Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 08, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Forterra, Inc. | |
Entity Central Index Key | 1,678,463 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 64,203,794 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Net sales | $ 436,685 | $ 381,723 | $ 774,987 | $ 568,719 |
Cost of goods sold | 361,089 | 298,632 | 660,424 | 449,937 |
Gross profit | 75,596 | 83,091 | 114,563 | 118,782 |
Selling, general & administrative expenses | (67,297) | (57,060) | (132,598) | (90,721) |
Impairment and exit charges | (11,376) | (23) | (11,811) | (23) |
Earnings from equity method investee | 3,342 | 3,565 | 6,513 | 4,868 |
Other operating income | 2,010 | 2,116 | 3,243 | 3,344 |
Operating expenses, including earnings from equity method investments | (73,321) | (51,402) | (134,653) | (82,532) |
Income (loss) from operations | 2,275 | 31,689 | (20,090) | 36,250 |
Other income (expenses) | ||||
Interest expense | (17,078) | (24,839) | (30,620) | (42,129) |
Other income (expense), net | 0 | (1,177) | 0 | (1,177) |
Income (loss) before income taxes | (14,803) | 5,673 | (50,710) | (7,056) |
Income tax benefit | 3,630 | 26,173 | 16,994 | 36,740 |
Income (loss) from continuing operations | (11,173) | 31,846 | (33,716) | 29,684 |
Discontinued operations, net of tax | 0 | 4,843 | 0 | 3,069 |
Net income (loss) | $ (11,173) | $ 36,689 | $ (33,716) | $ 32,753 |
Basic and Diluted earnings (loss) per share: | ||||
Continuing operations (in usd per share) | $ (0.18) | $ 0.70 | $ (0.53) | $ 0.65 |
Discontinued operations (in usd per share) | 0 | 0.11 | 0 | 0.07 |
Net income (loss) (in usd per share) | $ (0.18) | $ 0.81 | $ (0.53) | $ 0.72 |
Weighted average common shares outstanding: | ||||
Basic and Diluted (in shares) | 63,792,743 | 45,369,474 | 63,791,127 | 45,369,474 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income (loss) | $ (11,173) | $ 36,689 | $ (33,716) | $ 32,753 |
Unrealized loss on derivative activities, net of tax | (1,412) | (218) | (1,908) | (1,427) |
Foreign currency translation adjustment | 206 | 2,935 | 1,236 | 4,783 |
Comprehensive Income (loss) | $ (12,379) | $ 39,406 | $ (34,388) | $ 36,109 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 22,024 | $ 40,024 |
Receivables, net | 240,058 | 201,481 |
Inventories | 287,300 | 279,502 |
Prepaid expenses | 7,363 | 6,417 |
Other current assets | 18,885 | 5,179 |
Current assets held for sale | 77,244 | 0 |
Total current assets | 652,874 | 532,603 |
Non-current assets | ||
Property, plant and equipment, net | 432,477 | 452,914 |
Goodwill | 508,474 | 491,447 |
Intangible assets, net | 256,362 | 281,598 |
Investment in equity method investee | 56,499 | 55,236 |
Other long-term assets | 12,072 | 10,988 |
Non-current assets held for sale | 18,585 | 0 |
Total assets | 1,937,343 | 1,824,786 |
Current liabilities | ||
Trade payables | 125,372 | 134,059 |
Accrued liabilities | 59,293 | 82,165 |
Deferred revenue | 10,329 | 20,797 |
Current portion of long-term debt | 12,510 | 10,500 |
Current liabilities held for sale | 21,564 | 0 |
Total current liabilities | 229,068 | 247,521 |
Non-current liabilities | ||
Senior term loan | 1,183,809 | 990,483 |
Revolving credit facility | 76,471 | 95,064 |
Deferred tax liabilities | 87,267 | 100,550 |
Deferred gain on sale-leaseback | 76,982 | 78,215 |
Other long-term liabilities | 27,039 | 23,253 |
Long-term TRA payable | 156,783 | 156,783 |
Total liabilities | 1,837,419 | 1,691,869 |
Commitments and Contingencies | ||
Equity | ||
Common stock, $0.001 par value, 64,165,557 and 63,924,124 shares issued and outstanding, respectively, and 190,000,000 shares authorized | 18 | 18 |
Additional paid-in-capital | 229,711 | 228,316 |
Accumulated other comprehensive loss | (5,697) | (5,025) |
Retained deficit | (124,108) | (90,392) |
Total shareholder's equity | 99,924 | 132,917 |
Total liabilities and shareholders' equity | $ 1,937,343 | $ 1,824,786 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common shares, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common shares, issued (in shares) | 64,165,557 | 63,924,124 |
Common shares, outstanding (in shares) | 64,165,557 | 63,924,124 |
Common shares, authorized (in shares) | 190,000,000 | 190,000,000 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income (loss) | $ (33,716) | $ 32,753 |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation & amortization expense | 58,305 | 40,420 |
Loss (gain) on disposal of property, plant and equipment | 1,194 | (1,217) |
Amortization of debt discount and issuance costs | 3,994 | 3,760 |
Impairment charges | 10,551 | 0 |
Earnings from equity method investee | (6,513) | (4,868) |
Distributions from equity method investee | 5,250 | 4,500 |
Unrealized (gain) loss on derivative instruments, net | (1,326) | 1,026 |
Provision (recoveries) for doubtful accounts | 1,398 | 360 |
Deferred taxes | (12,112) | (38,376) |
Deferred rent | 1,122 | 0 |
Other non-cash items | 571 | 54 |
Change in assets and liabilities: | ||
Receivables, net | (70,062) | (47,321) |
Inventories | (49,458) | 6,940 |
Other assets | (8,190) | (10,917) |
Accounts payable and accrued liabilities | (21,031) | (1,841) |
Other assets & liabilities | (6,021) | 8,361 |
NET CASH USED IN OPERATING ACTIVITIES | (126,044) | (6,366) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property, plant and equipment | (30,024) | (16,340) |
Assets and liabilities acquired, business combinations, net | (35,380) | (841,861) |
NET CASH USED IN INVESTING ACTIVITIES | (65,404) | (858,201) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from sale-leaseback | 0 | 216,280 |
Deferred transaction costs on failed sale-leaseback | 0 | (6,492) |
Payment of debt issuance costs | (2,498) | (6,896) |
Payments on Senior and Junior Term Loans | (5,753) | (2,191) |
Proceeds from Senior and Junior Term Loans, net | 200,000 | 548,400 |
Proceeds from Revolver | 194,000 | 106,611 |
Payments on Revolver | (213,000) | (55,173) |
Proceeds from settlement of derivatives | 0 | 6,546 |
Capital contribution from parent | 0 | 402,127 |
Payments for return of contributed capital | 0 | (347,344) |
Other financing activities | (110) | 0 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 172,639 | 861,868 |
Effect of exchange rate changes on cash | 809 | 926 |
Net change in cash and cash equivalents | (18,000) | (1,773) |
Cash and cash equivalents, beginning of period | 40,024 | 43,590 |
Cash and cash equivalents, end of period | 22,024 | 41,817 |
SUPPLEMENTAL DISCLOSURES: | ||
Cash interest paid | 26,465 | 26,915 |
Income taxes paid | 25,882 | 0 |
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING DISCLOSURES: | ||
Fair value changes of derivatives recorded in OCI, net of tax | $ (1,908) | $ (1,427) |
Organization and description of
Organization and description of the business | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and description of the business | Organization and description of the business Description of the Business Forterra, Inc. (“Forterra” or the "Company") is involved in the manufacturing, sale and distribution of building materials in the United States (‘‘U.S.’’) and 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 residential, infrastructure and non-residential sectors of the construction industry. Forterra, a Delaware corporation, was formed on June 21, 2016 to hold the business of Forterra Building Products following the Reorganization (as defined below). The Acquisition The business of Forterra Building Products included indirect wholly-owned subsidiaries of LSF9 Concrete Holdings Ltd. ("LSF9"). Lone Star Fund IX (U.S.), L.P. (along with its affiliates and associates, but excluding the Company and other companies that it owns as a result of its investment activity, "Lone Star"), through its wholly-owned subsidiary LSF9, acquired the business of Forterra Building Products on March 13, 2015 (the "Acquisition"). LSF9, which was formed on February 6, 2015 for the purpose of acquiring the business of Forterra Building Products, had no operations prior to the date of the Acquisition. Prior to the Acquisition, the entities comprising the business of Forterra Building Products were indirect wholly-owned subsidiaries of HeidelbergCement A.G. ("HeidelbergCement") a publicly listed company in Germany, encompassing HeidelbergCement's North American building products operations (“BP NAM"). LSF9 acquired BP NAM in the Acquisition, a business combination which also included the acquisition of HeidelbergCement’s U.K.-based building products operations for a total purchase price of $1.33 billion in cash, subject to a possible earn-out of up to $100.0 million as contingent consideration. The acquisition of BP NAM and HeidelbergCement's UK-based building products business was funded with an equity investment of $432.3 million and third-party debt in the amount of $940.0 million . As HeidelbergCement's U.K.-based building products operations are not part of Forterra, Forterra was allocated a proportion of the total debt and equity used in the Acquisition. See Note 11, Debt and deferred financing costs. Initial Public Offering On October 6, 2016, Forterra filed an Amended and Restated Certificate of Incorporation which increased the number of authorized shares of common stock from 1,000 with a par value of $0.01 per share to 190,000,000 with a par value of $0.001 per share, and, immediately after which, effected a 41,619.472 for one stock split (the "Stock Split") of its issued and outstanding common stock previously approved by the Company's Board of Directors. Following the Stock Split there were 41,619,472 shares of common stock outstanding. The Company's Amended and Restated Certificate of Incorporation has also authorized 10,000,000 shares of preferred stock that may be issued at the approval of the Company's Board of Directors. No shares of preferred stock have been issued or were outstanding as of December 31, 2016 or June 30, 2017. On October 25, 2016, Forterra sold 18,420,000 shares of common stock in its initial public offering (the "Offering") at a public offering price of $18.00 per share. The Company received net proceeds of $313.3 million in the Offering. Reorganization Prior to the consummation of the Offering, LSF9 distributed its brick operations in the United States and Eastern Canada to an affiliate of Lone Star (the "Bricks Disposition"), recognized as a return of capital in the statement of shareholders' equity. Following the Bricks Disposition and prior to the consummation of the Offering, the remaining building products operations of LSF9 in the United States and Eastern Canada were transferred to Forterra, Inc. in an internal reorganization under common control transaction (the "Reorganization"). Following the Reorganization, Forterra, Inc. became a wholly owned subsidiary of Forterra US Holdings, LLC, which is indirectly wholly owned by an affiliate of Lone Star. The Reorganization was accounted for as a change in reporting entity, and the condensed consolidated financial statements have been retrospectively adjusted for all periods presented to reflect the new organizational structure following the Reorganization, including the presentation of discontinued operations associated with the Bricks Disposition. Refinancing Concurrent with the completion of the Offering, Forterra entered into a new $300 million asset based revolving credit facility for working capital and general corporate purposes (the “2016 Revolver”) and a new $1.05 billion senior term loan facility (“2016 Senior Term Loan”), the proceeds of which, together with a $125.0 million draw on the 2016 Revolver and $296.0 million in proceeds from the Offering, were used to repay in full and terminate the then-existing asset based revolving credit facility (the “2015 Revolver”), $1.04 billion senior term loan (the “2015 Senior Term Loan”) and $260.0 million junior term loan (the “Junior term Loan”) (collectively, the "Refinancing"). The terms of the 2016 Senior Term Loan and the 2016 Revolver are described in greater detail in Note 11, Debt and deferred financing costs. |
Summary of significant accounti
Summary of significant accounting policies | 6 Months Ended |
Jun. 30, 2017 | |
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) and cash flows 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, 2017. Seasonal changes and other conditions can affect the sales volumes of the Company's products. Therefore, the financial results for any interim period do not necessarily indicate the expected results for the year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2016 as provided in Forterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 31, 2017 (the "2016 10-K"). The Company has continued to follow the accounting policies set forth in those financial statements. During the first quarter of 2017, the Company identified and corrected prior period errors related to cost accrual items which should have been recognized in 2016. A cumulative correction was recorded during the quarter ended March 31, 2017 which increased pretax loss by $4.6 million , which consisted of a $3.3 million increase to cost of goods sold and a $2.0 million increase to selling, general and administrative expenses, partially offset by a $0.7 million increase in revenues. The Company evaluated the impact of correcting these errors and concluded the errors were immaterial to operating results for the year ended December 31, 2016, expected annual operating results for the year ended December 31, 2017, as well as the trend of earnings. Long-lived assets held for sale The Company accounts for long-lived assets held for sale in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 360, Accounting for the Impairment or Disposal of Long-Lived Asset, which requires assets to be classified as held for sale when the following criteria are met: 1) management, having the authority to approve the action, commits to a plan to sell; 2) the asset or asset group is available for immediate sale in its present condition; 3) an active program to locate a buyer and other actions required to complete the plan to sell have been initiated; 4) actions required to complete the sale indicate that is it unlikely that significant changes to the plan will be made or that the plan will be withdrawn, and 5) the sale is probable to qualify for recognition as a completed sale within one year. At such time assets or an asset group are determined to be held for sale, its carrying amount is adjusted to the lower of its depreciated book value or its estimated fair value, less costs to sell, and depreciation is no longer recognized. An impairment charge is recognized if the carrying value is in excess of its fair value. The assets and liabilities are required to be classified as held for sale on the accompanying condensed consolidated balance sheets. See additional description of assets held for sale as of June 30, 2017 at Note 20 Discontinued operations and assets held for sale. Goodwill Goodwill represents the excess of costs over the fair value of identifiable assets acquired and liabilities assumed. The Company evaluates goodwill and intangible assets in accordance with ASC 350, Goodwill and Other Intangible Assets . ASC 350 requires goodwill to be either qualitatively or quantitatively assessed for impairment annually (or more frequently if impairment indicators arise) for each reporting unit. The Company performs its annual impairment testing of goodwill as of October 1 of each year and in interim periods if events occur that would indicate that it is more likely than not the fair value of a reporting unit is less than carrying value. The Company first assesses qualitative factors to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as the basis for determining whether it is necessary to perform a quantitative goodwill impairment test. The quantitative analysis compares the fair value of the reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds the fair value, impairment is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Credit Risk At June 30, 2017 , the Company had an individual customer within its Water Pipe & Products segment that accounted for more than 10% of total net sales for the three and six months ended June 30, 2017 . The customer represented approximately 12% and 13% , of the Company's total net sales for the three and six months ended June 30, 2017 , respectively, and had total receivables at June 30, 2017 totaling 18% of the Company's total receivables, net. Recent Accounting Guidance Adopted In January 2017, the FASB issued Accounting Standards Update ("ASU") 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, however early adoption is permitted. The Company early adopted the guidance provided in the ASU in the second quarter of 2017. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements, however it could have a material impact in the future, to the extent the new guidance impacts the Company's application of a definition of a business to significant transactions, including acquisitions and divestitures. In January 2017, the FASB issued ASU 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment to simplify the accounting for goodwill impairment. The guidance removes the second step of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. This guidance is effective in 2020, but early adoption is permitted for any impairment tests performed after January 1, 2017. The Company elected to early adopt the ASU effective in the second quarter of 2017. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In the second quarter of 2017, the Company recognized impairment of goodwill associated with one of its reporting units. See Note 8, Goodwill and other intangible assets for a discussion of our interim goodwill assessment and the related impairment charge. In July 2015, the FASB issued Accounting Standards Update ("ASU") 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, requiring an entity to measure inventory within the scope of the ASU at the lower of cost and net realizable value. For public business entities, the amendments in this update were effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The adoption of this ASU during the first quarter of 2017 did not have a material impact on the condensed consolidated financial statements. Recent Accounting Guidance Not Yet Adopted In May 2014, the FASB issued guidance (the effective date of which was later delayed) that outlines a single comprehensive model for accounting for revenue arising from contracts with customers, which supersedes most of the existing revenue recognition guidance. This guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. The guidance is effective for interim and annual reporting periods that begin after December 15, 2017. Early adoption of the standard is permitted, but not before the original effective date of interim and annual reporting periods beginning after December 15, 2016. During the second quarter of 2016, the FASB issued additional revenue recognition guidance that clarifies how an entity identifies performance obligations related to customer contracts as well as the objectives of collectability, sales and other taxes, non-cash consideration, contract modifications at transition, and technical corrections. The guidance is effective beginning in the first quarter of 2018, and the Company does not currently plan to early adopt the guidance. The guidance permits two methods of adoption, retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). The Company will utilize the modified retrospective method upon adoption. The Company continues to evaluate the effect that the updated standard will have on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , amending the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. For public business entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted as of the standard’s issuance date. ASU 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company believes the adoption of this ASU will have a material impact on its consolidated financial statements as it will result in most of the Company’s leases and associated assets being presented on the balance sheet. In May 2017, the FASB issued ASU 2017-09 Stock Compensation (Topic 718): Scope of Modification Accounting to clarify which changes to the terms and conditions of a share-based payment require the application of modification accounting. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. |
Business combinations
Business combinations | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Business combinations | Business combinations The acquisition described below is accounted for as a business combination as defined by ASC 805, Business Combinations . The Company allocated the purchase price to the individually identifiable assets acquired and liabilities assumed based on their estimated fair value on the date of acquisition. The excess purchase price over those fair values was recorded as goodwill. The determination of fair values of the acquired assets and assumed liabilities requires significant judgment, including estimates impacting the determination of estimated lives of tangible and intangible assets, calculation of the fair value of property, plant and equipment, inventory, and various intangibles. The fair values of assets and liabilities were determined using level 3 inputs as defined by ASC 820, Fair Value Measurements and Disclosures . On February 3, 2017, Forterra acquired the assets of Royal Enterprises America, Inc. ("Royal") for aggregate consideration of $35.5 million in cash, including customary working capital adjustments. Royal manufactures concrete drainage pipe, precast concrete products, stormwater treatment technologies and erosion control products serving the greater Minneapolis market . The acquisition was financed with borrowings on the 2016 Revolver. The preliminary respective fair values of the assets acquired and liabilities assumed at the acquisition date are as follows (in thousands) : Net working capital $ 2,994 Property, plant and equipment, net 12,335 Customer relationship intangible 1,676 Non-compete agreement intangible 866 Other intangibles 443 Other assets and liabilities (726 ) Net identifiable assets acquired 17,588 Goodwill 17,903 Cash consideration transferred $ 35,491 Preliminary balances may be subject to change upon the Company's final determination of the fair value of acquired assets and liabilities. The Company has finalized the fair value allocations of all other acquisitions with the exception of the Company's 2016 acquisition of J&G Concrete Operations, LLC ("J&G") which remained preliminary at June 30, 2017. Goodwill recognized is attributable primarily to expected operating efficiencies and expansion opportunities in the business acquired. Goodwill is expected to be deductible for tax purposes for the Royal acquisition. Transaction costs The Company recognized aggregate transaction costs, including legal, accounting, valuation, and advisory fees, specific to acquisitions of $0.2 million and $0.4 million , for the three and and six months ended June 30, 2017, respectively, and $5.0 million and $7.6 million , for the three and six months ended June 30, 2016, respectively . These costs are recorded in the condensed consolidated statements of operations within selling, general and administrative expenses. |
Receivables, net
Receivables, net | 6 Months Ended |
Jun. 30, 2017 | |
Receivables [Abstract] | |
Receivables, net | Receivables, net Receivables consist of the following (in thousands) : June 30, December 31, 2017 2016 Trade receivables $ 234,621 $ 178,012 Amounts billed, but not yet paid under retainage provisions 1,571 1,959 Other receivables 6,263 22,408 Total receivables $ 242,455 $ 202,379 Less: Allowance for doubtful accounts (2,397 ) (898 ) Receivables, net $ 240,058 $ 201,481 |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following (in thousands) : June 30, December 31, 2017 2016 Finished goods $ 201,140 $ 185,507 Raw materials 85,681 90,647 Work in process 479 3,348 Total inventories $ 287,300 $ 279,502 |
Investment in equity method inv
Investment in equity method investee | 6 Months Ended |
Jun. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in equity method investee | Investment in equity method investee The Company contributed plant assets and related inventory from nine operating locations as part of the agreement to form a joint venture with Americast, Inc., Concrete Pipe & Precast LLC ("CP&P"), and in return for the contribution the Company obtained a 50% ownership stake in the joint venture through its 500 Common Unit voting shares in CP&P. Both at June 30, 2017 and December 31, 2016, the Company owned 50% of CP&P's voting common stock. The Company's investment in the joint venture was $56.5 million at June 30, 2017 , which is included within the Drainage Pipe & Products segment. Selected unaudited historical financial data for the investee is as follows ( in thousands ): Three months ended Six months ended June 30, June 30, 2017 2017 Net sales $ 35,447 $ 69,619 Gross profit 11,528 22,703 Income from operations 7,007 13,642 Net income $ 6,928 $ 13,514 |
Property, plant and equipment,
Property, plant and equipment, net | 6 Months Ended |
Jun. 30, 2017 | |
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) : June 30, December 31, 2017 2016 Machinery and equipment $ 331,758 $ 329,871 Land, buildings and improvements 147,555 142,105 Other equipment 4,074 2,592 Construction-in-progress 36,609 43,855 Total property, plant and equipment 519,996 518,423 Less: accumulated depreciation (87,519 ) (65,509 ) Property, plant and equipment, net $ 432,477 $ 452,914 Depreciation expense totaled $15.1 million and $30.1 million for the three and six months ended June 30, 2017 , respectively, and $14.7 million and $23.4 million for the three and six months ended June 30, 2016 , respectively, 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 | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and other intangible assets, net | Goodwill and other intangible assets, net The Company has goodwill which has been recorded in connection with its acquisition of businesses. The following table summarizes the changes in goodwill by operating segment for the six months ended June 30, 2017 ( in thousands ): Drainage Pipe & Products Water Pipe & Products Total Balance at December 31, 2016 $ 168,866 $ 322,581 $ 491,447 Acquisitions 19,515 — 19,515 Impairment — (3,003 ) (3,003 ) Foreign currency 508 7 515 Balance at June 30, 2017 $ 188,889 $ 319,585 $ 508,474 During the second quarter of 2017, the Company performed interim goodwill impairment testing of our Canadian concrete and steel pressure pipe reporting unit after identifying indicators it was more-likely-than-not the reporting unit's carrying value was in excess of its fair value. The reporting unit's operating results are primarily driven by large contractual projects, for which future demand has not materialized, driving changes in the valuations inputs and assumptions supporting the reporting unit's fair value. Upon early adoption of ASU 2017-04 (see Note 2), the Company uses a one-step quantitative approach that compares the business enterprise value of each reporting unit with its carrying value. Business enterprise value is computed based on both an income approach (discounted cash flows) and a market approach. The income approach uses a reporting unit's estimated future cash flows, discounted at the weighted average cost of capital of a hypothetical third-party buyer. The market approach estimates fair value by applying cash flow multiples to the reporting unit's operating performance. The multiples are derived from comparable publicly traded companies with similar operating and investment characteristics to the reporting unit. The calculation of business enterprise value is based on significant unobservable inputs, such as price trends, customer demand, material costs and discount rates, and are classified as Level 3 in the fair value hierarchy. As a result of our interim impairment testing, we determined the carrying value of the reporting unit's goodwill was fully impaired and a goodwill impairment charge of $3.0 million was recorded. Intangible assets other than goodwill at June 30, 2017 and December 31, 2016 included the following ( in thousands ): Net carrying value as of June 30, 2017 Net carrying value as of December 31, 2016 Customer relationships $ 191,419 $ 209,937 Trade names 32,308 34,771 Patents 18,236 20,673 Customer backlog 91 1,628 Non-compete agreements 7,166 7,410 In-Process R&D 6,354 6,692 Other 788 487 Total intangible assets $ 256,362 $ 281,598 Amortization expense totaled $13.4 million and $28.2 million for the three and six months ended June 30, 2017 , respectively, and $10.5 million and $13.1 million for the three and six months ended June 30, 2016 , respectively, which is included in selling, general and administrative expenses in the condensed consolidated statements of operations. |
Fair value measurement
Fair value measurement | 6 Months Ended |
Jun. 30, 2017 | |
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, accrued liabilities, and the long-term tax receivable agreement payable. The carrying value of the Company's cash equivalents, trade receivables, other receivables, trade payables, the asset based revolver and accrued liabilities approximates fair value due to their short-term maturity. 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 carrying amount and estimated fair value of the Company’s financial instruments and other assets and liabilities measured and recorded at fair value on a recurring basis is as follows for the dates indicated (in thousands) : Fair value measurements at June 30, 2017 using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Fair Value Non-current assets Derivative asset — $1,326 — $1,326 Current liabilities Derivative liability — $3,467 — $3,467 Fair value measurements at December 31, 2016 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 Non-current liabilities Derivative liability — $372 — $372 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 June 30, 2017 using Carrying Amount June 30, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value 2016 Senior Term Loan $1,196,319 — $1,173,333 — $1,173,333 Tax receivable agreement payable 160,783 — — 135,375 135,375 Fair value measurements at December 31, 2016 using Carrying Amount December 31, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value 2016 Senior Term Loan $1,000,983 — $1,064,395 — $1,064,395 Tax receivable agreement payable 160,783 — — 125,614 125,614 The fair value of debt is the estimated amount the Company would have to pay to transfer its debt, including any premium or discount attributable to the difference between the stated interest rate and market rate of interest at the balance sheet date. Fair values are supported by observable market transactions when available. The determination of the fair value of the tax receivable agreement payable was determined using a discounted cash flow methodology using level 3 inputs as defined by ASC 820. 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. In the second quarter of 2017, the Company recorded goodwill impairment $3.0 million and long-lived asset impairment of $7.5 million . The measurements supporting each of the above impairment charges are classified as a Level 3 fair value assessment due to the significance of unobservable inputs used in the determination of the fair value. See Note 8 Goodwill and other intangible assets and Note 20 Discontinued operations and assets held for sale for further discussion. |
Accrued liabilities
Accrued liabilities | 6 Months Ended |
Jun. 30, 2017 | |
Payables and Accruals [Abstract] | |
Accrued liabilities | Accrued liabilities Accrued liabilities consist of the following (in thousands) : June 30, December 31, 2017 2016 Accrued payroll and employee benefits $ 25,876 $ 29,945 Accrued taxes 8,838 32,746 Accrued rebates 8,839 7,509 Warranty 4,056 3,509 Other miscellaneous accrued liabilities 3,363 3,681 Tax receivable agreement liability, current portion 4,000 4,000 Short-term derivative liability 3,467 — Environmental & reclamation obligation 671 775 Other 183 — Total accrued liabilities $ 59,293 $ 82,165 |
Debt and deferred financing cos
Debt and deferred financing costs | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt and deferred financing costs | Debt and deferred financing costs The Company’s debt consisted of the following (in thousands) : June 30, December 31, 2017 2016 2016 Senior Term Loan, net of debt issuance costs and original issuance discount of $45,303 and $46,392, respectively $ 1,196,319 $ 1,000,983 2016 Revolver, net of debt issuance costs of $3,529 and $3,936, respectively 76,471 95,064 Total debt $ 1,272,790 $ 1,096,047 Less: current portion debt (12,510 ) (10,500 ) Total long-term debt $ 1,260,280 $ 1,085,547 Concurrent with the completion of the Offering, in the Refinancing the Company entered into the 2016 Revolver for working capital and general corporate purposes and the 2016 Senior Term Loan, the proceeds of which, together with the proceeds from the Offering, were used to repay in full the Junior Term Loan of $260.0 million , the 2015 Senior Term Loan of $1.04 billion , and the existing balance under the 2015 Revolver, in addition to related expenses associated with the Offering and Refinancing. Immediately subsequent to the completion of the Offering, Forterra had $125.0 million outstanding on its 2016 Revolver and $1.05 billion on its 2016 Senior Term Loan. The $260.0 million repayment toward the Junior Term Loan represented a full repayment of the outstanding principal on that loan, resulting in a related write-off of issue discounts and capitalized issuance costs of approximately $22.4 million . The repayment also triggered a prepayment penalty of approximately $7.8 million . The 2016 Senior Term Loan provides for a $1.05 billion senior secured term loan that was made available to a newly formed direct subsidiary of Forterra. Subject to the conditions set forth in the term loan agreement, the 2016 Senior Term Loan may be increased by (i) up to the greater of $285.0 million and 1.0x consolidated EBITDA 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. Effective May 1, 2017 the Company amended the 2016 Senior Term Loan to increase the principal outstanding by an additional $200.0 million and to reduce the interest margins applicable to the full balance of the 2016 Senior Term Loan by 50 basis points such that applicable margin based on LIBOR has been reduced from 3.50% to 3.00% . The net proceeds from the incremental term loan of $196.8 million were used to pay down a portion of the outstanding balance on the 2016 Revolver. This amendment had no effect on the Company's ability to increase the size of the 2016 Senior Term Loan under the original provisions. The 2016 Senior Term Loan matures on October 25, 2023 and is subject to quarterly amortization equal to 0.25% of the initial principal amount. Interest will accrue 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. Outstanding borrowings under the 2016 Senior 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 2016 Senior Term Loan is secured by substantially all of the assets of Forterra, the borrower and the Guarantors; provided that the obligations under the 2016 Senior 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 2016 Senior 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 2016 Senior Term Loan does not contain any financial covenants. Obligations under the 2016 Senior Term Loan may be accelerated upon certain customary events of default (subject to grace periods, as appropriate). The 2016 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 2016 Revolver (the "2016 Credit Agreement"), the 2016 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 2016 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. The 2016 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 2016 Revolver for the most recently completed calendar quarter. The obligations of the borrowers under the 2016 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 2016 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. The 2016 Revolver contains 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 2016 Credit Agreement 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 2016 Revolver falls below a threshold set forth in the 2016 Credit Agreement. Obligations under the 2016 Credit Agreement 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). The weighted average annual interest rate on the 2016 Revolver was 3.13% and 2.89% for the three and six months ended June 30, 2017 , respectively. 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 2016 Revolver. Availability under the 2016 Revolver at June 30, 2017 based on draws, and outstanding letters of credit and allowable borrowing base was $204.3 million . As of June 30, 2017 , scheduled maturities of long-term debt were as follows: Total 2016 Senior Term Loan 2016 Revolver 2017 $ 6,255 $ 6,255 $ — 2018 12,510 12,510 — 2019 12,510 12,510 — 2020 12,510 12,510 — 2021 92,510 12,510 80,000 Thereafter: 1,185,327 1,185,327 — $ 1,321,622 $ 1,241,622 $ 80,000 2015 Senior Term Loan, Junior Term Loan, and Revolving Credit Facility In connection with the financing of the Acquisition, LSF9 entered into the 2015 Senior Term Loan for borrowings of $635.0 million , the Junior Term Loan for borrowings of $260.0 million , and drew $45.0 million on the 2015 Revolver (such credit agreements together, as amended from time to time, the “Initial Credit Agreements”). Approximately $515.5 million was the obligation of Forterra as a joint and several obligation under ASC 405-40, Obligations Resulting from Joint and Several Liability Arrangements . See Note 1, Basis of presentation to the audited consolidated financial statements included in the 2016 10-K for additional information. In October 2015, the Company increased the size of the 2015 Senior Term Loan by $240.0 million in connection with the acquisition of Cretex Concrete Products, Inc (the “Cretex Acquisition”). Additionally, in April 2016, the Company's capacity on the 2015 Revolver was increased to $285.0 million . In conjunction with the issuance of debt related to the Acquisition and the Cretex Acquisition, LSF9 incurred $71.6 million of debt issuance costs and debt discounts; of which $51.9 million was attributed to the Company debt obligation. The Initial Credit Agreements were secured by substantially all of the assets of the Company. In April 2016, LSF9 borrowed $205.0 million on the 2015 Revolver in order to finance the acquisition of USP Holdings Inc. (the “USP Acquisition”) of which $203.4 million was repaid during April 2016 with proceeds from an affiliated entity controlled by LSF9 but not included among the legal entities that comprise the Company. In connection with the additional proceeds obtained in April 2016 which benefited the Company, under ASC 405-40 , Obligations Resulting from Joint and Several Liability Arrangements, the Company assumed an additional obligation of $203.4 million that was recognized as an increase to the Company’s allocated share of the 2015 Senior Term Loan balance with an associated increase in debt issuance fees and discount related to the 2015 Senior Term Loan of $8.9 million . The affiliated entity was subsequently released as a co-obligor and its joint and several liability under terms of all of the 3 rd party credit agreements. On June 17, 2016, LSF9 borrowed an incremental $345.0 million on the 2015 Senior Term Loan and used the proceeds to pay a dividend of $338.3 million , net of debt issuance costs, to the shareholders of LSF9. The dividend was recorded as a return of capital. LSF9 incurred debt issuance fees and discount of $6.7 million in connection with the issuance of the debt. The incremental borrowings incurred interest at the same rate as the 2015 Senior Term Loan. Under ASC 405-40 Obligations Resulting from Joint and Several Liability Arrangements , the Company recognized the full amount of the incremental borrowing, net of related issuance costs and discount, as an obligation in the condensed consolidated balance sheet. Joint and Several Obligations The Company recorded debt on its balance sheet as of December 31, 2015 under ASC 405-40, Obligations Resulting from Joint and Several Liability Arrangements . The Company and the affiliates of LSF9 were co-obligors and jointly and severally liable under terms of the Initial Credit Agreements. The Company’s allocated portion of the $940.0 million of third party debt used to finance the Acquisition was $515.5 million . The initial obligation of $515.5 million was reflected on the Company’s condensed consolidated balance sheet at the Acquisition date as $254.9 million of 2015 Senior Term Loan, $260.0 million of Junior Term Loan and $0.6 million of 2015 Revolver obligations. The remaining $424.5 million of the debt was allocated to affiliates of LSF9 that are not included in Forterra based on the amounts affiliates of LSF9 have fully repaid as discussed below). In April of 2016, the Company’s affiliate co-obligors were released from joint and several liability under the Initial Credit Agreements. The Company was consequently the sole source of repayment for its $515.5 million share for the initial obligation under the Initial Credit Agreements, as well as other obligations recorded on the balance sheet. In addition to the initial debt obligation of $515.5 million recorded by the Company, additional 2015 Senior Term Loan borrowings of $240.0 million that in October 2015 were used to finance the Cretex Acquisition were allocated in full to the Company. On April 26, 2016, affiliates of the Company under control of LSF9 but not included in Forterra repaid $203.4 million of the 2015 Revolver balance that was drawn in April 2016 and $176.7 million of the 2015 Senior Term Loan, after which the other affiliates were released as obligors to the loan and the Company became the sole source of repayment under the LSF9 debt agreement. The Company reflected the increased obligation as an increase in the 2015 Senior Term Loan in order to reflect the change in its obligation as a result of the additional borrowings of LSF9. A proportionate amount of debt issuance costs and discount related to the increased obligation under the 2015 Senior Term Loan was also allocated to the Company at the time of the increased obligation. Lines of Credit and Other Debt Facilities The Company had standby letters of credit outstanding of $15.7 million as of June 30, 2017 which reduce the borrowings available under the Revolver. |
Derivatives and hedging
Derivatives and hedging | 6 Months Ended |
Jun. 30, 2017 | |
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) financing activities in the condensed consolidated statements of cash flows. At June 30, 2017 , the Company had foreign exchange forward contracts, designated as cash flow hedges in accordance with ASC 815-20 Derivatives - Hedging , which allows for the effective portion of the changes in the fair value of the instruments to be captured in accumulated other comprehensive income, and ineffective portion recorded in earnings. These instruments were assigned to Forterra by an affiliate concurrent with the Reorganization, directly prior to the Refinancing and Offering and have a termination date of March 2018. Additionally, o n 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 have a three -year term and expire on March 31, 2020. The interest rate swaps are not designated as cash flow hedges, therefore all changes in the fair value of these instruments are captured as a component of interest expense in the condensed consolidated statements of operations. The instruments the Company previously held, included foreign exchange forward contracts and fixed-for-float cross currency swaps entered into in March of 2016, were settled in connection with the Reorganization and Refinancing, resulting in a net cash settlement of approximately $1.3 million paid by the Company in the fourth quarter of 2016. A quantitative analysis is utilized to assess hedge effectiveness for cash flow hedges. The Company assesses the hedge effectiveness and measures the amount of ineffectiveness for the hedge relationships based on changes in forward exchange rates. 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 June 30, 2017 and December 31, 2016, 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) : June 30, 2017 Derivative Assets Derivative Liabilities Notional Amount Fair Value Notional Amount Fair Value Foreign exchange forward contracts $ — — $ 92,961 $ 3,467 Interest rate swaps 525,000 1,326 — — Total derivatives, gross 1,326 3,467 Less: Legally enforceable master netting agreements — — Total derivatives, net $ — $ 1,326 $ — $ 3,467 December 31, 2016 Derivative Assets Derivative Liabilities Notional Amount Fair Value Notional Amount Fair Value Foreign exchange forward contracts $ — $ — $ 92,961 $ 372 Total derivatives, gross — — — 372 Less: Legally enforceable master netting agreements — — — — Total derivatives, net $ — $ — $ — $ 372 The following table presents the effect of derivative instruments on the condensed consolidated statements of operations (in thousands) : Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 Cross currency swaps Loss on derivatives not designated as hedges in other operating income (expense) — (411 ) — (2,874 ) Interest rate swaps Gain on derivatives not designated as hedges included in interest expense (708 ) — 1,326 — |
Sale-leaseback transaction
Sale-leaseback transaction | 6 Months Ended |
Jun. 30, 2017 | |
Leases [Abstract] | |
Sale-Leaseback Transaction | Sale-Leaseback Transaction On April 5, 2016, the Company sold properties in 47 sites throughout the U.S. and Canada to Pipe Portfolio Owner (Multi) LP (the "U.S. Buyer") and FORT-BEN Holdings (ONQC) Ltd. (the “Canadian Buyer”) for an aggregate purchase price of approximately $204.3 million . On April 14, 2016, the Company sold additional properties in two sites located in the U.S. to the U.S. Buyer for an aggregate purchase price of approximately $11.9 million . In connection with these transactions, the Company and U.S. Buyer and an affiliate of the Canadian Buyer entered into master land and building lease agreements under which the Company agreed to lease back each of the properties for an initial term of twenty years , followed by one optional renewal term of 9 years, 11 months . Leaseback rental will escalate annually by 2% during the initial term and based on changes in the Consumer Price Index capped at 4% during the optional renewal period. The proceeds received from the sale-leaseback transactions net of transaction costs of $6.5 million amounted to $209.7 million . Prior to the Reorganization, the sale-leaseback transactions were considered to have one form of prohibited “continuing involvement” at the inception of the lease which preclude sale-leaseback accounting for transactions involving real estate in the financial statements of the Company because a guarantee by LSF9 provided the buyer-lessor or the lessor, as applicable, with additional collateral that reduced the buyer-lessor’s or the lessor's, as applicable, risk of loss. As a result, the assets subject to the sale-leaseback remained on the balance sheet and were depreciated. Additionally, the aggregate proceeds were recorded as a financing obligation in the consolidated balance sheet and under financing in the statements of cash flow. In October 2016, t he Company entered into agreements to replace the original guarantor, LSF9, with Forterra, as the new guarantor, effective immediately following completion of the Reorganization. Due to the change in guarantor, the sale leaseback qualified for sales recognition and was classified as an operating lease beginning October 2016. Associated with the sale, in October 2016, the Company recognized a loss on the statement of operations of $19.6 million and a deferred gain of $81.5 million . The deferred gain will be amortized over the life of the lease. As of June 30, 2017 , the non-current portion of the deferred gain was $77.0 million and the current portion of the deferred gain was $2.8 million in the condensed consolidated balance sheets. |
Commitments and contingencies
Commitments and contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies 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 combined 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. In connection with the Acquisition, there is an earn-out contingency including 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 HeidelbergCement'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 exceeds the specified target, LSF9, and therefore, Forterra would be required to pay HeidelbergCement 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 earn-out statement to HC demonstrating that no payment was required. On June 13, 2016, HeidelbergCement provided notification that it is disputing, 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 HeidelbergCement’s position has merit and intends to vigorously oppose HeidelbergCement's assertions. On October 5, 2016, affiliates of HeidelbergCement 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, cla im ing a breach of contract and seeking the $100.0 million and other damages (the "Delaware Action"). In November 2016, the defendants filed a motion to dismiss the Delaware Action, and on January 6, 2017, the plaintiffs filed a First Amended Complaint. The defendants filed a motion to dismiss the First Amended Complaint on February 22, 2017, requesting that the Court dismiss all claims in the Delaware Action. On March 24, 2017, the plaintiffs in the Delaware Action filed a response, and the defendants filed a reply on April 7, 2017. The court in the Delaware Action has set a hearing on the defendants' motion to dismiss for September 21, 2017. As a result of the Reorganization, the defendants in the Delaware Action are no longer part of the Company and its consolidated subsidiaries, however the Company remains the liable party in this matter. As of June 30, 2017 , no liability for this contingency has been accrued as payment of any earn-out 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. 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 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 below 50%, or through certain cash distribution as defined in the LTIP. Before the payout of any cash the LTIP requires Lone Star to 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 June 30, 2017 , no monetization event had occurred, and therefore no amounts were accrued in the 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 is 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 Offering, 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. Tax receivable agreement In connection with the Offering, the Company entered into a tax receivable agreement 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 tax receivable agreement 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 Offering, (ii) the utilization of the Company's and its subsidiaries’ net operating losses and tax credits, if any, attributable to periods prior to the Offering, (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 USP Acquisition and (v) certain other tax benefits attributable to payments made under the tax receivable agreement. For purposes of the tax receivable agreement, 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 tax receivable agreement as a contingent liability, with amounts accrued when considered probable and reasonably estimable. As of the Offering date, the Company recorded a $160.8 million liability and a reduction to additional paid-in-capital related to the tax receivable agreement for the undiscounted value of probable future payments. Net of tax effects of $18.5 million , the net reduction to additional paid-in-capital related to the initial liability for the tax receivable agreement was $142.3 million . 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 Offering will be recorded as a reduction to the liability and will be recorded as a financing obligation in the statement of cash flows. At the end of each reporting period, any changes in the Company's estimate of the liability will be recorded in the statement of operations as a component of other income/expense and will be recorded as an operating activity in the statement of cash flows. As of June 30, 2017 , the liability recorded is $160.8 million as no payments have been made through June 30, 2017. The timing and amount of future tax benefits associated with the tax receivable agreement are subject to change, and additional payments may be required which could be materially different from the current accrued liability. |
Earnings per share
Earnings per share | 6 Months Ended |
Jun. 30, 2017 | |
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 common shares outstanding during the period. Potentially dilutive securities include employee stock options and shares of restricted stock. Diluted EPS reflects the assumed exercise or conversion of all dilutive securities. For purposes of calculating earnings (loss) per share, weighted average shares prior to the Reorganization have been retroactively adjusted to give effect to Stock Split and the Reorganization for all historical periods presented in the financial statements. The computations of earnings (loss) per share for periods prior to our IPO do not include the shares issued in connection with the IPO. The calculations of the basic and diluted EPS for the three and six months ended June 30, 2017 and 2016 are presented below (in thousands, except share and per share amounts) : For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 Income (loss) from continuing operations $ (11,173 ) $ 31,846 $ (33,716 ) $ 29,684 Discontinued operations, net of tax — 4,843 — 3,069 Net Income (loss) $ (11,173 ) $ 36,689 $ (33,716 ) $ 32,753 Common stock: Weighted average basic shares outstanding 63,792,743 45,369,474 63,791,127 45,369,474 Effect of dilutive securities — — — — Weighted average diluted shares outstanding 63,792,743 45,369,474 63,791,127 45,369,474 Basic earnings (loss) per share: Income (loss) from continuing operations $ (0.18 ) $ 0.70 $ (0.53 ) $ 0.65 Income from discontinued operations, net of taxes $ — $ 0.11 $ — $ 0.07 Net income (loss) $ (0.18 ) $ 0.81 $ (0.53 ) $ 0.72 Diluted earnings (loss) per share: Income (loss) from continuing operations $ (0.18 ) $ 0.70 $ (0.53 ) $ 0.65 Income from discontinued operations, net of taxes $ — $ 0.11 $ — $ 0.07 Net income (loss) $ (0.18 ) $ 0.81 $ (0.53 ) $ 0.72 |
Stock-based plans
Stock-based plans | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based plans | Stock-based plans 2016 Stock Incentive Plan Forterra has one equity compensation plan under which it has granted stock awards, the Forterra, Inc. 2016 Stock Incentive Plan (the "2016 Incentive Plan"). The 2016 Incentive Plan became effective October 19, 2016, upon the approval of the Company's then-sole equity-holder, and serves as the umbrella plan for the Company’s stock-based and cash-based incentive compensation programs for its directors, officers and other eligible employees. The aggregate number of shares of common stock that may be issued under the 2016 Incentive Plan may not exceed 5,000,000 shares. Effective October 19, 2016, the board of directors granted employees and independent directors 361,590 options to purchase shares of common stock at an exercise price of $18.00 per share and 136,900 shares of restricted common stock. Both the options and restricted shares awarded to employees are subject to a four -year vesting period and the options and restricted shares awarded to independent directors are subject to a one -year vesting period. Additional grants of an aggregate of 612,362 options and 290,350 restricted shares were awarded to employees effective March 20, 2017 and June 27, 2017. These options and restricted shares are subject to a three -year vesting period. The awards of stock options granted under the 2016 Incentive Plan have a term of ten years. In accordance with ASC 718, Compensation-Stock Compensation , the Company recognizes stock-based compensation expense over the requisite service period for the entire award, which is generally the maximum vesting period of the award, in an amount equal to the grant date fair value of share-based payments, which include stock options granted and restricted stock awards to employees and non-employee members of Forterra's board of directors. The Company records stock-based compensation expense in cost of goods sold and selling, general and administrative expenses. Stock-based compensation expense was approximately $1.0 million and $1.4 million for the three and six months ended June 30, 2017, respectively. Stock Option Grants The value of the options is determined by using a Black-Scholes pricing model that includes the following variables: 1) exercise price of the instrument, 2) fair market value of the underlying stock on date of grant, 3) expected life, 4) estimated volatility and 5) the risk-free interest rate. The Company utilized the following weighted-average assumptions in estimating the fair value of the option grants in the six months ended June 30, 2017: Expected dividends — % Expected volatility 39.60 % Risk-free interest rate 0.65 % Expected lives in years 6 Weighted-average fair value of options: Granted $6.25 The Black-Scholes model requires the use of subjective assumptions including expectations of future dividends and stock price volatility. Expected volatility is calculated based on an analysis of historical and implied volatility measures for a set of Forterra's peer companies. The average expected life is based on the contractual term of the option and expected employee exercise and post-vesting employment termination behavior. Such assumptions are only used for making the required fair value estimate and should not be considered as indicators of future dividend policy or stock price appreciation. Because changes in the subjective assumptions can materially affect the fair value estimate, and because employee stock option have characteristics significantly different from those of traded options, the use of the Black-Scholes option pricing model may not provide a reliable estimate of the fair value of employee stock options. A summary of the status of stock options granted under the 2016 Incentive Plan during the three months ended June 30, 2017, and changes during the three months then ended, is presented in the table below: Shares Weighted Average Exercise Price Outstanding, beginning of period 815,958 $18.54 Granted 154,154 $8.30 Exercised — n/a Forfeited (109,387 ) $18.79 Outstanding, end of period 860,725 $16.67 Restricted Stock Awards Restricted stock awards are share awards that entitle the holder to receive shares of the Company's common stock which become freely transferable upon vesting. During the three and six months ended June 30, 2017, pursuant to the 2016 Incentive Plan, the Company issued 40,241 and 290,350 restricted stock awards, respectively. These restricted stock awards granted to employees generally vest on a three -year vesting schedule. The estimated compensation cost of the restricted stock awards, which is equal to the fair value of the awards on the date of grant net of estimated forfeitures, is recognized on a straight-line basis over the vesting period. The following table summarizes information about restricted stock award activity during the three months ended June 30, 2017: Shares Weighted Average Grant Date Fair Value Unvested balance, beginning of period 384,759 $18.62 Grants 40,241 $8.30 Vested shares (4,500 ) $18.00 Forfeitures (47,686 ) $18.81 Unvested balance, end of period 372,814 $17.49 |
Income taxes
Income taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded income tax benefit from continuing operations of $3.6 million and $17.0 million for the three and six months ended June 30, 2017, respectively, and $26.2 million and $36.7 million for the three and six months ended June 30, 2016, respectively. The income tax benefit for the six months ended June 30, 2017 recorded includes an effective tax rate of 33.5% , which differs from the federal statutory rate primarily due to the effect of state income taxes, valuation allowance in certain states and foreign jurisdictions, partially offset by the favorable foreign rate differentials. There was no income tax benefit derived from the goodwill impairment recognized in the three months ended June 30, 2017 as the related goodwill is not deductible for income tax purposes. The income tax expense for the six months ended June 30, 2016 is primarily attributable to the reduction of the Company's valuation allowance and corresponding recognition of a deferred tax benefit after giving consideration to deferred income tax liabilities of $34.9 million recorded in the acquisition of Sherman-Dixie Concrete Industries, Inc. and USP Holdings, Inc. The Company's quarterly provision for income taxes has historically been calculated using the annual effective tax rate method, which applies an estimated annual effective tax rate to year-to-date pre-tax income or loss. However, when a reliable estimate of the annual effective tax rate cannot be made, such as when minor changes in estimated income for the full year can result in significant variations to the estimated annual effective tax rate, the actual effective tax rate for the year to date may be the best estimate of the annual effective tax rate. The Company has determined that it cannot make a reliable estimate of its annual effective tax rate; therefore, for the three and six months ended June 30, 2017, interim income taxes were recorded using the actual year-to-date effective tax rate as described under ASC 740-270-30-18, Accounting for Income Taxes-Interim Reporting . |
Segment reporting
Segment reporting | 6 Months Ended |
Jun. 30, 2017 | |
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 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 earnings before interest, taxes, depreciation and amortization (“EBITDA”) as a basis for making the decisions to allocate resources and assess performance. The following tables set forth reportable segment information with respect to net sales and other financial information attributable to the Company's reportable segments for the three and six months ended June 30, 2017 and 2016 (in thousands) : For the three months ended June 30, 2017: Drainage Pipe & Products Water Pipe & Products Corporate and Other Total Net Sales $ 221,521 $ 215,163 $ 1 436,685 Income (loss) from continuing operations before income taxes 29,088 434 (44,325 ) (14,803 ) Depreciation and amortization 10,868 17,464 169 28,501 Interest expense 123 15 16,940 17,078 EBITDA $ 40,079 $ 17,913 $ (27,216 ) $ 30,776 Capital expenditures $ 7,943 $ 3,351 $ 125 $ 11,419 For the three months ended June 30, 2016: Drainage Pipe & Products Water Pipe & Products Corporate and Other Total Net Sales $ 192,228 $ 189,170 $ 325 381,723 Income (loss) from continuing operations before income taxes 33,732 16,753 (44,812 ) 5,673 Depreciation and amortization 10,081 14,939 116 25,136 Interest (income)/expense 3,272 772 20,795 24,839 EBITDA $ 47,085 $ 32,464 $ (23,901 ) $ 55,648 Capital expenditures $ 4,329 $ 2,804 $ 624 $ 7,757 For the six months ended June 30, 2017: Drainage Pipe & Products Water Pipe & Products Corporate and Other Total Net Sales $ 381,969 $ 393,012 $ 6 774,987 Income (loss) from continuing operations before income taxes 28,127 99 (78,936 ) (50,710 ) Depreciation and amortization 23,144 34,910 251 58,305 Interest expense 219 16 30,385 30,620 EBITDA $ 51,490 $ 35,025 $ (48,300 ) $ 38,215 Capital expenditures $ 14,465 $ 8,161 $ 973 $ 23,599 Total assets $ 807,192 $ 1,081,149 $ 49,001 $ 1,937,342 For the six months ended June 30, 2016: Drainage Pipe & Products Water Pipe & Products Corporate and Other Total Net Sales $ 336,549 $ 229,641 $ 2,529 568,719 Income (loss) from continuing operations before income taxes 52,211 19,343 (78,610 ) (7,056 ) Depreciation and amortization 19,551 16,502 375 36,428 Interest expense 3,272 772 38,085 42,129 EBITDA $ 75,034 $ 36,617 $ (40,150 ) $ 71,501 Capital expenditures $ 6,270 $ 3,403 $ 624 $ 10,297 Total assets $ 724,744 $ 1,122,392 $ 25,831 $ 1,872,967 In the three and six months ended June 30, 2017 above, the Water Pipe & Products income from continuing operations includes the impact of $3.0 million of goodwill impairment and $7.5 million of long-lived asset impairment charges. 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 $3.3 million and $6.5 million for the three and six months ended June 30, 2017 , respectively, and $3.6 million and $4.9 million for the three and six months ended June 30, 2016 , respectively, and with the following balances (in thousands) : At June 30, At December 31, 2017 2016 Investment in equity method investee $ 56,499 $ 55,236 The Company is also required by ASC 280 to disclose additional information related to geographic location. The Company has operations in the United States, Canada and Mexico. 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: June 30, December 31, 2017 2016 United States $ 401,968 $ 422,853 Canada 20,038 19,584 Mexico 10,471 10,477 $ 432,477 $ 452,914 Net Sales: For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 United States $ 412,594 $ 347,997 $ 733,730 $ 517,846 Canada 20,852 30,767 34,819 47,914 Mexico 3,239 2,959 6,438 2,959 $ 436,685 $ 381,723 $ 774,987 $ 568,719 |
Related party transactions
Related party transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related party transactions | Related party transactions Hudson Advisors The Company had an advisory agreement with Hudson Advisors, an affiliate of Lone Star, to provide certain management oversight services to the Company, including assistance and advice on strategic plans, obtaining and maintaining certain legal documents, and communicating and coordinating with service providers. The Company incurred fees totaling $2.2 million and $3.1 million for the three and six months ended June 30, 2016 , respectively, included in selling, general and administrative expense on the condensed consolidated statement of operations. In conjunction with the Offering, the advisory agreement with Hudson Advisors was terminated. Affiliates receivable The Company pays for certain services provided for affiliates which the Company bills to its affiliates. At June 30, 2017 and December 31, 2016, the Company recorded a receivable of $0.5 million and $0.1 million , respectively for services paid on behalf of affiliates in other current assets on the condensed consolidated balance sheets. Tax receivable agreement In connection with the Offering, the Company entered into a tax receivable agreement 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 further discussion at Note 14 Commitments and contingencies. Bricks Joint Venture In connection with the Bricks Disposition, Forterra entered into a transition services agreement with the joint venture formed by the affiliate of Lone Star and an unaffiliated third party pursuant to which Forterra's former bricks business was contributed (the "Bricks Joint Venture"). Pursuant to the transition services agreement, Forterra continued to provide certain administrative services, including but not limited to information technology, accounting and treasury for a limited period of time following the Bricks Disposition. The Bricks Joint Venture paid the Company a total of $0.9 million and $1.6 million pursuant to the transition services agreement for the three and six months ended June 30, 2017 , respectively. Additionally, during the transition period, the Company collected cash from as well as settled invoices and payroll on behalf of its former bricks business. As a result, Forterra had a net payable due to affiliates of $8.4 million as of December 31, 2016, and a net receivable from affiliates of $5.7 million as of June 30, 2017. |
Discontinued operations and ass
Discontinued operations and assets held for sale | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued operations and assets held for sale | Discontinued operations and assets held for sale Discontinued operations On August 23, 2016, an affiliate of Lone Star entered into an agreement with an unaffiliated third party to contribute Forterra's bricks business to a Bricks Joint Venture. In exchange for the contribution of the bricks business, an affiliate of Lone Star received a 50% interest in the Bricks Joint Venture. In connection with the Reorganization described in Note 1, on October 17, 2016, Forterra distributed its bricks business to an affiliate of Lone Star in a transaction among entities under common control. The Bricks Disposition has been accounted for as a discontinued operation. Following the Bricks Disposition, Forterra no longer had any relation to or business affiliation with its former bricks business or the Bricks Joint Venture other than contractual arrangements regarding certain limited transition services, the temporary use of the “Forterra” name, and a short-term loan, of approximately $11.9 million , which was subsequently been repaid in full in 2016. The key components of loss from discontinued operations for the three and six months ended June 30, 2016 consist of the following (in thousands) : Three months ended Six months ended June 30, 2016 June 30, 2016 Revenue $ 41,086 $ 71,424 Operating costs and expenses (34,790 ) (64,154 ) Depreciation and amortization (1,525 ) (3,992 ) Operating income $ 4,771 $ 3,278 Other income (expense) 79 (2 ) Income tax expense (7 ) (207 ) Income from discontinued operations, net of tax $ 4,843 $ 3,069 Assets held for sale On June 23, 2017 Forterra entered into a definitive agreement to sell its U.S. concrete and steel pressure pipe business, which is part of its Water Pipe and Products segment, to Thompson Pipe Group ("TPG") in exchange for approximately $23.2 million in cash, exclusive of fees and expenses, as well as assets relating to a drainage pipe and products manufacturing facility. As of June 30, 2017, the Company determined the assets and liabilities associated with the disposal group met the criteria required to be classified as held for sale. Assets and liabilities which meet the held for sale criteria are carried at fair value less selling costs. An analysis indicated that the carrying value of the long-lived assets held for sale exceeded the fair value less costs to sell, and as a result, an pre-tax impairment charge of $7.5 million was recorded within impairment and exit charges for the three and six months ended June 30, 2017. The long-lived assets' fair value was estimated using accepted cost approach methodologies. Assets and liabilities classified as held for sale on our accompanying condensed consolidated balance sheets at June 30, 2017 consisted of the following ( in thousands ): June 30, 2017 Receivables, net $ 31,007 Inventories 46,125 Prepaid expenses 112 Current assets held for sale $ 77,244 Property, plant and equipment, net 18,585 Non-current assets held for sale $ 18,585 Trade payables 11,256 Accrued liabilities 126 Deferred revenue 10,182 Current liabilities held for sale $ 21,564 The pre-tax loss of the U.S. concrete and steel pressure pipe disposal group held for sale is $9.2 million and $15.3 million for the three and six month periods ended June 30, 2017, respectively inclusive of long-lived asset impairment of $7.5 million . In 2016, the disposal group had a pre-tax income of $5.9 million for the three months ended June 30, 2016 and pre-tax income of $6.9 million for the six months ended June 30, 2016. |
Subsequent events
Subsequent events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent events | Subsequent events On July 31, 2017, the Company completed the sale of the assets of its U.S. concrete and steel pressure pipe business. As provided in Note 20, these assets were classified as held for sale as of June 30, 2017. The Company received $23.2 million in cash, exclusive of fees and expenses, as well as assets relating to a drainage pipe and products manufacturing facility previously owned by TPG. In exchange, the Company contributed the net working capital and long-lived assets of its U.S. concrete and steel pressure pipe business. Subject to the finalization of customary net working capital adjustments and the determination of the fair value of assets acquired in the transaction, for which not all relevant information is yet available, the Company expects to record a pre-tax loss on sale in continuing operations for this transaction in the third quarter of 2017, which the Company preliminarily estimates will be approximately $25 million . |
Summary of significant accoun28
Summary of significant accounting policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
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. |
Long-lived assets held for sale | Long-lived assets held for sale The Company accounts for long-lived assets held for sale in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 360, Accounting for the Impairment or Disposal of Long-Lived Asset, which requires assets to be classified as held for sale when the following criteria are met: 1) management, having the authority to approve the action, commits to a plan to sell; 2) the asset or asset group is available for immediate sale in its present condition; 3) an active program to locate a buyer and other actions required to complete the plan to sell have been initiated; 4) actions required to complete the sale indicate that is it unlikely that significant changes to the plan will be made or that the plan will be withdrawn, and 5) the sale is probable to qualify for recognition as a completed sale within one year. At such time assets or an asset group are determined to be held for sale, its carrying amount is adjusted to the lower of its depreciated book value or its estimated fair value, less costs to sell, and depreciation is no longer recognized. An impairment charge is recognized if the carrying value is in excess of its fair value. The assets and liabilities are required to be classified as held for sale on the accompanying condensed consolidated balance sheets. |
Goodwill | Goodwill Goodwill represents the excess of costs over the fair value of identifiable assets acquired and liabilities assumed. The Company evaluates goodwill and intangible assets in accordance with ASC 350, Goodwill and Other Intangible Assets . ASC 350 requires goodwill to be either qualitatively or quantitatively assessed for impairment annually (or more frequently if impairment indicators arise) for each reporting unit. The Company performs its annual impairment testing of goodwill as of October 1 of each year and in interim periods if events occur that would indicate that it is more likely than not the fair value of a reporting unit is less than carrying value. The Company first assesses qualitative factors to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as the basis for determining whether it is necessary to perform a quantitative goodwill impairment test. The quantitative analysis compares the fair value of the reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds the fair value, impairment is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. |
Recent Accounting Guidance Adopted and Not Yet Adopted | Recent Accounting Guidance Adopted In January 2017, the FASB issued Accounting Standards Update ("ASU") 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, however early adoption is permitted. The Company early adopted the guidance provided in the ASU in the second quarter of 2017. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements, however it could have a material impact in the future, to the extent the new guidance impacts the Company's application of a definition of a business to significant transactions, including acquisitions and divestitures. In January 2017, the FASB issued ASU 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment to simplify the accounting for goodwill impairment. The guidance removes the second step of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. This guidance is effective in 2020, but early adoption is permitted for any impairment tests performed after January 1, 2017. The Company elected to early adopt the ASU effective in the second quarter of 2017. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In the second quarter of 2017, the Company recognized impairment of goodwill associated with one of its reporting units. See Note 8, Goodwill and other intangible assets for a discussion of our interim goodwill assessment and the related impairment charge. In July 2015, the FASB issued Accounting Standards Update ("ASU") 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, requiring an entity to measure inventory within the scope of the ASU at the lower of cost and net realizable value. For public business entities, the amendments in this update were effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The adoption of this ASU during the first quarter of 2017 did not have a material impact on the condensed consolidated financial statements. Recent Accounting Guidance Not Yet Adopted In May 2014, the FASB issued guidance (the effective date of which was later delayed) that outlines a single comprehensive model for accounting for revenue arising from contracts with customers, which supersedes most of the existing revenue recognition guidance. This guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. The guidance is effective for interim and annual reporting periods that begin after December 15, 2017. Early adoption of the standard is permitted, but not before the original effective date of interim and annual reporting periods beginning after December 15, 2016. During the second quarter of 2016, the FASB issued additional revenue recognition guidance that clarifies how an entity identifies performance obligations related to customer contracts as well as the objectives of collectability, sales and other taxes, non-cash consideration, contract modifications at transition, and technical corrections. The guidance is effective beginning in the first quarter of 2018, and the Company does not currently plan to early adopt the guidance. The guidance permits two methods of adoption, retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). The Company will utilize the modified retrospective method upon adoption. The Company continues to evaluate the effect that the updated standard will have on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , amending the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. For public business entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted as of the standard’s issuance date. ASU 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company believes the adoption of this ASU will have a material impact on its consolidated financial statements as it will result in most of the Company’s leases and associated assets being presented on the balance sheet. In May 2017, the FASB issued ASU 2017-09 Stock Compensation (Topic 718): Scope of Modification Accounting to clarify which changes to the terms and conditions of a share-based payment require the application of modification accounting. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. |
Business combinations (Tables)
Business combinations (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Schedule of Fair Values of Assets Acquired and Liabilities Assumed | The preliminary respective fair values of the assets acquired and liabilities assumed at the acquisition date are as follows (in thousands) : Net working capital $ 2,994 Property, plant and equipment, net 12,335 Customer relationship intangible 1,676 Non-compete agreement intangible 866 Other intangibles 443 Other assets and liabilities (726 ) Net identifiable assets acquired 17,588 Goodwill 17,903 Cash consideration transferred $ 35,491 |
Receivables, net (Tables)
Receivables, net (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Receivables [Abstract] | |
Schedule of Receivables, Net and Allowance for Doubtful Accounts | Receivables consist of the following (in thousands) : June 30, December 31, 2017 2016 Trade receivables $ 234,621 $ 178,012 Amounts billed, but not yet paid under retainage provisions 1,571 1,959 Other receivables 6,263 22,408 Total receivables $ 242,455 $ 202,379 Less: Allowance for doubtful accounts (2,397 ) (898 ) Receivables, net $ 240,058 $ 201,481 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following (in thousands) : June 30, December 31, 2017 2016 Finished goods $ 201,140 $ 185,507 Raw materials 85,681 90,647 Work in process 479 3,348 Total inventories $ 287,300 $ 279,502 |
Investment in equity method i32
Investment in equity method investee (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Selected Historical Financial Data of the Investee | Selected unaudited historical financial data for the investee is as follows ( in thousands ): Three months ended Six months ended June 30, June 30, 2017 2017 Net sales $ 35,447 $ 69,619 Gross profit 11,528 22,703 Income from operations 7,007 13,642 Net income $ 6,928 $ 13,514 |
Property, plant and equipment33
Property, plant and equipment, net (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment, net | Property, plant and equipment, net, consist of the following (in thousands) : June 30, December 31, 2017 2016 Machinery and equipment $ 331,758 $ 329,871 Land, buildings and improvements 147,555 142,105 Other equipment 4,074 2,592 Construction-in-progress 36,609 43,855 Total property, plant and equipment 519,996 518,423 Less: accumulated depreciation (87,519 ) (65,509 ) Property, plant and equipment, net $ 432,477 $ 452,914 |
Goodwill and other intangible34
Goodwill and other intangible assets, net (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill by Segment | The following table summarizes the changes in goodwill by operating segment for the six months ended June 30, 2017 ( in thousands ): Drainage Pipe & Products Water Pipe & Products Total Balance at December 31, 2016 $ 168,866 $ 322,581 $ 491,447 Acquisitions 19,515 — 19,515 Impairment — (3,003 ) (3,003 ) Foreign currency 508 7 515 Balance at June 30, 2017 $ 188,889 $ 319,585 $ 508,474 |
Schedule of Intangible Assets | Intangible assets other than goodwill at June 30, 2017 and December 31, 2016 included the following ( in thousands ): Net carrying value as of June 30, 2017 Net carrying value as of December 31, 2016 Customer relationships $ 191,419 $ 209,937 Trade names 32,308 34,771 Patents 18,236 20,673 Customer backlog 91 1,628 Non-compete agreements 7,166 7,410 In-Process R&D 6,354 6,692 Other 788 487 Total intangible assets $ 256,362 $ 281,598 |
Fair value measurement (Tables)
Fair value measurement (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Summary of Carrying and Fair Value Amounts for Financial Instruments and Liabilities | 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 June 30, 2017 using Carrying Amount June 30, 2017 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value 2016 Senior Term Loan $1,196,319 — $1,173,333 — $1,173,333 Tax receivable agreement payable 160,783 — — 135,375 135,375 Fair value measurements at December 31, 2016 using Carrying Amount December 31, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value 2016 Senior Term Loan $1,000,983 — $1,064,395 — $1,064,395 Tax receivable agreement payable 160,783 — — 125,614 125,614 |
Summary of Fair Value Measurements on Recurring Basis | The carrying amount and estimated fair value of the Company’s financial instruments and other assets and liabilities measured and recorded at fair value on a recurring basis is as follows for the dates indicated (in thousands) : Fair value measurements at June 30, 2017 using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Fair Value Non-current assets Derivative asset — $1,326 — $1,326 Current liabilities Derivative liability — $3,467 — $3,467 Fair value measurements at December 31, 2016 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 Non-current liabilities Derivative liability — $372 — $372 |
Accrued liabilities (Tables)
Accrued liabilities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands) : June 30, December 31, 2017 2016 Accrued payroll and employee benefits $ 25,876 $ 29,945 Accrued taxes 8,838 32,746 Accrued rebates 8,839 7,509 Warranty 4,056 3,509 Other miscellaneous accrued liabilities 3,363 3,681 Tax receivable agreement liability, current portion 4,000 4,000 Short-term derivative liability 3,467 — Environmental & reclamation obligation 671 775 Other 183 — Total accrued liabilities $ 59,293 $ 82,165 |
Debt and deferred financing c37
Debt and deferred financing costs (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The Company’s debt consisted of the following (in thousands) : June 30, December 31, 2017 2016 2016 Senior Term Loan, net of debt issuance costs and original issuance discount of $45,303 and $46,392, respectively $ 1,196,319 $ 1,000,983 2016 Revolver, net of debt issuance costs of $3,529 and $3,936, respectively 76,471 95,064 Total debt $ 1,272,790 $ 1,096,047 Less: current portion debt (12,510 ) (10,500 ) Total long-term debt $ 1,260,280 $ 1,085,547 |
Schedule of minimum future principal payments | As of June 30, 2017 , scheduled maturities of long-term debt were as follows: Total 2016 Senior Term Loan 2016 Revolver 2017 $ 6,255 $ 6,255 $ — 2018 12,510 12,510 — 2019 12,510 12,510 — 2020 12,510 12,510 — 2021 92,510 12,510 80,000 Thereafter: 1,185,327 1,185,327 — $ 1,321,622 $ 1,241,622 $ 80,000 |
Derivatives and hedging (Tables
Derivatives and hedging (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair values of derivative assets and liabilities in the balance sheets | The following table presents the fair values of derivative assets and liabilities in the condensed consolidated balance sheets (in thousands) : June 30, 2017 Derivative Assets Derivative Liabilities Notional Amount Fair Value Notional Amount Fair Value Foreign exchange forward contracts $ — — $ 92,961 $ 3,467 Interest rate swaps 525,000 1,326 — — Total derivatives, gross 1,326 3,467 Less: Legally enforceable master netting agreements — — Total derivatives, net $ — $ 1,326 $ — $ 3,467 December 31, 2016 Derivative Assets Derivative Liabilities Notional Amount Fair Value Notional Amount Fair Value Foreign exchange forward contracts $ — $ — $ 92,961 $ 372 Total derivatives, gross — — — 372 Less: Legally enforceable master netting agreements — — — — Total derivatives, net $ — $ — $ — $ 372 |
Gain (loss) recognized in the statements of operations and comprehensive income on derivative instruments in cash flow hedging relationships | The following table presents the effect of derivative instruments on the condensed consolidated statements of operations (in thousands) : Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 Cross currency swaps Loss on derivatives not designated as hedges in other operating income (expense) — (411 ) — (2,874 ) Interest rate swaps Gain on derivatives not designated as hedges included in interest expense (708 ) — 1,326 — |
Earnings per share (Tables)
Earnings per share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of Basic and Dilutive Earnings Per Share | The calculations of the basic and diluted EPS for the three and six months ended June 30, 2017 and 2016 are presented below (in thousands, except share and per share amounts) : For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 Income (loss) from continuing operations $ (11,173 ) $ 31,846 $ (33,716 ) $ 29,684 Discontinued operations, net of tax — 4,843 — 3,069 Net Income (loss) $ (11,173 ) $ 36,689 $ (33,716 ) $ 32,753 Common stock: Weighted average basic shares outstanding 63,792,743 45,369,474 63,791,127 45,369,474 Effect of dilutive securities — — — — Weighted average diluted shares outstanding 63,792,743 45,369,474 63,791,127 45,369,474 Basic earnings (loss) per share: Income (loss) from continuing operations $ (0.18 ) $ 0.70 $ (0.53 ) $ 0.65 Income from discontinued operations, net of taxes $ — $ 0.11 $ — $ 0.07 Net income (loss) $ (0.18 ) $ 0.81 $ (0.53 ) $ 0.72 Diluted earnings (loss) per share: Income (loss) from continuing operations $ (0.18 ) $ 0.70 $ (0.53 ) $ 0.65 Income from discontinued operations, net of taxes $ — $ 0.11 $ — $ 0.07 Net income (loss) $ (0.18 ) $ 0.81 $ (0.53 ) $ 0.72 |
Stock-based plans (Tables)
Stock-based plans (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Weighted Average Assumptions in Estimating Fair Value of Options | The Company utilized the following weighted-average assumptions in estimating the fair value of the option grants in the six months ended June 30, 2017: Expected dividends — % Expected volatility 39.60 % Risk-free interest rate 0.65 % Expected lives in years 6 Weighted-average fair value of options: Granted $6.25 |
Schedule of Stock Options Outstanding, Vested and Expected to Vest | A summary of the status of stock options granted under the 2016 Incentive Plan during the three months ended June 30, 2017, and changes during the three months then ended, is presented in the table below: Shares Weighted Average Exercise Price Outstanding, beginning of period 815,958 $18.54 Granted 154,154 $8.30 Exercised — n/a Forfeited (109,387 ) $18.79 Outstanding, end of period 860,725 $16.67 |
Schedule of Restricted Stock Award Activity | The following table summarizes information about restricted stock award activity during the three months ended June 30, 2017: Shares Weighted Average Grant Date Fair Value Unvested balance, beginning of period 384,759 $18.62 Grants 40,241 $8.30 Vested shares (4,500 ) $18.00 Forfeitures (47,686 ) $18.81 Unvested balance, end of period 372,814 $17.49 |
Segment reporting (Tables)
Segment reporting (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following tables set forth reportable segment information with respect to net sales and other financial information attributable to the Company's reportable segments for the three and six months ended June 30, 2017 and 2016 (in thousands) : For the three months ended June 30, 2017: Drainage Pipe & Products Water Pipe & Products Corporate and Other Total Net Sales $ 221,521 $ 215,163 $ 1 436,685 Income (loss) from continuing operations before income taxes 29,088 434 (44,325 ) (14,803 ) Depreciation and amortization 10,868 17,464 169 28,501 Interest expense 123 15 16,940 17,078 EBITDA $ 40,079 $ 17,913 $ (27,216 ) $ 30,776 Capital expenditures $ 7,943 $ 3,351 $ 125 $ 11,419 For the three months ended June 30, 2016: Drainage Pipe & Products Water Pipe & Products Corporate and Other Total Net Sales $ 192,228 $ 189,170 $ 325 381,723 Income (loss) from continuing operations before income taxes 33,732 16,753 (44,812 ) 5,673 Depreciation and amortization 10,081 14,939 116 25,136 Interest (income)/expense 3,272 772 20,795 24,839 EBITDA $ 47,085 $ 32,464 $ (23,901 ) $ 55,648 Capital expenditures $ 4,329 $ 2,804 $ 624 $ 7,757 For the six months ended June 30, 2017: Drainage Pipe & Products Water Pipe & Products Corporate and Other Total Net Sales $ 381,969 $ 393,012 $ 6 774,987 Income (loss) from continuing operations before income taxes 28,127 99 (78,936 ) (50,710 ) Depreciation and amortization 23,144 34,910 251 58,305 Interest expense 219 16 30,385 30,620 EBITDA $ 51,490 $ 35,025 $ (48,300 ) $ 38,215 Capital expenditures $ 14,465 $ 8,161 $ 973 $ 23,599 Total assets $ 807,192 $ 1,081,149 $ 49,001 $ 1,937,342 For the six months ended June 30, 2016: Drainage Pipe & Products Water Pipe & Products Corporate and Other Total Net Sales $ 336,549 $ 229,641 $ 2,529 568,719 Income (loss) from continuing operations before income taxes 52,211 19,343 (78,610 ) (7,056 ) Depreciation and amortization 19,551 16,502 375 36,428 Interest expense 3,272 772 38,085 42,129 EBITDA $ 75,034 $ 36,617 $ (40,150 ) $ 71,501 Capital expenditures $ 6,270 $ 3,403 $ 624 $ 10,297 Total assets $ 724,744 $ 1,122,392 $ 25,831 $ 1,872,967 In the three and six months ended June 30, 2017 above, the Water Pipe & Products income from continuing operations includes the impact of $3.0 million of goodwill impairment and $7.5 million of long-lived asset impairment charges. 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 $3.3 million and $6.5 million for the three and six months ended June 30, 2017 , respectively, and $3.6 million and $4.9 million for the three and six months ended June 30, 2016 , respectively, and with the following balances (in thousands) : At June 30, At December 31, 2017 2016 Investment in equity method investee $ 56,499 $ 55,236 |
Long-lived Assets by Geographic Areas | The Company is also required by ASC 280 to disclose additional information related to geographic location. The Company has operations in the United States, Canada and Mexico. 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: June 30, December 31, 2017 2016 United States $ 401,968 $ 422,853 Canada 20,038 19,584 Mexico 10,471 10,477 $ 432,477 $ 452,914 |
Revenue from External Customers by Geographic Areas | Net Sales: For the three months ended June 30, For the six months ended June 30, 2017 2016 2017 2016 United States $ 412,594 $ 347,997 $ 733,730 $ 517,846 Canada 20,852 30,767 34,819 47,914 Mexico 3,239 2,959 6,438 2,959 $ 436,685 $ 381,723 $ 774,987 $ 568,719 |
Discontinued operations and a42
Discontinued operations and assets held for sale (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Loss From Discontinued Operations and Assets and Liabilities Classified as Held-For-Sale | The key components of loss from discontinued operations for the three and six months ended June 30, 2016 consist of the following (in thousands) : Three months ended Six months ended June 30, 2016 June 30, 2016 Revenue $ 41,086 $ 71,424 Operating costs and expenses (34,790 ) (64,154 ) Depreciation and amortization (1,525 ) (3,992 ) Operating income $ 4,771 $ 3,278 Other income (expense) 79 (2 ) Income tax expense (7 ) (207 ) Income from discontinued operations, net of tax $ 4,843 $ 3,069 Assets and liabilities classified as held for sale on our accompanying condensed consolidated balance sheets at June 30, 2017 consisted of the following ( in thousands ): June 30, 2017 Receivables, net $ 31,007 Inventories 46,125 Prepaid expenses 112 Current assets held for sale $ 77,244 Property, plant and equipment, net 18,585 Non-current assets held for sale $ 18,585 Trade payables 11,256 Accrued liabilities 126 Deferred revenue 10,182 Current liabilities held for sale $ 21,564 |
Organization and description 43
Organization and description of the business (Details) | Oct. 25, 2016USD ($)$ / sharesshares | Oct. 06, 2016$ / sharesshares | Mar. 13, 2015USD ($) | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($)$ / sharesshares | Oct. 05, 2016$ / sharesshares | Jun. 13, 2016USD ($) |
Subsidiary, Sale of Stock [Line Items] | ||||||||
Common shares, authorized (in shares) | shares | 190,000,000 | 190,000,000 | ||||||
Common shares, par value (in usd per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||
Common shares, outstanding (in shares) | shares | 64,165,557 | 63,924,124 | ||||||
Proceeds from debt | $ 200,000,000 | $ 548,400,000 | ||||||
Repayments of debt | $ 5,753,000 | $ 2,191,000 | ||||||
Forterra Building Products | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Common shares, authorized (in shares) | shares | 190,000,000 | 1,000 | ||||||
Common shares, par value (in usd per share) | $ / shares | $ 0.001 | $ 0.01 | ||||||
Stock split (in shares) | 41,619.472 | |||||||
Common shares, outstanding (in shares) | shares | 41,619,472 | |||||||
Preferred stock, authorized (in shares) | shares | 10,000,000 | |||||||
Preferred stock, shares issued (in shares) | shares | 0 | 0 | ||||||
Preferred stock, shares outstanding (in shares) | shares | 0 | 0 | ||||||
Debt obligations | $ 1,272,790,000 | $ 1,096,047,000 | ||||||
Repayments of debt | $ 296,000,000 | |||||||
Forterra Building Products | Senior Notes | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Repayments of debt | 1,040,000,000 | |||||||
Forterra Building Products | Senior Notes | 2016 Senior Term Loan | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Debt obligations | 1,050,000,000 | 1,000,983,000 | ||||||
Forterra Building Products | Line of Credit | Revolving Credit Facility | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Proceeds from debt | 125,000,000 | |||||||
Forterra Building Products | Line of Credit | 2016 Revolver | Revolving Credit Facility | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Line of credit facility, maximum borrowing capacity | 300,000,000 | |||||||
Debt obligations | 125,000,000 | $ 76,471,000 | $ 95,064,000 | |||||
Forterra Building Products | Junior Term Loan | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Repayments of debt | $ 260,000,000 | |||||||
Forterra Building Products | IPO | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Number of shares issued in stock offering (in shares) | shares | 18,420,000 | |||||||
Public offering price (in usd per share) | $ / shares | $ 18 | |||||||
Net proceeds from offering | $ 313,300,000 | |||||||
Predecessor | Heidelberg Cement Hanson Building Products | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Business acquisition, possible maximum earn out | $ 100,000,000 | $ 100,000,000 | ||||||
Predecessor | Heidelberg Cement Hanson Building Products | Forterra Building Products | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Aggregate consideration | 1,330,000,000 | |||||||
Business acquisition, possible maximum earn out | 100,000,000 | |||||||
Capital contribution used to fund acquisition | 432,300,000 | |||||||
Debt acquired to fund acquisition | $ 940,000,000 |
Summary of significant accoun44
Summary of significant accounting policies - Prior Period Adjustments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Increase in pre-tax loss | $ 14,803 | $ (5,673) | $ 50,710 | $ 7,056 | |
Increase to cost of revenue | 361,089 | 298,632 | 660,424 | 449,937 | |
Increase in selling, general and administrative expenses | 67,297 | 57,060 | 132,598 | 90,721 | |
Increase in revenues | $ 436,685 | $ 381,723 | $ 774,987 | $ 568,719 | |
Prior Period Adjustments-Cost Accruals | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Increase in pre-tax loss | $ 4,600 | ||||
Increase to cost of revenue | 3,300 | ||||
Increase in selling, general and administrative expenses | 2,000 | ||||
Increase in revenues | $ 700 |
Summary of significant accoun45
Summary of significant accounting policies - Credit Risk (Details) - Customer Concentration Risk - Water Pipe & Products | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Sales Revenue, Net | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 12.00% | 13.00% |
Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 18.00% |
Business combinations - Additio
Business combinations - Additional Information (Details) - USD ($) $ in Millions | Feb. 03, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 |
Selling, General and Administrative Expenses | |||||
Business Acquisition [Line Items] | |||||
Business combinations, transaction costs | $ 0.2 | $ 5 | $ 0.4 | $ 7.6 | |
Royal | |||||
Business Acquisition [Line Items] | |||||
Aggregate consideration | $ 35.5 |
Business combinations - Fair Va
Business combinations - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Feb. 03, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | |||
Goodwill | $ 508,474 | $ 491,447 | |
Royal | |||
Business Acquisition [Line Items] | |||
Net working capital | $ 2,994 | ||
Property, plant and equipment | 12,335 | ||
Other assets and liabilities | (726) | ||
Net identifiable assets acquired | 17,588 | ||
Goodwill | 17,903 | ||
Cash consideration transferred | 35,491 | ||
Royal | Customer relationships | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets | 1,676 | ||
Royal | Non-compete agreements | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets | 866 | ||
Royal | Other | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets | $ 443 |
Receivables, net (Details)
Receivables, net (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | $ 242,455 | $ 202,379 |
Less: Allowance for doubtful accounts | (2,397) | (898) |
Receivables, net | 240,058 | 201,481 |
Trade receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | 234,621 | 178,012 |
Amounts billed, but not yet paid under retainage provisions | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | 1,571 | 1,959 |
Other receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | $ 6,263 | $ 22,408 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 201,140 | $ 185,507 |
Raw materials | 85,681 | 90,647 |
Work in process | 479 | 3,348 |
Total inventories | $ 287,300 | $ 279,502 |
Investment in equity method i50
Investment in equity method investee - Additional Information (Details) $ in Thousands | Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Jul. 20, 2012locationshares |
Schedule of Equity Method Investments [Line Items] | |||
Investment in equity method investee | $ 56,499 | $ 55,236 | |
Drainage Pipe & Products | |||
Schedule of Equity Method Investments [Line Items] | |||
Investment in equity method investee | $ 56,499 | $ 55,236 | |
Joint Venture | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership percentage | 50.00% | 50.00% | |
Joint Venture | Drainage Pipe & Products | |||
Schedule of Equity Method Investments [Line Items] | |||
Investment in equity method investee | $ 56,500 | ||
Forterra Building Products | Joint Venture | |||
Schedule of Equity Method Investments [Line Items] | |||
Number of operating locations under joint venture | location | 9 | ||
Ownership percentage | 50.00% | ||
Number or shares owned on equity method investment (in shares) | shares | 500 |
Investment in equity method i51
Investment in equity method investee - Selected Historical Financial Data of Investee (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | ||
Net sales | $ 35,447 | $ 69,619 |
Gross profit | 11,528 | 22,703 |
Income from operations | 7,007 | 13,642 |
Net income | $ 6,928 | $ 13,514 |
Property, plant and equipment52
Property, plant and equipment, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | |||||
Total property, plant and equipment | $ 519,996 | $ 519,996 | $ 518,423 | ||
Less: accumulated depreciation | (87,519) | (87,519) | (65,509) | ||
Property, plant and equipment, net | 432,477 | 432,477 | 452,914 | ||
Depreciation expense | 15,100 | $ 14,700 | 30,100 | $ 23,400 | |
Machinery and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, plant and equipment | 331,758 | 331,758 | 329,871 | ||
Land, buildings and improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, plant and equipment | 147,555 | 147,555 | 142,105 | ||
Other equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, plant and equipment | 4,074 | 4,074 | 2,592 | ||
Construction-in-progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, plant and equipment | $ 36,609 | $ 36,609 | $ 43,855 |
Goodwill and other intangible53
Goodwill and other intangible assets, net - Goodwill Roll Forward (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Goodwill [Roll Forward] | ||
Balance at December 31, 2016 | $ 491,447 | |
Acquisitions | 19,515 | |
Impairment | (3,003) | |
Foreign currency | 515 | |
Balance at June 30, 2017 | $ 508,474 | 508,474 |
Drainage Pipe & Products | ||
Goodwill [Roll Forward] | ||
Balance at December 31, 2016 | 168,866 | |
Acquisitions | 19,515 | |
Impairment | 0 | |
Foreign currency | 508 | |
Balance at June 30, 2017 | 188,889 | 188,889 |
Water Pipe & Products | ||
Goodwill [Roll Forward] | ||
Balance at December 31, 2016 | 322,581 | |
Acquisitions | 0 | |
Impairment | (3,003) | (3,000) |
Foreign currency | 7 | |
Balance at June 30, 2017 | $ 319,585 | $ 319,585 |
Goodwill and other intangible54
Goodwill and other intangible assets, net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Goodwill impairment loss | $ 3,003 | |||
Selling, General and Administrative Expenses | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 13,400 | $ 10,500 | 28,200 | $ 13,100 |
Water Pipe & Products | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Goodwill impairment loss | $ 3,003 | $ 3,000 |
Goodwill and other intangible55
Goodwill and other intangible assets, net - Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, net carrying value | $ 256,362 | $ 281,598 |
In-Process R&D | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangibles, net carrying value | 6,354 | 6,692 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangibles, net carrying value | 191,419 | 209,937 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangibles, net carrying value | 32,308 | 34,771 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangibles, net carrying value | 18,236 | 20,673 |
Customer backlog | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangibles, net carrying value | 91 | 1,628 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangibles, net carrying value | 7,166 | 7,410 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangibles, net carrying value | $ 788 | $ 487 |
Fair value measurement - Assets
Fair value measurement - Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Non-current assets | ||
Derivative asset | $ 1,326 | $ 0 |
Non-current liabilities | ||
Derivative liability | 3,467 | 372 |
Fair Value, Measurements, Recurring | ||
Non-current assets | ||
Derivative asset | 1,326 | |
Non-current liabilities | ||
Derivative liability | 3,467 | 372 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Non-current assets | ||
Derivative asset | 0 | |
Non-current liabilities | ||
Derivative liability | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Non-current assets | ||
Derivative asset | 1,326 | |
Non-current liabilities | ||
Derivative liability | 3,467 | 372 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Non-current assets | ||
Derivative asset | 0 | |
Non-current liabilities | ||
Derivative liability | $ 0 | $ 0 |
Fair value measurement - Carryi
Fair value measurement - Carrying Amount and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Tax receivable agreement payable | $ 4,000 | $ 4,000 |
Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Tax receivable agreement payable | 160,783 | 160,783 |
Carrying Amount | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
2016 Senior Term Loan | 1,196,319 | 1,000,983 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Tax receivable agreement payable | 135,375 | 125,614 |
Fair Value | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
2016 Senior Term Loan | 1,173,333 | 1,064,395 |
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] | ||
2016 Senior 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] | ||
2016 Senior Term Loan | 1,173,333 | 1,064,395 |
Fair Value | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Tax receivable agreement payable | 135,375 | 125,614 |
Fair Value | Significant Unobservable Inputs (Level 3) | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
2016 Senior Term Loan | $ 0 | $ 0 |
Fair value measurement - Additi
Fair value measurement - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Goodwill impairment loss | $ (3,003) | ||
Long-lived asset impairment | 10,551 | $ 0 | |
Water Pipe & Products | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Goodwill impairment loss | $ (3,003) | (3,000) | |
Long-lived asset impairment | $ 7,500 | $ 7,500 |
Accrued liabilities (Details)
Accrued liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Accrued payroll and employee benefits | $ 25,876 | $ 29,945 |
Accrued taxes | 8,838 | 32,746 |
Accrued rebates | 8,839 | 7,509 |
Warranty | 4,056 | 3,509 |
Other miscellaneous accrued liabilities | 3,363 | 3,681 |
Tax receivable agreement liability, current portion | 4,000 | 4,000 |
Short-term derivative liability | 3,467 | 0 |
Environmental & reclamation obligation | 671 | 775 |
Other | 183 | 0 |
Total accrued liabilities | $ 59,293 | $ 82,165 |
Debt and deferred financing c60
Debt and deferred financing costs - Schedule of Debt (Details) - Forterra Building Products - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | Oct. 25, 2016 |
Debt Instrument [Line Items] | |||
Total debt | $ 1,272,790 | $ 1,096,047 | |
Less: current portion debt | (12,510) | (10,500) | |
Total long-term debt | 1,260,280 | 1,085,547 | |
Senior Term Loan | 2016 Senior Term Loan | |||
Debt Instrument [Line Items] | |||
Total debt | 1,000,983 | $ 1,050,000 | |
Debt issue costs and original issue discount | 45,303 | 46,392 | |
Senior Term Loan | 2016 Revolver | |||
Debt Instrument [Line Items] | |||
Debt issuance costs | 3,529 | 3,936 | |
Revolving Line of Credit | Revolving Credit Facility | 2016 Revolver | |||
Debt Instrument [Line Items] | |||
Total debt | $ 76,471 | $ 95,064 | $ 125,000 |
Debt and deferred financing c61
Debt and deferred financing costs - Additional Information (Details) - USD ($) | May 01, 2017 | Oct. 25, 2016 | Jun. 17, 2016 | Mar. 13, 2015 | Apr. 30, 2016 | Oct. 31, 2015 | Jun. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||||||||||
Repayments of long term debt | $ 5,753,000 | $ 2,191,000 | ||||||||
Net proceeds from incremental term loan | 194,000,000 | $ 106,611,000 | ||||||||
2016 Senior Term Loan | LIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Margin rate | 3.00% | 3.50% | ||||||||
Senior Term Loan | 2016 Senior Term Loan | Canada | LIBOR or CDOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, collateral covenant, percentage of voting stock, maximum | 65.00% | |||||||||
Line of Credit | 2016 Senior Term Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit facility, additional borrowing capacity | $ 200,000,000 | |||||||||
Debt instrument, reduction in applicable interest rate percentage | 0.50% | |||||||||
Net proceeds from incremental term loan | $ 196,800,000 | |||||||||
Forterra Building Products | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt outstanding | $ 1,272,790,000 | 1,272,790,000 | $ 1,096,047,000 | |||||||
Debt instrument, face amount, carve out portion | $ 515,500,000 | |||||||||
Long-term debt, gross | 1,321,622,000 | 1,321,622,000 | ||||||||
Forterra Building Products | 2016 Senior Term Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt, gross | 1,241,622,000 | 1,241,622,000 | ||||||||
Forterra Building Products | 2016 Revolver | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt, gross | $ 80,000,000 | $ 80,000,000 | ||||||||
Forterra Building Products | 2015 Senior Term Loan Credit Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount, carve out increase during period | $ 203,400,000 | |||||||||
Payments of dividends | $ 338,300,000 | |||||||||
Forterra Building Products | Junior Term Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Repayments of long term debt | $ 260,000,000 | |||||||||
Write-off of issue discounts and capitalized issuance costs | 22,400,000 | |||||||||
Repayments of debt, prepayment penalty | 7,800,000 | |||||||||
Debt instrument, face amount | 260,000,000 | |||||||||
Long-term debt, gross | 260,000,000 | |||||||||
Forterra Building Products | Junior Term Loan | LIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate, floor percentage | 1.00% | 1.00% | ||||||||
Forterra Building Products | Senior Term Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Repayments of long term debt | 1,040,000,000 | |||||||||
Forterra Building Products | Senior Term Loan | Senior Secured Term Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt outstanding | 1,050,000,000 | |||||||||
Line of credit facility, accordion feature, increase limit | 285,000,000 | |||||||||
Forterra Building Products | Senior Term Loan | 2016 Senior Term Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt outstanding | 1,050,000,000 | 1,000,983,000 | ||||||||
Debt instrument, amortization percentage | 0.25% | |||||||||
Debt issue costs and original issue discount | $ 45,303,000 | $ 45,303,000 | 46,392,000 | |||||||
Forterra Building Products | Senior Term Loan | 2016 Senior Term Loan | LIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate, floor percentage | 1.00% | |||||||||
Forterra Building Products | Senior Term Loan | 2016 Senior Term Loan | Base Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Margin rate | 2.00% | |||||||||
Forterra Building Products | Senior Term Loan | 2015 Senior Term Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | 635,000,000 | |||||||||
Forterra Building Products | Senior Term Loan | 2015 Senior Term Loan Credit Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt increase | 345,000,000 | |||||||||
Debt instrument, discount (premium) and debt issuance costs, carve-out portion | 8,900,000 | |||||||||
Debt issue costs and original issue discount | $ 6,700,000 | |||||||||
Long-term debt, gross | 254,900,000 | |||||||||
Forterra Building Products | Line of Credit | 2016 Revolver | Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt outstanding | 125,000,000 | $ 76,471,000 | $ 76,471,000 | $ 95,064,000 | ||||||
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% | |||||||||
Fixed charge coverage ratio | 1 | |||||||||
Weighted average annual interest rate | 3.13% | 2.89% | ||||||||
Allowable borrowing base | $ 204,300,000 | $ 204,300,000 | ||||||||
Stand-by letters of credit outstanding | $ 15,700,000 | $ 15,700,000 | ||||||||
Forterra Building Products | Line of Credit | 2016 Revolver | Revolving Credit Facility | Minimum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit, facility fee percentage | 0.20% | |||||||||
Forterra Building Products | Line of Credit | 2016 Revolver | Revolving Credit Facility | Maximum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit, facility fee percentage | 0.325% | |||||||||
Forterra Building Products | Line of Credit | 2016 Revolver | Revolving Credit Facility | LIBOR or CDOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, collateral covenant, percentage of voting stock, maximum | 65.00% | |||||||||
Forterra Building Products | Line of Credit | 2016 Revolver | Revolving Credit Facility | LIBOR or CDOR | Minimum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Margin rate | 1.25% | |||||||||
Forterra Building Products | Line of Credit | 2016 Revolver | Revolving Credit Facility | LIBOR or CDOR | Maximum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Margin rate | 1.75% | |||||||||
Forterra Building Products | Line of Credit | 2016 Revolver | Revolving Credit Facility | CDOR | Minimum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Margin rate | 0.25% | |||||||||
Forterra Building Products | Line of Credit | 2016 Revolver | Revolving Credit Facility | CDOR | Maximum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Margin rate | 0.75% | |||||||||
Forterra Building Products | Line of Credit | 2016 Revolver | Revolving Credit Facility | Canada | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit facility, maximum borrowing capacity | $ 20,000,000 | |||||||||
Forterra Building Products | Line of Credit | 2016 Revolver | Revolving Credit Facility | United States | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit facility, maximum borrowing capacity | $ 280,000,000 | |||||||||
Forterra Building Products | Line of Credit | 2015 Revolver | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Repayments of long term debt | 203,400,000 | |||||||||
Debt increase | 205,000,000 | |||||||||
Forterra Building Products | Line of Credit | 2015 Revolver | Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt outstanding | 45,000,000 | |||||||||
Long-term debt, gross | 600,000 | |||||||||
Affiliates of LSF9 | Senior Term Loan | 2015 Senior Term Loan Credit Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Repayments of long term debt | 176,700,000 | |||||||||
Affiliates of LSF9 | Line of Credit | 2015 Revolver | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Repayments of long term debt | 203,400,000 | |||||||||
Cretex | Forterra Building Products | Senior Term Loan | 2015 Senior Term Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt increase | $ 240,000,000 | |||||||||
Cretex | Forterra Building Products | Senior Term Loan | 2015 Senior Term Loan Credit Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt increase | 240,000,000 | |||||||||
Cretex | Forterra Building Products | Line of Credit | 2015 Revolver | Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit facility, maximum borrowing capacity | $ 285,000,000 | |||||||||
Cretex | Forterra Building Products | Financing obligation | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt issuance costs, gross | 71,600,000 | |||||||||
Debt instrument, discount (premium) and debt issuance costs, carve-out portion | $ 51,900,000 | |||||||||
Predecessor | Heidelberg Cement Hanson Building Products | Forterra Building Products | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt acquired to fund acquisition | 940,000,000 | |||||||||
Successor | Forterra Building Products | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount, unallocated portion | $ 424,500,000 |
Debt and deferred financing c62
Debt and deferred financing costs - Future Minimum Principal Payments (Details) - Forterra Building Products $ in Thousands | Jun. 30, 2017USD ($) |
Debt Instrument [Line Items] | |
2,017 | $ 6,255 |
2,018 | 12,510 |
2,019 | 12,510 |
2,020 | 12,510 |
2,021 | 92,510 |
Thereafter | 1,185,327 |
Long-term Debt, Gross | 1,321,622 |
2016 Senior Term Loan | |
Debt Instrument [Line Items] | |
2,017 | 6,255 |
2,018 | 12,510 |
2,019 | 12,510 |
2,020 | 12,510 |
2,021 | 12,510 |
Thereafter | 1,185,327 |
Long-term Debt, Gross | 1,241,622 |
2016 Revolver | |
Debt Instrument [Line Items] | |
2,017 | 0 |
2,018 | 0 |
2,019 | 0 |
2,020 | 0 |
2,021 | 80,000 |
Thereafter | 0 |
Long-term Debt, Gross | $ 80,000 |
Derivatives and hedging - Addit
Derivatives and hedging - Additional Information (Details) - USD ($) $ in Thousands | Feb. 09, 2017 | Dec. 31, 2016 | Jun. 30, 2017 |
Derivative [Line Items] | |||
Derivative, net notional amount settled in cash | $ 1,300 | ||
Interest Rate Swap | |||
Derivative [Line Items] | |||
Derivative Asset, Notional Amount | $ 525,000 | ||
Interest Rate Swap | Not Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative notional amount | $ 525,000 | ||
Derivative, fixed Interest rate to pay interest | 1.52% | ||
Derivative, term of contract | 3 years |
Derivatives and hedging - Deriv
Derivatives and hedging - Derivative Instruments, Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Derivative Assets | ||
Derivative Asset, Fair Value | $ 1,326 | $ 0 |
Derivative Asset, less legally enforceable master netting agreements | 0 | 0 |
Derivative Asset, net | 1,326 | 0 |
Derivative Liabilities | ||
Derivative Liability, Fair Value | 3,467 | 372 |
Derivative Liability, less legally enforceable master netting agreements | 0 | 0 |
Derivative Liability, net | 3,467 | 372 |
Foreign exchange forward contracts | ||
Derivative Assets | ||
Derivative Asset, Notional Amount | 0 | 0 |
Derivative Asset, Fair Value | 0 | 0 |
Derivative Liabilities | ||
Derivative Liability, Notional Amount | 92,961 | 92,961 |
Derivative Liability, Fair Value | 3,467 | $ 372 |
Interest Rate Swap | ||
Derivative Assets | ||
Derivative Asset, Notional Amount | 525,000 | |
Derivative Asset, Fair Value | 1,326 | |
Derivative Liabilities | ||
Derivative Liability, Notional Amount | 0 | |
Derivative Liability, Fair Value | $ 0 |
Derivatives and hedging - Der65
Derivatives and hedging - Derivative Instruments, Gain (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Loss on derivatives recognized in Accumulated other comprehensive loss | $ (1,412) | $ (218) | $ (1,908) | $ (1,427) |
Not Designated as Hedging Instrument | Cross currency swaps | Other Operating Income (Expense) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Loss on derivatives not designated as hedges in other operating income (expense) | 0 | (411) | 0 | (2,874) |
Not Designated as Hedging Instrument | Interest Rate Swap | Interest Expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain on derivatives not designated as hedges included in interest expense | $ (708) | $ 0 | $ 1,326 | $ 0 |
Sale-leaseback transaction (Det
Sale-leaseback transaction (Details) $ in Thousands | Apr. 14, 2016USD ($)property | Apr. 05, 2016USD ($)property | Oct. 31, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Sale Leaseback Transaction [Line Items] | ||||||
Number of properties sold | property | 2 | 47 | ||||
Proceeds from sale-leaseback | $ 11,900 | $ 204,300 | $ 0 | $ 216,280 | ||
Sale leaseback transaction, lease term | 20 years | |||||
Sale leaseback transaction, lease renewal term | 9 years 11 months | |||||
Sale leaseback transaction, transaction costs | $ 6,500 | 0 | $ 6,492 | |||
Proceeds from sale leaseback transactions, net of transaction costs | $ 209,700 | |||||
Sale leaseback transaction, loss recognized in operations | $ 19,600 | |||||
Total deferred gain on leaseback | $ 81,500 | |||||
Deferred gain on sale-leaseback, noncurrent | 76,982 | $ 78,215 | ||||
Other Current Liabilities | ||||||
Sale Leaseback Transaction [Line Items] | ||||||
Deferred gain on leaseback, current | $ 2,800 | |||||
Minimum | ||||||
Sale Leaseback Transaction [Line Items] | ||||||
Sale leaseback transaction, rent escalation percentage | 2.00% | |||||
Maximum | ||||||
Sale Leaseback Transaction [Line Items] | ||||||
Sale leaseback transaction, rent escalation percentage | 4.00% |
Commitments and contingencies (
Commitments and contingencies (Details) - USD ($) | Oct. 25, 2016 | Oct. 05, 2016 | Jun. 30, 2017 | Jun. 13, 2016 | Mar. 13, 2015 |
Lone Star | Affiliated Entities | |||||
Loss Contingencies [Line Items] | |||||
Income tax benefits, recognized as reduction to equity | $ 18,500,000 | ||||
Accrued liabilities related to tax receivable agreement | $ 160,800,000 | ||||
Reduction to additional-paid-in capital related to tax receivable agreement | $ 142,300,000 | ||||
Payments of liability related to tax receivable agreement | 0 | ||||
HeidelbergCement, Case | Pending Litigation | |||||
Loss Contingencies [Line Items] | |||||
Loss contingency, damages sought | $ 100,000,000 | ||||
Loss contingency liability | $ 0 | ||||
Predecessor | Heidelberg Cement Hanson Building Products | |||||
Loss Contingencies [Line Items] | |||||
Business acquisition, possible maximum earn out | $ 100,000,000 | $ 100,000,000 | |||
Successor | Lone Star | Affiliated Entities | |||||
Loss Contingencies [Line Items] | |||||
Certain covered tax benefits paid by related party, percentage | 85.00% |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Income (loss) from continuing operations | $ (11,173) | $ 31,846 | $ (33,716) | $ 29,684 |
Discontinued operations, net of tax | 0 | 4,843 | 0 | 3,069 |
Net income (loss) | $ (11,173) | $ 36,689 | $ (33,716) | $ 32,753 |
Common stock: | ||||
Weighted average basic shares outstanding (in shares) | 63,792,743 | 45,369,474 | 63,791,127 | 45,369,474 |
Weighted average diluted shares outstanding (in shares) | 63,792,743 | 45,369,474 | 63,791,127 | 45,369,474 |
Basic earnings (loss) per share: | ||||
Loss from continuing operations (in usd per share) | $ (0.18) | $ 0.70 | $ (0.53) | $ 0.65 |
Loss from discontinued operations, net of taxes (in usd per share) | 0 | 0.11 | 0 | 0.07 |
Net loss (in usd per share) | (0.18) | 0.81 | (0.53) | 0.72 |
Diluted earnings (loss) per share: | ||||
Loss from continuing operations (in usd per share) | (0.18) | 0.70 | (0.53) | 0.65 |
Loss from discontinued operations, net of taxes (in usd per share) | 0 | 0.11 | 0 | 0.07 |
Net income (loss) (in usd per share) | $ (0.18) | $ 0.81 | $ (0.53) | $ 0.72 |
Stock options | ||||
Common stock: | ||||
Effect of dilutive securities - stock options (in shares) | 0 | 0 | 0 | 0 |
Stock-based plans - Additional
Stock-based plans - Additional Information (Details) $ / shares in Units, $ in Millions | Mar. 20, 2017shares | Oct. 19, 2016plan$ / sharesshares | Jun. 30, 2017USD ($)shares | Jun. 30, 2017USD ($)$ / sharesshares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of equity compensation plans | plan | 1 | |||
Stock options granted (in shares) | 154,154 | |||
Granted at fair value (in usd per share) | $ / shares | $ 8.30 | |||
Stock-based compensation expense | $ | $ 1 | $ 1.4 | ||
Restricted stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted stocks granted (in shares) | 40,241 | |||
Share-based incentive plan award vesting period | 3 years | |||
Employees and Independent Directors | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options granted (in shares) | 361,590 | |||
Granted at fair value (in usd per share) | $ / shares | $ 18 | |||
Employees and Independent Directors | Restricted stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted stocks granted (in shares) | 136,900 | |||
Employees | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options granted (in shares) | 612,362 | |||
Employees | Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based incentive plan award vesting period | 3 years | 4 years | ||
Employees | Restricted stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted stocks granted (in shares) | 290,350 | 40,241 | 290,350 | |
Share-based incentive plan award vesting period | 3 years | 4 years | ||
Independent Directors | Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based incentive plan award vesting period | 1 year | |||
Independent Directors | Restricted stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based incentive plan award vesting period | 1 year | |||
2016 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized for issuance (in shares) | 5,000,000 | |||
2016 Stock Incentive Plan | Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Term of share-based incentive plan | 10 years |
Stock-based plans - Weighted Av
Stock-based plans - Weighted Average Assumptions in Estimating Fair Value of Options (Details) | 6 Months Ended |
Jun. 30, 2017$ / shares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Expected dividends | 0.00% |
Expected volatility | 39.60% |
Risk-free interest rate | 0.65% |
Expected lives in years | 6 years |
Weighted-average fair value of options: | |
Granted (in usd per share) | $ 6.25 |
Weighted Average Exercise Price | |
Granted (in usd per share) | $ 8.30 |
Stock-based plans - Stock Optio
Stock-based plans - Stock Options Activity (Details) | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Shares | |
Outstanding, beginning of period (in shares) | 815,958 |
Granted (in shares) | 154,154 |
Exercised (in shares) | 0 |
Forfeited (in shares) | (109,387) |
Outstanding, end of period (in shares) | 860,725 |
Weighted Average Exercise Price | |
Outstanding, end of period (in usd per share) | $ / shares | $ 18.54 |
Granted (in usd per share) | $ / shares | 8.30 |
Forfeited (in usd per share) | $ / shares | 18.79 |
Outstanding, end of period (in usd per share) | $ / shares | $ 16.67 |
Stock-based plans - Restricted
Stock-based plans - Restricted Stock Awards Activity (Details) - Restricted stock | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Shares | |
Unvested balance, beginning of period (in shares) | shares | 384,759 |
Grants (in shares) | shares | 40,241 |
Vested (in shares) | shares | (4,500) |
Forfeitures (in shares) | shares | (47,686) |
Unvested balance, end of period (in shares) | shares | 372,814 |
Weighted Average Grant Date Fair Value | |
Unvested balance, beginning of the period (in usd per share) | $ / shares | $ 18.62 |
Grants (in usd per share) | $ / shares | 8.30 |
Vested (in usd per share) | $ / shares | 18 |
Forfeitures (in usd per share) | $ / shares | 18.81 |
Unvested balance, end of period (in usd per share) | $ / shares | $ 17.49 |
Income taxes (Details)
Income taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Tax Contingency [Line Items] | ||||
Income tax (expense) benefit | $ 3,630,000 | $ 26,173,000 | $ 16,994,000 | $ 36,740,000 |
Effective income tax rate percentage | 33.50% | |||
Income tax benefit derived from non-deductible goodwill | $ 0 | $ 0 | ||
Sherman-Dixie and USP | ||||
Income Tax Contingency [Line Items] | ||||
Deferred income tax liabilities acquired | $ 34,900,000 | $ 34,900,000 |
Segment reporting (Details)
Segment reporting (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)geographic_area | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of geographic areas | geographic_area | 3 | ||||
Net sales | $ 436,685 | $ 381,723 | $ 774,987 | $ 568,719 | |
Income (loss) before income taxes | (14,803) | 5,673 | (50,710) | (7,056) | |
Depreciation and amortization | 28,501 | 25,136 | 58,305 | 36,428 | |
Interest expense | 17,078 | 24,839 | 30,620 | 42,129 | |
EBITDA | 30,776 | 55,648 | 38,215 | 71,501 | |
Capital expenditures | 11,419 | 7,757 | 23,599 | 10,297 | |
Assets | 1,937,342 | 1,872,967 | 1,937,342 | 1,872,967 | |
Earnings from equity method investee | 3,342 | 3,565 | 6,513 | 4,868 | |
Investment in equity method investee | 56,499 | 56,499 | $ 55,236 | ||
Goodwill impairment loss | 3,003 | ||||
Long-lived asset impairment | 10,551 | 0 | |||
Property, plant and equipment, net | 432,477 | 432,477 | 452,914 | ||
United States | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 412,594 | 347,997 | 733,730 | 517,846 | |
Property, plant and equipment, net | 401,968 | 401,968 | 422,853 | ||
Canada | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 20,852 | 30,767 | 34,819 | 47,914 | |
Property, plant and equipment, net | 20,038 | 20,038 | 19,584 | ||
Mexico | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 3,239 | 2,959 | 6,438 | 2,959 | |
Property, plant and equipment, net | 10,471 | 10,471 | 10,477 | ||
Drainage Pipe & Products | |||||
Segment Reporting Information [Line Items] | |||||
Earnings from equity method investee | 3,300 | 3,600 | 6,500 | 4,900 | |
Investment in equity method investee | 56,499 | 56,499 | $ 55,236 | ||
Goodwill impairment loss | 0 | ||||
Water Pipe & Products | |||||
Segment Reporting Information [Line Items] | |||||
Goodwill impairment loss | 3,003 | 3,000 | |||
Long-lived asset impairment | 7,500 | 7,500 | |||
Operating segments | Drainage Pipe & Products | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 221,521 | 192,228 | 381,969 | 336,549 | |
Income (loss) before income taxes | 29,088 | 33,732 | 28,127 | 52,211 | |
Depreciation and amortization | 10,868 | 10,081 | 23,144 | 19,551 | |
Interest expense | 123 | 3,272 | 219 | 3,272 | |
EBITDA | 40,079 | 47,085 | 51,490 | 75,034 | |
Capital expenditures | 7,943 | 4,329 | 14,465 | 6,270 | |
Assets | 807,192 | 724,744 | 807,192 | 724,744 | |
Operating segments | Water Pipe & Products | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 215,163 | 189,170 | 393,012 | 229,641 | |
Income (loss) before income taxes | 434 | 16,753 | 99 | 19,343 | |
Depreciation and amortization | 17,464 | 14,939 | 34,910 | 16,502 | |
Interest expense | 15 | 772 | 16 | 772 | |
EBITDA | 17,913 | 32,464 | 35,025 | 36,617 | |
Capital expenditures | 3,351 | 2,804 | 8,161 | 3,403 | |
Assets | 1,081,149 | 1,122,392 | 1,081,149 | 1,122,392 | |
Corporate and Other | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 1 | 325 | 6 | 2,529 | |
Income (loss) before income taxes | (44,325) | (44,812) | (78,936) | (78,610) | |
Depreciation and amortization | 169 | 116 | 251 | 375 | |
Interest expense | 16,940 | 20,795 | 30,385 | 38,085 | |
EBITDA | (27,216) | (23,901) | (48,300) | (40,150) | |
Capital expenditures | 125 | 624 | 973 | 624 | |
Assets | $ 49,001 | $ 25,831 | $ 49,001 | $ 25,831 |
Related party transactions (Det
Related party transactions (Details) - USD ($) $ in Millions | Oct. 25, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Related Party Transaction [Line Items] | ||||||
Due from affiliates, current | $ 0.5 | $ 0.5 | $ 0.1 | |||
Successor | Affiliated Entities | Lone Star | ||||||
Related Party Transaction [Line Items] | ||||||
Payment of certain covered tax benefits buy the Company, percentage | 85.00% | |||||
Successor | Affiliated Entities | Management Services Agreement | Hudson Advisors | Selling, General and Administrative Expenses | ||||||
Related Party Transaction [Line Items] | ||||||
Related party fees | $ 2.2 | $ 3.1 | ||||
Successor | Affiliated Entities | Transition Service Agreement | Bricks Joint Venture | ||||||
Related Party Transaction [Line Items] | ||||||
Proceeds from affiliates, collection of transition service agreement | 0.9 | 1.6 | ||||
Net payable to affiliates | $ 8.4 | |||||
Net receivable from affiliates | $ 5.7 | $ 5.7 |
Discontinued operations and a76
Discontinued operations and assets held for sale - Components of Loss From Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Income from discontinued operations, net of tax | $ 0 | $ 4,843 | $ 0 | $ 3,069 |
Bricks Disposition | Discontinued Operations, Disposed of by Means Other than Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues | 41,086 | 71,424 | ||
Operating costs and expenses | (34,790) | (64,154) | ||
Depreciation and amortization | (1,525) | (3,992) | ||
Operating income | 4,771 | 3,278 | ||
Other income | 79 | |||
Other income (expense) | (2) | |||
Income tax expense | (7) | (207) | ||
Income from discontinued operations, net of tax | $ 4,843 | $ 3,069 |
Discontinued operations and a77
Discontinued operations and assets held for sale - Additional Information (Details) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Oct. 17, 2016 | Aug. 23, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Long-lived asset impairment | $ 10,551 | $ 0 | |||||
Water Pipe & Products | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Long-lived asset impairment | $ 7,500 | 7,500 | |||||
US Concrete and Steel Pressure | Water Pipe & Products | Disposal Group, Held-for-sale, Not Discontinued Operations | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Pre-tax income (loss) of disposal group held for sale | $ (9,200) | $ 5,900 | $ (15,300) | $ 6,900 | |||
Forterra Building Products | Bricks Joint Venture | Affiliated Entities | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Equity method investment, ownership percentage | 50.00% | ||||||
Short-term loan | $ 11,900 | ||||||
Repayment of short-term loan | $ 11,900 |
Discontinued operations and a78
Discontinued operations and assets held for sale - Assets and Liabilities of Assets Held-For-Sale (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Current assets held for sale | $ 77,244 | $ 0 |
Non-current assets held for sale | 18,585 | 0 |
Current liabilities held for sale | 21,564 | $ 0 |
US Concrete and Steel Pressure | Water Pipe & Products | Disposal Group, Held-for-sale, Not Discontinued Operations | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Receivables, net | 31,007 | |
Inventories | 46,125 | |
Prepaid expenses | 112 | |
Current assets held for sale | 77,244 | |
Property, plant and equipment, net | 18,585 | |
Non-current assets held for sale | 18,585 | |
Trade payables | 11,256 | |
Accrued liabilities | 126 | |
Deferred revenue | 10,182 | |
Current liabilities held for sale | $ 21,564 |
Subsequent events (Details)
Subsequent events (Details) - US Concrete and Steel Pressure - Water Pipe & Products - Disposal Group, Disposed of by Sale, Not Discontinued Operations - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2017 | Jul. 31, 2017 | |
Scenario, Forecast | Continuing Operations | ||
Subsequent Event [Line Items] | ||
Loss on sale of disposal group | $ 25 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Cash consideration on sale of disposal group | $ 23.2 |