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Delaware
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37-1830464
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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[ ] Large accelerated filer
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[X] Accelerated filer
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Non-accelerated filer [ ]
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[X] Smaller reporting company
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[ ] Emerging growth company
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Page
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Part I
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Part II
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Part III
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Part IV
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government funding of infrastructure and related construction activities;
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the level of construction activity, particularly in the residential construction and non-residential construction markets;
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the highly competitive nature of our industry and our ability to effectively compete;
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the availability and price of the raw materials and other inputs we use in our business;
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our dependence on key customers and the absence of long-term agreements with these customers;
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the level of construction activity in Texas;
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disruption at one or more of our manufacturing facilities or in our supply chain;
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construction project delays and our inventory management;
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the seasonality of our business and its susceptibility to adverse weather;
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our ability to successfully integrate acquisitions;
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labor disruptions and other union activity;
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compliance with applicable regulations;
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a tightening of mortgage lending or mortgage financing requirements;
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the ability to implement our growth strategy;
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our current dispute with HeidelbergCement related to the payment of an earnout;
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compliance with environmental laws and regulations;
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energy costs;
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changes in tax laws could adversely affect us;
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compliance with health and safety laws and regulations;;
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our dependence on key executives and key management personnel;
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our ability and that of the customers with which we work to retain and attract additional skilled and non-skilled technical or sales personnel;
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credit and non-payment risks of our customers;
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warranty and related claims;
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legal and regulatory claims;
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our contract backlog;
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our ability to maintain sufficient liquidity and ensure adequate financing or guarantees for large projects;
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delays or outages in our information technology systems and computer networks;
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security breaches in our information technology systems and other cybersecurity incidents; and
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additional factors discussed in our filings with the Securities and Exchange Commission, or the SEC.
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Key Segments
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Drainage Pipe & Products
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Water Pipe & Products
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Products
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Product Applications
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Storm water and wastewater infrastructure
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Potable and wastewater transmission and distribution
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Primary Market Channels
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- Direct to Contractors - Distributors
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- Distributors - Direct to Contractors, Municipalities and Utilities Waterworks
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# of Active Manufacturing Facilities
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59
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18
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Cretex Acquisition - On October 1, 2015, we acquired Cretex Concrete Products, Inc., or Cretex, a manufacturer of concrete pipe, box culverts, concrete precast drainage structures, pre-stressed bridge components and ancillary precast products in the Upper Midwestern United States. Cretex now operates as part of our Drainage Pipe & Products segment.
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Sherman-Dixie Acquisition - On January 29, 2016, we acquired Sherman-Dixie Concrete Industries, Inc., or Sherman-Dixie, a manufacturer of precast concrete structures operating in Kentucky, Tennessee, Alabama and Indiana. Sherman-Dixie now operates as part of our Drainage Pipe & Products segment.
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U.S. Pipe Acquisition - On April 15, 2016, we acquired USP Holdings Inc., or U.S. Pipe, a manufacturer of water transmission pipe servicing residential, commercial and infrastructure customers. U.S. Pipe operates as part of our Water Pipe & Products segment.
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Bio Clean Acquisition - On August 4, 2016, we acquired Bio Clean Environmental Services, Inc. and Modular Wetland Systems, Inc., or Bio Clean, which designs and sells storm water management systems that meet the requirements of local regulatory bodies regulating storm water quality and owns technologies relating to drainage and storm water management. Bio Clean now operates as part of our Drainage Pipe & Products segment.
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J&G Acquisition - On October 14, 2016, we acquired J&G Concrete Operations, LLC, or J&G a manufacturer of concrete pipe, box culverts and special fittings in North Texas. J&G now operates as part of our Drainage Pipe & Products segment.
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•
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Precast Concepts Acquisition - On October 14, 2016, we acquired Precast Concepts, LLC, or Precast Concepts, a manufacturer of concrete pipe, box culverts, storm detention systems and other precast concrete and related products in Colorado. Precast Concepts now operates as part of our Drainage Pipe & Products segment.
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•
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Royal Acquisition - On February 3, 2017, we acquired the assets of Royal Enterprises America, Inc., or Royal, a manufacturer of concrete drainage pipe, precast concrete products, storm water treatment technologies and erosion control products serving the greater Minneapolis market. Royal now operates as part of our Drainage Pipe & Products segment.
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Sale Leaseback - In April 2016, we sold properties in 49 sites throughout the U.S. and Canada to Pipe Portfolio Owner (Multi) LP, or the U.S. Buyer, and FORT-BEN Holdings (ONQC) Ltd., or the Canadian Buyer, and we and U.S. Buyer and an affiliate of the Canadian Buyer entered into master land and building lease agreements under which we agreed to lease back each of the properties for an initial term of twenty years, followed by one optional renewal terms of 9 years, 11 months. On June 5, 2018, we amended and restated these arrangements and we exchanged ownership of two facilities in the U.S. for 24 facilities located in the U.S. and Canada previously included in the sale-leaseback transaction and also extended the lease terms for all facilities to an initial term of twenty-five years, followed by one optional renewal term of 9 years, 11 months.
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U.S. Pressure Pipe Divestiture - On July 31, 2017, we completed the sale of our U.S. concrete and steel pressure pipe business, a component of our Water Pipe and Products segment, to Thompson Pipe Group, or TPG, in exchange for approximately $23.2 million in cash, subject to standard working capital adjustments, exclusive of fees and expenses, as well as certain assets relating to a drainage pipe and products manufacturing facility in Conroe, Texas.
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Foley Exchange Agreement - On January 31, 2018, we completed the sale to Foley Products Company of several of our pipe & precast plants in the southeast region, including Tennessee, Alabama and Georgia, which were part of the Drainage Pipe & Products segment, in exchange for $9.1 million in cash, a drainage facility located in Prentiss, Mississippi and land in Texas.
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the federal Resource Conservation and Recovery Act, or RCRA, and comparable state laws that impose requirements for the generation, handling, transportation, treatment, storage, disposal and cleanup of waste from our operations;
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the federal Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, also known as “Superfund,” and comparable state laws that govern the cleanup of hazardous substances that may have been released at properties currently or previously owned or operated by us or locations which we have sent waste for disposal;
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the federal Clean Water Act, or CWA, and analogous state laws and regulations that can impose detailed permit requirements and strict controls on discharges of waste water from our facilities; and
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the federal Clean Air Act, or CAA, and comparable state laws and regulations that impose obligations related to air emissions, including federal and state laws and regulations to address greenhouse gas, or GHG, emissions.
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merging computer, technology and other information networks and systems;
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diversion of the attention of our management and that of the acquired business;
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merging or linking different accounting and financial reporting systems and systems of internal controls;
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assimilation of personnel, human resources and other administrative departments and potentially contrasting corporate cultures;
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disruption of our relationship with, or loss of, key customers, suppliers or personnel;
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interference with, or loss of momentum in, our ongoing business or that of the acquired companies; and
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delays or cost overruns in the integration process.
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dispose of certain assets;
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incur or guarantee additional indebtedness;
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enter into new lines of business;
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make investments, intercompany loans or certain payments in respect of indebtedness;
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incur or maintain certain liens;
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enter into transactions with affiliates;
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engage in certain sale and leaseback transactions;
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declare or pay dividends and make other restricted payments, including the repurchase or redemption of our stock; and
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engage in mergers, consolidations, liquidations and certain asset sales.
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actual or anticipated variations in our quarterly operating results;
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changes in market valuations of similar companies;
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changes in the markets in which we operate;
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additions or departures of key personnel;
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actions by stockholders, including the sale by Lone Star of any of its shares of our common stock;
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speculation in the press or investment community;
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general market, economic and political conditions, including an economic slowdown;
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uncertainty regarding economic events, including in Europe in connection with the United Kingdom’s departure from the European Union;
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changes in interest rates;
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our operating performance and the performance of other similar companies;
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our ability to accurately project future results and our ability to achieve those and other industry and analyst forecasts; and
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new legislation or other regulatory developments that adversely affect us, our markets or our industry.
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•
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it is assumed that we will pay effective state and local taxes at a rate of 5%, even though our actual effective state and local tax rate may be materially lower;
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tax benefits existing at the time of our initial public offering are deemed to be utilized before any post-closing/after-acquired tax benefits and, as a result, we could be required to make payments to Lone Star for a particular tax year even if our tax liability for such year would have been materially reduced or eliminated by reason of our utilization of the post-initial public offering/after-acquired tax benefits;
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a non-taxable transfer of assets by us to a non-consolidated entity is treated under the tax receivable agreement as a taxable sale at fair market value and, as a result, we could be required to make payments to Lone Star even though such non-taxable transfer would not generate any actual tax benefits to us or our non-consolidated entity; and
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a taxable sale or other taxable transfer of subsidiary stock by us (in cases where the subsidiary’s tax basis in its assets exceeds our tax basis in the subsidiary’s stock) is treated under the tax receivable agreement as a taxable sale of the subsidiary’s assets and, as a result, we could be required to make payments to Lone Star that materially exceed the actual tax benefit we realize from such stock sale.
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permit us to issue, without stockholder approval, preferred stock in one or more series and, with respect to each series, fix the number of shares constituting the series and the designation of the series, the voting powers, if any, of the shares of the series and the preferences and other special rights, if any, and any qualifications, limitations or restrictions, of the shares of the series;
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prevent stockholders from calling special meetings;
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restrict the ability of stockholders to act by written consent after such time as Lone Star owns less than a majority of our common stock;
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limit the ability of stockholders to amend our certificate of incorporation and bylaws;
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require advance notice for nominations for election to the board of directors and for stockholder proposals;
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do not permit cumulative voting in the election of our directors, which means that the holders of a majority of our common stock may elect all of the directors standing for election; and
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establish a classified board of directors with staggered three-year terms (which will be phased out over the next 3 annual meetings of stockholders).
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Facility Name
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City
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State/Province
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Ownership
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Drainage Pipe & Products (59 plants)
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Caldwell
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Caldwell
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Idaho
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Owned
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Salt Lake City
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Salt Lake City
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Utah
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Owned
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Pelham
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Pelham
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Alabama
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Owned
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El Mirage
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El Mirage
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Arizona
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Leased
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West Memphis
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West Memphis
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Arkansas
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Leased
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Florin Road (2 plants)
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Sacramento
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California
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Leased
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Deland Precast
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Deland
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Florida
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Leased
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Gretna
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Gretna
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Florida
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Leased
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Marianna
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Marianna
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Florida
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Leased
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Winter Haven Pipe
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Winter Haven
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Florida
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Leased
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St. Martinville
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St. Martinville
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Louisiana
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Leased
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Como
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Como
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Mississippi
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Owned
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Prentiss (2 plants)
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Prentiss
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Mississippi
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Owned
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Columbus
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Columbus
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Ohio
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Leased
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Macedonia
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Macedonia
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Ohio
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Owned
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Austin Pipe
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Austin
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Texas
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Leased
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Cedar Hill Pipe
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Cedar Hill
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Texas
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Leased
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Grand Prairie (2 plants)
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Grand Prairie
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Texas
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Leased
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Jersey Village (3 plants)
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Houston
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Texas
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Leased
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Waco
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Hewitt
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Texas
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Leased
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New Caney
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New Caney
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Texas
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Owned
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Ottawa
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Gloucester
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Ontario
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Leased
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Cambridge
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Cambridge
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Ontario
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Leased
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Lexington
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Lexington
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Kentucky
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Leased
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Elizabethtown
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Elizabethtown
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Kentucky
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Leased
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Louisville
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Louisville
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Kentucky
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Leased
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Billings
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Billings
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Montana
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Leased
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Bonner Springs
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Bonner Springs
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Kansas
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Leased
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Cedar Rapids
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Cedar Rapids
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Iowa
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Owned
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Des Moines
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Des Moines
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Iowa
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Leased
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Elk River (3 plants)
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Elk River
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Minnesota
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Leased
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Hawley
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Hawley
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Minnesota
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Leased
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Helena
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Helena
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Montana
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Leased
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Humboldt
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Humboldt
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Iowa
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Owned
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Iowa Falls
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Iowa Falls
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Iowa
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Leased
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Lawrence
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Lawrence
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Kansas
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Owned
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Marshalltown
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Marshalltown
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Iowa
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Leased
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Facility Name
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City
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State/Province
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Ownership
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West Des Moines
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West Des Moines
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Iowa
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Leased
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Menoken
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Menoken
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North Dakota
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Leased
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Mitchell
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Mitchell
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South Dakota
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Owned
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Plattsmouth
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Plattsmouth
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Nebraska
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Leased
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Rapid City
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Rapid City
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South Dakota
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Leased
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Henderson (2 plants)
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Henderson
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Colorado
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Leased
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Grand Junction
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Grand Junction
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Colorado
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Leased
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Lubbock
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Lubbock
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Texas
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Owned
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Mineral Wells
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Mineral Wells
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Texas
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Owned
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San Antonio
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San Antonio
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Texas
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Owned
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Stacy
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Stacy
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Minnesota
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Owned
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Green Cove Springs
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Green Cove Springs
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Florida
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Owned
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Riverside
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Menifee
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California
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Leased
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Oceanside
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Oceanside
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California
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Leased
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Water Pipe & Products (18 plants)
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St. Eustache Pressure Pipe
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St. Eustache
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Quebec
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Owned
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Stouffville
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Stouffville
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Ontario
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Owned
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Uxbridge
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Uxbridge
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Ontario
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Owned
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Bessemer (2 plants)
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Bessemer
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Alabama
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Leased
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Mini Mill
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Bessemer
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Alabama
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Leased
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Union City
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Union City
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California
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Owned
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Lynchburg
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Lynchburg
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Virginia
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Owned
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Monterrey, Mexico
|
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Monterrey
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Mexico
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|
Owned
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Rogers
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Rogers
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|
Minnesota
|
|
Leased
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Ottawa
|
|
Ottawa
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|
Kansas
|
|
Leased
|
Marysville
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|
Marysville
|
|
California
|
|
Leased
|
Warren
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|
Warren
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|
Oregon
|
|
Leased
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Ephrata
|
|
Ephrata
|
|
Pennsylvania
|
|
Leased
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Phoenix
|
|
Phoenix
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|
Arizona
|
|
Leased
|
Orlando
|
|
Orlando
|
|
Florida
|
|
Leased
|
Gainesville
|
|
Gainesville
|
|
Georgia
|
|
Leased
|
San Antonio
|
|
San Antonio
|
|
Texas
|
|
Leased
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
Successor
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|
|
Predecessor
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||||||||||||||||
(in thousands)
|
Year ended December 31,
|
Year ended December 31,
|
Year ended December 31,
|
Year ended December 31,
|
For the period March 14 to December 31,
|
|
|
For the period from January 1 to March 13,
|
||||||||||||
Statement of Operations Data:
|
2019
|
2018
|
2017
|
2016
|
2015
|
|
|
2015
|
||||||||||||
Net sales
|
$
|
1,529,752
|
|
$
|
1,479,712
|
|
$
|
1,580,413
|
|
$
|
1,363,962
|
|
$
|
604,275
|
|
|
|
$
|
112,698
|
|
Cost of goods sold
|
1,233,370
|
|
1,234,143
|
|
1,327,305
|
|
1,083,508
|
|
513,723
|
|
|
|
98,339
|
|
||||||
Gross profit
|
296,382
|
|
245,569
|
|
253,108
|
|
280,454
|
|
90,552
|
|
|
|
14,359
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Selling, general & administrative expenses
|
(221,770
|
)
|
(209,877
|
)
|
(255,034
|
)
|
(216,099
|
)
|
(121,554
|
)
|
|
|
(17,106
|
)
|
||||||
Impairment and exit charges
|
(3,520
|
)
|
(4,336
|
)
|
(13,220
|
)
|
(2,218
|
)
|
(1,026
|
)
|
|
|
(542
|
)
|
||||||
Other operating income, net
|
1,094
|
|
9,523
|
|
5,197
|
|
(10,971
|
)
|
1,092
|
|
|
|
818
|
|
||||||
|
(224,196
|
)
|
(204,690
|
)
|
(263,057
|
)
|
(229,288
|
)
|
(121,488
|
)
|
|
|
(16,830
|
)
|
||||||
Income (loss) from operations
|
72,186
|
|
40,879
|
|
(9,949
|
)
|
51,166
|
|
(30,936
|
)
|
|
|
(2,471
|
)
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Other income (expenses)
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
(94,970
|
)
|
(78,337
|
)
|
(59,408
|
)
|
(125,048
|
)
|
(45,953
|
)
|
|
|
(82
|
)
|
||||||
Gain on extinguishment of debt
|
1,708
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
||||||
Earnings from equity method investee
|
10,466
|
|
10,162
|
|
12,360
|
|
11,947
|
|
8,429
|
|
|
|
67
|
|
||||||
Change in tax receivable agreement liability
|
—
|
|
—
|
|
46,180
|
|
—
|
|
—
|
|
|
|
—
|
|
||||||
Other income (expense), net
|
—
|
|
6,016
|
|
(31,915
|
)
|
(847
|
)
|
(326
|
)
|
|
|
(28
|
)
|
||||||
Loss before income taxes
|
(10,610
|
)
|
(21,280
|
)
|
(42,732
|
)
|
(62,782
|
)
|
(68,786
|
)
|
|
|
(2,514
|
)
|
||||||
Income tax (expense) benefit
|
3,279
|
|
(3,085
|
)
|
40,672
|
|
51,692
|
|
(5,392
|
)
|
|
|
742
|
|
||||||
Loss from continuing operations
|
(7,331
|
)
|
(24,365
|
)
|
(2,060
|
)
|
(11,090
|
)
|
(74,178
|
)
|
|
|
(1,772
|
)
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Discontinued operations, net of tax
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3,484
|
|
$
|
(8,608
|
)
|
|
|
$
|
(3,984
|
)
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss
|
$
|
(7,331
|
)
|
$
|
(24,365
|
)
|
$
|
(2,060
|
)
|
$
|
(7,606
|
)
|
$
|
(82,786
|
)
|
|
|
$
|
(5,756
|
)
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic and Diluted Earnings (loss) Per Share:
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
$
|
(0.11
|
)
|
$
|
(0.38
|
)
|
$
|
(0.03
|
)
|
$
|
(0.23
|
)
|
$
|
(1.63
|
)
|
|
|
|
||
Discontinued operations
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
0.07
|
|
$
|
(0.19
|
)
|
|
|
|
||
Net loss
|
$
|
(0.11
|
)
|
$
|
(0.38
|
)
|
$
|
(0.03
|
)
|
$
|
(0.16
|
)
|
$
|
(1.82
|
)
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||||||||
Statement of Cash Flows Data:
|
|
|
|
|
|
|
|
|
||||||||||||
Net cash provided by (used in) operating activities
|
$
|
146,786
|
|
$
|
27,196
|
|
$
|
42,334
|
|
$
|
76,925
|
|
$
|
121,417
|
|
|
|
$
|
(48,224
|
)
|
Net cash provided by (used in) investing activities
|
(42,295
|
)
|
(51,052
|
)
|
(66,023
|
)
|
(1,062,447
|
)
|
(898,039
|
)
|
|
|
(2,762
|
)
|
||||||
Net cash provided by (used in) financing activities
|
(106,181
|
)
|
(43,451
|
)
|
86,250
|
|
981,728
|
|
822,580
|
|
|
|
60,907
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
34,800
|
|
$
|
35,793
|
|
$
|
104,534
|
|
$
|
40,024
|
|
$
|
26,027
|
|
|
|
|
||
Property, plant & equipment, net
|
475,575
|
|
492,167
|
|
412,572
|
|
452,914
|
|
315,859
|
|
|
|
|
|||||||
Total assets
|
1,740,058
|
|
1,793,252
|
|
1,811,238
|
|
1,824,786
|
|
938,875
|
|
|
|
|
|||||||
Total debt1
|
1,098,303
|
|
1,188,605
|
|
1,193,787
|
|
1,096,047
|
|
705,829
|
|
|
|
|
|||||||
Shareholders' equity
|
120,967
|
|
108,222
|
|
132,491
|
|
132,917
|
|
52,315
|
|
|
|
|
|
|
|
•
|
Drainage Pipe & Products - We are a producer of concrete drainage pipe and precast products.
|
•
|
Water Pipe & Products - We are a producer of ductile iron pipe, or DIP, and concrete pressure pipe products.
|
•
|
Corporate and Other - Corporate, general and administrative expenses not allocated to our revenue-generating segments such as certain shared services, executive and other administrative functions.
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Income Data:
|
Year ended
December 31, 2019 |
|
Year ended
December 31, 2018 |
|
% Change
|
||||
|
|
|
|
|
|
||||
Net sales
|
$
|
1,529,752
|
|
|
$
|
1,479,712
|
|
|
3.4%
|
Cost of goods sold
|
1,233,370
|
|
|
1,234,143
|
|
|
(0.1)%
|
||
Gross profit
|
296,382
|
|
|
245,569
|
|
|
20.7%
|
||
Selling, general and administrative expenses
|
(221,770
|
)
|
|
(209,877
|
)
|
|
5.7%
|
||
Impairment and exit charges
|
(3,520
|
)
|
|
(4,336
|
)
|
|
(18.8)%
|
||
Other operating income, net
|
1,094
|
|
|
9,523
|
|
|
(88.5)%
|
||
|
(224,196
|
)
|
|
(204,690
|
)
|
|
9.5%
|
||
Income from operations
|
72,186
|
|
|
40,879
|
|
|
76.6%
|
||
Other income (expenses)
|
|
|
|
|
|
||||
Interest expense
|
(94,970
|
)
|
|
(78,337
|
)
|
|
21.2%
|
||
Gain on extinguishment of debt
|
1,708
|
|
|
—
|
|
|
*
|
||
Earnings from equity method investee
|
10,466
|
|
|
10,162
|
|
|
3.0%
|
||
Other income, net
|
—
|
|
|
6,016
|
|
|
*
|
||
Loss before income taxes
|
(10,610
|
)
|
|
(21,280
|
)
|
|
(50.1)%
|
||
Income tax (expense) benefit
|
3,279
|
|
|
(3,085
|
)
|
|
*
|
||
Net loss
|
$
|
(7,331
|
)
|
|
$
|
(24,365
|
)
|
|
(69.9)%
|
|
|
|
|
|
|
(in thousands)
|
For the year ended December 31,
|
|
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
Net sales:
|
|
|
|
|
|
|||||
Drainage Pipe & Products
|
$
|
894,722
|
|
|
$
|
811,477
|
|
|
10.3
|
%
|
Water Pipe & Products
|
635,030
|
|
|
668,235
|
|
|
(5.0
|
)%
|
||
Corporate and Other
|
—
|
|
|
—
|
|
|
|
|
||
Total
|
$
|
1,529,752
|
|
|
$
|
1,479,712
|
|
|
3.4
|
%
|
|
|
|
|
|
|
|
||||
Gross profit (loss):
|
|
|
|
|
|
|
||||
Drainage Pipe & Products
|
200,321
|
|
|
174,786
|
|
|
14.6
|
%
|
||
Water Pipe & Products
|
96,275
|
|
|
71,471
|
|
|
34.7
|
%
|
||
Corporate and Other
|
(214
|
)
|
|
(688
|
)
|
|
(68.9
|
)%
|
||
Total
|
$
|
296,382
|
|
|
$
|
245,569
|
|
|
20.7
|
%
|
|
|
|
|
|
|
|
||||
Segment EBITDA(1):
|
|
|
|
|
|
|
||||
Drainage Pipe & Products
|
171,413
|
|
|
156,735
|
|
|
9.4
|
%
|
||
Water Pipe & Products(2)
|
84,424
|
|
|
64,547
|
|
|
30.8
|
%
|
||
Corporate and Other
|
(74,219
|
)
|
|
(58,802
|
)
|
|
26.2
|
%
|
(1)
|
For purposes of evaluating segment performance, the Company's chief operating decision maker reviews earnings before interest, taxes, depreciation and amortization, or EBITDA, as a basis for making the decisions to allocate resources and assess performance. Our discussion below includes the primary drivers of EBITDA. See Note 21 to our consolidated financial statements, for segment EBITDA reconciliation to income (loss) before income taxes.
|
|
|
|
Statements of Income Data:
|
Year ended
December 31, 2018 |
|
Year ended
December 31, 2017 |
|
% Change
|
|||||
|
|
|
|
|
|
|||||
Net sales
|
$
|
1,479,712
|
|
|
$
|
1,580,413
|
|
|
(6.4
|
)%
|
Cost of goods sold
|
1,234,143
|
|
|
1,327,305
|
|
|
(7.0
|
)%
|
||
Gross profit
|
245,569
|
|
|
253,108
|
|
|
(3.0
|
)%
|
||
Selling, general and administrative expenses
|
(209,877
|
)
|
|
(255,034
|
)
|
|
(17.7
|
)%
|
||
Impairment and exit charges
|
(4,336
|
)
|
|
(13,220
|
)
|
|
(67.2
|
)%
|
||
Other operating income, net
|
9,523
|
|
|
5,197
|
|
|
83.2
|
%
|
||
|
(204,690
|
)
|
|
(263,057
|
)
|
|
(22.2
|
)%
|
||
Income (loss) from operations
|
40,879
|
|
|
(9,949
|
)
|
|
*
|
|||
Other income (expenses)
|
|
|
|
|
|
|||||
Interest expense
|
(78,337
|
)
|
|
(59,408
|
)
|
|
31.9
|
%
|
||
Change in tax receivable agreement liability
|
—
|
|
|
46,180
|
|
|
*
|
|||
Earnings from equity method investee
|
10,162
|
|
|
12,360
|
|
|
(17.8
|
)%
|
||
Other income (expense), net
|
6,016
|
|
|
(31,915
|
)
|
|
*
|
|||
Loss before income taxes
|
(21,280
|
)
|
|
(42,732
|
)
|
|
(50.2
|
)%
|
||
Income tax (expense) benefit
|
(3,085
|
)
|
|
40,672
|
|
|
*
|
|||
Net loss
|
$
|
(24,365
|
)
|
|
$
|
(2,060
|
)
|
|
*
|
|
|
|
|
|
|
(in thousands)
|
For the year ended December 31,
|
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
Net sales:
|
|
|
|
|
|
|||||
Drainage Pipe & Products
|
$
|
811,477
|
|
|
$
|
834,810
|
|
|
(2.8
|
)%
|
Water Pipe & Products
|
668,235
|
|
|
745,555
|
|
|
(10.4
|
)%
|
||
Corporate and Other
|
—
|
|
|
48
|
|
|
(100.0
|
)%
|
||
Total
|
$
|
1,479,712
|
|
|
$
|
1,580,413
|
|
|
(6.4
|
)%
|
|
|
|
|
|
|
|||||
Gross profit (loss):
|
|
|
|
|
|
|||||
Drainage Pipe & Products
|
174,786
|
|
|
147,741
|
|
|
18.3
|
%
|
||
Water Pipe & Products
|
71,471
|
|
|
108,320
|
|
|
(34.0
|
)%
|
||
Corporate and Other
|
(688
|
)
|
|
(2,953
|
)
|
|
(76.7
|
)%
|
||
Total
|
$
|
245,569
|
|
|
$
|
253,108
|
|
|
(3.0
|
)%
|
|
|
|
|
|
|
|||||
Segment EBITDA(1):
|
|
|
|
|
|
|||||
Drainage Pipe & Products
|
156,735
|
|
|
129,618
|
|
|
20.9
|
%
|
||
Water Pipe & Products(2)
|
64,547
|
|
|
47,587
|
|
|
35.6
|
%
|
||
Corporate and Other
|
(58,802
|
)
|
|
(44,870
|
)
|
|
31.0
|
%
|
(1)
|
For purposes of evaluating segment performance, the Company's chief operating decision maker reviews earnings before interest, taxes, depreciation and amortization, or EBITDA, as a basis for making the decisions to allocate resources and assess performance. Our discussion below includes the primary drivers of EBITDA. See Note 21, Segment Reporting, for segment EBITDA reconciliation to income (loss) before income taxes.
|
(2)
|
For the 2017 period, segment EBITDA included a $32.3 million loss as a result of the U.S. Pressure Pipe Divestiture in July 2017.
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2019
|
|
Year ended December 31, 2018
|
|
Year ended December 31, 2017
|
||||||
|
|
|
|
|
|
||||||
Statement of Cash Flows data:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
146,786
|
|
|
$
|
27,196
|
|
|
$
|
42,334
|
|
Net cash used in investing activities
|
(42,295
|
)
|
|
(51,052
|
)
|
|
(66,023
|
)
|
|||
Net cash (used in) provided by financing activities
|
(106,181
|
)
|
|
(43,451
|
)
|
|
86,250
|
|
|
|
|
|
Payment Due by Period
|
||||||||||||||||||||||||||
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||
Senior term loan
|
$
|
1,123,358
|
|
|
$
|
12,510
|
|
|
$
|
12,510
|
|
|
$
|
12,510
|
|
|
$
|
1,085,828
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest on indebtedness (1)
|
204,282
|
|
|
54,532
|
|
|
53,774
|
|
|
53,165
|
|
|
42,811
|
|
|
—
|
|
|
—
|
|
|||||||
Operating leases
|
160,218
|
|
|
11,858
|
|
|
9,682
|
|
|
9,380
|
|
|
10,127
|
|
|
9,561
|
|
|
109,610
|
|
|||||||
Finance leases
|
738,967
|
|
|
16,894
|
|
|
17,049
|
|
|
17,300
|
|
|
17,516
|
|
|
17,841
|
|
|
652,367
|
|
|||||||
Total Commitments
|
$
|
2,226,825
|
|
|
$
|
95,794
|
|
|
$
|
93,015
|
|
|
$
|
92,355
|
|
|
$
|
1,156,282
|
|
|
$
|
27,402
|
|
|
$
|
761,977
|
|
(1)
|
The interest rate on the Term loan is 5.52%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Statements
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
Consolidated Statements of Operations
|
|
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
Consolidated Statements of Shareholders' Equity
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
|
Consolidated Notes to Financial Statements
|
|
|
|
|
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
||||||||
Net sales
|
$
|
1,529,752
|
|
|
$
|
1,479,712
|
|
|
$
|
1,580,413
|
|
Cost of goods sold
|
1,233,370
|
|
|
1,234,143
|
|
|
1,327,305
|
|
|||
Gross profit
|
296,382
|
|
|
245,569
|
|
|
253,108
|
|
|||
Selling, general & administrative expenses
|
(221,770
|
)
|
|
(209,877
|
)
|
|
(255,034
|
)
|
|||
Impairment and exit charges
|
(3,520
|
)
|
|
(4,336
|
)
|
|
(13,220
|
)
|
|||
Other operating income, net
|
1,094
|
|
|
9,523
|
|
|
5,197
|
|
|||
|
(224,196
|
)
|
|
(204,690
|
)
|
|
(263,057
|
)
|
|||
Income (loss) from operations
|
72,186
|
|
|
40,879
|
|
|
(9,949
|
)
|
|||
|
|
|
|
|
|
||||||
Other income (expenses)
|
|
|
|
|
|
||||||
Interest expense
|
(94,970
|
)
|
|
(78,337
|
)
|
|
(59,408
|
)
|
|||
Gain on extinguishment of debt
|
1,708
|
|
|
—
|
|
|
—
|
|
|||
Earnings from equity method investee
|
10,466
|
|
|
10,162
|
|
|
12,360
|
|
|||
Change in tax receivable agreement liability
|
—
|
|
|
—
|
|
|
46,180
|
|
|||
Other income (expense), net
|
—
|
|
|
6,016
|
|
|
(31,915
|
)
|
|||
Loss before income taxes
|
(10,610
|
)
|
|
(21,280
|
)
|
|
(42,732
|
)
|
|||
Income tax (expense) benefit
|
3,279
|
|
|
(3,085
|
)
|
|
40,672
|
|
|||
|
|
|
|
|
|
||||||
Net loss
|
$
|
(7,331
|
)
|
|
$
|
(24,365
|
)
|
|
$
|
(2,060
|
)
|
|
|
|
|
|
|
||||||
Basic and Diluted earnings (loss) per share:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(0.11
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
||||||
Weighted average shares of common stock outstanding:
|
|
|
|
|
|
||||||
Basic and Diluted
|
64,232
|
|
|
63,904
|
|
|
63,801
|
|
|
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net loss
|
$
|
(7,331
|
)
|
|
$
|
(24,365
|
)
|
|
$
|
(2,060
|
)
|
Unrealized gain (loss) on derivative activities, net of tax
|
—
|
|
|
970
|
|
|
(3,548
|
)
|
|||
Change in other postretirement benefit plans, net of tax
|
373
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation adjustment
|
3,304
|
|
|
(5,782
|
)
|
|
3,475
|
|
|||
Comprehensive loss
|
$
|
(3,654
|
)
|
|
$
|
(29,177
|
)
|
|
$
|
(2,133
|
)
|
|
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
34,800
|
|
|
$
|
35,793
|
|
Receivables, net
|
205,801
|
|
|
198,468
|
|
||
Inventories
|
238,483
|
|
|
285,030
|
|
||
Prepaid expenses
|
11,021
|
|
|
7,289
|
|
||
Other current assets
|
8,890
|
|
|
17,509
|
|
||
Total current assets
|
498,995
|
|
|
544,089
|
|
||
Non-current assets
|
|
|
|
||||
Property, plant and equipment, net
|
475,575
|
|
|
492,167
|
|
||
Operating lease right-of-use assets
|
60,253
|
|
|
—
|
|
||
Goodwill
|
508,826
|
|
|
508,193
|
|
||
Intangible assets, net
|
142,674
|
|
|
183,789
|
|
||
Investment in equity method investee
|
50,034
|
|
|
50,607
|
|
||
Other long-term assets
|
3,701
|
|
|
14,407
|
|
||
Total assets
|
$
|
1,740,058
|
|
|
$
|
1,793,252
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Trade payables
|
$
|
102,426
|
|
|
$
|
114,708
|
|
Accrued liabilities
|
88,839
|
|
|
70,236
|
|
||
Deferred revenue
|
9,527
|
|
|
9,138
|
|
||
Current portion of long-term debt
|
12,510
|
|
|
12,510
|
|
||
Current portion of tax receivable agreement
|
13,145
|
|
|
15,457
|
|
||
Total current liabilities
|
226,447
|
|
|
222,049
|
|
||
Non-current liabilities
|
|
|
|
||||
Long-term debt
|
1,085,793
|
|
|
1,176,095
|
|
||
Long-term finance lease liabilities
|
137,365
|
|
|
134,948
|
|
||
Long-term operating lease liabilities
|
54,411
|
|
|
—
|
|
||
Deferred tax liabilities
|
28,929
|
|
|
46,615
|
|
||
Deferred gain on sale-leaseback
|
—
|
|
|
9,338
|
|
||
Other long-term liabilities
|
21,906
|
|
|
22,667
|
|
||
Long-term tax receivable agreement
|
64,240
|
|
|
73,318
|
|
||
Total liabilities
|
1,619,091
|
|
|
1,685,030
|
|
||
Commitments and Contingencies (Note 16)
|
|
|
|
|
|
||
Equity
|
|
|
|
|
|
||
Common stock, $0.001 par value. 190,000 shares authorized; 64,741 and 64,206 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively
|
19
|
|
|
18
|
|
||
Additional paid-in-capital
|
244,372
|
|
|
234,931
|
|
||
Accumulated other comprehensive loss
|
(7,063
|
)
|
|
(10,740
|
)
|
||
Retained deficit
|
(116,361
|
)
|
|
(115,987
|
)
|
||
Total shareholders' equity
|
120,967
|
|
|
108,222
|
|
||
Total liabilities and shareholders' equity
|
$
|
1,740,058
|
|
|
$
|
1,793,252
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
Additional Paid-in-Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Retained Deficit
|
|
Total Shareholders' Equity
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at December 31, 2016
|
|
63,924,124
|
|
|
$
|
18
|
|
|
$
|
228,316
|
|
|
$
|
(5,025
|
)
|
|
$
|
(90,392
|
)
|
|
$
|
132,917
|
|
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
3,696
|
|
|
—
|
|
|
—
|
|
|
3,696
|
|
|||||
Stock-based plan activity
|
|
306,764
|
|
|
—
|
|
|
(37
|
)
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,060
|
)
|
|
(2,060
|
)
|
|||||
Gains on derivative transactions, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,548
|
)
|
|
—
|
|
|
(3,548
|
)
|
|||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,475
|
|
|
—
|
|
|
3,475
|
|
|||||
Other
|
|
—
|
|
|
—
|
|
|
(1,952
|
)
|
|
—
|
|
|
—
|
|
|
(1,952
|
)
|
|||||
Balance at December 31, 2017
|
|
64,230,888
|
|
|
$
|
18
|
|
|
$
|
230,023
|
|
|
$
|
(5,098
|
)
|
|
$
|
(92,452
|
)
|
|
$
|
132,491
|
|
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
6,240
|
|
|
—
|
|
|
—
|
|
|
6,240
|
|
|||||
Stock-based plan activity
|
|
(25,284
|
)
|
|
—
|
|
|
(126
|
)
|
|
—
|
|
|
—
|
|
|
(126
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,365
|
)
|
|
(24,365
|
)
|
|||||
Gain on derivative transactions, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
970
|
|
|
—
|
|
|
970
|
|
|||||
Reclassification due to the adoption of ASU 2018-02
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(830
|
)
|
|
830
|
|
|
—
|
|
|||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,782
|
)
|
|
—
|
|
|
(5,782
|
)
|
|||||
Other
|
|
—
|
|
|
—
|
|
|
(1,206
|
)
|
|
—
|
|
|
—
|
|
|
(1,206
|
)
|
|||||
Balance at December 31, 2018
|
|
64,205,604
|
|
|
$
|
18
|
|
|
$
|
234,931
|
|
|
$
|
(10,740
|
)
|
|
$
|
(115,987
|
)
|
|
$
|
108,222
|
|
Cumulative effect of accounting changes, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,957
|
|
|
6,957
|
|
|||||
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
7,919
|
|
|
—
|
|
|
—
|
|
|
7,919
|
|
|||||
Stock-based plan activity
|
|
535,063
|
|
|
1
|
|
|
1,522
|
|
|
—
|
|
|
—
|
|
|
1,523
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,331
|
)
|
|
(7,331
|
)
|
|||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,304
|
|
|
—
|
|
|
3,304
|
|
|||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
373
|
|
|
—
|
|
|
373
|
|
|||||
Balance at December 31, 2019
|
|
64,740,667
|
|
|
$
|
19
|
|
|
$
|
244,372
|
|
|
$
|
(7,063
|
)
|
|
$
|
(116,361
|
)
|
|
$
|
120,967
|
|
|
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net loss
|
$
|
(7,331
|
)
|
|
$
|
(24,365
|
)
|
|
$
|
(2,060
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|||||||||||
Depreciation & amortization expense
|
97,258
|
|
|
105,423
|
|
|
115,659
|
|
|||
(Gain) / loss on business divestiture
|
—
|
|
|
(6,016
|
)
|
|
32,278
|
|
|||
(Gain) / loss on disposal of property, plant and equipment
|
2,045
|
|
|
(4,266
|
)
|
|
2,107
|
|
|||
Gain on extinguishment of debt
|
(1,708
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization of debt discount and issuance costs
|
7,962
|
|
|
8,143
|
|
|
8,123
|
|
|||
Stock-based compensation expense
|
7,919
|
|
|
6,240
|
|
|
3,696
|
|
|||
Impairment on property, plant, and equipment and goodwill
|
128
|
|
|
956
|
|
|
10,551
|
|
|||
Earnings from equity method investee
|
(10,466
|
)
|
|
(10,162
|
)
|
|
(12,360
|
)
|
|||
Distributions from equity method investee
|
11,039
|
|
|
13,141
|
|
|
13,717
|
|
|||
Unrealized (gain) loss on derivative instruments, net
|
6,401
|
|
|
(1,408
|
)
|
|
(5,251
|
)
|
|||
Unrealized foreign currency gains, net
|
45
|
|
|
(527
|
)
|
|
(615
|
)
|
|||
Provision (recoveries) for doubtful accounts
|
387
|
|
|
(1,224
|
)
|
|
2,947
|
|
|||
Deferred income taxes
|
(20,067
|
)
|
|
(20,768
|
)
|
|
(25,496
|
)
|
|||
Tax receivable agreement non-cash items
|
—
|
|
|
—
|
|
|
(46,180
|
)
|
|||
Deferred rent
|
—
|
|
|
1,373
|
|
|
2,616
|
|
|||
Other non-cash items
|
1,320
|
|
|
83
|
|
|
196
|
|
|||
Change in assets and liabilities:
|
|
|
|
|
|
||||||
Receivables, net
|
(7,394
|
)
|
|
(2,466
|
)
|
|
(16,831
|
)
|
|||
Inventories
|
47,491
|
|
|
(45,313
|
)
|
|
1,838
|
|
|||
Other current assets
|
514
|
|
|
8,657
|
|
|
(24,003
|
)
|
|||
Accounts payable and accrued liabilities
|
2,675
|
|
|
(4,548
|
)
|
|
(19,424
|
)
|
|||
Other assets & liabilities
|
8,568
|
|
|
4,243
|
|
|
826
|
|
|||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
146,786
|
|
|
27,196
|
|
|
42,334
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Purchase of property, plant and equipment, and intangible assets
|
(53,709
|
)
|
|
(50,609
|
)
|
|
(52,514
|
)
|
|||
Proceeds from business divestiture
|
—
|
|
|
618
|
|
|
23,200
|
|
|||
Proceeds from sale of fixed assets
|
11,414
|
|
|
8,429
|
|
|
—
|
|
|||
Settlement of net investment hedges
|
—
|
|
|
(4,990
|
)
|
|
—
|
|
|||
Assets and liabilities acquired, business combinations, net
|
—
|
|
|
(4,500
|
)
|
|
(36,709
|
)
|
|||
NET CASH USED IN INVESTING ACTIVITIES
|
(42,295
|
)
|
|
(51,052
|
)
|
|
(66,023
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Payments of debt issuance costs
|
—
|
|
|
—
|
|
|
(2,498
|
)
|
|||
Proceeds from issuance of common stock, net
|
1,703
|
|
|
—
|
|
|
—
|
|
|||
Payments on term loans
|
(95,741
|
)
|
|
(12,510
|
)
|
|
(12,008
|
)
|
|||
Proceeds from term loans, net
|
—
|
|
|
—
|
|
|
200,000
|
|
|||
Proceeds from revolver
|
54,000
|
|
|
—
|
|
|
194,000
|
|
|||
Payments on revolver
|
(54,000
|
)
|
|
—
|
|
|
(293,000
|
)
|
|||
Payment pursuant to tax receivable agreement
|
(11,390
|
)
|
|
(30,407
|
)
|
|
—
|
|
|||
Other financing activities
|
(753
|
)
|
|
(534
|
)
|
|
(244
|
)
|
|||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
(106,181
|
)
|
|
(43,451
|
)
|
|
86,250
|
|
|||
Effect of exchange rate changes on cash
|
697
|
|
|
(1,434
|
)
|
|
1,949
|
|
|||
Net change in cash and cash equivalents
|
(993
|
)
|
|
(68,741
|
)
|
|
64,510
|
|
|||
Cash and cash equivalents, beginning of period
|
35,793
|
|
|
104,534
|
|
|
40,024
|
|
|||
Cash and cash equivalents, end of period
|
$
|
34,800
|
|
|
$
|
35,793
|
|
|
$
|
104,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Net working capital
|
$
|
10,984
|
|
Property, plant and equipment
|
9,221
|
|
|
Customer relationship intangible
|
2,100
|
|
|
Non-compete agreement intangible
|
5,600
|
|
|
Other intangibles
|
290
|
|
|
Net identifiable assets acquired
|
28,195
|
|
|
Goodwill
|
8,996
|
|
|
Consideration transferred
|
$
|
37,191
|
|
|
|
2017
|
||
|
|
Royal
|
||
Net working capital
|
|
$
|
2,994
|
|
Property, plant and equipment, net
|
|
12,335
|
|
|
Customer relationship intangible
|
|
1,676
|
|
|
Non-compete agreement intangible
|
|
866
|
|
|
Trade names
|
|
308
|
|
|
Customer backlog intangible
|
|
63
|
|
|
Patents
|
|
72
|
|
|
Other assets and liabilities
|
|
(726
|
)
|
|
Net identifiable assets acquired
|
|
17,588
|
|
|
Goodwill
|
|
17,903
|
|
|
Cash consideration transferred
|
|
$
|
35,491
|
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Trade receivables
|
$
|
178,698
|
|
|
$
|
188,999
|
|
Amounts billed, but not yet paid under retainage provisions
|
3,093
|
|
|
2,065
|
|
||
Other receivables
|
26,078
|
|
|
9,545
|
|
||
Total receivables
|
$
|
207,869
|
|
|
$
|
200,609
|
|
Less: Allowance for doubtful accounts
|
(2,068
|
)
|
|
(2,141
|
)
|
||
Receivables, net
|
$
|
205,801
|
|
|
$
|
198,468
|
|
|
|
Allowance for doubtful accounts
|
||
Balance at December 31, 2017
|
|
$
|
(4,033
|
)
|
Recovery on doubtful accounts
|
|
1,224
|
|
|
Write-offs and adjustments
|
|
668
|
|
|
Balance at December 31, 2018
|
|
$
|
(2,141
|
)
|
Provision for doubtful accounts
|
|
(387
|
)
|
|
Write-offs and adjustments
|
|
460
|
|
|
Balance at December 31, 2019
|
|
$
|
(2,068
|
)
|
|
|
|
|
Year ended December 31,
|
|||||||||
|
2019
|
|
2018
|
|
2017
|
|||||
Distribution received from CP&P
|
$
|
(11,039
|
)
|
|
$
|
(13,141
|
)
|
|
(13,717
|
)
|
Share of earnings in CP&P
|
10,538
|
|
|
10,234
|
|
|
12,432
|
|
||
Amortization of excess fair value of investment
|
(72
|
)
|
|
(72
|
)
|
|
(72
|
)
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
136,430
|
|
|
$
|
125,744
|
|
|
$
|
137,458
|
|
Gross profit
|
40,379
|
|
|
37,491
|
|
|
43,453
|
|
|||
Income from operations
|
20,899
|
|
|
19,729
|
|
|
25,346
|
|
|||
Net income
|
20,844
|
|
|
19,804
|
|
|
25,437
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Machinery and equipment
|
$
|
398,127
|
|
|
$
|
373,881
|
|
Land, buildings and improvements
|
240,403
|
|
|
235,819
|
|
||
Other equipment
|
8,660
|
|
|
6,962
|
|
||
Construction-in-progress
|
29,157
|
|
|
32,448
|
|
||
Total property, plant and equipment
|
676,347
|
|
|
649,110
|
|
||
Less: accumulated depreciation
|
(200,772
|
)
|
|
(156,943
|
)
|
||
Property, plant and equipment, net
|
$
|
475,575
|
|
|
$
|
492,167
|
|
|
|
|
|
Drainage Pipe & Products
|
|
Water Pipe & Products
|
|
Total
|
||||||
Balance at December 31, 2017
|
$
|
179,723
|
|
|
$
|
316,418
|
|
|
$
|
496,141
|
|
Acquisitions
|
9,951
|
|
|
—
|
|
|
9,951
|
|
|||
Foreign currency and other adjustments
|
159
|
|
|
1,942
|
|
|
2,101
|
|
|||
Balance at December 31, 2018
|
189,833
|
|
|
318,360
|
|
|
508,193
|
|
|||
Foreign currency and other adjustments
|
633
|
|
|
—
|
|
|
633
|
|
|||
Balance at December 31, 2019
|
$
|
190,466
|
|
|
$
|
318,360
|
|
|
$
|
508,826
|
|
|
Weighted average amortization period (in years)
|
|
Gross carrying amount as of December 31, 2019
|
|
Accumulated amortization
|
|
Net carrying value as of December 31, 2019
|
||||||
Customer relationships
|
10
|
|
$
|
235,907
|
|
|
$
|
(135,038
|
)
|
|
$
|
100,869
|
|
Trade names
|
10
|
|
39,390
|
|
|
(19,764
|
)
|
|
19,626
|
|
|||
Patents
|
11
|
|
23,629
|
|
|
(15,956
|
)
|
|
7,673
|
|
|||
Customer backlog
|
0.8
|
|
13,209
|
|
|
(13,209
|
)
|
|
—
|
|
|||
Non-compete agreements
|
5
|
|
17,090
|
|
|
(9,020
|
)
|
|
8,070
|
|
|||
Developed technology
|
17
|
|
6,354
|
|
|
(374
|
)
|
|
5,980
|
|
|||
Other
|
10
|
|
867
|
|
|
(411
|
)
|
|
456
|
|
|||
Total intangible assets
|
|
|
$
|
336,446
|
|
|
$
|
(193,772
|
)
|
|
$
|
142,674
|
|
|
|
|
|
Weighted average amortization period (in years)
|
|
Gross carrying amount as of December 31, 2018
|
|
Accumulated amortization
|
|
Net carrying value as of December 31, 2018
|
||||||
Customer relationships
|
10
|
|
$
|
231,056
|
|
|
$
|
(99,583
|
)
|
|
$
|
131,473
|
|
Trade names
|
10
|
|
39,390
|
|
|
(14,867
|
)
|
|
24,523
|
|
|||
Patents
|
11
|
|
23,629
|
|
|
(12,325
|
)
|
|
11,304
|
|
|||
Customer backlog
|
0.8
|
|
13,206
|
|
|
(13,206
|
)
|
|
—
|
|
|||
Non-compete agreements
|
5
|
|
15,618
|
|
|
(6,044
|
)
|
|
9,574
|
|
|||
In-Process R&D (1)
|
Indefinite-lived
|
|
6,354
|
|
|
—
|
|
|
6,354
|
|
|||
Other
|
10
|
|
867
|
|
|
(306
|
)
|
|
561
|
|
|||
Total intangible assets
|
|
|
$
|
330,120
|
|
|
$
|
(146,331
|
)
|
|
$
|
183,789
|
|
Year ended
|
|
Intangible assets subject to amortization
|
||
2020
|
|
$
|
41,286
|
|
2021
|
|
33,221
|
|
|
2022
|
|
23,984
|
|
|
2023
|
|
17,651
|
|
|
2024
|
|
12,742
|
|
|
Total
|
|
$
|
128,884
|
|
|
|
|
|
Fair value measurements at December 31, 2019 using
|
|
||||||||||
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs (Level 3)
|
Total Fair Value December 31, 2018
|
||||||||
Recurring:
|
|
|
|
|
||||||||
Non-current assets
|
|
|
|
|
||||||||
Derivative asset
|
$
|
—
|
|
$
|
258
|
|
$
|
—
|
|
$
|
258
|
|
|
|
|
|
|
||||||||
|
Fair value measurements at December 31, 2018 using
|
|
||||||||||
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
Total Fair Value December 31, 2017
|
||||||||
Recurring:
|
|
|
|
|
||||||||
Non-current assets
|
|
|
|
|
||||||||
Derivative asset
|
$
|
—
|
|
$
|
6,659
|
|
$
|
—
|
|
$
|
6,659
|
|
|
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Accrued payroll and employee benefits
|
$
|
32,815
|
|
|
$
|
31,095
|
|
Short-term capital leases
|
16,542
|
|
|
16,430
|
|
||
Short-term operating leases
|
8,784
|
|
|
—
|
|
||
Accrued taxes
|
5,354
|
|
|
11,489
|
|
||
Accrued rebates
|
9,895
|
|
|
3,542
|
|
||
Warranty
|
5,536
|
|
|
3,251
|
|
||
Environmental obligation
|
718
|
|
|
570
|
|
||
Other miscellaneous accrued liabilities
|
9,195
|
|
|
3,859
|
|
||
Total accrued liabilities
|
$
|
88,839
|
|
|
$
|
70,236
|
|
|
|
|
|
December 31,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Term Loan, net of debt issuance costs and original issuance discount of
$25,055 and $34,252, respectively |
$
|
1,098,303
|
|
|
$
|
1,188,605
|
|
Total debt
|
$
|
1,098,303
|
|
|
$
|
1,188,605
|
|
Less: current portion debt
|
(12,510
|
)
|
|
(12,510
|
)
|
||
Total long-term debt
|
$
|
1,085,793
|
|
|
$
|
1,176,095
|
|
|
|
|
|
|
Term Loan
|
||
2020
|
|
$
|
12,510
|
|
2021
|
|
12,510
|
|
|
2022
|
|
12,510
|
|
|
2023
|
|
1,085,828
|
|
|
|
|
$
|
1,123,358
|
|
|
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Workers' compensation
|
$
|
9,023
|
|
|
$
|
9,837
|
|
Deferred rent
|
—
|
|
|
4,259
|
|
||
Employee benefits
|
2,945
|
|
|
3,307
|
|
||
Insurance
|
1,345
|
|
|
1,550
|
|
||
Environmental remediation liability
|
872
|
|
|
1,001
|
|
||
Other miscellaneous long-term liabilities
|
7,721
|
|
|
2,713
|
|
||
|
$
|
21,906
|
|
|
$
|
22,667
|
|
|
|
|
|
December 31, 2019
|
||||||||||||||
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||
|
Notional Amount
|
|
Fair Value
|
|
Notional Amount
|
|
Fair Value
|
||||||||
Interest rate swaps
|
$
|
525,000
|
|
|
$
|
258
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total derivatives, gross
|
|
|
258
|
|
|
|
|
—
|
|
||||||
Less: Legally enforceable master netting agreements
|
|
|
—
|
|
|
|
|
—
|
|
||||||
Total derivatives, net
|
|
|
$
|
258
|
|
|
|
|
$
|
—
|
|
|
December 31, 2018
|
||||||||||||||
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||
|
Notional Amount
|
|
Fair Value
|
|
Notional Amount
|
|
Fair Value
|
||||||||
Interest rate swaps
|
$
|
525,000
|
|
|
$
|
6,659
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total derivatives, gross
|
|
|
6,659
|
|
|
|
|
|
—
|
|
|||||
Less: Legally enforceable master netting agreements
|
|
|
—
|
|
|
|
|
—
|
|
||||||
Total derivatives, net
|
|
|
|
$
|
6,659
|
|
|
|
|
$
|
—
|
|
|
Year ended December 31,
|
Year ended December 31,
|
||||
|
2019
|
2018
|
||||
Net investment hedges
|
|
|
||||
Foreign exchange forward contracts
|
|
|
||||
Gain on derivatives recognized in Accumulated other comprehensive loss
|
$
|
—
|
|
$
|
970
|
|
Derivatives not designated as hedges
|
|
|
||||
Interest rate swaps
|
|
|
||||
Gain (loss) on derivatives not designated as hedges included in interest expense
|
(6,401
|
)
|
1,408
|
|
|
|
|
Lease cost
|
Classification
|
|
Year ended December 31, 2019
|
||
Operating lease cost
|
Lease expense
|
|
$
|
16,464
|
|
Finance lease cost
|
|
|
|
||
Amortization of leased assets
|
Depreciation, amortization, and accretion
|
|
2,276
|
|
|
Interest on lease liabilities
|
Interest expense
|
|
18,528
|
|
Lease term and discount rate
|
|
December 31, 2019
|
|
Weighted-average remaining lease term (years)
|
|
|
|
Operating leases
|
|
15.5 years
|
|
Finance leases
|
|
33.1 years
|
|
Weighted-average discount rate (%)
|
|
|
|
Operating leases
|
|
12.6
|
%
|
Finance leases
|
|
12.3
|
%
|
|
|
Year ended December 31, 2019
|
||
Cash paid for amounts included in lease liabilities
|
|
|
||
Operating cash flows related to operating leases
|
|
$
|
14,945
|
|
Operating cash flows related to finance leases
|
|
16,090
|
|
|
Financing cash flows related to finance leases
|
|
583
|
|
|
Leased assets obtained in exchange for new finance lease liabilities
|
|
180
|
|
|
Leased assets obtained in exchange for new operating lease liabilities
|
|
4,925
|
|
|
|
Classification
|
|
December 31, 2019
|
||
Operating leases
|
|
|
|
|
||
Right of use assets
|
|
Operating lease right-of-use assets
|
|
$
|
60,253
|
|
Operating lease liabilities - current portion
|
|
Accrued liabilities
|
|
(8,784
|
)
|
|
Operating lease liabilities - long term portion
|
|
Long-term operating lease liabilities
|
|
(54,411
|
)
|
|
Finance leases
|
|
|
|
|
||
Finance lease assets
|
|
Property, plant and equipment, net
|
|
49,999
|
|
|
Finance lease liabilities - current portion
|
|
Accrued liabilities
|
|
(16,542
|
)
|
|
Finance lease liabilities - long term portion
|
|
Long-term finance lease liabilities
|
|
(137,365
|
)
|
|
|
|
|
Operating leases
|
|
Finance leases
|
|
Total
|
||||||
2020
|
$
|
13,766
|
|
|
$
|
16,894
|
|
|
$
|
30,660
|
|
2021
|
11,371
|
|
|
17,049
|
|
|
28,420
|
|
|||
2022
|
10,500
|
|
|
17,300
|
|
|
27,800
|
|
|||
2023
|
10,247
|
|
|
17,516
|
|
|
27,763
|
|
|||
2024
|
9,561
|
|
|
17,841
|
|
|
27,402
|
|
|||
Thereafter
|
109,610
|
|
|
652,367
|
|
|
761,977
|
|
|||
Total lease payments
|
165,055
|
|
|
738,967
|
|
|
904,022
|
|
|||
Less: imputed interest
|
(101,860
|
)
|
|
(585,060
|
)
|
|
(686,920
|
)
|
|||
Present value of lease liabilities
|
$
|
63,195
|
|
|
$
|
153,907
|
|
|
$
|
217,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net loss
|
|
$
|
(7,331
|
)
|
|
$
|
(24,365
|
)
|
|
$
|
(2,060
|
)
|
|
|
|
|
|
|
|
||||||
Common stock:
|
|
|
|
|
|
|
||||||
Weighted average basic shares outstanding
|
|
64,232
|
|
|
63,904
|
|
|
63,801
|
|
|||
Effect of dilutive securities - stock options
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Weighted average diluted shares outstanding
|
|
64,232
|
|
|
63,904
|
|
|
63,801
|
|
|||
|
|
|
|
|
|
|
||||||
Basic and Diluted earnings (loss) per share:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Expected dividends
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Expected volatility
|
|
32.08
|
%
|
|
32.90
|
%
|
|
39.60
|
%
|
|||
Risk-free interest rate
|
|
2.43
|
%
|
|
1.71
|
%
|
|
0.86
|
%
|
|||
Expected lives in years
|
|
6
|
|
|
6
|
|
|
6
|
|
|||
Weighted-average fair value of options:
|
|
|
|
|
|
|
||||||
Granted at fair value
|
|
$
|
1.54
|
|
|
$
|
2.76
|
|
|
$
|
4.16
|
|
Weighted-average exercise price of options:
|
|
|
|
|
|
|
||||||
Granted at fair value
|
|
$
|
4.29
|
|
|
$
|
7.92
|
|
|
$
|
10.76
|
|
|
|
|
|
|
Shares
|
Weighted Average Exercise Price
|
|
|
|
(in thousands)
|
|
|
Outstanding, December 31, 2017
|
|
1,254,429
|
|
$12.31
|
Granted
|
|
2,189,216
|
|
$7.92
|
Exercised
|
|
—
|
|
n/a
|
Forfeited
|
|
(342,226
|
)
|
$12.53
|
Outstanding, December 31, 2018
|
|
3,101,419
|
|
$9.19
|
Granted
|
|
2,771,930
|
|
$4.29
|
Exercised
|
|
(224,266
|
)
|
$7.60
|
Forfeited
|
|
(1,975,987
|
)
|
$7.50
|
Outstanding, December 31, 2019
|
|
3,673,096
|
|
$6.50
|
Options vested or expected to vest at year end
|
|
3,673,096
|
|
$6.50
|
Options exercisable at year end
|
|
927,863
|
|
$8.81
|
|
|
|
|
|
Shares
|
Weighted Average Grant Date Fair Value
|
|
|
|
(in thousands)
|
|
|
Unvested balance at December 31, 2017
|
|
441,350
|
|
$13.60
|
Grants
|
|
542,979
|
|
$7.98
|
Vested shares
|
|
(155,260
|
)
|
$13.11
|
Forfeitures
|
|
(84,706
|
)
|
$12.98
|
Unvested balance at December 31, 2018
|
|
744,363
|
|
$9.68
|
Grants
|
|
2,562,250
|
|
$4.58
|
Vested shares
|
|
(508,799
|
)
|
$7.74
|
Forfeitures
|
|
(640,172
|
)
|
$6.21
|
Unvested balance at December 31, 2019
|
|
2,157,642
|
|
$5.11
|
|
|
|
|
Year ended December 31,
|
Year ended December 31,
|
Year ended December 31,
|
||||||
|
2019
|
2018
|
2017
|
||||||
U.S. companies
|
$
|
(21,557
|
)
|
$
|
(36,317
|
)
|
$
|
(54,690
|
)
|
Foreign companies
|
10,947
|
|
15,037
|
|
11,958
|
|
|||
Loss from continuing operations before income taxes
|
$
|
(10,610
|
)
|
$
|
(21,280
|
)
|
$
|
(42,732
|
)
|
|
Year ended December 31,
|
Year ended December 31,
|
Year ended December 31,
|
||||||
|
2019
|
2018
|
2017
|
||||||
Current income tax
|
|
|
|
||||||
U.S. companies
|
$
|
(9,510
|
)
|
$
|
(13,225
|
)
|
$
|
21,539
|
|
State
|
(4,260
|
)
|
(5,779
|
)
|
(1,479
|
)
|
|||
Foreign companies
|
(3,018
|
)
|
(4,849
|
)
|
(4,884
|
)
|
|||
Total current tax (expense) benefit
|
(16,788
|
)
|
(23,853
|
)
|
15,176
|
|
|||
|
|
|
|
||||||
Deferred income tax
|
|
|
|
||||||
U.S. companies
|
16,180
|
|
17,273
|
|
26,866
|
|
|||
State
|
4,232
|
|
3,306
|
|
(1,658
|
)
|
|||
Foreign companies
|
(345
|
)
|
189
|
|
288
|
|
|||
Total deferred tax benefit
|
20,067
|
|
20,768
|
|
25,496
|
|
|||
|
|
|
|
||||||
Income tax (expense) benefit
|
$
|
3,279
|
|
$
|
(3,085
|
)
|
$
|
40,672
|
|
|
|
|
|
Year ended December 31,
|
Year ended December 31,
|
Year ended December 31,
|
||||||
|
2019
|
2018
|
2017
|
||||||
Loss from continuing operations
|
$
|
(10,610
|
)
|
$
|
(21,280
|
)
|
$
|
(42,732
|
)
|
|
|
|
|
||||||
Income tax benefit at statutory rate of 21% and 35%
|
$
|
2,228
|
|
$
|
4,469
|
|
$
|
14,956
|
|
State income taxes, net of federal benefit
|
113
|
|
1,494
|
|
1,470
|
|
|||
Foreign rate differential
|
(361
|
)
|
(568
|
)
|
1,586
|
|
|||
Non-deductible executive compensation
|
(1,011
|
)
|
(129
|
)
|
—
|
|
|||
Tax effect of equity compensation
|
(496
|
)
|
(310
|
)
|
(13
|
)
|
|||
M&E and other non-deductible expenses
|
(763
|
)
|
(452
|
)
|
(1,220
|
)
|
|||
Change in valuation allowance
|
1,927
|
|
(6,601
|
)
|
(4,141
|
)
|
|||
Divestiture of assets
|
—
|
|
(1,559
|
)
|
—
|
|
|||
Goodwill impairment
|
—
|
|
—
|
|
(1,147
|
)
|
|||
Effect of TCJA
|
—
|
|
—
|
|
26,932
|
|
|||
Net US tax cost on foreign income
|
(221
|
)
|
(390
|
)
|
—
|
|
|||
Tax credits
|
552
|
|
390
|
|
497
|
|
|||
Other prior year adjustments
|
1,311
|
|
571
|
|
1,752
|
|
|||
Total income tax benefit (expense)
|
$
|
3,279
|
|
$
|
(3,085
|
)
|
$
|
40,672
|
|
|
|
|
|
December 31, 2019
|
December 31, 2018
|
||||
Deferred tax assets:
|
|
|
||||
Inventory
|
$
|
6,891
|
|
$
|
6,424
|
|
Reserves
|
4,112
|
|
2,263
|
|
||
Accrued liabilities
|
4,656
|
|
4,347
|
|
||
Net operating losses
|
2,964
|
|
3,243
|
|
||
Capitalized transaction costs
|
3,599
|
|
3,407
|
|
||
Finance leases
|
55,063
|
|
39,512
|
|
||
Deferred gain on sale-leaseback
|
—
|
|
2,521
|
|
||
Interest expense limitation
|
6,566
|
|
2,780
|
|
||
Tax receivable agreement
|
1,655
|
|
1,645
|
|
||
Other assets
|
4,687
|
|
1,110
|
|
||
Total deferred tax assets
|
90,193
|
|
67,252
|
|
||
Valuation allowance
|
(13,555
|
)
|
(15,427
|
)
|
||
Total deferred tax assets, net
|
$
|
76,638
|
|
$
|
51,825
|
|
Deferred tax liabilities:
|
|
|
||||
Fixed assets
|
$
|
(53,156
|
)
|
$
|
(50,686
|
)
|
Lease assets
|
(25,378
|
)
|
(11,543
|
)
|
||
Deferred financing costs
|
(6,812
|
)
|
(8,631
|
)
|
||
Intangible assets
|
(20,221
|
)
|
(27,580
|
)
|
||
Total deferred tax liabilities
|
$
|
(105,567
|
)
|
$
|
(98,440
|
)
|
|
|
|
||||
Net deferred tax asset (liability)
|
$
|
(28,929
|
)
|
$
|
(46,615
|
)
|
|
Amount
|
Expiration Date
|
||
Federal net operating losses
|
$
|
—
|
|
—
|
State net operating losses
|
$
|
29,048
|
|
2021-2039
|
Foreign net operating losses
|
$
|
5,848
|
|
2036-2039
|
|
|
|
|
|
|
|
Year ended
December 31, |
|
Year ended
December 31,
|
|
Year ended
December 31,
|
||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales:
|
|
|
|
|
|
||||||
Drainage Pipe & Products
|
$
|
894,722
|
|
|
$
|
811,477
|
|
|
$
|
834,810
|
|
Water Pipe & Products
|
635,030
|
|
|
668,235
|
|
|
745,555
|
|
|||
Corporate and Other
|
—
|
|
|
—
|
|
|
48
|
|
|||
Total
|
$
|
1,529,752
|
|
|
$
|
1,479,712
|
|
|
$
|
1,580,413
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
||||||
Drainage Pipe & Products
|
$
|
37,331
|
|
|
$
|
41,495
|
|
|
$
|
45,750
|
|
Water Pipe & Products
|
58,476
|
|
|
62,917
|
|
|
69,089
|
|
|||
Corporate and Other
|
1,451
|
|
|
1,011
|
|
|
820
|
|
|||
Total
|
$
|
97,258
|
|
|
$
|
105,423
|
|
|
$
|
115,659
|
|
|
|
|
|
|
|
||||||
Segment EBITDA and reconciliation to income (loss) before income taxes:
|
|
|
|
|
|
||||||
Drainage Pipe & Products
|
$
|
171,413
|
|
|
$
|
156,735
|
|
|
$
|
129,618
|
|
Water Pipe & Products
|
84,424
|
|
|
64,547
|
|
|
47,587
|
|
|||
Corporate and Other
|
(74,219
|
)
|
|
(58,802
|
)
|
|
(44,870
|
)
|
|||
Less: Interest expense
|
(94,970
|
)
|
|
(78,337
|
)
|
|
(59,408
|
)
|
|||
Depreciation and amortization
|
(97,258
|
)
|
|
(105,423
|
)
|
|
(115,659
|
)
|
|||
Loss before income taxes
|
$
|
(10,610
|
)
|
|
$
|
(21,280
|
)
|
|
$
|
(42,732
|
)
|
|
|
|
|
|
|
||||||
Capital expenditures:
|
|
|
|
|
|
|
|
||||
Drainage Pipe & Products
|
$
|
23,096
|
|
|
$
|
27,761
|
|
|
|
||
Water Pipe & Products
|
14,246
|
|
|
18,529
|
|
|
|
||||
Corporate and Other
|
2,531
|
|
|
2,391
|
|
|
|
||||
Total
|
$
|
39,873
|
|
|
$
|
48,681
|
|
|
|
||
|
|
|
|
|
|
||||||
Total assets:
|
|
|
|
|
|
|
|
||||
Drainage Pipe & Products
|
$
|
819,373
|
|
|
$
|
800,454
|
|
|
|
||
Water Pipe & Products
|
862,542
|
|
|
922,162
|
|
|
|
||||
Corporate and Other
|
58,143
|
|
|
70,636
|
|
|
|
||||
Total
|
$
|
1,740,058
|
|
|
$
|
1,793,252
|
|
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Investment in equity method investee
|
$
|
50,034
|
|
|
$
|
50,607
|
|
|
|
|
Property, plant, and equipment, net:
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
United States
|
$
|
422,486
|
|
|
$
|
441,773
|
|
Canada
|
43,754
|
|
|
40,331
|
|
||
Mexico
|
9,335
|
|
|
10,063
|
|
||
|
$
|
475,575
|
|
|
$
|
492,167
|
|
Net Sales:
|
Year ended December 31,
|
|
Year ended December 31,
|
|
Year ended December 31,
|
||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
1,448,492
|
|
|
$
|
1,389,115
|
|
|
$
|
1,485,092
|
|
Canada
|
73,270
|
|
|
80,868
|
|
|
82,529
|
|
|||
Mexico
|
7,990
|
|
|
9,729
|
|
|
12,792
|
|
|||
|
$
|
1,529,752
|
|
|
$
|
1,479,712
|
|
|
$
|
1,580,413
|
|
|
|
|
Year ended December 31, 2019:
|
|
|
||||||||||||||
(in thousands, except per share amounts)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Net sales
|
|
$
|
291,858
|
|
|
$
|
410,219
|
|
|
$
|
464,526
|
|
|
$
|
363,149
|
|
Cost of goods sold
|
|
250,053
|
|
|
324,405
|
|
|
362,362
|
|
|
296,550
|
|
||||
Gross profit
|
|
41,805
|
|
|
85,814
|
|
|
102,164
|
|
|
66,599
|
|
||||
Income (loss) from continuing operations before taxes
|
|
(32,336
|
)
|
|
3,835
|
|
|
28,327
|
|
|
(10,436
|
)
|
||||
Net income (loss)
|
|
(25,039
|
)
|
|
2,954
|
|
|
22,430
|
|
|
(7,676
|
)
|
||||
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
(0.39
|
)
|
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
(0.12
|
)
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
(0.39
|
)
|
|
$
|
0.05
|
|
|
$
|
0.34
|
|
|
$
|
(0.12
|
)
|
Year ended December 31, 2018:
|
|
|
||||||||||||||
(in thousands, except per share amounts)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Net sales
|
|
$
|
289,960
|
|
|
$
|
416,087
|
|
|
$
|
434,510
|
|
|
$
|
339,155
|
|
Cost of goods sold
|
|
255,595
|
|
|
340,774
|
|
|
357,374
|
|
|
280,400
|
|
||||
Gross profit
|
|
34,365
|
|
|
75,313
|
|
|
77,136
|
|
|
58,755
|
|
||||
Income (loss) from continuing operations before taxes
|
|
(23,595
|
)
|
|
14,237
|
|
|
8,296
|
|
|
(20,218
|
)
|
||||
Net income (loss)
|
|
(19,910
|
)
|
|
6,994
|
|
|
5,503
|
|
|
(16,952
|
)
|
||||
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
(0.31
|
)
|
|
$
|
0.11
|
|
|
$
|
0.09
|
|
|
$
|
(0.27
|
)
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
(0.31
|
)
|
|
$
|
0.11
|
|
|
$
|
0.09
|
|
|
$
|
(0.27
|
)
|
|
Year ended
December 31, |
|
Year ended
December 31, |
|
Year ended
December 31, |
||||||
|
2019
|
|
2018
|
|
2017
|
||||||
SUPPLEMENTAL DISCLOSURES (in thousands):
|
|
|
|
|
|
||||||
Cash interest paid
|
$
|
77,086
|
|
|
$
|
69,381
|
|
|
$
|
54,676
|
|
Income taxes paid, net of refunds received
|
12,343
|
|
|
11,068
|
|
|
28,086
|
|
|||
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING DISCLOSURES:
|
|
|
|
|
|
||||||
Assets and liabilities acquired in non-cash exchange
|
—
|
|
|
18,140
|
|
|
—
|
|
|||
Capital lease obligation resulting from the sale-leaseback exchange transaction
|
—
|
|
|
(148,962
|
)
|
|
—
|
|
|||
Fair value changes of derivatives recorded in OCI, net of tax
|
—
|
|
|
970
|
|
|
(3,548
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
Karl Watson, Jr.
|
|
55
|
|
Chief Executive Officer, Director
|
Charles R. Brown, II
|
|
56
|
|
Executive Vice President and Chief Financial Officer
|
Richard Hunter
|
|
58
|
|
President, Drainage Pipe & Products
|
Vikrant Bhatia
|
|
42
|
|
President, Water Pipe & Products
|
Lori M. Browne
|
|
45
|
|
Executive Vice President, General Counsel and Corporate Secretary
|
Chris Meyer
|
|
49
|
|
Chairman of the Board, Director
|
Richard Cammerer, Jr.
|
|
46
|
|
Director
|
Rafael Colorado
|
|
42
|
|
Director
|
Maureen Harrell
|
|
40
|
|
Director
|
Chad Lewis
|
|
37
|
|
Director
|
Clint McDonnough
|
|
64
|
|
Director
|
John McPherson
|
|
51
|
|
Director
|
Jacques Sarrazin
|
|
70
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or Paid in Cash
|
|
Stock Awards (1)
|
|
All Other Compensation
|
|
Total
|
|||||||
Clint McDonnough
|
$
|
102,500
|
|
|
$
|
100,002
|
|
|
—
|
|
|
$
|
202,502
|
|
John McPherson
|
$
|
45,000
|
|
|
$
|
454,368
|
|
|
—
|
|
|
$
|
499,368
|
|
Jacques Sarrazin
|
$
|
82,500
|
|
|
$
|
100,002
|
|
|
—
|
|
|
$
|
182,502
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Title
|
Karl Watson, Jr.
|
|
Chief Executive Officer (1)
|
Charlie Brown
|
|
Executive Vice President, Chief Financial Officer
|
Richard Hunter
|
|
President, Drainage Pipe & Products(2)
|
Vikrant Bhatia
|
|
President, Water Pipe & Products(3)
|
Lori Browne
|
|
Executive Vice President, General Counsel & Corporate Secretary
|
Jeff Bradley
|
|
Former Chief Executive Officer(4)
|
(2)
|
Mr. Hunter served as our Chief Operating Officer until he assumed the position of President, Drainage Pipe & Products effective March 25, 2019.
|
(3)
|
Mr. Bhatia served as our Executive Vice President until he assumed the position of President, Water Pipe & Products effective March 25, 2019.
|
(4)
|
Mr. Bradley resigned his position as Chief Executive Officer effective June 30, 2019.
|
|
|
|
What We Do
|
|
What We Don't Do
|
ü Align pay to performance by ensuring a significant portion of executive compensation is tied to performance and not guaranteed
|
|
û No cash severance multiple in excess of one times base salary and target bonus
|
ü Enforce a robust insider trading policy, including prohibiting derivative or other hedging transactions with our shares
|
|
û No excise tax gross-ups
|
ü Provide minimal executive perquisites and executive benefits generally aligned to those available to all of our full-time employees
|
|
û No repricing or cash buyout of underwater stock options without stockholder approval
|
ü Separate the roles of Chairman and Chief Executive Officer
|
|
û No defined benefit pension plans or enhanced executive retirement formulas
|
ü Engage an independent compensation consultant
|
|
û No single-trigger change-in-control benefits
|
•
|
Align the base salary and incentive compensation of our executive officers to those of comparable companies of similar size in our industry to enable us to hire and retain skilled, experienced and talented individuals;
|
•
|
Focus a meaningful portion of our executive officers’ compensation on achieving financial metrics that are tied to the Company’s performance over both short-term and long-term horizons, thereby aligning their interests to those of our stockholders;
|
•
|
Recognize and reward individual excellence; and
|
•
|
Provide balanced incentives that motivate our executives to achieve our short-term and long-term goals without incentivizing executives to take excessive risks.
|
|
|
|
Element
|
|
Description
|
|
Objective
|
Base salary
|
|
Fixed level of annual cash compensation, reviewed annually.
|
|
Provides a competitive level of base pay designed to attract and retain qualified executives
|
Annual incentive compensation
|
|
Annual cash performance bonus payable based upon attainment of short-term objectives. The total target level of annual incentive compensation is set as a percentage of each individual’s base salary. Annual incentive awards are then earned based on (i) the achievement of financial metrics of the Company and/or one of its segments, and (ii) the achievement by that individual of certain individual goals established by the Compensation Committee, for our CEO, and established by our CEO for his direct-reports, including all other NEOs. Payment of annual incentive compensation can range from 0% to 200% of the targeted amount.
|
|
Motivates executives to drive performance and rewards executives for achievement in key areas of operational and financial performance.
|
Long-term equity incentives
|
|
The Compensation Committee may grant executives various types of equity awards. During 2019, our NEOs (other than Mr. Watson) were awarded non-qualified stock options and restricted stock units, each vesting ratably over a three-year period. At the time of his appointment, our CEO was granted performance-based restricted stock units that vest based on a combination of the achievement of specified targets for the price of our common stock as well as continued service.
|
|
Directly aligns our executives’ interests with those of our stockholders and incentivizes them to increase overall stockholder return and value as well as helps develop an ownership culture in the Company; Provides retentive value.
|
Long-term return-driven incentive compensation
|
|
Cash-based long term incentive plan established prior to our IPO and funded entirely by Forterra US Holdings, LLC, our majority stockholder, in which certain of our NEOs participate, entitling them to potential cash payouts upon designated liquidity events in which Lone Star realizes a specified internal rate of return on its investment in the Company.
|
|
Motivates and rewards executives for increasing Company value and serves to align executive compensation with our equity holders’ realized returns; Provides retentive value.
|
Benefits and perquisites
|
|
Participation in broad-based employee plans offered to our salaried, full-time employees generally, including a 401(k) plan Company match of up to 4% of covered compensation. Use of cars leased by the Company as part of its fleet lease program, together with a fuel card.
|
|
Provides competitive benefits and limited perquisites to attract and retain executives. Most of the benefits offered to our executives are similarly offered to all salaried U.S. employees.
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
2018 Annual Base Salary (as of year-end)
|
|
2019 Annual Base Salary(1)
|
Karl H. Watson, Jr.(2)
|
|
not applicable
|
|
$875,000
|
Charlie Brown
|
|
$500,000
|
|
$515,000
|
Richard Hunter
|
|
$365,000
|
|
$450,000
|
Vikrant Bhatia
|
|
$375,000
|
|
$425,000
|
Lori Browne
|
|
$375,000
|
|
$386,250
|
Jeff Bradley(3)
|
|
$825,000
|
|
$849,750
|
(1)
|
Reflects annual base salary at year end 2019 or the NEO's last date of employment with us.
|
(2)
|
Mr. Watson's position was effective July 1, 2019.
|
(3)
|
Mr. Bradley resigned his position effective June 30, 2019.
|
NEO
|
|
Target Bonus (as a percentage of annual base salary)
|
|
Potential Bonus (as a percentage of annual base salary)
|
Karl H. Watson, Jr.(1)
|
|
100%
|
|
200%
|
Charlie Brown
|
|
100%
|
|
200%
|
Richard Hunter
|
|
100%
|
|
200%
|
Vikrant Bhatia
|
|
75%
|
|
150%
|
Lori Browne
|
|
75%
|
|
150%
|
Jeff Bradley(2)
|
|
100%
|
|
200%
|
(1)
|
Mr. Watson’s employment with the Company began effective July 1, 2019. His annual incentive bonus was applied to his pro-rated base salary for the portion of 2019 during which he was employed with the Company.
|
(2)
|
Mr. Bradley’s employment with the Company terminated effective June 30, 2019. The payment of Mr. Bradley’s annual incentive payment for 2019 was included in his Separation Agreement, as more fully described above in the section entitled “Severance Agreements.”
|
|
|
|
NEO
|
|
Financial Metric (Company-wide Adjusted EBITDA(1))
|
|
Financial Metric (Segment-Specific Adjusted EBITDA)
|
|
Personal MBOs
|
Karl H. Watson, Jr.(2)
|
|
70%
|
|
|
|
30%
|
Charlie Brown
|
|
70%
|
|
|
|
30%
|
Richard Hunter(3)
|
|
20%
|
|
50%
|
|
30%
|
Vikrant Bhatia(3)
|
|
20%
|
|
50%
|
|
30%
|
Lori Browne
|
|
40%
|
|
|
|
60%
|
Jeff Bradley(4)
|
|
70%
|
|
|
|
30%
|
(1)
|
This non-GAAP measure reflects our overall Company or applicable segment Adjusted EBITDA, adjusted for AIP purposes to exclude the impact of a non-cash inventory valuation adjustment during 2019 related to our production planning process.
|
(2)
|
Mr. Watson’s employment with the Company began effective July 1, 2019. His annual incentive bonus was applied to his pro-rated base salary for the portion of 2019 during which he was employed with the Company.
|
(3)
|
The financial metrics governing the AIP for Messrs. Hunter and Bhatia are partially driven by our overall performance and partially driven by the performance of the segment each individual manages.
|
(4)
|
Mr. Bradley’s employment with the Company terminated effective June 30, 2019. The payment of Mr. Bradley’s annual incentive payment for 2019 was included in his Separation Agreement, as more fully described above in the section entitled “Severance Agreements.”
|
|
|
|
NEO
|
Individual Goals for 2019
|
Charlie Brown
|
•
Achieved discretionary debt reduction exceeding target of between $30 and $85 million
•
Enhanced productivity through standardization of processes, including control design efficiency, IT governance and priorities, and standardization of SKUs in Drainage
•
Achieved continuation of no material weaknesses in 2019
•
Reorganized Finance and IT structure to address succession planning needs and reduce costs through efficiencies
|
Richard Hunter
|
•
Successfully deployed salesforce across Drainage
•
Established baseline and implementation of metrics to measure customer service
•
Continue Drainage operational excellence roll out to a specified number of sites, impacting specified number of tons produced
•
Increased 2019 Inventory turns from 2018 levels
•
Achieved continuation of no material weaknesses in 2019
•
Provide a safe and healthy work environment by achieving safety rates that exceed prior year performance
•
Implemented talent development program for Drainage senior leadership
|
Vikrant Bhatia
|
•
Established baseline and implementation of metrics to measure customer service
•
Won back specified percentage of 2018 customer losses
•
Produced DIP with a scrap percentage lower than a specified rate
•
Executed outbound transportation optimization with a specified rate of on time deliveries
•
Achieved continuation of no material weaknesses in 2019
•
Provide a safe and healthy work environment by achieving safety rates that exceed prior year performance
•
Implemented succession and development plans from 2018 talent review
|
Lori Browne
|
•
Managed review, updating and alignment of Company terms and conditions for all lines of business, including alignment of credit terms corporate M&A strategy, including sale-leaseback swap deal
•
Managed all aspects of litigation efforts
•
Supported Company’s M&A efforts as well as sales of non-core assets
•
Achieved continuation of no material weaknesses in 2019
•
Developed and hosted training for executives and Board on key compliance and fiduciary duties
•
Developed and hosted training of sales force regarding antitrust and sales terms and conditions
|
Jeff Bradley
|
•
Discretionary debt reduction of between $30 and $85 million
•
Continue Drainage operational excellence roll out to a specified number of sites, reduce scrap rates in Water business
•
No material weaknesses in 2019
•
Provide a safe and healthy work environment by achieving safety rates that exceed prior year performance
|
NEO
|
|
Actual Bonus Payout
|
|
Percentage of Target
|
Karl H. Watson, Jr.(1)
|
|
$437,500
|
|
100%
|
Charlie Brown
|
|
$775,075
|
|
151%
|
Richard Hunter
|
|
$696,330
|
|
155%
|
Vikrant Bhatia
|
|
$383,584
|
|
120%
|
Lori Browne
|
|
$396,002
|
|
137%
|
(1)
|
Mr. Watson received a pro-rated annual incentive payment based on his service to us for only a portion of 2019 pursuant to the terms of his employment agreement, as described above in the section entitled "Employment Agreements."
|
|
|
|
•
|
Mr. Brown received 197,351 NQSOs and 88,690 RSUs,
|
•
|
Mr. Hunter received 162,914 NQSOs and 73,214 RSUs,
|
•
|
Mr. Bhatia received 121,854 NQSOs and 54,762 RSUs,
|
•
|
Ms. Browne received 133,775 NQSOs and 60,119 RSUs, and
|
•
|
Mr. Bradley received 723,179 NQSOs and 325,000 RSUs, which were forfeited on his subsequent termination.
|
|
|
|
•
|
Lone Star Fund IX (U.S.), L.P. and/or its affiliates sell, transfer or otherwise dispose of all or a portion of their direct and indirect ownership interests in Concrete Holdings or a respective successor entity (whether through a direct sale, merger, consolidation, reorganization, or other similar transaction) to an unrelated third party for cash;
|
•
|
A firm commitment underwritten public offering of the equity interests of Concrete Holdings or a respective successor entity is consummated that either (1) is registered under the Securities Act, or (2) results in such equity interests being admitted for trading on either the Main Market or the AIM market of the London Stock Exchange, in each case, where Lone Star Fund IX (U.S.), L.P. and/or its affiliates sell all or a portion of their direct and indirect ownership interests in Concrete Holdings or a respective successor entity, as applicable, in such offering; or
|
•
|
Forterra US Holdings pays any cash distributions to Lone Star Fund IX (U.S.), L.P. and/or its affiliates (including in connection with a sale of the assets of, or equity interests issued by, Concrete Holdings or a respective successor entity).
|
|
|
|
Cumulative IRR Achieved from Aggregate LE Cash Received
|
Percentage of the Incremental LE Profit Amount to Be Credited as LE Participation Amount
|
14.99% or less
|
0%
|
Over 15% up to 16.49%
|
2.50% of excess over 15%
|
Over 16.5% up to 17.99%
|
5.50% of excess over 16.5%
|
Over 18% up to 19.99%
|
7.00% of excess over 18%
|
Over 20% up to 22.99%
|
8.00% of excess over 20%
|
Over 23% up to 25.99%
|
9.00% of excess over 23%
|
Over 26% up to 28.99%
|
9.75% of excess over 26%
|
Over 29% up to 31.99%
|
10.00% of excess over 29%
|
Over 32% up to 34.99%
|
10.50% of excess over 32%
|
Over 35% up to 44.99%
|
12.25% of excess over 35%
|
Over 45%
|
5.00% of excess over 45%
|
•
|
the sum of the net cash proceeds from the event causing the liquidity event actually received by Forterra US Holdings, LLC’s direct and indirect equity owners net of transaction costs and expenses, or the LE Cash Received, plus all prior LE Cash Received (collectively with the current LE Cash Received, the Aggregate LE Cash Received), over
|
•
|
the beginning equity value (as defined in the LTIP) (such excess, the LE Profit Amount).
|
|
|
|
|
|
|
Name and Principal Position(1)
|
Year
|
Salary ($)(2)
|
Bonus($)(3)
|
Stock Awards ($)(4)
|
Option Awards ($)(5)
|
Non-Equity Incentive Plan Compensation($)(6)
|
All Other Compensation($)(7)
|
Total($)
|
|||||||
Karl H. Watson, Jr. Chief Executive Officer
|
2019
|
437,500
|
|
—
|
|
6,453,000
|
|
—
|
|
437,500
|
|
45,578
|
|
7,373,578
|
|
Charlie Brown
|
2019
|
511,265
|
|
—
|
|
310,427
|
|
298,000
|
|
775,075
|
|
13,580
|
|
1,908,347
|
|
Executive Vice President
|
2018
|
500,000
|
|
—
|
|
298,001
|
|
447,000
|
|
525,650
|
|
99,920
|
|
1,870,571
|
|
and Chief Financial Officer
|
2017
|
134,615
|
|
—
|
|
300,000
|
|
450,000
|
|
53,322
|
|
36,049
|
|
973,986
|
|
Richard Hunter
|
2019
|
430,385
|
|
—
|
|
310,427
|
|
246,114
|
|
696,330
|
|
13,154
|
|
1,696,410
|
|
President, Drainage Pipe & Products
|
|
|
|
|
|
|
|
|
|||||||
Vikrant Bhatia
|
2019
|
413,462
|
|
—
|
|
232,191
|
|
184,085
|
|
383,584
|
|
13,232
|
|
1,226,554
|
|
President, Water Pipe & Products
|
2018
|
375,000
|
|
35,000
|
|
184,000
|
|
276,000
|
|
334,997
|
|
9,605
|
|
1,214,602
|
|
Lori Browne
|
2019
|
383,453
|
|
—
|
|
254,905
|
|
202,094
|
|
396,002
|
|
29,679
|
|
1,266,133
|
|
Executive Vice President
|
2018
|
368,761
|
|
—
|
|
181,798
|
|
272,701
|
|
345,965
|
|
29,680
|
|
1,198,905
|
|
and General Counsel
|
2017
|
327,502
|
|
—
|
|
157,501
|
|
105,002
|
|
244,125
|
|
32,305
|
|
866,435
|
|
Jeff Bradley
|
2019
|
418,696
|
|
—
|
|
1,378,000
|
|
1,092,507
|
|
|
13,232
|
|
2,902,435
|
|
|
Former Chief
|
2018
|
825,000
|
|
—
|
|
1,002,798
|
|
1,504,199
|
|
734,911
|
|
14,999
|
|
4,081,907
|
|
Executive Officer
|
2017
|
818,750
|
|
—
|
|
1,125,011
|
|
750,005
|
|
111,375
|
|
24,392
|
|
2,829,533
|
|
(1)
|
Current position held by the NEOs as of February 27, 2020 except for Mr. Bradley, who was our Chief Executive Officer from September 1, 2015 through June 30, 2019.
|
(2)
|
Includes elective deferrals into our 401(k) plan.
|
(3)
|
Represents one-time payment to recognize Mr. Bhatia’s acceptance of responsibility for and contributions to the commercial team of our Water Pipe & Products segment during the third and fourth quarters of 2018.
|
(4)
|
Represents the aggregate grant date fair value of performance-based restricted stock unit, restricted stock unit and restricted stock awards granted to each of the NEOs in accordance with Accounting Standards Codification (ASC) 718 and Item 402 of Regulation S-K. For additional information on the assumptions used in determining fair value for share-based compensation, refer to Notes 2 and 19 in our Consolidated Financial Statements. Also see the “2019 Grants of Plan-Based Awards” table below for additional information on these awards.
|
(5)
|
Represents the aggregate grant date fair value of stock options granted to each of the NEOs in accordance with ASC 718 and Item 402 of Regulation S-K. The amounts reflect the fair market value at the date of grant for these awards based on a binomial value using the Black-Scholes valuation model. See the “2019 Grants of Plan-Based Awards” table below for information on these awards. The binomial value assigned to an option as of each grant date is as follows:
|
Date of Grant
|
|
NEO
|
|
Option Value
|
March 14, 2019
|
|
Messrs. Brown, Hunter, Bhatia, Bradley and Ms. Browne
|
|
$1.51
|
March 1, 2018
|
|
Messrs. Brown, Bhatia, Bradley and Ms. Browne
|
|
$2.53
|
September 25, 2017
|
|
Mr. Brown
|
|
$1.66
|
March 20, 2017
|
|
Ms. Browne and Mr. Bradley
|
|
$7.25
|
(6)
|
These amounts reflect payments under our Annual Incentive Plan.
|
(7)
|
The “All Other Compensation” column for 2019 includes, as applicable for each NEO: (a) Company contributions under our 401(k) plan with respect to such period, (b) amounts paid to lease a Company vehicle under our fleet lease program
|
|
|
|
NEO
|
Company Contributions to 401(k) Plan
|
Company Vehicle Payments
|
Relocation Payments / Allowance
|
Tax Gross Up for Relocation Payments
|
Group Life Insurance Premiums
|
Separation Payments and Benefits
|
||||
Karl H. Watson, Jr.
|
|
—
|
|
$27,064
|
$17,804
|
$710
|
—
|
|
||
Charlie Brown
|
$11,200
|
—
|
|
—
|
|
—
|
|
$2,380
|
—
|
|
Richard Hunter
|
$11,200
|
—
|
|
—
|
|
—
|
|
$1,954
|
—
|
|
Vikrant Bhatia
|
$11,200
|
—
|
|
—
|
|
—
|
|
$435
|
—
|
|
Lori Browne
|
$11,200
|
$18,297
|
—
|
|
—
|
|
$383
|
—
|
|
|
Jeff Bradley
|
$11,200
|
—
|
|
—
|
|
—
|
|
$2,032
|
$3,066,188
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
|
All Other Stock Awards: Number of Shares of Stock or Units
(#)(2)
|
All Other Option Awards: Number of Securities Underlying Options (#)(3)
|
Exercise or Base Price of Option Awards ($/Share)(4)
|
Grant Date Fair Value of Stock and Option Awards
($)(5)
|
|||||||||
Name
|
Type of Award
|
Grant Date
|
Threshold ($)
|
Target ($)
|
Maximum ($)(1)
|
|||||||||||
Karl H. Watson, Jr.(6)
|
Annual Incentive Plan
|
|
437,500
|
875,000
|
|
1,750,000
|
|
|
|
|
|
|||||
|
Performance-Based Restricted Stock Units
|
7/1/2019
|
|
|
|
1,350,000
|
|
|
|
6,453,000
|
|
|||||
Charlie Brown
|
Annual Incentive Plan
|
|
257,500
|
515,000
|
|
1,030,000
|
|
|
|
|
|
|||||
|
Restricted Stock Units
|
3/14/2019
|
|
|
|
88,690
|
|
|
|
376,046
|
|
|||||
|
Stock Options
|
3/14/2019
|
|
|
|
|
197,351
|
|
$
|
4.24
|
|
298,138
|
|
|||
Richard Hunter
|
Annual Incentive Plan
|
|
225,000
|
450,000
|
|
900,000
|
|
|
|
|
|
|||||
|
Restricted Stock Units
|
3/14/2019
|
|
|
|
73,214
|
|
|
|
310,427
|
|
|||||
|
Stock Options
|
3/14/2019
|
|
|
|
|
162,914
|
|
$
|
4.24
|
|
246,114
|
|
|||
Vikrant Bhatia
|
Annual Incentive Plan
|
|
159,375
|
318,750
|
|
637,500
|
|
|
|
|
|
|||||
|
Restricted Stock Units
|
3/14/2019
|
|
|
|
54,762
|
|
|
|
232,191
|
|
|||||
|
Stock Options
|
3/14/2019
|
|
|
|
|
121,854
|
|
$
|
4.24
|
|
184,085
|
|
|||
Lori Browne
|
Annual Incentive Plan
|
|
144,844
|
289,688
|
|
579,375
|
|
|
|
|
|
|||||
|
Restricted Stock Units
|
3/14/2019
|
|
|
|
60,119
|
|
|
|
254,905
|
|
|||||
|
Stock Options
|
3/14/2019
|
|
|
|
|
133,775
|
|
$
|
4.24
|
|
202,094
|
|
|||
Jeff Bradley(7)
|
Annual Incentive Plan
|
|
424,875
|
849,750
|
|
1,699,500
|
|
|
|
|
|
|||||
|
Restricted Stock Units
|
3/14/2019
|
|
|
|
325,000
|
|
|
|
1,378,000
|
|
|||||
|
Stock Options
|
3/14/2019
|
|
|
|
|
723,179
|
|
$
|
4.24
|
|
1,092,507
|
|
(1)
|
Our Annual Incentive Plan contemplates a maximum potential award as shown above, but also permits the Compensation Committee to grant discretionary additional bonuses in excess of this amount in order to recognize exceptional Company and individual performance.
|
(2)
|
Reflects performance-based restricted stock units, or PRSUs, granted to Mr. Watson and restricted stock units granted to Messrs. Brown, Hunter, Bhatia, Bradley and Ms. Browne in 2019. For Mr. Watson's award, unless an award is forfeited prior to vesting, the performance based restricted stock units is split into five equal tranches of 270,000 restricted stock units, and 25% of each tranche vests upon the twenty-day volume weighted average trading price for our common stock equaling or exceeding a specified threshold, while the remaining 75% of each tranche vests on the first anniversary of the initial 25% vesting of the tranche. For the remainder of the awards, unless forfeited prior to vesting, the restricted stock units vest in approximately one-third increments on each of the first, second, and third anniversary of the grant date.
|
(3)
|
Reflects the number of non-qualified stock options granted in 2019. Unless an award is forfeited prior to vesting, option awards generally have a 10-year term and become exercisable annually over three years from the grant date in equal approximately 1/3 increments.
|
(4)
|
The closing price of Forterra, Inc. common stock per share on Grant Date.
|
(5)
|
Represents the fair value (at grant date) of stock options, PRSUs and RSUs granted to NEOs in 2019 in accordance with ASC 718. See footnotes 4 and 5 to the Summary Compensation Table above.
|
(6)
|
Mr. Watson was eligible for a pro-rated annual incentive payment based on his service to us commencing July 1, 2019 per his employment agreement.
|
(7)
|
Mr. Bradley forfeited all of the restricted stock units and option awards reported in this table upon the termination of his employment on June 30, 2019 and received a pro-rated annual incentive payment based on the portion of 2019 during which he was employed by the Company.
|
|
|
|
|
Option Awards
|
Stock Awards
|
||||||||
Number of Securities Underlying Unexercised Option
(#)
Exercisable
|
Number of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Option Exercise Price
($)
|
Option Expiration Date
|
Number of Shares or Units of Stock That Have Not Vested
(#)
|
Market Value of Shares or Units of Stock That Have Not Vested
($)
|
|||||
Karl H. Watson, Jr.
|
|
|
|
|
1,147,500(1)
|
|
13,265,100
|
|
||
Charlie Brown
|
0
58,887 |
|
197,351(2)
117,793(3) |
|
4.24
7.29 |
03/14/2029
03/01/2028
|
88,690(4)
27,254(5) |
|
1,025,256
315,056 |
|
|
180,704
|
|
90,380(6)
|
|
4.23
|
9/25/2027
|
23,646(7)
|
|
273,348
|
|
Richard Hunter
|
0
23,004
|
|
162,914(2)
46,016(8)
|
|
4.24
9.23
|
03/14/2029
06/11/2028
|
73,214(4)
10,835(9)
|
|
846,354
125,253
|
|
Vikrant Bhatia
|
0
36,360
|
|
121,854(2)
72,731(3)
|
|
4.24
7.29
|
03/14/2029
03/01/2028
|
54,762(4)
16,828(5)
|
|
633,049
194,532
|
|
|
21,975
22,920
|
|
10,992(10)
11,464(12)
|
|
9.16
8.92
|
12/12/2027
08/07/2027
|
2,912(11)
2,991(13)
|
|
33,663
34,576
|
|
Lori Browne
|
0
35,925
|
|
133,775(2)
71,862(3)
|
|
4.24
7.29 |
03/14/2029
03/01/2028
|
60,119(4)
16,627(5)
|
|
694,976
192,208
|
|
|
9,654
16,410
|
|
4,829(14)
5,470(16)
|
|
18.96
18.00
|
03/20/2027
10/19/2026
|
2,770(15)
2,188(17)
|
|
32,021
25,293
|
|
Jeff Bradley(18)
|
—
|
|
—
|
|
n/a
|
n/a
|
—
|
|
—
|
|
(1)
|
Represents performance-based restricted stock units, 540,000 units of which the performance condition had not been met at December 31, 2019 and the vesting dates for the remaining units, in the amount of 202,500 shares each, are expected to occur 9/18/2020, 11/5/2020 and 11/25/2020.
|
(2)
|
Options vest annually in approximately equal increments of 1/3 with remaining vesting dates of 3/14/2020, 3/14/2021 and 3/14/2022.
|
(3)
|
Options vest annually in approximately equal increments of 1/3 with remaining vesting dates of 3/1/2020 and 3/1/2021.
|
(4)
|
These restricted stock units vest in approximately equal increments of 1/3 each on the first, second and third anniversaries of the Grant Date. The remaining vesting dates for these units are 3/14/2020, 3/14/2021, and 3/14/2022.
|
(5)
|
These restricted stock units vest in approximately equal increments of 1/3 each on the first, second and third anniversaries of the Grant Date. The remaining vesting date for these units is 3/1/2020.
|
(6)
|
Options vest annually in approximately equal increments of 1/3 with a remaining vesting date of 9/25/2020.
|
(7)
|
These shares of restricted stock vest in equal increments of 1/3 each on the first, second and third anniversaries of the Grant Date. The remaining vesting date for these shares is 9/25/2020.
|
(8)
|
Options vest annually in approximately equal increments of 1/3 with remaining vesting dates of 6/11/2020 and 6/11/2021.
|
(9)
|
These shares of restricted stock vest in equal increments of 1/3 each on the first, second and third anniversaries of the Grant Date. The remaining vesting dates for these shares are 6/11/2020 and 6/11/2021.
|
(10)
|
Options vest annually in approximately equal increments of 1/3 with a remaining vesting date of 12/12/2020.
|
(11)
|
These restricted stock units vest in approximately equal increments of 1/3 each on the first, second and third anniversaries of the Grant Date. The remaining vesting date for these restricted stock units is 12/12/2020.
|
(12)
|
Options vest annually in approximately equal increments of 1/3 with a remaining vesting date of 8/7/2020.
|
(13)
|
These shares of restricted stock vest in approximately equal increments of 1/3 each on the first, second and third anniversaries of the Grant Date. The remaining vesting date for these shares is 8/7/2020.
|
(14)
|
Options vest annually in approximately equal increments of 1/3 with a remaining vesting date of 3/20/2020.
|
(15)
|
These shares of restricted stock vest in equal increments of 1/3 each on the first, second and third anniversaries of the Grant Date. The remaining vesting date for these shares is 3/20/2020.
|
(16)
|
Options vest annually in 25% increments with a remaining vesting date of 10/19/2020.
|
|
|
|
(17)
|
These shares of restricted stock vest in increments of 25% each on the first, second, third and fourth anniversaries of the Grant Date. The remaining vesting date for these shares is 10/19/2020.
|
(18)
|
Mr. Bradley forfeited all of his unvested options and unvested restricted stock and restricted stock units upon his voluntary resignation of his employment effective 6/30/2019. Under the terms of the 2016 Stock Incentive Plan and the 2018 Stock Incentive Plan, any remaining unexercised options were canceled on 9/30/2019.
|
|
|
Option Awards
|
|
Stock Awards
|
||||
Name
|
|
Number of Shares Acquired on Exercise
(#)(1)
|
|
Value
Realized on Exercise
($)
|
|
Number of Shares Acquired on Vesting
(#)
|
|
Value
Realized on Vesting
($)
|
Karl H. Watson, Jr.(1)
|
|
—
|
|
—
|
|
202,500
|
|
1,997,325
|
Charlie Brown(2)
|
|
—
|
|
—
|
|
37,262
|
|
244,528
|
Richard Hunter(3)
|
|
—
|
|
—
|
|
5,416
|
|
26,863
|
Vikrant Bhatia(4)
|
|
—
|
|
—
|
|
14,312
|
|
92,749
|
Lori Browne(5)
|
|
—
|
|
—
|
|
13,268
|
|
72,813
|
Jeff Bradley(6)
|
|
175,822
|
|
29,444
|
|
65,625
|
|
324,278
|
(1)
|
The number of shares acquired on vesting and value realized on vesting reflects the combined total of the 67,500 performance-based restricted stock units that vested with a closing market price of $7.70 on September 18, 2019, the 67,500 performance-based restricted stock units that vested with a closing market price of $10.95 on November 5, 2019, and the 67,500 performance-based restricted stock units that vested with a closing market price of $10.94 on November 25, 2019.
|
(2)
|
The number of shares acquired on vesting and value realized on vesting reflects the 13,624 restricted stock units that vested with a closing market price of $5.30 on March 1, 2019 and the 23,638 shares of restricted stock that vested with a closing market price of $7.29 on September 25, 2019.
|
(3)
|
The number of shares acquired on vesting and value realized on vesting reflects the 5,416 restricted stock units that vested with a closing market price of $4.96 on June 11, 2019.
|
(4)
|
The number of shares acquired on vesting and value realized on vesting reflects the combined total of the 8,412 restricted stock units that vested with a closing market price of $5.30 on March 1, 2019, the 2,989 shares of restricted stock that vested with a closing market price of $5.82 on August 7, 2019, and the 2,911 restricted stock units that vested with a closing market price of $10.57 on December 12, 2019.
|
(5)
|
The number of shares acquired on vesting and value realized on vesting reflects the combined total of the 8,311 restricted stock units that vested with a closing market price of $5.30 on March 1, 2019, the 2,769 shares of restricted stock that vested with a closing market price of $4.11 on March 20, 2019 and the 2,188 shares of restricted stock that vested with a closing market price of $7.95 on October 18, 2019.
|
(6)
|
The number of options exercised and value realized on exercise reflects the combined total of 106,577 options exercised at $7.51 on September 18, 2019, a total of 13,299 options exercised at the weighted-average exercise price of $7.40 on September 26, 2019, a total of 28,052 options exercised at the weighted-average exercise price of $7.40 on September 27, 2019, a total of 27,894 options exercised at the weighted-average exercise price of $7.34 on September 30, 2019. The number of shares acquired on vesting and value realized on vesting reflects the combined total of the 45,848 restricted stock units that vested with a closing market price of $5.30 on March 1, 2019 and the 19,777 shares of restricted stock that vested with a closing market price of $4.11 on March 20, 2019.
|
|
|
|
|
|
Base Salary
Continuation
|
|
Pro-rated
2019 Annual Bonus
|
|
Health Care Coverage Continuation (1)
|
|
Performance-Based RSUs
(2)
|
|
Total
|
Termination without Cause or Resignation for Good Reason not in connection with a Change in Control
|
|
$875,000
|
|
$437,500
|
|
$15,723
|
|
$7,022,700
|
|
$8,350,923
|
Termination without Cause in connection with Retirement
|
|
$875,000
|
|
$437,500
|
|
$15,723
|
|
$975,375
|
|
$2,303,598
|
Termination without Cause in connection with a Change in Control
|
|
$875,000
|
|
$437,500
|
|
$15,723
|
|
$13,265,100
|
|
$14,593,323
|
Death or Disability
|
|
n/a
|
|
$437,500
|
|
n/a
|
|
$7,022,700
|
|
$7,460,200
|
(1)
|
Based on applicable COBRA rates in effect under our group health plan as of December 31, 2019.
|
(2)
|
As of December 31, 2019, 202,500 performance-based restricted stock units, or PRSUs, granted on July 1, 2019 had vested according to the terms of the award agreement. However, in the event of a termination without cause or due to death, disability all of Mr. Watson’s unvested PRSUs for which the applicable performance targets had been achieved prior to the date of termination would have become vested on the date of termination and all unvested PRSUs for which the applicable performance target had not been achieved would have been forfeited and canceled as of the date of termination. In the event of a termination due to Mr. Watson's retirement, a pro-rated portion of the unvested PRSUs for which the applicable performance targets had been achieved prior to the date of termination would have become vested on the date of termination, such pro-rated portion to be determined by multiplying the unvested shares by a formula involving the number of months of service to us after achievement of the applicable performance target, and all other
|
|
|
|
|
|
Base Salary
Continuation
|
|
Pro-rated
2019 Annual Bonus
|
|
Health Care Coverage Continuation (1)
|
|
Stock Options, RSUs and
Restricted Shares
(2)
|
|
Total
|
Termination without Cause or Resignation for Good Reason not in Connection with a Change in Control
|
|
$515,000
|
|
$775,075
|
|
$15,723
|
|
All unvested awards are forfeited
|
|
$1,305,798
|
Termination without Cause in Connection with a Change in Control
|
|
$515,000
|
|
$775,075
|
|
$15,723
|
|
$5,799,739
|
|
$7,105,537
|
Death or Disability
|
|
n/a
|
|
$775,075
|
|
n/a
|
|
$5,799,739
|
|
$6,574,814
|
(1)
|
Based on applicable COBRA rates in effect under our group health plan as of December 31, 2019.
|
(2)
|
As of December 31, 2019, two-thirds of the stock options and restricted shares granted on September 25, 2017 had vested and one-third of the stock options and restricted shares granted on March 1, 2018 had vested according to the terms of the award agreements, and none of the stock options and restricted stock granted on March 14, 2019 had vested. However, in the event of a termination as a result of retirement, death, disability or without cause within 24 months of a change in control all of Mr. Brown’s unvested stock options and restricted shares would have accelerated. The value included above reflects the number of shares that would have accelerated multiplied by the closing price per share of our common stock of $11.56 on December 31, 2019, the last trading day of our fiscal year, less the relevant exercise price (in the case of stock options).
|
|
|
|
|
|
Base Salary
Continuation
|
|
Pro-rated
2019 Annual Bonus
|
|
Health Care Coverage Continuation (1)
|
|
Stock Options and RSUs
(2)
|
|
Total
|
Termination without Cause or Resignation for Good Reason not in Connection with a Change in Control
|
|
$450,000
|
|
$696,330
|
|
$15,723
|
|
All unvested awards are forfeited
|
|
$1,162,053
|
Termination without Cause in Connection with a Change in Control
|
|
$450,000
|
|
$696,330
|
|
$15,723
|
|
$2,271,354
|
|
$3,433,407
|
Death or Disability
|
|
n/a
|
|
$696,330
|
|
n/a
|
|
$2,271,354
|
|
$2,967,684
|
(1)
|
Based on applicable COBRA rates in effect under our group health plan as of December 31, 2019.
|
(2)
|
As of December 31, 2019, one-third of the stock options and restricted shares granted on June 11, 2018 had vested according to the terms of the award agreements and none of the stock options and restricted stock granted on March 14, 2019 had vested. However, in the event of a termination as a result of retirement, death, disability or without cause within 24 months of a change in control all of Mr. Richard Hunter’s unvested stock options and restricted shares would have accelerated. The value included above reflects the number of shares that would have accelerated multiplied by the closing price per share of our common stock of $11.56 on December 31, 2019, the last trading day of our fiscal year, less the relevant exercise price (in the case of stock options).
|
|
|
|
|
|
Base Salary
Continuation
|
|
Pro-rated
2019 Annual Bonus
|
|
Health Care Coverage Continuation (1)
|
|
Stock Options, RSUs and
Restricted Shares
(2)
|
|
Total
|
Termination without Cause or Resignation for Good Reason not in Connection with a Change in Control
|
|
$425,000
|
|
$383,584
|
|
$15,723
|
|
All unvested awards are forfeited
|
|
$824,307
|
Termination without Cause in Connection with a Change in Control
|
|
$425,000
|
|
$383,584
|
|
$15,723
|
|
$2,423,503
|
|
$3,247,810
|
Death or Disability
|
|
n/a
|
|
$383,584
|
|
n/a
|
|
$2,423,503
|
|
$2,807,087
|
(1)
|
Based on applicable COBRA rates in effect under our group health plan as of December 31, 2019.
|
(2)
|
As of December 31, 2019, two-thirds of the stock options and restricted shares granted on August 7, 2017 and December 12, 2017 had vested, one-third of the stock options and restricted shares granted on March 1, 2018 had vested according to the terms of the award agreements and none of the stock options and restricted stock granted on March 14, 2019 had vested. However, in the event of a termination as a result of death, disability or without cause within 24 months of a change in control all of Mr. Bhatia’s unvested stock options and restricted shares would have accelerated. The value included above reflects the number of shares that would have accelerated multiplied by the closing price per share of our common stock of $11.56 on December 31, 2019, the last trading day of our fiscal year, less the relevant exercise price (in the case of stock options).
|
|
|
|
|
|
Base Salary
Continuation
|
|
Pro-rated 2019 Annual Bonus
|
|
Health
Care Coverage Continuation (1)
|
|
Stock Options, RSUs and Restricted Shares (2)
|
|
LTIP Units
(3)
|
|
Total
|
Termination without Cause or Resignation for Good Reason not in Connection with a Change in Control
|
|
$386,250
|
|
$396,002
|
|
n/a
|
|
All unvested awards are forfeited
|
|
Remain Outstanding through June 30, 2020
|
|
$782,252
|
Termination without Cause in Connection with a Change in Control
|
|
$386,250
|
|
$396,002
|
|
n/a
|
|
$2,383,982
|
|
Remain Outstanding through June 30, 2020
|
|
$3,166,234
|
Death or Disability
|
|
n/a
|
|
$396,002
|
|
n/a
|
|
$2,383,982
|
|
n/a
|
|
$2,779,984
|
(1)
|
Ms. Browne does not currently participate in our group health plan.
|
(2)
|
As of December 31, 2019, 75% of the stock options and restricted shares granted on October 19, 2016 had vested, two-thirds of the stock options and restricted shares granted on March 20, 2017 had vested, one-third of the stock options and restricted stock units granted March 1, 2018 had vested and none of the stock options and restricted stock units granted March 14, 2019 had vested according to the terms of the award agreements. However, in the event of a termination as a result of death, disability or without cause within 24 months of a change in control all of Ms. Browne’s unvested stock options and restricted shares would have accelerated. The value included above reflects the number of shares that would have accelerated multiplied by the closing price per share of our common stock of $11.56 on December 31, 2019, the last trading day of our fiscal year, less the relevant exercise price (in the case of stock options).
|
(3)
|
Had she been terminated on December 31, 2019, the 17,500 pool units granted to Ms. Browne would have remained outstanding through June 30, 2020 under the terms of her LTIP Award Agreement.
|
|
|
Lump Sum Payment
|
|
Pro-rated 2019 Annual Bonus
|
|
Lump Sum Payment (representing one year of base salary and performance bonus)
|
|
Health
Care Coverage Continuation
|
|
Stock Options, RSUs and Restricted Shares
|
|
LTIP Units
|
|
Total
|
Termination without Cause or Resignation for Good Reason not in Connection with a Change in Control
|
|
$875,000
|
|
$433,904
|
|
$1,750,000
|
|
$14,568
|
|
All unvested awards are forfeited
|
|
105,000 Vested Units Remain Outstanding through July 8, 2021
|
|
$3,073,472
|
|
|
|
Plan Category
|
|
(a) Number of Securities
to Be Issued Upon
Exercise of
Outstanding Options, Warrants and Rights
|
|
(b) Weighted Average
Exercise Price of
Outstanding Options, Warrants and Rights
|
|
(c) Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column(a))
|
||||
Equity compensation plans approved by security holders
|
|
3,673,096
|
|
|
$
|
6.50
|
|
|
3,282,574
|
|
|
|
|
Name of Beneficial Owner
|
Shares of Common Stock
|
Percentage of Total Outstanding Common Stock (%)
|
||
5% Stockholder and Selling Stockholder
|
|
|
||
Forterra US Holdings, LLC(1)
|
45,107,250
|
|
69.6%
|
|
Named Executive Officers
|
|
|
||
Karl H. Watson, Jr.(2)
|
507,265
|
|
*
|
|
Charlie Brown(3)
|
528,740
|
|
*
|
|
Richard Hunter(4)
|
105,809
|
|
*
|
|
Vikrant Bhatia(5)
|
250,277
|
|
*
|
|
Lori Browne(6)
|
217,171
|
|
*
|
|
Jeff Bradley(7)
|
195,184
|
|
*
|
|
Directors
|
|
|
||
Richard “Chip” Cammerer, Jr.(8)
|
—
|
|
—
|
|
Rafael Colorado(8)
|
—
|
|
—
|
|
Maureen Harrell(8)
|
—
|
|
—
|
|
Chad Lewis(8)
|
—
|
|
—
|
|
Clint McDonnough(9)
|
43,712
|
|
*
|
|
John McPherson(9)
|
45,161
|
|
*
|
|
Chris Meyer(8)
|
62,500
|
|
*
|
|
Jacques Sarrazin(9)
|
16,041
|
|
*
|
|
All directors and executive officers as a group (14 persons)(10)
|
1,971,860
|
|
3.0%
|
|
(1)
|
Forterra US Holdings, LLC, a Delaware limited liability company, is wholly owned by LSF9 Stardust Holdings, L.P., a Bermuda exempted limited partnership, which is controlled by its general partner, LSF9 Stardust GP, LLC, a Delaware limited liability company, which is wholly owned by Lone Star Fund IX (U.S.), L.P., a Delaware limited partnership, which is controlled by its general partner, Lone Star Partners IX, L.P., a Bermuda exempted limited partnership, which is controlled by its general partner, Lone Star Management Co. IX, Ltd., a Bermuda limited exempted company, which is controlled by its sole owner (shareholder) John P. Grayken. The address for such persons is 2711 North Haskell Avenue, Suite 1700, Dallas, Texas 75204.
|
(2)
|
Mr. Watson is also a Director.
|
(3)
|
Includes options to purchase 364,261 shares of common stock and 43,188 restricted stock units that have vested or will vest within 60 days of the Determination Date.
|
(4)
|
Includes options to purchase 77,308 shares of common stock and 24,404 restricted stock units that have vested or will vest within 60 days of the Determination Date.
|
(5)
|
Includes options to purchase 158,233 shares of common stock and 26,666 restricted stock units that have vested or will vest within 60 days of the Determination Date.
|
(6)
|
Includes options to purchase 147,334 shares of common stock and 28,351 restricted stock units that have vested or will vest within 60 days of the Determination Date.
|
(7)
|
Based on information available to us as of the Determination Date.
|
(8)
|
Owns interests in entities which own direct or indirect non-controlling interests in Forterra US Holdings, LLC and therefore expressly disclaims any beneficial ownership of our common stock owned by Forterra US Holdings, LLC.
|
(9)
|
Includes options to purchase 2,810 shares of common stock that have vested.
|
(10)
|
Includes 755,566 options to purchase common stock and 122,609 restricted stock units that have vested
|
|
|
|
|
|
|
•
|
we will pay state and local taxes at a rate of 5%, even though our actual effective state and local tax rate may be materially lower;
|
•
|
tax benefits existing at the time of our IPO are deemed to be utilized before any post-closing/after- acquired tax benefits;
|
•
|
a non-taxable transfer of assets by us to a non-consolidated entity is treated under the tax receivable agreement as a taxable sale at fair market value; and
|
•
|
a taxable sale or other taxable transfer of subsidiary stock by us is (in cases where the subsidiary’s tax basis in its assets exceeds our tax basis in the subsidiary’s stock) treated under the tax receivable agreement as a taxable sale of the subsidiary’s assets.
|
|
|
|
|
|
|
|
2019
|
2018
|
||||
|
(in thousands)
|
|||||
Audit fees(1)
|
$
|
3,886
|
|
$
|
5,527
|
|
Audit-related fees(2)
|
$
|
94
|
|
$
|
401
|
|
Tax fees
|
__
|
|
__
|
|
||
All other fees
|
__
|
|
__
|
|
||
TOTAL
|
$
|
3,980
|
|
$
|
5,928
|
|
|
|
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
|
|
|
|
2.1+
|
|
(a)
|
|
|
|
|
|
|
|
2.2
|
|
(a)
|
|
|
|
|
|
|
|
2.3
|
|
(a)
|
|
|
|
|
|
|
|
2.4+
|
|
(a)
|
|
|
|
|
|
|
|
2.5+
|
|
(a)
|
|
|
|
|
|
|
|
2.6+
|
|
(a)
|
|
|
|
|
|
|
|
3.1
|
|
(d)
|
|
|
|
|
|
|
|
3.2
|
|
(b)
|
|
|
|
|
|
|
|
4.1
|
|
(b)
|
|
|
|
|
|
|
|
4.2
|
|
(e)
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
(l)
|
|
|
|
|
|
|
|
10.2
|
|
(l)
|
|
|
|
|
|
|
|
10.3
|
|
(a)
|
|
|
|
|
|
|
|
10.4
|
|
(e)
|
|
|
|
|
|
|
|
10.5
|
|
(b)
|
|
|
|
|
|
|
|
10.6#
|
|
(a)
|
|
|
|
|
|
|
|
10.7#
|
|
(a)
|
|
|
|
|
|
|
|
10.8#
|
|
(h)
|
|
|
|
|
|
|
|
10.9#
|
|
(g)
|
|
|
|
|
|
|
|
10.10#
|
|
(c)
|
|
|
|
|
|
|
|
10.11#
|
|
(c)
|
|
|
|
|
|
|
|
10.12#
|
|
(c)
|
|
|
|
|
|
|
|
10.13#
|
|
(c)
|
|
|
|
|
|
|
|
10.14#
|
|
(c)
|
|
|
|
|
|
|
|
10.15#
|
|
(m)
|
|
|
|
|
|
|
|
10.16
|
|
(f)
|
|
|
|
|
|
|
|
10.17
|
|
(f)
|
|
|
|
|
|
|
|
10.18
|
|
(i)
|
|
|
|
|
|
|
|
10.19#
|
|
(j)
|
|
|
|
|
|
|
|
10.20#
|
|
(k)
|
|
|
|
|
|
|
|
|
|
|
10.21#
|
|
(n)
|
|
|
|
|
|
|
|
10.22#
|
|
(n)
|
|
|
|
|
|
|
|
10.23#
|
|
(o)
|
|
|
|
|
|
|
|
10.24#
|
|
*
|
|
|
|
|
|
|
|
10.25#
|
|
*
|
|
|
|
|
|
|
|
10.26#
|
|
*
|
|
|
|
|
|
|
|
10.27#
|
|
*
|
|
|
|
|
|
|
|
21.1
|
|
*
|
|
|
|
|
|
|
|
23.1
|
|
*
|
|
|
|
|
|
|
|
23.2
|
|
*
|
|
|
|
|
|
|
|
31.1
|
|
*
|
|
|
|
|
|
|
|
31.2
|
|
*
|
|
|
|
|
|
|
|
32.1
|
|
^
|
|
|
|
|
|
|
|
99.1
|
|
*
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
*
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
*
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Calculation Linkbase Document.
|
*
|
|
101.DEF
|
|
XBRL Taxonomy Definition Linkbase Document.
|
*
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Label Linkbase Document.
|
*
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Presentation Linkbase Document.
|
*
|
|
|
|
|
*
|
Filed herewith
|
#
|
Denotes management compensatory plan or arrangement
|
+
|
Certain schedules to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedules will be furnished supplementally to the SEC upon request.
|
^
|
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.
|
(a)
|
Previously filed on July 8, 2016 as an exhibit to the Company’s Registration Statement on Form S-1 (File No. 333-212449) and incorporated herein by reference.
|
(b)
|
Previously filed on August 15, 2016 as an exhibit to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-212449) and incorporated herein by reference.
|
(c)
|
Previously filed on September 8, 2016 as an exhibit to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-212449) and incorporated herein by reference.
|
(d)
|
Previously filed on October 7, 2016 as an exhibit to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-212449) and incorporated herein by reference.
|
(e)
|
Previously filed on October 17, 2016 as an exhibit to Amendment No. 5 to the Company’s Registration Statement on Form S-1 (File No. 333-212449) and incorporated herein by reference.
|
(f)
|
Previously filed on November 11, 2016 as an exhibit to the Company’s Current Report on Form 8-K/A and incorporated herein by reference.
|
(g)
|
Previously filed on January 10, 2017 as an exhibit to the Company’s Registration Statement on Form S-8 (File No. 333-215504) and incorporated herein by reference.
|
(h)
|
Previously filed on March 31, 2017 as an exhibit to the Company Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and incorporated herein by reference.
|
(i)
|
Previously filed on May 15, 2017 as an exhibit to the Company Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017 and incorporated herein by reference.
|
(j)
|
Previously filed on September 7, 2017 as an exhibit to the Company’s Current Report on Form 8-K and incorporated herein by reference.
|
(k)
|
Previously filed on December 20, 2017 as an exhibit to the Company’s Current Report on Form 8-K and incorporated herein by reference.
|
(l)
|
Previously filed on June 11, 2018 as an exhibit to the Company’s Current Report on Form 8-K and incorporated herein by reference.
|
(m)
|
Previously filed on April 20, 2018 as an exhibit to the Company's Definitive Proxy Statement and incorporated herein by reference.
|
(n)
|
Previously filed on May 23, 2019 as an exhibit to the Company’s Current Report on Form 8-K and incorporated herein by reference.
|
(o)
|
Previously filed on Jun 24, 2019 as an exhibit to the Company’s Current Report on Form 8-K and incorporated herein by reference.
|
|
|
|
FORTERRA, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
/s/ Karl Watson, Jr.
|
|
February 27, 2020
|
By:
|
Karl Watson, Jr.
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Karl Watson, Jr.
|
|
Chief Executive Officer and Director
|
|
February 27, 2020
|
Karl Watson, Jr.
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Charles R. Brown, II
|
|
Executive Vice President and Chief Financial Officer
|
|
February 27, 2020
|
Charles R. Brown, II
|
|
(Principal Financial Officer, Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Chris Meyer
|
|
Chairman of the Board, Director
|
|
February 27, 2020
|
Chris Meyer
|
|
|
|
|
|
|
|
|
|
/s/ Richard Cammerer, Jr.
|
|
Director
|
|
February 27, 2020
|
Richard Cammerer, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ Rafael Colorado
|
|
Director
|
|
February 27, 2020
|
Rafael Colorado
|
|
|
|
|
|
|
|
|
|
/s/ Maureen Harrell
|
|
Director
|
|
February 27, 2020
|
Maureen Harrell
|
|
|
|
|
|
|
|
|
|
/s/ Chad Lewis
|
|
Director
|
|
February 27, 2020
|
Chad Lewis
|
|
|
|
|
|
|
|
|
|
/s/ Clint McDonnough
|
|
Director
|
|
February 27, 2020
|
Clint McDonnough
|
|
|
|
|
|
|
|
|
|
/s/ John McPherson
|
|
Director
|
|
February 27, 2020
|
John McPherson
|
|
|
|
|
|
|
|
|
|
/s/ Jacques Sarrazin
|
|
Director
|
|
February 27, 2020
|
Jacques Sarrazin
|
|
|
|
|
|
|
|
|
|
|
Name of Participant:
|
|
Grant Date:
|
|
Number of Shares Covered by Option:
|
|
Exercise Price Per Share:
|
|
Expiration Date:
|
|
Vesting Schedule:
|
|
1.
|
Terms of Option
|
2.
|
Nonqualified Stock Option
|
3.
|
Exercise of Option
|
4.
|
Expiration of Option
|
(d)
|
For purposes hereof, a Change in Control (as defined in the Plan) will not be deemed to occur until such date as the Company is no longer a controlled company of Lone Star Fund IX (U.S.), L.P.
|
5.
|
Restrictions on Resales of Shares Acquired Pursuant to Option Exercise
|
6.
|
Income Taxes
|
7.
|
NonTransferability of Option
|
8.
|
Other Agreements Superseded
|
9.
|
Limitation of Interest in Shares Subject to Option
|
10.
|
No Liability of Company
|
11.
|
General
|
12.
|
Electronic Delivery
|
Name of Participant:
|
|
Grant Date:
|
|
Number of Restricted Stock Units:
|
|
Vesting Schedule:
|
|
1.
|
TERMS OF RESTRICTED STOCK UNITS
|
2.
|
VESTING OF RESTRICTED STOCK UNITS
|
3.
|
RIGHTS AS STOCKHOLDER
|
4.
|
RESTRICTIONS ON RESALES OF SHARES
|
5.
|
INCOME TAXES
|
6.
|
NONTRANSFERABILITY OF AWARD
|
7.
|
OTHER AGREEMENTS SUPERSEDED
|
8.
|
LIMITATION OF INTEREST IN SHARES SUBJECT TO RESTRICTED STOCK UNITS
|
9.
|
GENERAL
|
10.
|
ELECTRONIC DELIVERY
|
Name of Participant:
|
|
Grant Date:
|
|
Number of Performance- Based Restricted Stock Units:
|
|
Performance Targets; Vesting Schedule:
|
•
The PRSUs granted hereunder shall become earned and eligible to vest based on the achievement of the performance targets set forth in Exhibit A attached hereto (each target, “Performance Target”).
•
The number of PRSUs earned upon the achievement of each Performance Target (in each case, the “Earned PRSUs”) shall vest as follows subject to Participant’s continued service with the Company or its Subsidiaries through the applicable vesting date: [ ].
|
1.
|
TERMS OF PERFORMANCE-BASED RESTRICTED STOCK UNITS
|
2.
|
PERFORMANCE TARGETS; VESTING OF PRSUS
|
•
|
Upon Participant’s Termination of Employment by the Company and its Subsidiaries without Cause or due to Participant’s death or Disability, all Unvested PRSUs for which the applicable Performance Targets have been achieved prior to the date of Termination of Employment shall become vested on the date of such Termination of Employment. All Unvested PRSUs for which the applicable Performance Targets have not been achieved prior to the date of Termination of Employment shall be forfeited and canceled as of the date of such Termination of Employment without the payment of any consideration therefor.
|
•
|
Upon Participant’s Termination of Employment due to Participant’s Retirement (which does not
|
•
|
Immediately prior to the occurrence of a Change in Control, each of the Performance Targets shall be deemed achieved and all Unvested PRSUs shall become vested as of immediately prior to the consummation of such Change in Control. For purposes hereof, a Change in Control (as defined in the Plan) will not be deemed to occur until such date as the Company is no longer a controlled company of Lone Star Fund IX (U.S.), L.P.
|
3.
|
RIGHTS AS STOCKHOLDER
|
4.
|
RESTRICTIONS ON RESALES OF SHARES
|
5.
|
INCOME TAXES
|
6.
|
NON-TRANSFERABILITY OF AWARD
|
7.
|
OTHER AGREEMENTS SUPERSEDED
|
8.
|
LIMITATION OF INTEREST IN SHARES SUBJECT TO PRSUS
|
9.
|
GENERAL
|
(a)
|
In the event that any provision of these Standard Terms and Conditions is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, such provision shall be reformed, if possible, to the extent necessary to render it legal, valid and enforceable, or otherwise deleted, and the remainder of these Standard Terms and Conditions shall not be affected except to the extent necessary to reform or delete such illegal, invalid or unenforceable provision.
|
(b)
|
The headings preceding the text of the sections hereof are inserted solely for convenience of reference, and shall not constitute a part of these Standard Terms and Conditions, nor shall they affect its meaning, construction or effect.
|
(c)
|
These Standard Terms and Conditions shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.
|
(d)
|
These Standard Terms and Conditions shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to principles of conflicts of law.
|
(e)
|
In the event of any conflict between the Grant Notice, these Standard Terms and Conditions and the Plan, the Grant Notice and these Standard Terms and Conditions shall control. In the event of any conflict between the Grant Notice and these Standard Terms and Conditions, the Grant Notice shall control.
|
(f)
|
All questions arising under the Plan or under these Standard Terms and Conditions shall be decided by the Committee in its total and absolute discretion.
|
10.
|
ELECTRONIC DELIVERY
|
Name of Subsidiary
|
|
Jurisdiction of Organization
|
Bio Clean Environmental Services, Inc.
|
|
California
|
Concrete Pipe & Precast, LLC
|
|
Delaware
|
Constructure Fabrication, LLC
|
|
Delaware
|
Custom Fab, Inc.
|
|
Florida
|
DIP Acquisition LLC
|
|
Delaware
|
Fab Pipe LLC
|
|
Delaware
|
Forterra Brick America, Inc.
|
|
Michigan
|
Forterra Concrete Industries, Inc.
|
|
Tennessee
|
Forterra Concrete Operations, LLC
|
|
Texas
|
Forterra Concrete Products, Inc.
|
|
Iowa
|
Forterra Finance, LLC
|
|
Delaware
|
Forterra Pipe & Precast, LLC
|
|
Delaware
|
Forterra Pipe & Precast, Ltd.
|
|
Canada (British Columbia)
|
Forterra Pipe & Precast BC, ULC
|
|
Canada (British Columbia)
|
Forterra Precast Concepts, LLC
|
|
Delaware
|
Forterra Pressure Pipe, Inc.
|
|
Ohio
|
Forterra Pressure Pipe, ULC
|
|
Canada (British Columbia)
|
Forterra Properties Idaho, LLC
|
|
Idaho
|
Forterra Properties Utah, LLC
|
|
Utah
|
Forterra Structural Precast, LLC
|
|
Delaware
|
Forterra Transportation, LLC
|
|
Delaware
|
Griffin Pipe Products Co., LLC
|
|
Delaware
|
Mill Handling LLC
|
|
Delaware
|
Modular Wetland Systems, Inc.
|
|
California
|
Stardust Holdings (USA), LLC
|
|
Delaware
|
United States Pipe and Foundry Company, LLC
|
|
Alabama
|
US Pipe Fabrication, LLC
|
|
Delaware
|
U.S. Pipe Mexico S. de R.L. de C.V.
|
|
Mexico
|
USP Holdings Inc.
|
|
Delaware
|
USP Land Holdings FCP, LLC
|
|
Delaware
|
USP Land Holdings FP&P, LLC
|
|
Delaware
|
1.
|
I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2019 of Forterra, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
Date:
|
February 27, 2020
|
/s/ Karl Watson, Jr.
|
|
|
Karl Watson, Jr.
|
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2019 of Forterra, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
Date:
|
February 27, 2020
|
/s/ Charles R. Brown, II
|
|
|
Charles R. Brown, II
|
|
|
Executive Vice President and Chief
|
|
|
Financial Officer
|
•
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 27, 2020
|
/s/ Karl Watson, Jr.
|
|
|
Karl Watson, Jr.
|
|
|
President and Chief Executive Officer
|
|
|
|
Date:
|
February 27, 2020
|
/s/ Charles R. Brown, II
|
|
|
Charles R. Brown, II
|
|
|
Executive Vice President and Chief
|
|
|
Financial Officer
|
CONCRETE PIPE & PRECAST, LLC
|
||||||||||||
|
|
|
|
|
|
|
||||||
STATEMENTS OF INCOME
|
||||||||||||
FOR THE YEARS ENDED DECEMBER 31, 2019, 2018, and 2017
|
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
|
||||||
Net sales
|
|
$
|
152,739,737
|
|
|
$
|
140,494,299
|
|
|
$
|
153,407,901
|
|
Cost of sales
|
|
112,370,896
|
|
|
103,021,478
|
|
|
109,999,001
|
|
|||
Gross profit
|
|
40,368,841
|
|
|
37,472,821
|
|
|
43,408,900
|
|
|||
|
|
|
|
|
|
|
||||||
Operating Expenses
|
|
|
|
|
|
|
||||||
Selling expenses
|
|
4,721,079
|
|
|
4,530,571
|
|
|
4,402,662
|
|
|||
General and administrative expenses
|
|
14,198,208
|
|
|
12,843,245
|
|
|
13,320,939
|
|
|||
Other operating income
|
|
(270,635
|
)
|
|
(471,151
|
)
|
|
(385,740
|
)
|
|||
Income from Operations
|
|
21,720,189
|
|
|
20,570,156
|
|
|
26,071,039
|
|
|||
|
|
|
|
|
|
|
||||||
Other income (expense)
|
|
|
|
|
|
|
||||||
Interest expense, net
|
|
(875,902
|
)
|
|
(766,574
|
)
|
|
(634,482
|
)
|
|||
Net income
|
|
$
|
20,844,287
|
|
|
$
|
19,803,582
|
|
|
$
|
25,436,557
|
|
CONCRETE PIPE & PRECAST, LLC
|
||||||||||||
|
|
|
|
|
|
|
||||||
STATEMENTS OF CASH FLOWS
|
||||||||||||
FOR THE YEARS ENDED DECEMBER 31, 2019, 2018, and 2017
|
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|||||||
|
Net income
|
$
|
20,844,287
|
|
|
$
|
19,803,582
|
|
|
$
|
25,436,557
|
|
|
Adjustments to reconcile net income to net cash provided by
|
|
|
|
|
|
||||||
|
operating activities:
|
|
|
|
|
|
||||||
|
Depreciation
|
7,146,957
|
|
|
7,082,851
|
|
|
7,211,784
|
|
|||
|
Amortization of debt issuance costs
|
21,993
|
|
|
21,991
|
|
|
48,267
|
|
|||
|
Amortization of intangibles
|
—
|
|
|
—
|
|
|
347
|
|
|||
|
Bad debt expense (recovery)
|
50,803
|
|
|
(80,265
|
)
|
|
(78,471
|
)
|
|||
|
Net loss (gain) on disposal of assets
|
(12,758
|
)
|
|
(669,816
|
)
|
|
112,910
|
|
|||
|
Changes in working capital:
|
|
|
|
|
|
||||||
|
Trade accounts receivable
|
(3,543,718
|
)
|
|
2,428,822
|
|
|
2,765,847
|
|
|||
|
Inventories
|
744,576
|
|
|
(1,212,185
|
)
|
|
(2,637,984
|
)
|
|||
|
Prepaids and other assets
|
304,746
|
|
|
346,198
|
|
|
216,880
|
|
|||
|
Due from / to affiliates
|
(23,593
|
)
|
|
(244,377
|
)
|
|
198,816
|
|
|||
|
Accounts payable and accrued expenses
|
1,067,218
|
|
|
727,071
|
|
|
(2,147,976
|
)
|
|||
|
Cash overdraft
|
580,068
|
|
|
(2,020,193
|
)
|
|
540,558
|
|
|||
|
Net cash provided by operating activities
|
27,180,579
|
|
|
26,183,679
|
|
|
31,667,535
|
|
|||
|
|
|
|
|
|
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|||||||
|
Capital expenditures
|
(4,444,156
|
)
|
|
(3,020,894
|
)
|
|
(5,899,647
|
)
|
|||
|
Proceeds from disposal of assets
|
13,000
|
|
|
2,306,405
|
|
|
—
|
|
|||
|
Principal received on notes receivable
|
—
|
|
|
897,435
|
|
|
73,703
|
|
|||
|
Net cash provided by (used in) investing activities
|
(4,431,156
|
)
|
|
182,946
|
|
|
(5,825,944
|
)
|
|||
|
|
|
|
|
|
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|||||||
|
Distributions paid
|
(22,077,086
|
)
|
|
(26,281,569
|
)
|
|
(27,434,820
|
)
|
|||
|
Net (repayments) proceeds on revolving line of credit
|
(759,679
|
)
|
|
(69,104
|
)
|
|
1,685,614
|
|
|||
|
Loan origination costs
|
—
|
|
|
—
|
|
|
(109,963
|
)
|
|||
|
Net cash used in financing activities
|
(22,836,765
|
)
|
|
(26,350,673
|
)
|
|
(25,859,169
|
)
|
|||
NET INCREASE (DECREASE) IN CASH
|
(87,342
|
)
|
|
15,952
|
|
|
(17,578
|
)
|
||||
CASH, BEGINNING OF YEAR
|
170,265
|
|
|
154,313
|
|
|
171,891
|
|
||||
CASH, END OF YEAR
|
$
|
82,923
|
|
|
$
|
170,265
|
|
|
$
|
154,313
|
|
|
|
|
|
|
|
|
|
||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
||||||||||
|
Cash paid for:
|
|
|
|
|
|
||||||
|
Interest
|
$
|
861,888
|
|
|
$
|
744,322
|
|
|
$
|
633,770
|
|
|
|
|
|
|
|
|
CONCRETE PIPE & PRECAST, LLC
|
||||
|
|
|
||
STATEMENTS OF CHANGES IN MEMBERS’ EQUITY
|
||||
FOR THE YEARS ENDED DECEMBER 31, 2019, 2018, and 2017
|
||||
|
|
|
||
|
|
|
||
|
|
|
||
BALANCE AT DECEMBER 31, 2016
|
|
$
|
68,016,405
|
|
Distributions
|
|
(27,434,820
|
)
|
|
Net income
|
|
25,436,557
|
|
|
BALANCE AT DECEMBER 31, 2017
|
|
66,018,142
|
|
|
Distributions
|
|
(26,281,569
|
)
|
|
Net income
|
|
19,803,582
|
|
|
BALANCE AT DECEMBER 31, 2018
|
|
59,540,155
|
|
|
Distributions
|
|
(22,077,086
|
)
|
|
Net income
|
|
20,844,287
|
|
|
BALANCE AT DECEMBER 31, 2019
|
|
$
|
58,307,356
|
|
|
Estimated Useful
|
||||
|
Lives in Years
|
||||
|
|
||||
Buildings and improvements
|
15 - 39
|
||||
Machinery and equipment
|
5 - 20
|
||||
Vehicles and delivery equipment
|
5 - 12
|
||||
Office equipment
|
3 - 7
|
|
2019
|
2018
|
||||
|
|
|
||||
Finished goods
|
$
|
15,806,040
|
|
$
|
15,595,655
|
|
Raw materials
|
2,986,068
|
|
3,950,455
|
|
||
Supplies
|
47,606
|
|
38,180
|
|
||
Total inventories
|
$
|
18,839,714
|
|
$
|
19,584,290
|
|
|
2019
|
2018
|
||||
|
|
|
||||
Land, buildings, and improvements
|
$
|
47,167,974
|
|
$
|
46,811,688
|
|
Machinery and equipment
|
115,677,357
|
|
111,622,852
|
|
||
Vehicles and delivery equipment
|
778,851
|
|
778,851
|
|
||
Office equipment
|
1,695,876
|
|
1,245,070
|
|
||
Assets under development
|
1,061,781
|
|
1,430,419
|
|
||
Total
|
166,381,839
|
|
161,888,880
|
|
||
Less: Accumulated depreciation
|
(107,450,797
|
)
|
(100,359,407
|
)
|
||
Net property, plant, and equipment
|
$
|
58,931,042
|
|
$
|
61,529,473
|
|
|
2019
|
2018
|
||||
|
|
|
||||
Current portion
|
$
|
—
|
|
$
|
—
|
|
Long-term portion
|
23,993,601
|
|
24,753,280
|
|
||
Notes payable
|
$
|
23,993,601
|
|
$
|
24,753,280
|
|
|
2019
|
|
2018
|
|
2017
|
|
|
|
|
|
|
Sale of products to affiliates
|
$499,212
|
|
$37,490
|
|
$104,024
|
Purchase of products and services from affiliates
|
681,176
|
|
340,291
|
|
464,371
|
Management fees paid to affiliates
|
544,571
|
|
529,842
|
|
513,220
|
2020
|
$
|
590,591
|
|
2021
|
446,734
|
|
|
2022
|
285,422
|
|
|
2023
|
101,080
|
|
|
2024
|
11,248
|
|
|
Total
|
$
|
1,435,075
|
|