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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Forterra Inc | NASDAQ:FRTA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 24.00 | 23.97 | 24.00 | 0 | 01:00:00 |
|
|
|
|
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Delaware
|
|
37-1830464
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(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
Large accelerated filer
o
|
|
Accelerated filer
o
|
|
Non-accelerated filer
(Do not check if a smaller reporting company)
x
|
|
Smaller reporting company
o
|
|
Emerging growth company
o
|
|
|
|
Page
|
Part I
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Financial Information
|
|
Financial Statements
|
||
|
Condensed Consolidated Statements of Operations
|
|
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Condensed Consolidated Statements of Comprehensive Loss
|
|
|
Condensed Consolidated Balance Sheets
|
|
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Condensed Consolidated Statements of Cash Flows
|
|
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Notes to the Unaudited Condensed Consolidated Financial Statements
|
|
Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
|
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Item 4.
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Controls and Procedures
|
|
|
|
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Part II
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Other Information
|
|
Item 1.
|
Legal Proceedings
|
|
Item 1A.
|
Risk Factors
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
Item 3.
|
Defaults Upon Senior Securities
|
|
Item 4.
|
Mine Safety Disclosures
|
|
Item 5.
|
Other Information
|
|
Item 6.
|
Exhibits
|
|
|
Signatures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Three months ended
|
||||||
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(unaudited)
|
||||||
Net sales
|
$
|
338,302
|
|
|
$
|
186,996
|
|
Cost of goods sold
|
299,335
|
|
|
151,305
|
|
||
Gross profit
|
38,967
|
|
|
35,691
|
|
||
Selling, general & administrative expenses
|
(65,301
|
)
|
|
(33,661
|
)
|
||
Impairment and exit charges
|
(435
|
)
|
|
—
|
|
||
Earnings from equity method investee
|
3,171
|
|
|
1,303
|
|
||
Gain (loss) on sale of property, plant, and equipment, net
|
(774
|
)
|
|
2
|
|
||
Other operating income
|
2,007
|
|
|
1,226
|
|
||
|
(61,332
|
)
|
|
(31,130
|
)
|
||
Income (loss) from operations
|
(22,365
|
)
|
|
4,561
|
|
||
Other income (expenses)
|
|
|
|
||||
Interest expense
|
(13,542
|
)
|
|
(17,290
|
)
|
||
Loss before income taxes
|
(35,907
|
)
|
|
(12,729
|
)
|
||
Income tax benefit
|
13,364
|
|
|
10,567
|
|
||
Loss from continuing operations
|
(22,543
|
)
|
|
(2,162
|
)
|
||
Discontinued operations, net of tax
|
—
|
|
|
(1,774
|
)
|
||
Net loss
|
$
|
(22,543
|
)
|
|
$
|
(3,936
|
)
|
|
|
|
|
||||
Basic and Diluted earnings (loss) per share:
|
|
|
|
||||
Continuing operations
|
$
|
(0.35
|
)
|
|
$
|
(0.05
|
)
|
Discontinued operations
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
Net income (loss)
|
$
|
(0.35
|
)
|
|
$
|
(0.09
|
)
|
Weighted average common shares outstanding:
|
|
|
|
||||
Basic and Diluted
|
63,789,474
|
|
|
45,369,474
|
|
|
|
Three months ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(unaudited)
|
||||||
Net loss
|
|
$
|
(22,543
|
)
|
|
$
|
(3,936
|
)
|
Unrealized loss on derivative activities, net of tax
|
|
(496
|
)
|
|
(1,209
|
)
|
||
Foreign currency translation adjustment
|
|
1,030
|
|
|
1,848
|
|
||
Comprehensive loss
|
|
$
|
(22,009
|
)
|
|
$
|
(3,297
|
)
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
(unaudited)
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
27,540
|
|
|
$
|
40,024
|
|
Receivables, net
|
242,478
|
|
|
201,481
|
|
||
Inventories
|
321,709
|
|
|
279,502
|
|
||
Prepaid expenses
|
7,924
|
|
|
6,417
|
|
||
Other current assets
|
11,215
|
|
|
5,179
|
|
||
Total current assets
|
610,866
|
|
|
532,603
|
|
||
Non-current assets
|
|
|
|
||||
Property, plant and equipment, net
|
461,932
|
|
|
452,914
|
|
||
Goodwill
|
507,036
|
|
|
491,447
|
|
||
Intangible assets, net
|
272,109
|
|
|
281,598
|
|
||
Investment in equity method investee
|
56,157
|
|
|
55,236
|
|
||
Other long-term assets
|
12,909
|
|
|
10,988
|
|
||
Total assets
|
$
|
1,921,009
|
|
|
$
|
1,824,786
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Trade payables
|
$
|
152,761
|
|
|
$
|
134,059
|
|
Accrued liabilities
|
62,369
|
|
|
82,165
|
|
||
Deferred revenue
|
21,610
|
|
|
20,797
|
|
||
Current portion of long-term debt
|
10,500
|
|
|
10,500
|
|
||
Total current liabilities
|
247,240
|
|
|
247,521
|
|
||
Non-current liabilities
|
|
|
|
||||
Senior Term Loan
|
989,631
|
|
|
990,483
|
|
||
Revolving credit facility
|
215,268
|
|
|
95,064
|
|
||
Deferred tax liabilities
|
95,731
|
|
|
100,550
|
|
||
Deferred gain on sale-leaseback
|
77,559
|
|
|
78,215
|
|
||
Other long-term liabilities
|
27,486
|
|
|
23,253
|
|
||
Long-term TRA Payable (Note 14)
|
156,783
|
|
|
156,783
|
|
||
Total liabilities
|
1,809,698
|
|
|
1,691,869
|
|
||
Commitments and Contingencies (Note 14)
|
|
|
|
|
|
||
Equity
|
|
|
|
||||
Common stock, $0.001 par value, 64,174,233 and 63,924,124 shares issued and outstanding, respectively, and 190,000,000 shares authorized
|
18
|
|
|
18
|
|
||
Additional paid-in-capital
|
228,719
|
|
|
228,316
|
|
||
Accumulated other comprehensive loss
|
(4,491
|
)
|
|
(5,025
|
)
|
||
Retained deficit
|
(112,935
|
)
|
|
(90,392
|
)
|
||
Total shareholders' equity
|
111,311
|
|
|
132,917
|
|
||
Total liabilities and shareholders' equity
|
$
|
1,921,009
|
|
|
$
|
1,824,786
|
|
|
|
Three months ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
(unaudited)
|
||||||
Net loss
|
|
$
|
(22,543
|
)
|
|
$
|
(3,936
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation & amortization expense
|
|
29,804
|
|
|
13,759
|
|
||
Loss (gain) on disposal of property, plant and equipment
|
|
774
|
|
|
(2
|
)
|
||
Amortization of debt discount and issuance costs
|
|
1,976
|
|
|
1,835
|
|
||
Earnings from equity method investee
|
|
(3,171
|
)
|
|
(1,303
|
)
|
||
Distributions from equity method investee
|
|
2,250
|
|
|
1,500
|
|
||
Unrealized foreign currency gains, net
|
|
(2,008
|
)
|
|
(2,782
|
)
|
||
Provision (recoveries) for doubtful accounts
|
|
1,677
|
|
|
83
|
|
||
Deferred taxes
|
|
(4,514
|
)
|
|
(11,189
|
)
|
||
Deferred rent
|
|
589
|
|
|
(28
|
)
|
||
Other non-cash items
|
|
458
|
|
|
—
|
|
||
Change in assets and liabilities:
|
|
|
|
|
||||
Receivables, net
|
|
(42,066
|
)
|
|
(19,102
|
)
|
||
Inventories
|
|
(38,305
|
)
|
|
(5,756
|
)
|
||
Related party receivables
|
|
(5,972
|
)
|
|
—
|
|
||
Other assets
|
|
(1,354
|
)
|
|
(3,020
|
)
|
||
Accounts payable and accrued liabilities
|
|
2,408
|
|
|
(4,432
|
)
|
||
Other assets & liabilities
|
|
2,214
|
|
|
(1,461
|
)
|
||
NET CASH USED IN OPERATING ACTIVITIES
|
|
(77,783
|
)
|
|
(35,834
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
||||
Purchase of property, plant and equipment
|
|
(17,077
|
)
|
|
(6,750
|
)
|
||
Assets and liabilities acquired, business combinations, net
|
|
(35,346
|
)
|
|
(66,751
|
)
|
||
NET CASH USED IN INVESTING ACTIVITIES
|
|
(52,423
|
)
|
|
(73,501
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
||||
Payments on Senior and Junior Term Loans
|
|
(2,625
|
)
|
|
(2,191
|
)
|
||
Proceeds from Revolver
|
|
134,000
|
|
|
80,000
|
|
||
Payments on Revolver
|
|
(14,000
|
)
|
|
(6,566
|
)
|
||
Proceeds from settlement of derivatives
|
|
—
|
|
|
6,566
|
|
||
Other financing activities
|
|
(7
|
)
|
|
—
|
|
||
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
117,368
|
|
|
77,809
|
|
||
Effect of exchange rate changes on cash
|
|
354
|
|
|
(261
|
)
|
||
Net change in cash and cash equivalents
|
|
(12,484
|
)
|
|
(31,787
|
)
|
||
Cash and cash equivalents, beginning of period
|
|
40,024
|
|
|
43,590
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
27,540
|
|
|
$
|
11,803
|
|
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURES:
|
||||||||
Cash interest paid
|
|
12,738
|
|
|
8,231
|
|
||
Income taxes paid
|
|
925
|
|
|
—
|
|
||
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING DISCLOSURES:
|
||||||||
Fair value changes of derivatives recorded in OCI, net of tax
|
|
(496
|
)
|
|
(1,209
|
)
|
|
|
||
Net working capital
|
$
|
3,183
|
|
Property, plant and equipment, net
|
12,335
|
|
|
Customer relationship intangible
|
3,814
|
|
|
Non-compete agreement intangible
|
808
|
|
|
Other intangibles
|
621
|
|
|
Other assets and liabilities
|
(726
|
)
|
|
Net identifiable assets acquired
|
20,035
|
|
|
Goodwill
|
15,311
|
|
|
Cash consideration transferred
|
$
|
35,346
|
|
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Trade receivables
|
$
|
209,409
|
|
|
$
|
178,012
|
|
Amounts billed, but not yet paid under retainage provisions
|
2,064
|
|
|
1,959
|
|
||
Other receivables
|
33,769
|
|
|
22,408
|
|
||
Total receivables
|
$
|
245,242
|
|
|
$
|
202,379
|
|
Less: Allowance for doubtful accounts
|
(2,764
|
)
|
|
(898
|
)
|
||
Receivables, net
|
$
|
242,478
|
|
|
$
|
201,481
|
|
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Finished goods
|
$
|
216,260
|
|
|
$
|
185,507
|
|
Raw materials
|
102,461
|
|
|
90,647
|
|
||
Work in process
|
2,988
|
|
|
3,348
|
|
||
Total inventories
|
$
|
321,709
|
|
|
$
|
279,502
|
|
|
|
Three months ended
|
|
|
|
March 31,
|
|
|
|
2017
|
|
Net sales
|
|
34,172
|
|
Gross profit
|
|
11,175
|
|
Income from operations
|
|
6,635
|
|
Net income
|
|
6,586
|
|
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Machinery and equipment
|
$
|
343,897
|
|
|
$
|
329,871
|
|
Land, buildings and improvements
|
149,395
|
|
|
142,105
|
|
||
Other equipment
|
3,156
|
|
|
2,592
|
|
||
Construction-in-progress
|
45,459
|
|
|
43,855
|
|
||
Total property, plant and equipment
|
541,907
|
|
|
518,423
|
|
||
Less: accumulated depreciation
|
(79,975
|
)
|
|
(65,509
|
)
|
||
Property, plant and equipment, net
|
$
|
461,932
|
|
|
$
|
452,914
|
|
|
Drainage Pipe & Products
|
|
Water Pipe & Products
|
|
Total
|
||||||
Balance at December 31, 2016
|
$
|
168,866
|
|
|
$
|
322,581
|
|
|
$
|
491,447
|
|
Acquisitions
|
15,311
|
|
|
—
|
|
|
15,311
|
|
|||
Foreign currency
|
252
|
|
|
26
|
|
|
278
|
|
|||
Balance at March 31, 2017
|
$
|
184,429
|
|
|
$
|
322,607
|
|
|
$
|
507,036
|
|
|
Weighted average amortization period (in years)
|
|
Gross carrying amount as of March 31, 2017
|
|
Accumulated amortization
|
|
Net carrying value as of March 31, 2017
|
||||||
Customer relationships
|
10
|
|
$
|
236,452
|
|
|
$
|
(32,998
|
)
|
|
$
|
203,454
|
|
Trade names
|
10
|
|
39,498
|
|
|
(5,881
|
)
|
|
33,617
|
|
|||
Patents
|
10
|
|
23,628
|
|
|
(4,129
|
)
|
|
19,499
|
|
|||
Customer backlog
|
0.5
|
|
13,171
|
|
|
(12,588
|
)
|
|
583
|
|
|||
Non-compete agreements
|
5
|
|
10,831
|
|
|
(3,057
|
)
|
|
7,774
|
|
|||
In-Process R&D
|
Indefinite-lived
|
|
6,692
|
|
|
0
|
|
|
6,692
|
|
|||
Other
|
11
|
|
529
|
|
|
(39
|
)
|
|
490
|
|
|||
Total intangible assets
|
|
|
$
|
330,801
|
|
|
$
|
(58,692
|
)
|
|
$
|
272,109
|
|
|
Weighted average amortization period (in years)
|
|
Gross carrying amount as of December 31, 2016
|
|
Accumulated amortization
|
|
Net carrying value as of December 31, 2016
|
||||||
Customer relationships
|
10
|
|
$
|
232,590
|
|
|
$
|
(22,653
|
)
|
|
$
|
209,937
|
|
Trade names
|
10
|
|
39,220
|
|
|
(4,449
|
)
|
|
34,771
|
|
|||
Patents
|
10
|
|
23,557
|
|
|
(2,884
|
)
|
|
20,673
|
|
|||
Customer backlog
|
0.5
|
|
12,900
|
|
|
(11,272
|
)
|
|
1,628
|
|
|||
Non-compete agreements
|
5
|
|
9,918
|
|
|
(2,508
|
)
|
|
7,410
|
|
|||
In-Process R&D
|
Indefinite-lived
|
|
6,692
|
|
|
0
|
|
|
6,692
|
|
|||
Other
|
11
|
|
529
|
|
|
(42
|
)
|
|
487
|
|
|||
Total intangible assets
|
|
|
$
|
325,406
|
|
|
$
|
(43,808
|
)
|
|
$
|
281,598
|
|
|
|
Fair value measurements at March 31, 2017 using
|
|
|||||||
|
Carrying Amount March 31, 2017
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
Total Fair Value
|
|||||
Non-current liabilities
|
|
|
|
|
||||||
2016 Senior Term Loan
|
$1,000,131
|
—
|
|
$1,055,198
|
—
|
|
$1,055,198
|
|||
Tax receivable agreement payable
|
160,783
|
|
—
|
|
—
|
|
132,128
|
|
132,128
|
|
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Accrued payroll and employee benefits
|
$
|
23,344
|
|
|
$
|
29,945
|
|
Accrued taxes
|
20,571
|
|
|
32,746
|
|
||
Accrued rebates
|
5,239
|
|
|
7,509
|
|
||
Warranty
|
4,306
|
|
|
3,509
|
|
||
Other miscellaneous accrued liabilities
|
3,950
|
|
|
3,681
|
|
||
Tax receivable agreement liability
|
4,000
|
|
|
4,000
|
|
||
Environmental & reclamation obligation
|
776
|
|
|
775
|
|
||
Other
|
183
|
|
|
—
|
|
||
Total accrued liabilities
|
$
|
62,369
|
|
|
$
|
82,165
|
|
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
2016 Senior Term Loan
|
|
|
|
||||
interest at 4.50%, net of debt issue costs and original issue discount of $44,619 and $46,392, respectively
|
$
|
1,000,131
|
|
|
$
|
1,000,983
|
|
2016 Revolver, net of debt issue costs of $3,732 and $3,936, respectively
|
215,268
|
|
|
95,064
|
|
||
Total debt
|
$
|
1,215,399
|
|
|
$
|
1,096,047
|
|
Less: current portion debt
|
(10,500
|
)
|
|
(10,500
|
)
|
||
Total long-term debt
|
$
|
1,204,899
|
|
|
$
|
1,085,547
|
|
|
Total
|
|
2016 Senior Term Loan
|
|
2016 Revolver
|
||||||
2017
|
$
|
7,875
|
|
|
$
|
7,875
|
|
|
$
|
—
|
|
2018
|
10,500
|
|
|
10,500
|
|
|
—
|
|
|||
2019
|
10,500
|
|
|
10,500
|
|
|
—
|
|
|||
2020
|
10,500
|
|
|
10,500
|
|
|
—
|
|
|||
2021
|
229,500
|
|
|
10,500
|
|
|
219,000
|
|
|||
Thereafter:
|
994,875
|
|
|
994,875
|
|
|
—
|
|
|||
|
$
|
1,263,750
|
|
|
$
|
1,044,750
|
|
|
$
|
219,000
|
|
|
March 31, 2017
|
||||||||||||||
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||
|
Notional Amount
|
|
Fair Value
|
|
Notional Amount
|
|
Fair Value
|
||||||||
Foreign exchange forward contracts
|
$
|
—
|
|
|
—
|
|
|
$
|
92,961
|
|
|
$
|
1,177
|
|
|
Interest rate swaps
|
525,000
|
|
|
2,034
|
|
|
—
|
|
|
—
|
|
||||
Total derivatives, gross
|
|
|
2,034
|
|
|
|
|
1,177
|
|
||||||
Less: Legally enforceable master netting agreements
|
|
|
—
|
|
|
|
|
—
|
|
||||||
Total derivatives, net
|
$
|
—
|
|
|
$
|
2,034
|
|
|
$
|
—
|
|
|
$
|
1,177
|
|
|
December 31, 2016
|
||||||||||||||
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||
|
Notional Amount
|
|
Fair Value
|
|
Notional Amount
|
|
Fair Value
|
||||||||
Foreign exchange forward contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
92,961
|
|
|
$
|
(372
|
)
|
Total derivatives, gross
|
—
|
|
|
—
|
|
|
—
|
|
|
(372
|
)
|
||||
Less: Legally enforceable master netting agreements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total derivatives, net
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(372
|
)
|
|
Three months ended
|
|||||
|
March 31,
|
|||||
|
2017
|
2016
|
||||
Cross currency swaps
|
|
|
||||
Loss on derivatives recognized in Accumulated other comprehensive loss
|
$
|
(496
|
)
|
$
|
(1,209
|
)
|
Loss on derivatives not designated as hedges in other operating income (expense)
|
—
|
|
(2,463
|
)
|
||
Interest rate swaps
|
|
|
||||
Gain on derivatives not designated as hedges included in interest expense
|
2,034
|
|
—
|
|
|
|
For the three months ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Loss from continuing operations
|
|
$
|
(22,543
|
)
|
|
$
|
(2,162
|
)
|
Discontinued operations, net of tax
|
|
—
|
|
|
(1,774
|
)
|
||
Net loss
|
|
(22,543
|
)
|
|
(3,936
|
)
|
||
Earnings allocated to unvested restricted stock awards
|
|
(64
|
)
|
|
—
|
|
||
Earnings allocated to common shareholders
|
|
(22,479
|
)
|
|
(3,936
|
)
|
||
|
|
|
|
|
||||
Common stock:
|
|
|
|
|
||||
Weighted average basic shares outstanding
|
|
63,789,474
|
|
|
45,369,474
|
|
||
Effect of dilutive securities - stock options
|
|
—
|
|
|
—
|
|
||
Weighted average diluted shares outstanding
|
|
63,789,474
|
|
|
45,369,474
|
|
||
|
|
|
|
|
||||
Basic earnings (loss) per share:
|
|
|
|
|
||||
Loss from continuing operations
|
|
$
|
(0.35
|
)
|
|
$
|
(0.05
|
)
|
Loss from discontinued operations, net of taxes
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
Net Loss
|
|
$
|
(0.35
|
)
|
|
$
|
(0.09
|
)
|
Diluted earnings (loss) per share:
|
|
|
|
|
||||
Loss from continuing operations
|
|
$
|
(0.35
|
)
|
|
$
|
(0.05
|
)
|
Loss from discontinued operations, net of taxes
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
Net loss
|
|
$
|
(0.35
|
)
|
|
$
|
(0.09
|
)
|
Expected dividends
|
—
|
%
|
Expected volatility
|
39.60
|
%
|
Risk-free interest rate
|
0.53
|
%
|
Expected lives in years
|
6
|
|
Weighted-average fair value of options:
|
|
|
Granted at fair value
|
$7.26
|
|
Weighted-average exercise price of options:
|
|
|
Granted at fair value
|
$18.96
|
|
Shares
|
Weighted Average Exercise Price
|
|
Outstanding, beginning of period
|
357,840
|
|
$18.00
|
Granted
|
458,118
|
|
$18.96
|
Exercised
|
—
|
|
n/a
|
Forfeited
|
—
|
|
n/a
|
Outstanding, end of period
|
815,958
|
|
$18.54
|
|
Shares
|
Weighted Average Grant Date Fair Value
|
|
Unvested balance, beginning of period
|
134,650
|
|
$18.00
|
Grants
|
250,109
|
|
$18.96
|
Vested shares
|
—
|
|
n/a
|
Forfeitures
|
—
|
|
n/a
|
Unvested balance, end of period
|
384,759
|
|
$18.62
|
|
At March 31,
|
|
At December 31,
|
||||
|
2017
|
|
2016
|
||||
Investment in equity method investee
|
$
|
56,157
|
|
|
$
|
55,236
|
|
Property, plant, and equipment, net:
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
United States
|
$
|
431,803
|
|
|
$
|
422,853
|
|
Canada
|
19,516
|
|
|
19,584
|
|
||
Mexico
|
10,613
|
|
|
10,477
|
|
||
|
$
|
461,932
|
|
|
$
|
452,914
|
|
Net Sales:
|
For the three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
United States
|
$
|
321,136
|
|
|
$
|
169,849
|
|
Canada
|
13,967
|
|
|
17,147
|
|
||
Mexico
|
3,199
|
|
|
—
|
|
||
|
$
|
338,302
|
|
|
$
|
186,996
|
|
|
Three Months Ended March 31, 2016
|
||
|
(in thousands)
|
||
Revenue
|
$
|
30,338
|
|
Operating costs and expenses
|
(29,364
|
)
|
|
Depreciation and amortization
|
(2,467
|
)
|
|
Operating loss
|
$
|
(1,493
|
)
|
Other expense
|
(81
|
)
|
|
Income tax benefit
|
(200
|
)
|
|
Loss from discontinued operations
|
$
|
(1,774
|
)
|
•
|
the level of construction activity, particularly in the residential construction and non-residential construction markets;
|
•
|
government funding of infrastructure and related construction activities;
|
•
|
the highly competitive nature of our industry and our ability to effectively compete;
|
•
|
energy costs;
|
•
|
the availability and price of the raw materials we use in our business;
|
•
|
the ability to implement our growth strategy;
|
•
|
our dependence on key customers and the absence of long-term agreements with these customers;
|
•
|
the level of construction activity in Texas and Canada;
|
•
|
disruption at one of our manufacturing facilities or in our supply chain;
|
•
|
construction project delays and our inventory management;
|
•
|
our ability to successfully integrate our recent acquisitions;
|
•
|
labor disruptions and other union activity;
|
•
|
a tightening of mortgage lending or mortgage financing requirements;
|
•
|
our current dispute with HeidelbergCement related to the payment of an earn-out;
|
•
|
compliance with environmental laws and regulations;
|
•
|
compliance with health and safety laws and regulations and other laws and regulations to which we are subject;
|
•
|
our dependence on key executives and key management personnel;
|
•
|
our ability to retain and attract additional skilled technical or sales personnel;
|
•
|
credit and non-payment risks of our customers;
|
•
|
warranty and related claims;
|
•
|
legal and regulatory claims;
|
•
|
the seasonality of our business and its susceptibility to severe adverse weather;
|
•
|
our ability to maintain sufficient liquidity and ensure adequate financing or guarantees for large projects;
|
•
|
delays or outages in our information technology systems and computer networks; and
|
•
|
additional factors discussed in our filings with the Securities and Exchange Commission, or the SEC.
|
•
|
Drainage Pipe & Products - We are a producer of concrete drainage pipe and precast products in the United States and Eastern Canada.
|
•
|
Water Pipe & Products - We are a producer of ductile iron pipe (DIP) and concrete and steel pressure pipe.
|
•
|
Corporate and Other - Consists of corporate overhead locations in the United States, and our roof tile operations which were sold in April 2016.
|
|
|
Purchase Price
|
||
Acquisitions:
|
|
(in millions)
|
||
2015
|
|
|
||
Cretex Concrete Products, Inc.
|
|
$
|
245.1
|
|
2016
|
|
|
||
Sherman-Dixie Concrete Industries
|
|
66.8
|
|
|
USP Holdings, Inc.
|
|
778.7
|
|
|
Bio Clean Environmental Services, Inc. and Modular Wetland Systems, Inc.
|
|
30.6
|
|
|
J&G Concrete Operations, LLC
|
|
32.4
|
|
|
Precast Concepts, LLC
|
|
99.6
|
|
|
2017
|
|
|
||
Royal
|
|
35.3
|
|
Statements of Income Data:
|
For the three months end March 31, 2017
|
|
% of
Net Sales |
|
For the three months end March 31, 2016
|
|
% of
Net Sales |
|||||
|
|
|
|
|
|
|
|
|||||
Net sales
|
$
|
338,302
|
|
|
100.0
|
%
|
|
186,996
|
|
|
100.0
|
%
|
Cost of goods sold
|
299,335
|
|
|
88.5
|
%
|
|
151,305
|
|
|
80.9
|
%
|
|
Gross profit
|
38,967
|
|
|
11.5
|
%
|
|
35,691
|
|
|
19.1
|
%
|
|
Selling, general and administrative expenses
|
(65,301
|
)
|
|
19.3
|
%
|
|
(33,661
|
)
|
|
18.0
|
%
|
|
Impairment and exit charges
|
(435
|
)
|
|
0.1
|
%
|
|
—
|
|
|
—
|
%
|
|
Earnings from equity method investee
|
3,171
|
|
|
0.9
|
%
|
|
1,303
|
|
|
0.7
|
%
|
|
Loss on sale of property, plant and equipment, net
|
(774
|
)
|
|
0.2
|
%
|
|
2
|
|
|
—
|
%
|
|
Other operating income
|
2,007
|
|
|
0.6
|
%
|
|
1,226
|
|
|
0.7
|
%
|
|
|
(61,332
|
)
|
|
18.1
|
%
|
|
(31,130
|
)
|
|
16.6
|
%
|
|
Income (loss) from operations
|
(22,365
|
)
|
|
6.6
|
%
|
|
4,561
|
|
|
2.4
|
%
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
||||
Interest expense
|
(13,542
|
)
|
|
4.0
|
%
|
|
(17,290
|
)
|
|
9.2
|
%
|
|
Loss before income taxes
|
(35,907
|
)
|
|
10.6
|
%
|
|
(12,729
|
)
|
|
6.8
|
%
|
|
Income tax benefit
|
13,364
|
|
|
4.0
|
%
|
|
10,567
|
|
|
5.7
|
%
|
|
Net loss
|
$
|
(22,543
|
)
|
|
6.7
|
%
|
|
(2,162
|
)
|
|
1.2
|
%
|
For the three months ended March 31, 2017:
|
|||||||||||||||
|
Drainage Pipe & Products
|
|
Water Pipe & Products
|
|
Corporate and Other
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Net sales
|
$
|
160,448
|
|
|
$
|
177,849
|
|
|
$
|
5
|
|
|
$
|
338,302
|
|
Gross profit (loss)
|
17,377
|
|
|
22,155
|
|
|
(565
|
)
|
|
38,967
|
|
||||
Loss from continuing operations before income taxes
|
(961
|
)
|
|
(335
|
)
|
|
(34,611
|
)
|
|
(35,907
|
)
|
|
(In thousands)
|
||||||
|
For the three months ended
|
||||||
|
March 31, 2017
|
|
March 31, 2016
|
||||
Statement of Cash Flows data:
|
|
|
|
||||
Net cash used in operating activities
|
$
|
(77,783
|
)
|
|
$
|
(35,834
|
)
|
Net cash used in investing activities
|
(52,423
|
)
|
|
(73,501
|
)
|
||
Net cash provided by financing activities
|
117,368
|
|
|
77,809
|
|
•
|
Recruit additional knowledgeable accounting personnel focused on inventory cost processes and controls.
|
•
|
Create accounting policies for establishing and monitoring inventory standard costs, evaluating labor and overhead variances and revenue recognition including bill and hold transactions.
|
•
|
Conduct additional training on all accounting policies with special emphasis on physical inventory counts.
|
•
|
Direct the internal audit organization to increase risk-based monitoring of inventory physical counts.
|
•
|
Create new monitoring controls to identify and correct invalid amounts within sales backlog.
|
•
|
Implement a policy which prohibits bill and hold transactions.
|
•
|
Expand and strengthen our finance and accounting organization by recruiting and hiring additional finance personnel;
|
•
|
Created our internal audit organization, which reports directly to our audit committee;
|
•
|
Documented transaction processes and designed internal controls for each business cycle (Purchase to Pay, Quote to Cash, Inventory, Payroll and Benefits, and Financial Close and Reporting);
|
•
|
Implemented a new accounting application to enhance controls over account reconciliations; and
|
•
|
Trained users on our ERP system use and controls
.
|
•
|
Enhance period end close process procedures and controls to improve information and communication flows between plant and corporate office locations, identify and process invoices received on a timely basis, and estimate accruals required for services received but not invoiced at period end.
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
|
|
|
|
10.10
|
|
First Amendment to Senior Lien Term Loan Credit Agreement dated May 1, 2017 by and among Forterra, Inc., Forterra Finance, LLC, as borrower, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
|
*
|
|
|
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
*
|
|
|
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
*^
|
|
|
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
*^
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
*
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
*
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Calculation Linkbase Document.
|
*
|
|
101.DEF
|
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XBRL Taxonomy Definition Linkbase Document.
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*
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101.LAB
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XBRL Taxonomy Label Linkbase Document.
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*
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101.PRE
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XBRL Taxonomy Presentation Linkbase Document.
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*
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*
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Filed herewith
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^
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Exhibit 32.1 shall not be deemed filed with the SEC, nor shall it be deemed incorporated by reference in any filing with the SEC under the Exchange Act or the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language
in any filings. |
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FORTERRA, INC.
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(Registrant)
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/s/ Jeff Bradley
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May 15, 2017
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By:
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Jeff Bradley
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President and Chief Executive Officer
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(Principal Executive Officer)
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/s/ William M. Brown
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May 15, 2017
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By:
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William M. Brown
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Executive Vice President and Chief Financial Officer
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(Principal Financial Officer)
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1 Year Forterra Chart |
1 Month Forterra Chart |
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