Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 27, 2020 | Oct. 23, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 27, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-03922 | |
Entity Registrant Name | PATRICK INDUSTRIES, INC. | |
Entity Incorporation, State or Country Code | IN | |
Entity Tax Identification Number | 35-1057796 | |
Entity Address, Address Line One | 107 WEST FRANKLIN STREET, P.O. Box 638 | |
Entity Address, City or Town | ELKHART, | |
Entity Address, State or Province | IN | |
Entity Address, Postal Zip Code | 46515 | |
City Area Code | 574 | |
Local Phone Number | 294-7511 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, no par value | |
Trading Symbol | PATK | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding (in shares) | 23,363,124 | |
Entity Central Index Key | 0000076605 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Income Statement [Abstract] | ||||
NET SALES | $ 700,707 | $ 566,186 | $ 1,713,984 | $ 1,787,622 |
Cost of goods sold | 567,210 | 461,851 | 1,397,285 | 1,464,078 |
GROSS PROFIT | 133,497 | 104,335 | 316,699 | 323,544 |
Operating Expenses: | ||||
Warehouse and delivery | 25,263 | 23,917 | 70,204 | 74,228 |
Selling, general and administrative | 38,184 | 33,817 | 105,681 | 104,403 |
Amortization of intangible assets | 10,221 | 9,191 | 29,600 | 26,448 |
Total operating expenses | 73,668 | 66,925 | 205,485 | 205,079 |
OPERATING INCOME | 59,829 | 37,410 | 111,214 | 118,465 |
Interest expense, net | 10,507 | 8,603 | 31,820 | 26,222 |
Income before income taxes | 49,322 | 28,807 | 79,394 | 92,243 |
Income taxes | 11,986 | 7,490 | 20,157 | 22,661 |
NET INCOME | $ 37,336 | $ 21,317 | $ 59,237 | $ 69,582 |
BASIC NET INCOME PER COMMON SHARE (in dollars per share) | $ 1.65 | $ 0.92 | $ 2.60 | $ 3.02 |
DILUTED NET INCOME PER COMMON SHARE (in dollars per share) | $ 1.62 | $ 0.92 | $ 2.57 | $ 2.99 |
Weighted average shares outstanding - Basic (in shares) | 22,674 | 23,076 | 22,784 | 23,073 |
Weighted average shares outstanding - Diluted (in shares) | 23,072 | 23,273 | 23,088 | 23,279 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Statement of Other Comprehensive Income [Abstract] | ||||
Net income | $ 37,336 | $ 21,317 | $ 59,237 | $ 69,582 |
Other comprehensive (loss) income, net of tax: | ||||
Unrealized gain (loss) of hedge derivatives | 989 | (240) | (1,553) | (3,225) |
Other | 60 | 19 | 8 | (48) |
Total other comprehensive income (loss) | 1,049 | (221) | (1,545) | (3,273) |
COMPREHENSIVE INCOME | $ 38,385 | $ 21,096 | $ 57,692 | $ 66,309 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 62,347 | $ 139,390 |
Trade and other receivables, net | 175,533 | 87,536 |
Inventories | 281,374 | 253,870 |
Prepaid expenses and other | 12,580 | 36,038 |
Total current assets | 531,834 | 516,834 |
Property, plant and equipment, net | 197,415 | 180,849 |
Operating lease right-of-use assets | 105,410 | 93,546 |
Goodwill | 356,433 | 319,349 |
Intangible assets, net | 380,919 | 357,014 |
Deferred financing costs, net | 2,544 | 2,978 |
Other non-current assets | 384 | 423 |
TOTAL ASSETS | 1,574,939 | 1,470,993 |
Current Liabilities | ||
Current maturities of long-term debt | 5,000 | 5,000 |
Current operating lease liabilities | 29,565 | 27,694 |
Accounts payable | 117,088 | 96,208 |
Accrued liabilities | 101,296 | 58,033 |
Total current liabilities | 252,949 | 186,935 |
Long-term debt, less current maturities, net | 673,852 | 670,354 |
Long-term operating lease liabilities | 76,873 | 66,467 |
Deferred tax liabilities, net | 26,100 | 27,284 |
Other long-term liabilities | 19,336 | 22,472 |
TOTAL LIABILITIES | 1,049,110 | 973,512 |
SHAREHOLDERS’ EQUITY | ||
Common stock | 177,308 | 172,662 |
Additional paid-in-capital | 24,440 | 25,014 |
Accumulated other comprehensive loss | (7,243) | (5,698) |
Retained earnings | 331,324 | 305,503 |
TOTAL SHAREHOLDERS’ EQUITY | 525,829 | 497,481 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 1,574,939 | $ 1,470,993 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Dec. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net income | $ 37,336 | $ 21,317 | $ 59,237 | $ 69,582 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation and amortization | 52,955 | 46,449 | |||
Stock-based compensation expense | 11,177 | 12,039 | |||
Amortization of convertible notes debt discount | 5,302 | 5,123 | |||
Deferred income taxes | (4,057) | (794) | |||
Other | 3,521 | 235 | |||
Change in operating assets and liabilities, net of acquisitions of businesses: | |||||
Trade receivables | (78,701) | (44,359) | |||
Inventories | (12,885) | 9,084 | |||
Prepaid expenses and other assets | 23,787 | 4,319 | |||
Accounts payable, accrued liabilities and other | 52,422 | 20,355 | |||
Net cash provided by operating activities | 112,758 | 122,033 | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Capital expenditures | (22,159) | (22,227) | |||
Proceeds from sale of property, equipment and other investing activities | 117 | 4,509 | |||
Business acquisitions, net of cash acquired | (123,382) | (22,350) | |||
Net cash used in investing activities | (145,424) | (40,068) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Term debt borrowings | 0 | 7,500 | |||
Term debt repayments | (2,500) | (3,750) | |||
Borrowings on revolver | 8,198 | 648,460 | |||
Repayments on revolver | (8,198) | (905,792) | |||
Stock repurchases under buyback program | (20,286) | (3,583) | |||
Proceeds from issuance of senior notes | 0 | 300,000 | |||
Cash dividends paid to shareholders | (17,265) | 0 | |||
Payments related to vesting of stock-based awards, net of shares tendered for taxes | (2,910) | (3,359) | |||
Payment of deferred financing costs | (58) | (7,214) | |||
Proceeds from exercise of stock options | 642 | 6 | |||
Payment of contingent consideration from a business acquisition | (2,000) | (4,416) | |||
Net cash (used in) provided by financing activities | (44,377) | 27,852 | |||
Increase (decrease) in cash and cash equivalents | (77,043) | 109,817 | |||
Cash and cash equivalents at beginning of year | 139,390 | 6,895 | $ 6,895 | ||
Cash and cash equivalents at end of period | $ 62,347 | $ 116,712 | $ 62,347 | $ 116,712 | $ 139,390 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in- Capital | Accumulated Other Comprehensive Loss | Retained Earnings |
Beginning Balance at Dec. 31, 2018 | $ 408,754 | $ 161,436 | $ 25,124 | $ (2,680) | $ 224,874 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 69,582 | 69,582 | |||
Other comprehensive income (loss), net of tax | (3,273) | (3,273) | |||
Share repurchases under buyback program | (3,583) | (674) | (104) | (2,805) | |
Issuance of shares upon exercise of common stock options | 6 | 6 | |||
Shares used to pay taxes on stock grants | (3,587) | (3,587) | |||
Stock-based compensation expense | 12,039 | 12,039 | |||
Ending Balance at Sep. 29, 2019 | 479,938 | 169,220 | 25,020 | (5,953) | 291,651 |
Beginning Balance at Jun. 30, 2019 | 458,617 | 166,086 | 25,124 | (5,732) | 273,139 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 21,317 | 21,317 | |||
Other comprehensive income (loss), net of tax | (221) | (221) | |||
Share repurchases under buyback program | (3,583) | (674) | (104) | (2,805) | |
Shares used to pay taxes on stock grants | (59) | (59) | |||
Stock-based compensation expense | 3,867 | 3,867 | |||
Ending Balance at Sep. 29, 2019 | 479,938 | 169,220 | 25,020 | (5,953) | 291,651 |
Beginning Balance at Dec. 31, 2019 | 497,481 | 172,662 | 25,014 | (5,698) | 305,503 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 59,237 | 59,237 | |||
Dividends declared | (17,666) | (17,666) | |||
Other comprehensive income (loss), net of tax | (1,545) | (1,545) | |||
Share repurchases under buyback program | (20,286) | (3,962) | (574) | (15,750) | |
Issuance of shares upon exercise of common stock options | 642 | 642 | |||
Shares used to pay taxes on stock grants | (3,211) | (3,211) | |||
Stock-based compensation expense | 11,177 | 11,177 | |||
Ending Balance at Sep. 27, 2020 | 525,829 | 177,308 | 24,440 | (7,243) | 331,324 |
Beginning Balance at Jun. 28, 2020 | 493,268 | 173,178 | 24,534 | (8,292) | 303,848 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 37,336 | 37,336 | |||
Dividends declared | (5,865) | (5,865) | |||
Other comprehensive income (loss), net of tax | 1,049 | 1,049 | |||
Share repurchases under buyback program | (4,736) | (647) | (94) | (3,995) | |
Shares used to pay taxes on stock grants | (53) | (53) | |||
Stock-based compensation expense | 4,830 | 4,830 | |||
Ending Balance at Sep. 27, 2020 | $ 525,829 | $ 177,308 | $ 24,440 | $ (7,243) | $ 331,324 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 27, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Patrick Industries, Inc. (“Patrick”, the “Company”, "we", "our") contain all adjustments (consisting of normal recurring adjustments) that we believe are necessary to present fairly the Company’s financial position as of September 27, 2020 and December 31, 2019, its results of operations for the third quarter and nine months ended September 27, 2020 and September 29, 2019 and its statements of cash flows for the nine months ended September 27, 2020 and September 29, 2019. Patrick’s unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules or regulations. For a description of significant accounting policies used by the Company in the preparation of its consolidated financial statements, please refer to Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The December 31, 2019 condensed consolidated statement of financial position data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Operating results for the third quarter and nine months ended September 27, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020. The Company maintains its financial records on the basis of a fiscal year ending on December 31, with the fiscal quarters spanning approximately thirteen weeks. The first quarter ends on the Sunday closest to the end of the first thirteen-week period. The second and third quarters are thirteen weeks in duration and the fourth quarter is the remainder of the year. The third quarter of fiscal year 2020 ended on September 27, 2020 and the third quarter of fiscal year 2019 ended on September 29, 2019. |
RECENTLY ISSUED ACCOUNTING PRON
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Policies [Abstract] | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | 2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Goodwill Impairment In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-04, " Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ". This ASU simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. The standard requires that the impairment loss be measured as the excess of the reporting unit's carrying amount over its fair value. It eliminates the second step that requires the impairment to be measured between the implied value of a reporting unit's goodwill and its carrying value. The Company adopted ASU 2017-04 on January 1, 2020 and the adoption did not have a material impact on the condensed consolidated financial statements. Credit Losses In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments ”, which amends certain provisions of Accounting Standards Codification ("ASC") 326, “Financial Instruments-Credit Loss”. The ASU changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held to maturity debt securities, loans and other instruments, entities are required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. Additionally, entities are required to disclose more information with respect to credit quality indicators, including information used to track credit quality by year of origination for most financing receivables. The Company adopted ASU 2016-13 on January 1, 2020 and the adoption did not have a material impact on the condensed consolidated financial statements. Income Taxes In December 2019, the FASB issued ASU 2019-12, " Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ", a new standard to simplify the accounting for income taxes. The guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this standard on our consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, " Reference Rate Reform (Topic 848) ", a new standard providing final guidance to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. The guidance is effective upon issuance and generally can be applied through December 31, 2022. We are currently evaluating the impact of this standard on our consolidated financial statements. Accounting for Convertible Instruments and Contracts in an Entity's Own Equity In August 2020, the FASB issued ASU 2020-06, " Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ", a new standard that simplifies certain accounting treatments for convertible debt instruments. The guidance eliminates certain requirements that require separate accounting for embedded conversion features and simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. In addition, the new guidance requires entities use the if-converted method for all convertible instruments in the diluted EPS calculation and include the effect of potential share settlement for instruments that may be settled in cash or shares, with certain exceptions. Furthermore, the guidance requires new disclosures about events that occur during the reporting period that cause conversion contingencies to be met and about the fair value of convertible debt at the instrument level, among other things. The guidance is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. We are currently evaluating the impact of this standard on our consolidated financial statements. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Sep. 27, 2020 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | 3. REVENUE RECOGNITION In the following table, revenue from contracts with customers, net of intersegment sales, is disaggregated by market type and by reportable segment, consistent with how the Company believes the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors: Third Quarter Ended September 27, 2020 (thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 290,326 $ 130,845 $ 421,171 Manufactured Housing 45,845 61,908 107,753 Industrial 69,242 9,090 78,332 Marine 88,861 4,590 93,451 Total $ 494,274 $ 206,433 $ 700,707 Nine Months Ended September 27, 2020 (thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 656,739 $ 288,778 $ 945,517 Manufactured Housing 127,857 182,579 310,436 Industrial 202,368 25,113 227,481 Marine 219,150 11,400 230,550 Total $ 1,206,114 $ 507,870 $ 1,713,984 Third Quarter Ended September 29, 2019 (thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 218,706 $ 91,313 $ 310,019 Manufactured Housing 44,159 64,959 109,118 Industrial 64,541 7,566 72,107 Marine 72,306 2,636 74,942 Total $ 399,712 $ 166,474 $ 566,186 ` Nine Months Ended September 29, 2019 (thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 694,261 $ 299,115 $ 993,376 Manufactured Housing 131,101 193,975 325,076 Industrial 188,292 25,149 213,441 Marine 246,017 9,712 255,729 Total $ 1,259,671 $ 527,951 $ 1,787,622 Contract Liabilities Contract liabilities, representing upfront payments from customers received prior to satisfying performance obligations, were immaterial as of the beginning and end of all periods presented and changes in contract liabilities were immaterial during all periods presented. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 27, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 4. INVENTORIES Inventories consist of the following: (thousands) September 27, 2020 December 31, 2019 Raw materials $ 196,298 $ 162,238 Work in process 15,955 14,272 Finished goods 28,225 28,446 Less: reserve for inventory obsolescence (13,301) (10,123) Total manufactured goods, net 227,177 194,833 Materials purchased for resale (distribution products) 56,676 60,918 Less: reserve for inventory obsolescence (2,479) (1,881) Total materials purchased for resale (distribution products), net 54,197 59,037 Total inventories $ 281,374 $ 253,870 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Sep. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | 5. GOODWILL AND INTANGIBLE ASSETS Changes in the carrying amount of goodwill for the nine months ended September 27, 2020 by segment are as follows: (thousands) Manufacturing Distribution Total Balance - December 31, 2019 $ 268,402 $ 50,947 $ 319,349 Acquisitions 35,087 8,980 44,067 Adjustments to preliminary purchase price allocations (8,708) 1,725 (6,983) Balance - September 27, 2020 $ 294,781 $ 61,652 $ 356,433 Intangible assets, net consist of the following as of September 27, 2020 and December 31, 2019: (thousands) September 27, December 31, Customer relationships $ 394,687 $ 357,513 Non-compete agreements 15,231 16,202 Patents 16,555 16,495 Trademarks 101,426 88,524 527,899 478,734 Less: accumulated amortization (146,980) (121,720) Intangible assets, net $ 380,919 $ 357,014 Changes in the carrying value of intangible assets for the nine months ended September 27, 2020 by segment are as follows: (thousands) Manufacturing Distribution Total Balance - December 31, 2019 $ 282,123 $ 74,891 $ 357,014 Acquisitions and other 36,409 13,096 49,505 Amortization (24,313) (5,287) (29,600) Impairment of intangible assets (1) (119) (1,831) (1,950) Adjustments to preliminary purchase price allocations 6,095 (145) 5,950 Balance - September 27, 2020 $ 300,195 $ 80,724 $ 380,919 (1) Certain immaterial operations permanently ceased activities during the nine months ended September 27, 2020. As a result, we recorded a $2.0 million pre-tax impairment of customer relationships and trademarks of these operations after determining the net carrying value of the assets was no longer recoverable. The impairment was calculated using our internal projections of discounted cash flows, which rely on Level 3 inputs in the fair value hierarchy based on the unobservable nature of the underlying data. The impairment was recorded in selling, general and administrative in our condensed consolidated statements of income for the nine months ended September 27, 2020. Valuation of Goodwill and Indefinite-Lived Intangibles We test goodwill and indefinite-lived intangible assets (trademarks) for impairment on an annual basis (as of September 30, 2019 for our most recent annual tests) and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. Our 2019 tests indicated that there was no impairment, as fair value exceeded carrying values, and we concluded that none of our reporting units or trademarks were at risk of failing the impairment test. Despite the excess fair value identified in our 2019 impairment tests, we assessed during the quarter and nine months ended September 27, 2020 whether the impact of the COVID-19 pandemic on overall macroeconomic conditions and our results of operations for the third quarter and nine months ended September 27, 2020 indicated that at September 27, 2020 it was more likely than not that our goodwill and trademarks were impaired. We evaluated among other factors (i) the results of our 2019 impairment tests; (ii) our market capitalization at September 27, 2020 in relation to the carrying amount of shareholders’ equity at September 27, 2020 and to fair values determined during our 2019 impairment tests; (iii) the results of our operations during the third quarter and nine months ended September 27, 2020 in relation to our projections; and (iv) our analysis of the impact on the fair values determined during our 2019 impairment tests using more recent projections and discount rates that account for various risks and uncertainties, including the duration and extent of impact to our business, related to the COVID-19 pandemic. Based on the results of our assessment, and other than immaterial impairments discussed above, we concluded that no triggering events had occurred which would indicate the fair values of our goodwill and trademarks may be less than the carrying values at September 27, 2020. However, we are unable to predict how long the COVID-19-related conditions will persist, what additional measures may be introduced by governments or private parties, or what effect any such additional measures may have on demand for our products or those of our customers in each of our end markets. As such, the outcome of our 2020 impairment tests, which we will perform in the fourth quarter of 2020, could result in an impairment of our goodwill or our trademarks. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 27, 2020 | |
Business Combinations [Abstract] | |
ACQUISITIONS | 6. ACQUISITIONS General The Company completed six acquisitions in the third quarter of 2020 and completed nine acquisitions in the first nine months of 2020 (the "2020 Acquisitions"). For the third quarter and nine months ended September 27, 2020, net sales included in the Company's condensed consolidated statements of income related to the 2020 Acquisitions were $19.6 million and $23.3 million, respectively. Operating income related to the 2020 Acquisitions for the third quarter and nine months ended September 27, 2020 was approximately $2.1 million and $2.2 million, respectively. Acquisition-related costs incurred in the first nine months of 2020 were immaterial. The Company completed two acquisitions in the first nine months of 2019. For the third quarter and first nine months ended September 29, 2019, revenue and operating income included in the Company's condensed consolidated statements of income were immaterial. Acquisition-related costs incurred in the first nine months of 2019 were immaterial. As of September 27, 2020, the aggregate fair value of the estimated contingent consideration payments was $8.0 million, $6.1 million of which is included in the line item "Accrued liabilities" and $1.9 million is included in “Other long-term liabilities” on the condensed consolidated statement of financial position. At December 31, 2019, the aggregate fair value of the estimated contingent consideration payments was $9.6 million, $2.0 million of which was included in the line item "Accrued liabilities" and $7.6 million was included in "Other long-term liabilities". The liabilities for contingent consideration expire at various dates through December 2023. The contingent consideration arrangements are subject to a maximum payment amount of up to $14.8 million in the aggregate. In the first nine months of 2020, the Company made cash payments of $2.0 million related to contingent consideration arrangements, recording a corresponding reduction to accrued liabilities. 2020 Acquisitions Acquisitions completed in the first nine months of 2020 include the following previously announced acquisitions: Company Description Maple City Woodworking Corporation Manufacturer of hardwood cabinet doors and fascia for the recreational vehicle ("RV") market based in Goshen, Indiana SEI Manufacturing, Inc. Manufacturer of towers, T-Tops, hardtops, rails, gates and other aluminum exterior products for the marine market located in Cromwell, Indiana Inland Plywood Company Supplier, laminator, and wholesale distributor of treated, untreated, and laminated plywood, medium density overlay panels, and other specialty products, primarily serving the marine market as well as the RV and industrial markets headquartered in Pontiac, Michigan with an additional facility in Cocoa, Florida Synergy RV Transport Transportation and logistics service provider primarily for original equipment manufacturers and dealers in the RV market located in Goshen, Indiana Front Range Stone Fabricator and installer of natural stone, quartz, solid surface, and laminate countertops, primarily serving big box home improvement retailers, home builders and commercial contractors in the industrial market based in Englewood, Colorado Inclusive of four immaterial acquisitions not discussed above, total cash consideration for the 2020 Acquisitions was approximately $124 million, plus contingent consideration over a maximum of a one-year period based on future performance in connection with certain acquisitions. The preliminary purchase price allocations are subject to valuation activities being finalized, and thus all required purchase accounting adjustments are subject to change within the measurement period as the Company finalizes its estimates. Changes to preliminary purchase accounting estimates recorded in the third quarter and first nine months of 2020 related to the 2020 Acquisitions were immaterial. The 2020 Acquisitions are included in the Manufacturing segment except for Synergy RV Transport, which is included in the Distribution segment. 2019 Acquisitions The Company completed four acquisitions in 2019 (the "2019 Acquisitions"), including the previously announced acquisitions of Topline Counters, LLC ("Topline Counters"), a Sumner, Washington-based designer and manufacturer of kitchen and bathroom countertops for residential and commercial markets, and G.G. Schmitt & Sons, Inc. ("G.G. Schmitt"), a Sarasota, Florida-based designer and manufacturer of customized hardware and structural components for the marine industry. The total cash consideration for the 2019 Acquisitions was $53.1 million, plus contingent consideration over a one-year period based on future performance in connection with the acquisition of G.G. Schmitt. Valuation activities and purchase accounting adjustments have been finalized on all 2019 Acquisitions, except for the finalization of tangible assets for Topline Counters. Changes to preliminary purchase accounting estimates recorded in the third quarter and first nine months of 2020 related to the 2019 Acquisitions were immaterial. The 2019 Acquisitions are included in the Manufacturing segment. The following table summarizes the fair values of the consideration paid, assets acquired, and the liabilities assumed as of the date of acquisition for the 2020 Acquisitions and the 2019 Acquisitions: (thousands) 2020 Acquisitions 2019 Acquisitions Consideration Cash, net of cash acquired $ 124,013 $ 53,307 Contingent consideration (1) 1,813 1,160 Total consideration 125,826 54,467 Assets Acquired Trade receivables $ 9,785 $ 9,692 Inventories 16,073 5,803 Prepaid expenses & other 502 20 Property, plant & equipment 15,633 6,567 Operating lease right-of-use assets 6,222 5,653 Identifiable intangible assets 49,445 23,715 Liabilities Assumed Accounts payable & accrued liabilities (6,264) (6,514) Operating lease obligations (6,222) (5,653) Deferred tax liabilities, net (3,415) (1,922) Total fair value of net assets acquired 81,759 37,361 Goodwill (2) 44,067 17,106 $ 125,826 $ 54,467 (1) These amounts reflect the preliminary estimated liability pertaining to the fair value of contingent consideration based on future performance relating to certain acquisitions. (2) Goodwill is tax-deductible for the 2020 Acquisitions, except Front Range Stone (approximately $14.1 million), and for the 2019 Acquisitions, except GG Schmitt (approximately $5.4 million). For acquisitions, the excess of purchase price consideration over the fair value of net assets acquired is recorded as goodwill, which generally represents the combined value of the Company's existing purchasing, manufacturing, sales, industry relationships, and systems resources with the organizational talent and expertise of the acquired companies' respective management teams to maximize efficiencies, revenue impact, market share growth, and net income. We estimate the value of acquired property, plant, and equipment using a combination of the income, cost, and market approaches, such as estimates of future income growth, capitalization rates, discount rates, and capital expenditure needs of the acquired businesses. The following table presents our estimates of identifiable intangibles for the 2020 Acquisitions and the 2019 Acquisitions: (thousands) Estimated Useful Life (in years) 2020 Acquisitions 2019 Acquisitions Customer relationships 10 $ 37,723 $ 18,112 Non-compete agreements 5 492 150 Trademarks Indefinite 11,230 5,453 $ 49,445 $ 23,715 We estimate the value of customer relationships using the multi-period excess earnings method, which is a variation on the income approach, calculating the present value of incremental after-tax cash flows attributable to the asset. Non-compete agreements are valued using a discounted cash flow approach, which is a variation of an income approach, with and without the individual counterparties to the non-compete agreements. Trademarks are valued using the relief-from-royalty method, which applies an estimated royalty rate to forecasted future cash flows, discounted to present value. Pro Forma Information The following pro forma information for the third quarter and nine months ended September 27, 2020 and September 29, 2019 assumes the 2020 Acquisitions and the 2019 Acquisitions occurred as of the beginning of the year immediately preceding each such acquisition. The pro forma information contains the actual operating results of the 2020 Acquisitions and 2019 Acquisitions combined with the results prior to their respective acquisition dates, adjusted to reflect the pro forma impact of the acquisitions occurring as of the beginning of the year immediately preceding each such acquisition. The pro forma information includes financing and interest expense charges based on incremental borrowings incurred in connection with each transaction. In addition, the pro forma information includes amortization expense, in the aggregate, related to intangible assets acquired in connection with the transactions of $0.5 million and $2.2 million for the third quarter and nine months ended September 27, 2020, respectively, and $1.4 million and $4.0 million for the third quarter and nine months ended September 29, 2019, respectively. Third Quarter Ended Nine Months Ended (thousands except per share data) September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Revenue $ 719,953 $ 621,936 $ 1,798,914 $ 1,961,263 Net income 38,412 24,914 65,392 80,077 Basic net income per common share 1.69 1.08 2.87 3.47 Diluted net income per common share 1.66 1.07 2.83 3.44 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 27, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | 7. STOCK-BASED COMPENSATION The Company recorded expense of $4.9 million and $11.2 million for the third quarter and nine months ended September 27, 2020, respectively, for its stock-based compensation plans in the condensed consolidated statements of income. Stock-based compensation expense for the nine months ended September 27, 2020 includes a reduction of expense due to certain forfeitures and adjustments in the amount of $2.3 million. For the third quarter and nine months ended September 29, 2019, the Company recorded stock-based compensation expense of $3.8 million and $12.0 million, respectively. The Board approved various stock-based grants under the Company’s 2009 Omnibus Incentive Plan in the first nine months of 2020 totaling 275,740 shares in the aggregate at an average fair value of $53.78 per share at grant date for a total fair value at grant date of $14.8 million. In addition, in the second quarter of 2020, the Board approved stock option grants representing 465,000 shares in the aggregate at an exercise price of $41.33 per share. The total cost to be expensed over the three-year vesting period will be $6.6 million, or $14.25 per share, with an underlying volatility of 42% under the Black Scholes option pricing model. As of September 27, 2020, there was approximately $25.5 million of total unrecognized compensation cost related to stock-based compensation arrangements granted under incentive plans. That cost is expected to be recognized over a weighted-average period of 17.4 months. |
NET INCOME PER COMMON SHARE
NET INCOME PER COMMON SHARE | 9 Months Ended |
Sep. 27, 2020 | |
Earnings Per Share [Abstract] | |
NET INCOME PER COMMON SHARE | 8. NET INCOME PER COMMON SHARE Net income per common share calculated for the third quarter and nine months of 2020 and 2019 is as follows: Third Quarter Ended Nine Months Ended (thousands except per share data) September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Net income for basic and diluted per share calculation $ 37,336 $ 21,317 $ 59,237 $ 69,582 Weighted average common shares outstanding - basic 22,674 23,076 22,784 23,073 Effect of potentially dilutive securities 398 197 304 206 Weighted average common shares outstanding - diluted 23,072 23,273 23,088 23,279 Basic net income per common share $ 1.65 $ 0.92 $ 2.60 $ 3.02 Diluted net income per common share $ 1.62 $ 0.92 $ 2.57 $ 2.99 An immaterial amount of securities was not included in the computation of diluted income per share as they are considered anti-dilutive under the treasury stock method. |
DEBT
DEBT | 9 Months Ended |
Sep. 27, 2020 | |
Debt Disclosure [Abstract] | |
DEBT | 9. DEBT A summary of total debt outstanding at September 27, 2020 and December 31, 2019 is as follows: (thousands) September 27, 2020 December 31, 2019 Long-term debt: 1.0% convertible notes due 2023 $ 172,500 $ 172,500 Term loan due 2024 95,000 97,500 Revolver due 2024 135,000 135,000 7.5% senior notes due 2027 300,000 300,000 Total long-term debt 702,500 705,000 Less: convertible notes debt discount, net (17,958) (23,260) Less: term loan deferred financing costs, net (463) (542) Less: senior notes deferred financing costs, net (5,227) (5,844) Less: current maturities of long-term debt (5,000) (5,000) Total long-term debt, less current maturities, net $ 673,852 $ 670,354 There were no material changes to any of our debt arrangements during the third quarter and nine months ended September 27, 2020. Interest rates for borrowings under the revolver and term loan are the prime rate or LIBOR plus a margin. At September 27, 2020, all of the Company's borrowings under the revolver and term loan were under the LIBOR-based option. The interest rate for incremental borrowings at September 27, 2020 was LIBOR plus 1.5% (or 1.69%) for the LIBOR-based option. The fee payable on committed but unused portions of the revolver was 0.20% at September 27, 2020. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 27, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | 10. DERIVATIVE FINANCIAL INSTRUMENTS The Company's credit facility exposes the Company to risks associated with the variability in interest expense associated with fluctuations in LIBOR. To partially mitigate this risk, the Company has historically entered into interest rate swaps. As of September 27, 2020, the Company had a combined notional principal amount of $200.0 million of interest rate swap agreements, all of which are designated as cash flow hedges. These swap agreements effectively convert the interest expense associated with a portion of the Company's variable rate debt from variable interest rates to fixed interest rates and have maturities ranging from February 2022 to March 2022. The following table summarizes the fair value of derivative contracts included in the condensed consolidated statements of financial position (in thousands): Fair value of derivative instruments Derivatives accounted for as cash flow hedges Balance sheet location September 27, 2020 December 31, 2019 Interest rate swaps Other long-term liabilities $ 7,964 $ 5,868 The interest rate swaps are comprised of over-the-counter derivatives, which are valued using models that primarily rely on observable inputs such as yield curves, which are classified as Level 2 in the fair value hierarchy. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 9 Months Ended |
Sep. 27, 2020 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | 11. ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss includes unrealized gains and losses on derivatives that qualify as hedges of cash flows, cumulative foreign currency translation and other adjustments. The activity in accumulated other comprehensive loss during the third quarter and nine months ended September 27, 2020 and September 29, 2019 was as follows: Third Quarter Ended September 27, 2020 (thousands) Cash Flow Hedges Other Foreign Currency Items Total Balance at June 28, 2020 $ (6,916) $ (1,270) $ (106) $ (8,292) Other comprehensive income (net of tax of $340, $0 and $0) 989 — 60 1,049 Balance at September 27, 2020 $ (5,927) $ (1,270) $ (46) $ (7,243) Nine Months Ended September 27, 2020 (thousands) Cash Flow Hedges Other Foreign Currency Items Total Balance at December 31, 2019 $ (4,374) $ (1,270) $ (54) $ (5,698) Other comprehensive income (loss) (net of tax benefit of $542, $0 and $0) (1,553) — 8 (1,545) Balance at September 27, 2020 $ (5,927) $ (1,270) $ (46) $ (7,243) Third Quarter Ended September 29, 2019 (thousands) Cash Flow Hedges Other Foreign Currency Items Total Balance at June 30, 2019 $ (4,958) $ (675) $ (99) $ (5,732) Other comprehensive income (loss) (net of tax benefit of $83, $0 and $0) (240) — 19 (221) Balance at September 29, 2019 $ (5,198) $ (675) $ (80) $ (5,953) Nine Months Ended September 29, 2019 (thousands) Cash Flow Hedges Other Foreign Currency Items Total Balance at December 31, 2018 $ (1,973) $ (675) $ (32) $ (2,680) Other comprehensive loss (net of tax benefit of $1,098, $0 and $0) (3,225) — (48) (3,273) Balance at September 29, 2019 $ (5,198) $ (675) $ (80) $ (5,953) |
LEASES
LEASES | 9 Months Ended |
Sep. 27, 2020 | |
Leases [Abstract] | |
LEASES | 12. LEASES Lease expense, supplemental cash flow information, and other information related to leases were as follows: Third Quarter Ended (thousands) September 27, 2020 September 29, 2019 Operating lease cost $ 8,525 $ 7,848 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 8,317 $ 6,946 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 17,091 $ 5,522 Nine Months Ended (thousands) September 27, 2020 September 29, 2019 Operating lease cost $ 25,093 $ 23,536 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 24,680 $ 20,545 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 34,993 $ 14,767 Balance sheet information related to leases was as follows: (thousands, except lease term and discount rate) September 27, 2020 December 31, 2019 Assets Operating lease right-of-use assets $ 105,410 $ 93,546 Liabilities Operating lease liabilities, current portion $ 29,565 $ 27,694 Long-term operating lease liabilities 76,873 66,467 Total lease liabilities $ 106,438 $ 94,161 Weighted average remaining lease term, operating leases (in years) 4.2 4.2 Weighted average discount rate, operating leases 3.9 % 3.7 % Maturities of lease liabilities were as follows at September 27, 2020: (thousands) 2020 (excluding the nine months ended September 27, 2020) $ 8,561 2021 31,924 2022 26,328 2023 20,593 2024 14,552 Thereafter 14,283 Total lease payments 116,241 Less imputed interest (9,803) Total $ 106,438 Leases have remaining lease terms of one year to ten years. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 27, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 13. FAIR VALUE MEASUREMENTS |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 27, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 14. INCOME TAXES The effective tax rate in the third quarter of 2020 and 2019 was 24.3% and 26.0%, respectively, and the effective tax rate for the comparable nine month periods was 25.4% and 24.6%, respectively. The effective tax rate for the third quarter of 2020 reflects the impact of certain federal and state income tax benefits and the first nine months of 2020 reflects the impact of $2.2 million of permanent tax differences due to certain Coronavirus Aid, Relief, and Economic Security Act payroll tax credits. In addition, the effective tax rate for the first nine months of 2019 includes the impact of the recognition of excess tax benefits on share-based compensation that was recorded as a reduction to income tax expense upon realization in the amount of $0.9 million. Cash paid for income taxes, net of refunds, was $1.8 million and $1.6 million for the third quarter and nine months of 2020, respectively, and $7.4 million and $30.0 million in the third quarter and nine months of 2019, respectively. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 27, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | 15. SEGMENT INFORMATION The Company has two reportable segments, Manufacturing and Distribution, which are based on its method of internal reporting, which segregates its businesses based on the manner in which its chief operating decision maker allocates resources, evaluates financial results, and determines compensation. The tables below present information about the sales and operating income of those segments. Third Quarter Ended September 27, 2020 (thousands) Manufacturing Distribution Total Net outside sales $ 494,274 $ 206,433 $ 700,707 Intersegment sales 12,004 1,640 13,644 Total sales 506,278 208,073 714,351 Operating income 63,312 16,444 79,756 Third Quarter Ended September 29, 2019 (thousands) Manufacturing Distribution Total Net outside sales $ 399,712 $ 166,474 $ 566,186 Intersegment sales 8,102 1,078 9,180 Total sales 407,814 167,552 575,366 Operating income 42,353 9,041 51,394 Nine Months Ended September 27, 2020 (thousands) Manufacturing Distribution Total Net outside sales $ 1,206,114 $ 507,870 $ 1,713,984 Intersegment sales 24,691 4,025 28,716 Total sales 1,230,805 511,895 1,742,700 Operating income 131,426 33,350 164,776 Nine Months Ended September 29, 2019 (thousands) Manufacturing Distribution Total Net outside sales $ 1,259,671 $ 527,951 $ 1,787,622 Intersegment sales 24,153 3,361 27,514 Total sales 1,283,824 531,312 1,815,136 Operating income 135,577 28,132 163,709 The following table presents a reconciliation of segment operating income to consolidated operating income: Third Quarter Ended Nine Months Ended (thousands) September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Operating income for reportable segments $ 79,756 $ 51,394 $ 164,776 $ 163,709 Unallocated corporate expenses (9,706) (4,793) (23,962) (18,796) Amortization (10,221) (9,191) (29,600) (26,448) Consolidated operating income $ 59,829 $ 37,410 $ 111,214 $ 118,465 |
STOCK REPURCHASE PROGRAMS
STOCK REPURCHASE PROGRAMS | 9 Months Ended |
Sep. 27, 2020 | |
Equity [Abstract] | |
STOCK REPURCHASE PROGRAM | 16. STOCK REPURCHASE PROGRAMS In March 2020, the Board approved a new stock repurchase program for up to $50 million of its common stock, including amounts remaining under previous authorizations. Approximately $38.8 million remains available in the amount of the Company's common stock that may be acquired under the current stock repurchase program as of September 27, 2020. In the third quarter of 2020, the Company repurchased 88,950 shares of its common stock at an average price of $53.24 for an aggregate cost of approximately $4.7 million. In the first nine months of 2020, the Company repurchased 545,105 shares of its common stock at an average price of $37.22 per share for an aggregate cost of approximately $20.3 million. During the third quarter and first nine months of 2019, the Company repurchased 98,201 shares at an average price of $36.50 per share for an aggregate cost of approximately $3.6 million. |
RECENTLY ISSUED ACCOUNTING PR_2
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Policies) | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Policies [Abstract] | |
Recent Issued Accounting Pronouncements | Goodwill Impairment In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-04, " Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ". This ASU simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. The standard requires that the impairment loss be measured as the excess of the reporting unit's carrying amount over its fair value. It eliminates the second step that requires the impairment to be measured between the implied value of a reporting unit's goodwill and its carrying value. The Company adopted ASU 2017-04 on January 1, 2020 and the adoption did not have a material impact on the condensed consolidated financial statements. Credit Losses In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments ”, which amends certain provisions of Accounting Standards Codification ("ASC") 326, “Financial Instruments-Credit Loss”. The ASU changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held to maturity debt securities, loans and other instruments, entities are required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. Additionally, entities are required to disclose more information with respect to credit quality indicators, including information used to track credit quality by year of origination for most financing receivables. The Company adopted ASU 2016-13 on January 1, 2020 and the adoption did not have a material impact on the condensed consolidated financial statements. Income Taxes In December 2019, the FASB issued ASU 2019-12, " Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ", a new standard to simplify the accounting for income taxes. The guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this standard on our consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, " Reference Rate Reform (Topic 848) ", a new standard providing final guidance to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. The guidance is effective upon issuance and generally can be applied through December 31, 2022. We are currently evaluating the impact of this standard on our consolidated financial statements. Accounting for Convertible Instruments and Contracts in an Entity's Own Equity In August 2020, the FASB issued ASU 2020-06, " Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ", a new standard that simplifies certain accounting treatments for convertible debt instruments. The guidance eliminates certain requirements that require separate accounting for embedded conversion features and simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. In addition, the new guidance requires entities use the if-converted method for all convertible instruments in the diluted EPS calculation and include the effect of potential share settlement for instruments that may be settled in cash or shares, with certain exceptions. Furthermore, the guidance requires new disclosures about events that occur during the reporting period that cause conversion contingencies to be met and about the fair value of convertible debt at the instrument level, among other things. The guidance is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. We are currently evaluating the impact of this standard on our consolidated financial statements. |
Revenue from Contract with Customer | 3. REVENUE RECOGNITION In the following table, revenue from contracts with customers, net of intersegment sales, is disaggregated by market type and by reportable segment, consistent with how the Company believes the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors: Third Quarter Ended September 27, 2020 (thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 290,326 $ 130,845 $ 421,171 Manufactured Housing 45,845 61,908 107,753 Industrial 69,242 9,090 78,332 Marine 88,861 4,590 93,451 Total $ 494,274 $ 206,433 $ 700,707 Nine Months Ended September 27, 2020 (thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 656,739 $ 288,778 $ 945,517 Manufactured Housing 127,857 182,579 310,436 Industrial 202,368 25,113 227,481 Marine 219,150 11,400 230,550 Total $ 1,206,114 $ 507,870 $ 1,713,984 Third Quarter Ended September 29, 2019 (thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 218,706 $ 91,313 $ 310,019 Manufactured Housing 44,159 64,959 109,118 Industrial 64,541 7,566 72,107 Marine 72,306 2,636 74,942 Total $ 399,712 $ 166,474 $ 566,186 ` Nine Months Ended September 29, 2019 (thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 694,261 $ 299,115 $ 993,376 Manufactured Housing 131,101 193,975 325,076 Industrial 188,292 25,149 213,441 Marine 246,017 9,712 255,729 Total $ 1,259,671 $ 527,951 $ 1,787,622 Contract Liabilities Contract liabilities, representing upfront payments from customers received prior to satisfying performance obligations, were immaterial as of the beginning and end of all periods presented and changes in contract liabilities were immaterial during all periods presented. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregation of revenue | In the following table, revenue from contracts with customers, net of intersegment sales, is disaggregated by market type and by reportable segment, consistent with how the Company believes the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors: Third Quarter Ended September 27, 2020 (thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 290,326 $ 130,845 $ 421,171 Manufactured Housing 45,845 61,908 107,753 Industrial 69,242 9,090 78,332 Marine 88,861 4,590 93,451 Total $ 494,274 $ 206,433 $ 700,707 Nine Months Ended September 27, 2020 (thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 656,739 $ 288,778 $ 945,517 Manufactured Housing 127,857 182,579 310,436 Industrial 202,368 25,113 227,481 Marine 219,150 11,400 230,550 Total $ 1,206,114 $ 507,870 $ 1,713,984 Third Quarter Ended September 29, 2019 (thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 218,706 $ 91,313 $ 310,019 Manufactured Housing 44,159 64,959 109,118 Industrial 64,541 7,566 72,107 Marine 72,306 2,636 74,942 Total $ 399,712 $ 166,474 $ 566,186 ` Nine Months Ended September 29, 2019 (thousands) Manufacturing Distribution Total Market type: Recreational Vehicle $ 694,261 $ 299,115 $ 993,376 Manufactured Housing 131,101 193,975 325,076 Industrial 188,292 25,149 213,441 Marine 246,017 9,712 255,729 Total $ 1,259,671 $ 527,951 $ 1,787,622 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventories consist of the following: (thousands) September 27, 2020 December 31, 2019 Raw materials $ 196,298 $ 162,238 Work in process 15,955 14,272 Finished goods 28,225 28,446 Less: reserve for inventory obsolescence (13,301) (10,123) Total manufactured goods, net 227,177 194,833 Materials purchased for resale (distribution products) 56,676 60,918 Less: reserve for inventory obsolescence (2,479) (1,881) Total materials purchased for resale (distribution products), net 54,197 59,037 Total inventories $ 281,374 $ 253,870 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | Changes in the carrying amount of goodwill for the nine months ended September 27, 2020 by segment are as follows: (thousands) Manufacturing Distribution Total Balance - December 31, 2019 $ 268,402 $ 50,947 $ 319,349 Acquisitions 35,087 8,980 44,067 Adjustments to preliminary purchase price allocations (8,708) 1,725 (6,983) Balance - September 27, 2020 $ 294,781 $ 61,652 $ 356,433 |
Schedule of intangible assets, net | Intangible assets, net consist of the following as of September 27, 2020 and December 31, 2019: (thousands) September 27, December 31, Customer relationships $ 394,687 $ 357,513 Non-compete agreements 15,231 16,202 Patents 16,555 16,495 Trademarks 101,426 88,524 527,899 478,734 Less: accumulated amortization (146,980) (121,720) Intangible assets, net $ 380,919 $ 357,014 |
Schedule of changes in intangible assets | Changes in the carrying value of intangible assets for the nine months ended September 27, 2020 by segment are as follows: (thousands) Manufacturing Distribution Total Balance - December 31, 2019 $ 282,123 $ 74,891 $ 357,014 Acquisitions and other 36,409 13,096 49,505 Amortization (24,313) (5,287) (29,600) Impairment of intangible assets (1) (119) (1,831) (1,950) Adjustments to preliminary purchase price allocations 6,095 (145) 5,950 Balance - September 27, 2020 $ 300,195 $ 80,724 $ 380,919 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Business Combinations [Abstract] | |
Schedule of acquisitions completed | Acquisitions completed in the first nine months of 2020 include the following previously announced acquisitions: Company Description Maple City Woodworking Corporation Manufacturer of hardwood cabinet doors and fascia for the recreational vehicle ("RV") market based in Goshen, Indiana SEI Manufacturing, Inc. Manufacturer of towers, T-Tops, hardtops, rails, gates and other aluminum exterior products for the marine market located in Cromwell, Indiana Inland Plywood Company Supplier, laminator, and wholesale distributor of treated, untreated, and laminated plywood, medium density overlay panels, and other specialty products, primarily serving the marine market as well as the RV and industrial markets headquartered in Pontiac, Michigan with an additional facility in Cocoa, Florida Synergy RV Transport Transportation and logistics service provider primarily for original equipment manufacturers and dealers in the RV market located in Goshen, Indiana Front Range Stone Fabricator and installer of natural stone, quartz, solid surface, and laminate countertops, primarily serving big box home improvement retailers, home builders and commercial contractors in the industrial market based in Englewood, Colorado |
Schedule of assets acquired and liabilities assumed | The following table summarizes the fair values of the consideration paid, assets acquired, and the liabilities assumed as of the date of acquisition for the 2020 Acquisitions and the 2019 Acquisitions: (thousands) 2020 Acquisitions 2019 Acquisitions Consideration Cash, net of cash acquired $ 124,013 $ 53,307 Contingent consideration (1) 1,813 1,160 Total consideration 125,826 54,467 Assets Acquired Trade receivables $ 9,785 $ 9,692 Inventories 16,073 5,803 Prepaid expenses & other 502 20 Property, plant & equipment 15,633 6,567 Operating lease right-of-use assets 6,222 5,653 Identifiable intangible assets 49,445 23,715 Liabilities Assumed Accounts payable & accrued liabilities (6,264) (6,514) Operating lease obligations (6,222) (5,653) Deferred tax liabilities, net (3,415) (1,922) Total fair value of net assets acquired 81,759 37,361 Goodwill (2) 44,067 17,106 $ 125,826 $ 54,467 (1) These amounts reflect the preliminary estimated liability pertaining to the fair value of contingent consideration based on future performance relating to certain acquisitions. (2) Goodwill is tax-deductible for the 2020 Acquisitions, except Front Range Stone (approximately $14.1 million), and for the 2019 Acquisitions, except GG Schmitt (approximately $5.4 million). For acquisitions, the excess of purchase price consideration over the fair value of net assets acquired is recorded as goodwill, which generally represents the combined value of the Company's existing purchasing, manufacturing, sales, industry relationships, and systems resources with the organizational talent and expertise of the acquired companies' respective management teams to maximize efficiencies, revenue impact, market share growth, and net income. |
Schedule of identifiable intangible assets acquired | The following table presents our estimates of identifiable intangibles for the 2020 Acquisitions and the 2019 Acquisitions: (thousands) Estimated Useful Life (in years) 2020 Acquisitions 2019 Acquisitions Customer relationships 10 $ 37,723 $ 18,112 Non-compete agreements 5 492 150 Trademarks Indefinite 11,230 5,453 $ 49,445 $ 23,715 |
Schedule of pro forma information | The pro forma information includes financing and interest expense charges based on incremental borrowings incurred in connection with each transaction. In addition, the pro forma information includes amortization expense, in the aggregate, related to intangible assets acquired in connection with the transactions of $0.5 million and $2.2 million for the third quarter and nine months ended September 27, 2020, respectively, and $1.4 million and $4.0 million for the third quarter and nine months ended September 29, 2019, respectively. Third Quarter Ended Nine Months Ended (thousands except per share data) September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Revenue $ 719,953 $ 621,936 $ 1,798,914 $ 1,961,263 Net income 38,412 24,914 65,392 80,077 Basic net income per common share 1.69 1.08 2.87 3.47 Diluted net income per common share 1.66 1.07 2.83 3.44 |
NET INCOME PER COMMON SHARE (Ta
NET INCOME PER COMMON SHARE (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | Net income per common share calculated for the third quarter and nine months of 2020 and 2019 is as follows: Third Quarter Ended Nine Months Ended (thousands except per share data) September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Net income for basic and diluted per share calculation $ 37,336 $ 21,317 $ 59,237 $ 69,582 Weighted average common shares outstanding - basic 22,674 23,076 22,784 23,073 Effect of potentially dilutive securities 398 197 304 206 Weighted average common shares outstanding - diluted 23,072 23,273 23,088 23,279 Basic net income per common share $ 1.65 $ 0.92 $ 2.60 $ 3.02 Diluted net income per common share $ 1.62 $ 0.92 $ 2.57 $ 2.99 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of total debt outstanding | A summary of total debt outstanding at September 27, 2020 and December 31, 2019 is as follows: (thousands) September 27, 2020 December 31, 2019 Long-term debt: 1.0% convertible notes due 2023 $ 172,500 $ 172,500 Term loan due 2024 95,000 97,500 Revolver due 2024 135,000 135,000 7.5% senior notes due 2027 300,000 300,000 Total long-term debt 702,500 705,000 Less: convertible notes debt discount, net (17,958) (23,260) Less: term loan deferred financing costs, net (463) (542) Less: senior notes deferred financing costs, net (5,227) (5,844) Less: current maturities of long-term debt (5,000) (5,000) Total long-term debt, less current maturities, net $ 673,852 $ 670,354 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative liabilities at fair value | The following table summarizes the fair value of derivative contracts included in the condensed consolidated statements of financial position (in thousands): Fair value of derivative instruments Derivatives accounted for as cash flow hedges Balance sheet location September 27, 2020 December 31, 2019 Interest rate swaps Other long-term liabilities $ 7,964 $ 5,868 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive income (Loss) | The activity in accumulated other comprehensive loss during the third quarter and nine months ended September 27, 2020 and September 29, 2019 was as follows: Third Quarter Ended September 27, 2020 (thousands) Cash Flow Hedges Other Foreign Currency Items Total Balance at June 28, 2020 $ (6,916) $ (1,270) $ (106) $ (8,292) Other comprehensive income (net of tax of $340, $0 and $0) 989 — 60 1,049 Balance at September 27, 2020 $ (5,927) $ (1,270) $ (46) $ (7,243) Nine Months Ended September 27, 2020 (thousands) Cash Flow Hedges Other Foreign Currency Items Total Balance at December 31, 2019 $ (4,374) $ (1,270) $ (54) $ (5,698) Other comprehensive income (loss) (net of tax benefit of $542, $0 and $0) (1,553) — 8 (1,545) Balance at September 27, 2020 $ (5,927) $ (1,270) $ (46) $ (7,243) Third Quarter Ended September 29, 2019 (thousands) Cash Flow Hedges Other Foreign Currency Items Total Balance at June 30, 2019 $ (4,958) $ (675) $ (99) $ (5,732) Other comprehensive income (loss) (net of tax benefit of $83, $0 and $0) (240) — 19 (221) Balance at September 29, 2019 $ (5,198) $ (675) $ (80) $ (5,953) Nine Months Ended September 29, 2019 (thousands) Cash Flow Hedges Other Foreign Currency Items Total Balance at December 31, 2018 $ (1,973) $ (675) $ (32) $ (2,680) Other comprehensive loss (net of tax benefit of $1,098, $0 and $0) (3,225) — (48) (3,273) Balance at September 29, 2019 $ (5,198) $ (675) $ (80) $ (5,953) |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Leases [Abstract] | |
Lease expense, supplemental cash flow and other lease information | Lease expense, supplemental cash flow information, and other information related to leases were as follows: Third Quarter Ended (thousands) September 27, 2020 September 29, 2019 Operating lease cost $ 8,525 $ 7,848 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 8,317 $ 6,946 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 17,091 $ 5,522 Nine Months Ended (thousands) September 27, 2020 September 29, 2019 Operating lease cost $ 25,093 $ 23,536 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 24,680 $ 20,545 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 34,993 $ 14,767 |
Lease assets and liabilities | Balance sheet information related to leases was as follows: (thousands, except lease term and discount rate) September 27, 2020 December 31, 2019 Assets Operating lease right-of-use assets $ 105,410 $ 93,546 Liabilities Operating lease liabilities, current portion $ 29,565 $ 27,694 Long-term operating lease liabilities 76,873 66,467 Total lease liabilities $ 106,438 $ 94,161 Weighted average remaining lease term, operating leases (in years) 4.2 4.2 Weighted average discount rate, operating leases 3.9 % 3.7 % |
Operating lease liability maturity | Maturities of lease liabilities were as follows at September 27, 2020: (thousands) 2020 (excluding the nine months ended September 27, 2020) $ 8,561 2021 31,924 2022 26,328 2023 20,593 2024 14,552 Thereafter 14,283 Total lease payments 116,241 Less imputed interest (9,803) Total $ 106,438 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information | The tables below present information about the sales and operating income of those segments. Third Quarter Ended September 27, 2020 (thousands) Manufacturing Distribution Total Net outside sales $ 494,274 $ 206,433 $ 700,707 Intersegment sales 12,004 1,640 13,644 Total sales 506,278 208,073 714,351 Operating income 63,312 16,444 79,756 Third Quarter Ended September 29, 2019 (thousands) Manufacturing Distribution Total Net outside sales $ 399,712 $ 166,474 $ 566,186 Intersegment sales 8,102 1,078 9,180 Total sales 407,814 167,552 575,366 Operating income 42,353 9,041 51,394 Nine Months Ended September 27, 2020 (thousands) Manufacturing Distribution Total Net outside sales $ 1,206,114 $ 507,870 $ 1,713,984 Intersegment sales 24,691 4,025 28,716 Total sales 1,230,805 511,895 1,742,700 Operating income 131,426 33,350 164,776 Nine Months Ended September 29, 2019 (thousands) Manufacturing Distribution Total Net outside sales $ 1,259,671 $ 527,951 $ 1,787,622 Intersegment sales 24,153 3,361 27,514 Total sales 1,283,824 531,312 1,815,136 Operating income 135,577 28,132 163,709 |
Summary of the reconciliation of segment operations | The following table presents a reconciliation of segment operating income to consolidated operating income: Third Quarter Ended Nine Months Ended (thousands) September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Operating income for reportable segments $ 79,756 $ 51,394 $ 164,776 $ 163,709 Unallocated corporate expenses (9,706) (4,793) (23,962) (18,796) Amortization (10,221) (9,191) (29,600) (26,448) Consolidated operating income $ 59,829 $ 37,410 $ 111,214 $ 118,465 |
REVENUE RECOGNITION - Schedule
REVENUE RECOGNITION - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
NET SALES | $ 700,707 | $ 566,186 | $ 1,713,984 | $ 1,787,622 |
Recreational Vehicle | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 421,171 | 310,019 | 945,517 | 993,376 |
Manufactured Housing | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 107,753 | 109,118 | 310,436 | 325,076 |
Industrial | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 78,332 | 72,107 | 227,481 | 213,441 |
Marine | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 93,451 | 74,942 | 230,550 | 255,729 |
Manufacturing | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 494,274 | 399,712 | 1,206,114 | 1,259,671 |
Manufacturing | Recreational Vehicle | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 290,326 | 218,706 | 656,739 | 694,261 |
Manufacturing | Manufactured Housing | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 45,845 | 44,159 | 127,857 | 131,101 |
Manufacturing | Industrial | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 69,242 | 64,541 | 202,368 | 188,292 |
Manufacturing | Marine | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 88,861 | 72,306 | 219,150 | 246,017 |
Distribution | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 206,433 | 166,474 | 507,870 | 527,951 |
Distribution | Recreational Vehicle | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 130,845 | 91,313 | 288,778 | 299,115 |
Distribution | Manufactured Housing | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 61,908 | 64,959 | 182,579 | 193,975 |
Distribution | Industrial | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | 9,090 | 7,566 | 25,113 | 25,149 |
Distribution | Marine | ||||
Disaggregation of Revenue [Line Items] | ||||
NET SALES | $ 4,590 | $ 2,636 | $ 11,400 | $ 9,712 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Inventory [Line Items] | ||
Raw materials | $ 196,298 | $ 162,238 |
Work in process | 15,955 | 14,272 |
Finished goods | 28,225 | 28,446 |
Total manufactured goods, net | 227,177 | 194,833 |
Materials purchased for resale (distribution products) | 56,676 | 60,918 |
Total materials purchased for resale (distribution products), net | 54,197 | 59,037 |
Total inventories | 281,374 | 253,870 |
Manufactured Goods | ||
Inventory [Line Items] | ||
Less: reserve for inventory obsolescence | (13,301) | (10,123) |
Distributed Goods | ||
Inventory [Line Items] | ||
Less: reserve for inventory obsolescence | $ (2,479) | $ (1,881) |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Carrying Amount of Goodwill by Segment (Details) $ in Thousands | 9 Months Ended |
Sep. 27, 2020USD ($) | |
Goodwill [Roll Forward] | |
Balance - December 31, 2019 | $ 319,349 |
Acquisitions | 44,067 |
Adjustments to preliminary purchase price allocations | (6,983) |
Balance - September 27, 2020 | 356,433 |
Manufacturing | |
Goodwill [Roll Forward] | |
Balance - December 31, 2019 | 268,402 |
Acquisitions | 35,087 |
Adjustments to preliminary purchase price allocations | (8,708) |
Balance - September 27, 2020 | 294,781 |
Distribution | |
Goodwill [Roll Forward] | |
Balance - December 31, 2019 | 50,947 |
Acquisitions | 8,980 |
Adjustments to preliminary purchase price allocations | 1,725 |
Balance - September 27, 2020 | $ 61,652 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets, Net, by Major Class (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Intangible Assets [Line Items] | ||
Total other intangible assets, net, excluding accumulated amortization | $ 527,899 | $ 478,734 |
Less: accumulated amortization | (146,980) | (121,720) |
Intangible assets, net | 380,919 | 357,014 |
Trademarks | ||
Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 101,426 | 88,524 |
Customer relationships | ||
Intangible Assets [Line Items] | ||
Finite-lived intangible assets | 394,687 | 357,513 |
Non-compete agreements | ||
Intangible Assets [Line Items] | ||
Finite-lived intangible assets | 15,231 | 16,202 |
Patents | ||
Intangible Assets [Line Items] | ||
Finite-lived intangible assets | $ 16,555 | $ 16,495 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Intangible Assets [Roll Forward] | ||||
Balance - December 31, 2019 | $ 357,014 | |||
Acquisitions and other | 49,505 | |||
Amortization | $ (10,221) | $ (9,191) | (29,600) | $ (26,448) |
Impairment of intangible assets | (2,000) | (1,950) | ||
Adjustments to preliminary purchase price allocations | (5,950) | |||
Balance - September 27, 2020 | 380,919 | 380,919 | ||
Manufacturing | ||||
Intangible Assets [Roll Forward] | ||||
Balance - December 31, 2019 | 282,123 | |||
Acquisitions and other | 36,409 | |||
Amortization | (24,313) | |||
Impairment of intangible assets | (119) | |||
Adjustments to preliminary purchase price allocations | (6,095) | |||
Balance - September 27, 2020 | 300,195 | 300,195 | ||
Distribution | ||||
Intangible Assets [Roll Forward] | ||||
Balance - December 31, 2019 | 74,891 | |||
Acquisitions and other | 13,096 | |||
Amortization | (5,287) | |||
Impairment of intangible assets | (1,831) | |||
Adjustments to preliminary purchase price allocations | 145 | |||
Balance - September 27, 2020 | $ 80,724 | $ 80,724 |
ACQUISITIONS - Narrative (Detai
ACQUISITIONS - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 27, 2020USD ($)acquisition | Sep. 29, 2019USD ($) | Sep. 27, 2020USD ($)acquisition | Sep. 29, 2019USD ($)acquisition | Dec. 31, 2019USD ($)acquisition | |
Business Acquisition [Line Items] | |||||
Number of acquisitions | acquisition | 6 | 9 | 2 | 4 | |
Excluding assessed tax | $ 700,707 | $ 566,186 | $ 1,713,984 | $ 1,787,622 | |
Operating Income (Loss) | 59,829 | 37,410 | 111,214 | 118,465 | |
Fair value of estimated contingent consideration payments | 8,000 | 8,000 | $ 9,600 | ||
Contingent consideration arrangements maximum payments amount | 14,800 | 14,800 | |||
Contingent consideration | $ 2,000 | 4,416 | |||
Number of acquisition immaterial | acquisition | 4 | ||||
Cash, net of cash acquired | $ 123,382 | 22,350 | |||
Contingent consideration, performance period | 1 year | ||||
Amortization expense | 500 | $ 1,400 | 2,200 | $ 4,000 | |
Acquired Entities | |||||
Business Acquisition [Line Items] | |||||
Excluding assessed tax | 19,600 | 23,300 | |||
Operating Income (Loss) | 2,100 | 2,200 | |||
Contingent consideration | 1,813 | $ 1,160 | |||
Cash, net of cash acquired | 124,013 | $ 53,307 | |||
Contingent consideration, performance period | 1 year | ||||
Acquired Entities | Previously Reported | |||||
Business Acquisition [Line Items] | |||||
Cash, net of cash acquired | $ 53,100 | ||||
Accrued Liabilities | |||||
Business Acquisition [Line Items] | |||||
Fair value of estimated contingent consideration payments | 6,100 | 6,100 | 2,000 | ||
Other Long-term Liabilities | |||||
Business Acquisition [Line Items] | |||||
Fair value of estimated contingent consideration payments | $ 1,900 | $ 1,900 | $ 7,600 |
ACQUISITIONS - Assets Acquired
ACQUISITIONS - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 27, 2020 | Sep. 29, 2019 | Dec. 31, 2019 | |
Consideration | |||
Cash, net of cash acquired | $ 123,382 | $ 22,350 | |
Contingent consideration | 2,000 | 4,416 | |
Assets Acquired | |||
Operating lease right-of-use assets | 105,410 | $ 93,546 | |
Liabilities Assumed | |||
Goodwill | 356,433 | 319,349 | |
Acquired Entities | |||
Consideration | |||
Cash, net of cash acquired | 124,013 | 53,307 | |
Contingent consideration | 1,813 | 1,160 | |
Total consideration | 125,826 | 54,467 | |
Assets Acquired | |||
Trade receivables | 9,785 | 9,692 | |
Inventories | 16,073 | 5,803 | |
Prepaid expenses & other | 502 | 20 | |
Property, plant & equipment | 15,633 | 6,567 | |
Operating lease right-of-use assets | 6,222 | 5,653 | |
Identifiable intangible assets | 49,445 | 23,715 | |
Liabilities Assumed | |||
Accounts payable & accrued liabilities | (6,264) | (6,514) | |
Operating lease obligations | (6,222) | (5,653) | |
Deferred tax liabilities, net | (3,415) | (1,922) | |
Total fair value of net assets acquired | 81,759 | 37,361 | |
Goodwill | 44,067 | 17,106 | |
Total net assets acquired | 125,826 | $ 54,467 | |
G. G. Schmitt | |||
Liabilities Assumed | |||
Goodwill tax-deductible | $ 14,100 | $ 5,400 |
ACQUISITIONS - Identifiable Int
ACQUISITIONS - Identifiable Intangible Assets Acquired (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 27, 2020 | Sep. 29, 2019 | |
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Identifiable intangible assets | $ 49,445 | $ 23,715 |
Trademarks | ||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Identifiable intangible assets | $ 11,230 | 5,453 |
Customer relationships | ||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Estimated Useful Life (in years) | 10 years | |
Identifiable intangible assets | $ 37,723 | 18,112 |
Non-compete agreements | ||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Estimated Useful Life (in years) | 5 years | |
Identifiable intangible assets | $ 492 | $ 150 |
ACQUISITIONS - Pro Forma Inform
ACQUISITIONS - Pro Forma Information Related to Acquisitions (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Business Combinations [Abstract] | ||||
Revenue | $ 719,953 | $ 621,936 | $ 1,798,914 | $ 1,961,263 |
Net income | $ 38,412 | $ 24,914 | $ 65,392 | $ 80,077 |
Basic net income per common share (in dollars per share) | $ 1.69 | $ 1.08 | $ 2.87 | $ 3.47 |
Diluted net income per common share (in dollars per share) | $ 1.66 | $ 1.07 | $ 2.83 | $ 3.44 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 4.9 | $ 3.8 | $ 11.2 | $ 12 |
Share-based compensation expense, forfeitures and modifications | $ 2.3 | |||
Granted shares (in shares) | 275,740 | |||
Average fair value of shares granted (in dollars per share) | $ 53.78 | |||
Fair value of shares granted, amount | $ 14.8 | |||
Weighted average exercise price (in dollars per share) | $ 41.33 | |||
Cost to be expensed | $ 6.6 | $ 6.6 | ||
Cost to be expensed (in dollars per share) | $ 14.25 | $ 14.25 | ||
Underlying volatility (percent) | 42.00% | |||
Unrecognized compensation cost | $ 25.5 | $ 25.5 | ||
Weighted average recognition period | 17 months 12 days | |||
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares approved (in shares) | 465,000 | 465,000 | ||
Vesting period | 3 years |
NET INCOME PER COMMON SHARE - I
NET INCOME PER COMMON SHARE - Income Per Share Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Earnings Per Share [Abstract] | ||||
Net income for basic and diluted per share calculation | $ 37,336 | $ 21,317 | $ 59,237 | $ 69,582 |
Weighted average shares outstanding - basic (in shares) | 22,674 | 23,076 | 22,784 | 23,073 |
Effect of potentially dilutive securities (in shares) | 398 | 197 | 304 | 206 |
Weighted average common shares outstanding - diluted (in shares) | 23,072 | 23,273 | 23,088 | 23,279 |
Basic net income per common share (in dollars per share) | $ 1.65 | $ 0.92 | $ 2.60 | $ 3.02 |
Diluted net income per common share (in dollars per share) | $ 1.62 | $ 0.92 | $ 2.57 | $ 2.99 |
DEBT - Schedule of Long-term De
DEBT - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 702,500 | $ 705,000 |
Less: convertible notes debt discount, net | (17,958) | (23,260) |
Less: term loan deferred financing costs, net | (463) | (542) |
Less: current maturities of long-term debt | (5,000) | (5,000) |
Total long-term debt, less current maturities, net | $ 673,852 | 670,354 |
1.0% convertible notes due 2023 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 1.00% | |
Total long-term debt | $ 172,500 | 172,500 |
Term loan due 2024 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 95,000 | 97,500 |
Revolver due 2024 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 135,000 | 135,000 |
7.5% senior notes due 2027 | Senior Notes | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 7.50% | |
7.5% senior notes due 2027 | $ 300,000 | 300,000 |
Less: senior notes deferred financing costs, net | $ (5,227) | $ (5,844) |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Line of Credit Facility [Line Items] | ||||
Interest paid | $ 3.2 | $ 6.9 | $ 21.4 | $ 19.7 |
Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Unused capacity, commitment fee percentage | 0.20% | |||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument, basis spread on variable rate | 1.50% | |||
Debt instrument, effective interest rate | 1.69% | 1.69% |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Narrative (Details) $ in Millions | Sep. 27, 2020USD ($) |
Designated as Hedging Instrument | Interest Rate Swap | |
Derivative [Line Items] | |
Derivative amount | $ 200 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Derivative Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Designated as Hedging Instrument | Interest Rate Swap | ||
Derivative [Line Items] | ||
Fair value of derivative instruments | $ 7,964 | $ 5,868 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS - Schedule of Accumulated Other Comprehensive Income Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning Balance | $ 493,268 | $ 458,617 | $ 497,481 | $ 408,754 |
Other comprehensive income (loss), net of tax | 1,049 | (221) | (1,545) | (3,273) |
Ending Balance | 525,829 | 479,938 | 525,829 | 479,938 |
Accumulated Other Comprehensive Loss | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning Balance | (8,292) | (5,732) | (5,698) | (2,680) |
Other comprehensive income (loss), net of tax | 1,049 | (221) | (1,545) | (3,273) |
Ending Balance | (7,243) | (5,953) | (7,243) | (5,953) |
Cash Flow Hedges | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning Balance | (6,916) | (4,958) | (4,374) | (1,973) |
Other comprehensive income (loss), net of tax | 989 | (240) | (1,553) | (3,225) |
Ending Balance | (5,927) | (5,198) | (5,927) | (5,198) |
Other comprehensive income (loss), tax expense (benefit) | 340 | (83) | (542) | (1,098) |
Other | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning Balance | (1,270) | (675) | (1,270) | (675) |
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | 0 |
Ending Balance | (1,270) | (675) | (1,270) | (675) |
Other comprehensive income (loss), tax expense (benefit) | 0 | 0 | 0 | 0 |
Foreign Currency Items | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning Balance | (106) | (99) | (54) | (32) |
Other comprehensive income (loss), net of tax | 60 | 19 | 8 | (48) |
Ending Balance | (46) | (80) | (46) | (80) |
Other comprehensive income (loss), tax expense (benefit) | $ 0 | $ 0 | $ 0 | $ 0 |
LEASES - Lease Expense, Supplem
LEASES - Lease Expense, Supplemental Cash Flow and Other Lease Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Leases [Abstract] | ||||
Operating lease cost | $ 8,525 | $ 7,848 | $ 25,093 | $ 23,536 |
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows for operating leases | 8,317 | 6,946 | 24,680 | 20,545 |
Right-of-use assets obtained in exchange for lease obligations: | ||||
Operating leases | $ 17,091 | $ 5,522 | $ 34,993 | $ 14,767 |
LEASES - Lease Assets and Liabi
LEASES - Lease Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Assets | ||
Operating lease right-of-use assets | $ 105,410 | $ 93,546 |
Liabilities | ||
Operating lease liabilities, current portion | 29,565 | 27,694 |
Long-term operating lease liabilities | 76,873 | 66,467 |
Total lease liabilities | $ 106,438 | $ 94,161 |
Weighted average remaining lease term, operating leases (in years) | 4 years 2 months 12 days | 4 years 2 months 12 days |
Weighted average discount rate, operating leases | 3.90% | 3.70% |
LEASES - Operating Lease Liabil
LEASES - Operating Lease Liability Maturity (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 (excluding the nine months ended September 27, 2020) | $ 8,561 | |
2021 | 31,924 | |
2022 | 26,328 | |
2023 | 20,593 | |
2024 | 14,552 | |
Thereafter | 14,283 | |
Total lease payments | 116,241 | |
Less imputed interest | (9,803) | |
Total | $ 106,438 | $ 94,161 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | Sep. 27, 2020 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 10 years |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Millions | Sep. 27, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents, fair value | $ 31 | $ 132.6 |
Fair Value, Inputs, Level 2 | Senior Notes | 7.50% Senior Notes Due 2027 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of senior notes | 326.1 | 320.3 |
Fair Value, Inputs, Level 2 | 1.0% Convertible Notes Due 2023 | Convertible Senior Notes Due 2023 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of convertible debt | $ 166.9 | $ 162.5 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 24.30% | 26.00% | 25.40% | 24.60% |
Payroll tax credits | $ 2.2 | |||
Reduction to income tax expense from excess tax benefits on share-based compensation | $ 0.9 | |||
Income taxes paid | $ 1.8 | $ 7.4 | $ 1.6 | $ 30 |
SEGMENT INFORMATION - Sales and
SEGMENT INFORMATION - Sales and Operating Income of Segments (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020USD ($) | Sep. 29, 2019USD ($) | Sep. 27, 2020USD ($)segment | Sep. 29, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments (in segments) | segment | 2 | |||
Net sales | $ 700,707 | $ 566,186 | $ 1,713,984 | $ 1,787,622 |
Operating income | 59,829 | 37,410 | 111,214 | 118,465 |
Intersegment sales | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (13,644) | (9,180) | (28,716) | (27,514) |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 714,351 | 575,366 | 1,742,700 | 1,815,136 |
Operating income | 79,756 | 51,394 | 164,776 | 163,709 |
Manufacturing | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 494,274 | 399,712 | 1,206,114 | 1,259,671 |
Manufacturing | Intersegment sales | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (12,004) | (8,102) | (24,691) | (24,153) |
Manufacturing | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 506,278 | 407,814 | 1,230,805 | 1,283,824 |
Operating income | 63,312 | 42,353 | 131,426 | 135,577 |
Distribution | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 206,433 | 166,474 | 507,870 | 527,951 |
Distribution | Intersegment sales | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (1,640) | (1,078) | (4,025) | (3,361) |
Distribution | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 208,073 | 167,552 | 511,895 | 531,312 |
Operating income | $ 16,444 | $ 9,041 | $ 33,350 | $ 28,132 |
SEGMENT INFORMATION - Reconcili
SEGMENT INFORMATION - Reconciliation of Segment Operating Income to Consolidated Operating Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Segment Reporting Information [Line Items] | ||||
Operating income | $ 59,829 | $ 37,410 | $ 111,214 | $ 118,465 |
Unallocated corporate expenses | (73,668) | (66,925) | (205,485) | (205,079) |
Amortization | (10,221) | (9,191) | (29,600) | (26,448) |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | 79,756 | 51,394 | 164,776 | 163,709 |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Unallocated corporate expenses | (9,706) | (4,793) | (23,962) | (18,796) |
Amortization | $ (10,221) | $ (9,191) | $ (29,600) | $ (26,448) |
STOCK REPURCHASE PROGRAMS - Nar
STOCK REPURCHASE PROGRAMS - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Mar. 29, 2020 | |
Equity [Abstract] | |||||
Authorized share repurchase program amount | $ 50,000,000 | ||||
Remaining authorized shares to be purchased amount | $ 38,800,000 | $ 38,800,000 | |||
Shares repurchased (in shares) | 88,950 | 98,201 | 545,105 | 98,201 | |
Average cost per share repurchased (in dollars per share) | $ 53.24 | $ 36.50 | $ 37.22 | $ 36.50 | |
Cost to repurchase the company's common stock | $ 4,700,000 | $ 3,600,000 | $ 20,300,000 | $ 3,600,000 |