, 2020 and 2019 (in thousands) : For the three months ended March 31, 2020 2019 Net sales: Drainage Pipe & Products $ 170,234 $ 163,734 Water Pipe & Products 160,642 128,124 Corporate and Other — — Total $ 330,876 $ 291,858 Depreciation and amortization: Drainage Pipe & Products $ 8,245 $ 9,202 Water Pipe & Products 13,879 14,875 Corporate and Other 377 315 Total $ 22,501 $ 24,392 Segment EBITDA and reconciliation to income (loss) before income taxes: Drainage Pipe & Products $ 26,052 $ 25,066 Water Pipe & Products 22,873 8,741 Corporate and Other (19,667 ) (17,086 ) Less: Interest expense (20,745 ) (24,665 ) Depreciation and amortization (22,501 ) (24,392 ) Income (loss) before income taxes $ (13,988 ) $ (32,336 ) Capital expenditures: Drainage Pipe & Products $ 3,030 $ 7,929 Water Pipe & Products 1,181 2,277 Corporate and Other 139 1,768 Total $ 4,350 $ 11,974 March 31, December 31, 2020 2019 Total assets: Drainage Pipe & Products $ 825,998 $ 819,373 Water Pipe & Products 880,077 862,542 Corporate and Other 206,545 58,143 Total $ 1,912,620 $ 1,740,058 The Company has an investment in an equity method investee included in the Drainage Pipe & Products segment for which earnings from equity method investee were $2.8 million and $1.6 million for the three months ended March 31, 2020 and March 31, 2019 , respectively, and with the following balances (in thousands) : March 31, December 31, 2020 2019 Investment in equity method investee $ 51,232 $ 50,034 |
Schedule of long-lived assets by geographic areas | Disaggregated revenue by geographic location is provided in the tables below. The Company has operations in the United States, Canada and Mexico. The economic characteristics of the Company's customers do not significantly vary across geographic locations or product lines. The Company has both revenues and long-lived assets in each country; and those assets and revenues are recorded within geographic location as follows (in thousands) : Property, plant, and equipment, net: March 31, December 31, 2020 2019 United States $ 415,142 $ 422,486 Canada 39,883 43,754 Mexico 9,140 9,335 $ 464,165 $ 475,575 |
Schedule of disaggregation of revenue by geographic areas | Net sales: For the three months ended March 31, 2020 2019 United States $ 315,380 $ 276,737 Canada 13,486 13,100 Mexico 2,010 2,021 $ 330,876 $ 291,858 |
Summary of significant accoun_3
Summary of significant accounting policies (Details) - Customer Concentration Risk - Customer A - Water Pipe & Products | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Sales Revenue, Net | ||
Significant Accounting Policies | ||
Concentration risk, percentage | 18.00% | 14.00% |
Accounts Receivable | ||
Significant Accounting Policies | ||
Concentration risk, percentage | 18.00% | 13.00% |
Acquisitions (Details)
Acquisitions (Details) $ in Millions | Mar. 01, 2019USD ($) |
TEXAS | Buckner | |
Business Acquisition [Line Items] | |
Cash consideration paid for assets acquired | $ 11.8 |
Receivables, net (Details)
Receivables, net (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables, gross | $ 230,454 | $ 207,869 |
Less: Allowance for doubtful accounts | (1,823) | (2,068) |
Receivables, net | 228,631 | 205,801 |
Trade receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables, gross | 198,358 | 178,698 |
Amounts billed but not yet paid under retainage provisions | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables, gross | 3,711 | 3,093 |
Other receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables, gross | $ 28,385 | $ 26,078 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 176,908 | $ 161,440 |
Raw materials | 81,774 | 76,237 |
Work in process | 591 | 806 |
Total inventories | $ 259,273 | $ 238,483 |
Investment in equity method i_3
Investment in equity method investee - Additional Information (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Schedule of Equity Method Investments [Line Items] | ||
Investment in equity method investee | $ 51,232 | $ 50,034 |
Drainage Pipe & Products | ||
Schedule of Equity Method Investments [Line Items] | ||
Investment in equity method investee | $ 51,232 | $ 50,034 |
CP&P Joint Venture | Drainage Pipe & Products | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investment, ownership percentage | 50.00% | |
Investment in equity method investee | $ 51,200 | |
Company's share of the underlying equity net assets of the investee | $ 13,000 |
Investment in equity method i_4
Investment in equity method investee - Company's Distribution and Earnings in Equity Method Investment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Schedule of Equity Method Investments [Line Items] | ||
Distribution received from CP&P | $ (1,600) | $ (1,500) |
Share of earnings in CP&P | 2,799 | 1,567 |
CP&P Joint Venture | ||
Schedule of Equity Method Investments [Line Items] | ||
Distribution received from CP&P | (1,600) | (1,500) |
Share of earnings in CP&P | 2,816 | 1,585 |
Amortization of excess fair value of investment | $ (18) | $ (18) |
Investment in equity method i_5
Investment in equity method investee - Selected Financial Data from the Investee (Details) - CP&P Joint Venture - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Schedule of Equity Method Investments [Line Items] | ||
Net sales | $ 34,758 | $ 28,249 |
Gross profit | 10,537 | 7,954 |
Income from operations | 5,620 | 3,180 |
Net income | $ 5,557 | $ 3,117 |
Property, plant and equipment_3
Property, plant and equipment, net (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | $ 676,253 | $ 676,347 | |
Less: accumulated depreciation | (212,088) | (200,772) | |
Property, plant and equipment, net | 464,165 | 475,575 | |
Depreciation expense | 12,200 | $ 12,800 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | 408,063 | 398,127 | |
Land, buildings and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | 240,894 | 240,403 | |
Other equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | 8,666 | 8,660 | |
Construction-in-progress | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment | $ 18,630 | $ 29,157 |
Goodwill and other intangible_3
Goodwill and other intangible assets, net - Goodwill by Operating Segment (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill [Roll Forward] | |
Balance at December 31, 2019 | $ 508,826 |
Foreign currency and other adjustments | (1,145) |
Balance at March 31, 2020 | 507,681 |
Drainage Pipe & Products | |
Goodwill [Roll Forward] | |
Balance at December 31, 2019 | 190,466 |
Foreign currency and other adjustments | (1,145) |
Balance at March 31, 2020 | 189,321 |
Water Pipe & Products | |
Goodwill [Roll Forward] | |
Balance at December 31, 2019 | 318,360 |
Foreign currency and other adjustments | 0 |
Balance at March 31, 2020 | $ 318,360 |
Goodwill and other intangible_4
Goodwill and other intangible assets, net - Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | $ 132,252 | $ 142,674 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 93,277 | 100,869 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 18,453 | 19,626 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 7,012 | 7,673 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 7,186 | 8,070 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | 5,887 | 5,980 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | $ 437 | $ 456 |
Goodwill and other intangible_5
Goodwill and other intangible assets, net - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Selling, General and Administrative Expenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 10.3 | $ 11.6 |
Fair value measurement - Estima
Fair value measurement - Estimated Carrying Amount and Fair Value of Financial Instruments Measured and Recorded at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Liabilities: | ||
Derivative liability | $ 488 | $ 0 |
Assets: | ||
Derivative asset | 0 | 258 |
Fair Value, Measurements, Recurring | ||
Liabilities: | ||
Derivative liability | 488 | |
Assets: | ||
Derivative asset | 258 | |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Liabilities: | ||
Derivative liability | 0 | |
Assets: | ||
Derivative asset | 0 | |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Liabilities: | ||
Derivative liability | 488 | |
Assets: | ||
Derivative asset | 258 | |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Liabilities: | ||
Derivative liability | $ 0 | |
Assets: | ||
Derivative asset | $ 0 |
Fair value measurement - Carryi
Fair value measurement - Carrying Amount and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Tax receivable agreement payable | $ 77,385 | $ 77,385 |
Carrying Amount | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term Loan | 1,091,949 | 1,098,303 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Tax receivable agreement payable | 48,505 | 47,625 |
Fair Value | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term Loan | 926,343 | 1,102,295 |
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Tax receivable agreement payable | 0 | 0 |
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term Loan | 0 | 0 |
Fair Value | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Tax receivable agreement payable | 0 | 0 |
Fair Value | Significant Other Observable Inputs (Level 2) | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term Loan | 926,343 | 1,102,295 |
Fair Value | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Tax receivable agreement payable | 48,505 | 47,625 |
Fair Value | Significant Unobservable Inputs (Level 3) | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term Loan | $ 0 | $ 0 |
Accrued liabilities (Details)
Accrued liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accrued payroll and employee benefits | $ 24,496 | $ 32,815 |
Short-term finance leases | 16,395 | 16,542 |
Short-term operating leases | 8,605 | 8,784 |
Accrued taxes | 6,770 | 5,354 |
Warranty | 5,412 | 5,536 |
Accrued rebates | 5,724 | 9,895 |
Environmental obligation | 731 | 718 |
Other miscellaneous accrued liabilities | 9,251 | 9,195 |
Total accrued liabilities | $ 77,384 | $ 88,839 |
Debt and deferred financing c_3
Debt and deferred financing costs - Schedule of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Oct. 25, 2016 |
Debt Instrument [Line Items] | |||
Total debt | $ 1,270,660 | $ 1,098,303 | |
Less: current portion debt | (12,510) | (12,510) | |
Total long-term debt | 1,258,150 | 1,085,793 | |
Senior Notes | Term Loan | |||
Debt Instrument [Line Items] | |||
Total debt | 1,091,949 | 1,098,303 | $ 1,100,000 |
Debt issuance costs and original issuance discount | 23,281 | 25,055 | |
Revolving Line of Credit | Revolver | |||
Debt Instrument [Line Items] | |||
Total debt | 178,711 | $ 0 | |
Debt issuance costs and original issuance discount | $ 1,289 |
Debt and deferred financing c_4
Debt and deferred financing costs - Additional Information (Details) - USD ($) | May 01, 2017 | Oct. 25, 2016 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||||
Debt outstanding | $ 1,270,660,000 | $ 1,098,303,000 | |||
Loss on early extinguishment of debt | 50,000 | $ 0 | |||
Term Loan | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Margin rate | 3.00% | ||||
Revolving Line of Credit | Revolver | |||||
Debt Instrument [Line Items] | |||||
Debt outstanding | 178,711,000 | 0 | |||
Revolving Line of Credit | Revolver | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 300,000,000 | ||||
Line of credit facility, accordion feature, increase limit | 100,000,000 | ||||
Line of credit facility, maximum borrowing capacity, accordion feature, increase limit | $ 50,000,000 | ||||
Debt instrument, borrowing base limitation, sum of eligible cash, maximum | 100.00% | ||||
Debt instrument, borrowing base limitation, eligible accounts receivable, maximum | 85.00% | ||||
Debt instrument, borrowing base limitation, eligible inventory, maximum | 75.00% | ||||
Debt instrument, borrowing base limitation, orderly liquidation value of eligible inventory, maximum | 85.00% | ||||
Debt instrument, borrowing base limitation, eligible accounts receivable and inventory, accordion feature, maximum | 2.50% | ||||
Outstanding borrowings under revolver | $ 180,000,000 | 0 | |||
Weighted average interest rate on borrowings outstanding | 2.06% | ||||
Stand-by letters of credit outstanding | $ 15,400,000 | ||||
Allowable borrowing base | $ 72,100,000 | ||||
Fixed charge coverage ratio | 1 | ||||
Revolving Line of Credit | Revolver | Revolving Credit Facility | Minimum | |||||
Debt Instrument [Line Items] | |||||
Line of credit, facility fee percentage | 0.20% | ||||
Revolving Line of Credit | Revolver | Revolving Credit Facility | Maximum | |||||
Debt Instrument [Line Items] | |||||
Line of credit, facility fee percentage | 0.325% | ||||
Revolving Line of Credit | Revolver | Revolving Credit Facility | Canada | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 20,000,000 | ||||
Revolving Line of Credit | Revolver | Revolving Credit Facility | United States | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 280,000,000 | ||||
Revolving Line of Credit | Revolver | Revolving Credit Facility | LIBOR or CDOR | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, collateral covenant, percentage of voting stock, maximum | 65.00% | ||||
Revolving Line of Credit | Revolver | Revolving Credit Facility | LIBOR or CDOR | Minimum | |||||
Debt Instrument [Line Items] | |||||
Margin rate | 1.25% | ||||
Revolving Line of Credit | Revolver | Revolving Credit Facility | LIBOR or CDOR | Maximum | |||||
Debt Instrument [Line Items] | |||||
Margin rate | 1.75% | ||||
Revolving Line of Credit | Revolver | Revolving Credit Facility | CDOR | Minimum | |||||
Debt Instrument [Line Items] | |||||
Margin rate | 0.25% | ||||
Revolving Line of Credit | Revolver | Revolving Credit Facility | CDOR | Maximum | |||||
Debt Instrument [Line Items] | |||||
Margin rate | 0.75% | ||||
Senior Notes | Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt outstanding | $ 1,100,000,000 | $ 1,091,949,000 | $ 1,098,303,000 | ||
Debt instrument, amortization percentage | 0.25% | ||||
Weighted average interest rate | 4.70% | 5.50% | |||
Aggregate principal amount of outstanding debt repurchased | $ 5,000,000 | ||||
Market value of debt repurchased | 4,900,000 | ||||
Write off of debt issuance costs | 100,000 | ||||
Loss on early extinguishment of debt | $ 100,000 | ||||
Senior Notes | Term Loan | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Interest rate, floor percentage | 1.00% | ||||
Senior Notes | Term Loan | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Margin rate | 2.00% | ||||
Senior Notes | Term Loan | LIBOR or CDOR | Canada | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, collateral covenant, percentage of voting stock, maximum | 65.00% | ||||
Senior Notes | Senior Secured Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt outstanding | $ 1,250,000,000 | ||||
Line of credit facility, accordion feature, increase limit | $ 285,000,000 | ||||
Consolidated EBITDA ratio | 1 |
Debt and deferred financing c_5
Debt and deferred financing costs - Scheduled Maturities of Long-term Debt (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Debt Instrument [Line Items] | |
2020 | $ 9,383 |
2021 | 192,510 |
2022 | 12,510 |
2023 | 1,080,827 |
Total | 1,295,230 |
Term Loan | |
Debt Instrument [Line Items] | |
2020 | 9,383 |
2021 | 12,510 |
2022 | 12,510 |
2023 | 1,080,827 |
Total | 1,115,230 |
Revolver | |
Debt Instrument [Line Items] | |
2020 | 0 |
2021 | 180,000 |
2022 | 0 |
2023 | 0 |
Total | $ 180,000 |
Derivatives and hedging - Addit
Derivatives and hedging - Additional Information (Details) - Interest Rate Swap - USD ($) | Mar. 30, 2020 | Feb. 09, 2017 | Mar. 31, 2020 | Dec. 31, 2019 |
Derivative [Line Items] | ||||
Derivative notional amount | $ 0 | $ 525,000,000 | ||
Not Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Derivative notional amount | $ 400,000,000 | $ 525,000,000 | ||
Derivative, term of contract | 30 months | 3 years | ||
Not Designated as Hedging Instrument | LIBOR | ||||
Derivative [Line Items] | ||||
Derivative, fixed interest rate to pay interest | 1.08% | 1.52% | ||
Derivative, floating interest rate received (minimum) | 1.00% |
Derivatives and hedging - Sched
Derivatives and hedging - Schedule of Fair Values of Derivative Assets and Liabilities in Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Derivative Assets | ||
Fair Value | $ 0 | $ 258 |
Less: Legally enforceable master netting agreements | 0 | 0 |
Total derivatives, net | 0 | 258 |
Derivative Liabilities | ||
Fair Value | 488 | 0 |
Less: Legally enforceable master netting agreements | 0 | 0 |
Total derivatives, net | 488 | 0 |
Interest rate swaps | ||
Derivative Assets | ||
Notional Amount | 0 | 525,000 |
Fair Value | 0 | 258 |
Derivative Liabilities | ||
Notional Amount | 400,000 | 0 |
Fair Value | $ 488 | $ 0 |
Derivatives and hedging - Sch_2
Derivatives and hedging - Schedule of Effect of Derivative Instruments on Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivatives not designated as hedges | Interest rate swaps | Interest expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Loss on derivatives not designated as hedges included in interest expense | $ (746) | $ (2,092) |
Leases (Details)
Leases (Details) | Mar. 31, 2020renewal_option |
Lessee, Lease, Description [Line Items] | |
Initial term of finance leases | 25 years |
Number of renewal options of finance leases | 1 |
Renewal term of finance leases | 10 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Initial term of operating leases | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Initial term of operating leases | 25 years |
Renewal term of operating leases | 10 years |
Commitments and contingencies (
Commitments and contingencies (Details) | Nov. 30, 2018plaintiff | Aug. 14, 2017plaintiff | Oct. 05, 2016USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 13, 2016USD ($) | Mar. 13, 2015USD ($) |
LTIP | |||||||
Loss Contingencies [Line Items] | |||||||
Amount accrued for long-term incentive plan | $ 0 | ||||||
Payments for long-term incentive plan | $ 0 | ||||||
Lone Star | Affiliated Entities | |||||||
Loss Contingencies [Line Items] | |||||||
Certain covered tax benefits paid by related party, percentage | 85.00% | ||||||
Accrued liabilities related to tax receivable agreement | $ 77,400,000 | $ 77,400,000 | |||||
Payments of liability related to tax receivable agreement | 0 | ||||||
Heidelberg Cement Hanson Building Products | |||||||
Loss Contingencies [Line Items] | |||||||
Business acquisition, possible maximum earn out | $ 100,000,000 | $ 100,000,000 | |||||
Delaware Action | Pending Litigation | |||||||
Loss Contingencies [Line Items] | |||||||
Loss contingency, damages sought | $ 100,000,000 | ||||||
Loss contingency liability | $ 0 | ||||||
Securities Action and Derivative Actions | |||||||
Loss Contingencies [Line Items] | |||||||
Loss contingency, number of plaintiffs | plaintiff | 2 | 4 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (14,066) | $ (25,039) |
Less: Earnings allocated to unvested restricted stock awards | 0 | 0 |
Earnings (loss) allocated to common shareholders | $ (14,066) | $ (25,039) |
Common stock: | ||
Weighted average basic shares outstanding (in shares) | 64,804 | 64,004 |
Effect of dilutive securities (in shares) | 0 | 0 |
Weighted average diluted shares outstanding (in shares) | 64,804 | 64,004 |
Basic earnings (loss) per share: | ||
Net loss (in dollars per share) | $ (0.22) | $ (0.39) |
Diluted earnings (loss) per share: | ||
Net loss (in dollars per share) | $ (0.22) | $ (0.39) |
Earnings per share - Additional
Earnings per share - Additional Information (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock Options and Restricted Shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 233,736 | 3,322,403 |
Income taxes (Details)
Income taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) | $ 78 | $ (7,297) |
Increase in valuation allowance for deferred tax assets | $ 3,500 |
Segment reporting (Details)
Segment reporting (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)geographic_area | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of geographic areas | geographic_area | 3 | ||
Net sales | $ 330,876 | $ 291,858 | |
Depreciation and amortization | 22,501 | 24,392 | |
Less: Interest expense | (20,745) | (24,665) | |
Loss before income taxes | (13,988) | (32,336) | |
Capital expenditures | 4,350 | 11,974 | |
Total assets | 1,912,620 | $ 1,740,058 | |
Earnings from equity method investee | 2,799 | 1,567 | |
Investment in equity method investee | 51,232 | 50,034 | |
Property, plant and equipment, net | 464,165 | 475,575 | |
United States | |||
Segment Reporting Information [Line Items] | |||
Net sales | 315,380 | 276,737 | |
Property, plant and equipment, net | 415,142 | 422,486 | |
Canada | |||
Segment Reporting Information [Line Items] | |||
Net sales | 13,486 | 13,100 | |
Property, plant and equipment, net | 39,883 | 43,754 | |
Mexico | |||
Segment Reporting Information [Line Items] | |||
Net sales | 2,010 | 2,021 | |
Property, plant and equipment, net | 9,140 | 9,335 | |
Drainage Pipe & Products | |||
Segment Reporting Information [Line Items] | |||
Earnings from equity method investee | 2,800 | 1,600 | |
Investment in equity method investee | 51,232 | 50,034 | |
Operating Segments | Drainage Pipe & Products | |||
Segment Reporting Information [Line Items] | |||
Net sales | 170,234 | 163,734 | |
Depreciation and amortization | 8,245 | 9,202 | |
Segment EBITDA and reconciliation to income (loss) before income taxes | 26,052 | 25,066 | |
Capital expenditures | 3,030 | 7,929 | |
Total assets | 825,998 | 819,373 | |
Operating Segments | Water Pipe & Products | |||
Segment Reporting Information [Line Items] | |||
Net sales | 160,642 | 128,124 | |
Depreciation and amortization | 13,879 | 14,875 | |
Segment EBITDA and reconciliation to income (loss) before income taxes | 22,873 | 8,741 | |
Capital expenditures | 1,181 | 2,277 | |
Total assets | 880,077 | 862,542 | |
Corporate and Other | |||
Segment Reporting Information [Line Items] | |||
Net sales | 0 | 0 | |
Depreciation and amortization | 377 | 315 | |
Segment EBITDA and reconciliation to income (loss) before income taxes | (19,667) | (17,086) | |
Capital expenditures | 139 | $ 1,768 | |
Total assets | $ 206,545 | $ 58,143 |
Related party transactions (Det
Related party transactions (Details) - Affiliated Entities - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CP&P Joint Venture | ||
Related Party Transaction [Line Items] | ||
Sales of products to related party | $ 500 | $ 5 |
Purchased goods and services from related party | $ 100 | $ 126 |
Lone Star | ||
Related Party Transaction [Line Items] | ||
Payment of certain covered tax benefits buy the Company, percentage | 85.00% |