UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended March 31, 2017
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from to
Commission File Number 000-50924
BEACON ROOFING SUPPLY, INC.
(Exact name of registrant as specified in its charter)
Delaware | 36-4173371 | |
(State
or other jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
505 Huntmar Park Drive, Suite 300, Herndon, VA 20170
(Address of Principal Executive Offices) (Zip Code)
(571) 323-3939
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer | x | Accelerated filer ¨ | |
Non-accelerated filer | ¨ (do not check if a smaller reporting company) | Smaller reporting company ¨ |
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of May 1, 2017, 60,283,487 shares of common stock, par value $0.01 per share, of the registrant were outstanding.
1
BEACON ROOFING SUPPLY, INC.
FORM 10-Q
For the Quarter Ended March 31, 2017
TABLE OF CONTENTS
Part I. | Financial Information (unaudited) | ||
Item 1. | Condensed Consolidated Financial Statements | ||
Consolidated Balance Sheets | 3 | ||
Consolidated Statements of Operations | 4 | ||
Consolidated Statements of Comprehensive Income | 5 | ||
Consolidated Statements of Cash Flows | 6 | ||
Notes to Condensed Consolidated Financial Statements | 7 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition And Results of Operations | 27 | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 41 | |
Item 4. | Controls and Procedures | 41 | |
Part II. | Other Information | ||
Item 6. | Exhibits | 42 | |
Signatures | 43 |
2
Consolidated Balance Sheets
(Unaudited; In thousands, except share and per share amounts)
March 31, | September 30, | March 31, | ||||||||||
2017 | 2016 | 2016 | ||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 10,012 | $ | 31,386 | $ | 14,841 | ||||||
Accounts receivable, less allowance of $17,140, $14,812 and $9,396 as of March 31, 2017, September 30, 2016 and March 31, 2016, respectively | 506,386 | 626,965 | 490,850 | |||||||||
Inventories, net | 580,889 | 480,736 | 513,750 | |||||||||
Prepaid expenses and other current assets | 217,389 | 163,103 | 164,625 | |||||||||
Total current assets | 1,314,676 | 1,302,190 | 1,184,066 | |||||||||
Property and equipment, net | 156,380 | 148,569 | 147,994 | |||||||||
Goodwill | 1,228,059 | 1,197,565 | 1,160,775 | |||||||||
Intangibles, net | 439,507 | 464,024 | 472,582 | |||||||||
Other assets, net | 1,511 | 1,511 | 1,430 | |||||||||
Total Assets | $ | 3,140,133 | $ | 3,113,859 | $ | 2,966,847 | ||||||
Liabilities and Stockholders' Equity | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 486,328 | $ | 360,915 | $ | 417,994 | ||||||
Accrued expenses | 131,264 | 161,113 | 152,692 | |||||||||
Current portions of long-term debt | 14,014 | 14,811 | 12,159 | |||||||||
Total current liabilities | 631,606 | 536,839 | 582,845 | |||||||||
Borrowings under revolving lines of credit, net | 269,124 | 359,661 | 295,690 | |||||||||
Long-term debt, net | 722,101 | 722,929 | 722,542 | |||||||||
Deferred income taxes, net | 137,495 | 135,482 | 102,878 | |||||||||
Long-term obligations under equipment financing and other, net | 30,639 | 35,121 | 42,907 | |||||||||
Total liabilities | 1,790,965 | 1,790,032 | 1,746,862 | |||||||||
Commitments and contingencies | ||||||||||||
Stockholders' equity: | ||||||||||||
Common stock (voting); $.01 par value; 100,000,000 shares authorized; 60,255,320 issued and outstanding as of March 31, 2017; 59,890,885 issued and outstanding as of September 30, 2016; 59,521,648 issued and outstanding at March 31, 2016 | 602 | 598 | 595 | |||||||||
Undesignated preferred stock; 5,000,000 shares authorized, none issued or outstanding | - | - | - | |||||||||
Additional paid-in capital | 709,278 | 694,564 | 678,748 | |||||||||
Retained earnings | 658,396 | 647,322 | 558,804 | |||||||||
Accumulated other comprehensive loss | (19,108 | ) | (18,657 | ) | (18,162 | ) | ||||||
Total stockholders' equity | 1,349,168 | 1,323,827 | 1,219,985 | |||||||||
Total Liabilities and Stockholders' Equity | $ | 3,140,133 | $ | 3,113,859 | $ | 2,966,847 |
See accompanying Notes to Condensed Consolidated Financial Statements
3
Consolidated Statements of Operations
(Unaudited; In thousands, except share and per share amounts)
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net sales | $ | 870,724 | $ | 823,537 | $ | 1,872,908 | $ | 1,800,017 | ||||||||
Cost of products sold | 666,247 | 627,773 | 1,417,364 | 1,371,065 | ||||||||||||
Gross profit | 204,477 | 195,764 | 455,544 | 428,952 | ||||||||||||
Operating expense | 207,533 | 191,881 | 411,643 | 398,225 | ||||||||||||
Income (loss) from operations | (3,056 | ) | 3,883 | 43,901 | 30,727 | |||||||||||
Interest expense, financing costs, and other | 12,268 | 13,026 | 25,842 | 29,282 | ||||||||||||
Income (loss) before provision for income taxes | (15,324 | ) | (9,143 | ) | 18,059 | 1,445 | ||||||||||
Provision for (benefit from) income taxes | (5,968 | ) | (3,424 | ) | 6,985 | 46 | ||||||||||
Net income (loss) | $ | (9,356 | ) | $ | (5,719 | ) | $ | 11,074 | $ | 1,399 | ||||||
Weighted-average common stock outstanding: | ||||||||||||||||
Basic | 60,141,580 | 59,295,990 | 60,041,332 | 59,133,569 | ||||||||||||
Diluted | 60,141,580 | 59,295,990 | 61,069,938 | 60,077,852 | ||||||||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | (0.16 | ) | $ | (0.10 | ) | $ | 0.18 | $ | 0.02 | ||||||
Diluted | $ | (0.16 | ) | $ | (0.10 | ) | $ | 0.18 | $ | 0.02 |
See accompanying Notes to Condensed Consolidated Financial Statements
4
Consolidated Statements of Comprehensive Income
(Unaudited; In thousands)
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income (loss) | $ | (9,356 | ) | $ | (5,719 | ) | $ | 11,074 | $ | 1,399 | ||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustment | 813 | 4,226 | (839 | ) | 1,757 | |||||||||||
Total other comprehensive income (loss) | 813 | 4,226 | (839 | ) | 1,757 | |||||||||||
Comprehensive income (loss) | $ | (8,543 | ) | $ | (1,493 | ) | $ | 10,235 | $ | 3,156 |
See accompanying Notes to Condensed Consolidated Financial Statements
5
Consolidated Statements of Cash Flows
(Unaudited; In thousands)
Six Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Operating Activities | ||||||||
Net income | $ | 11,074 | $ | 1,399 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 56,955 | 47,644 | ||||||
Stock-based compensation | 7,574 | 10,696 | ||||||
Certain interest expense and other financing costs | 2,703 | 4,053 | ||||||
Gain on sale of fixed assets | (420 | ) | (411 | ) | ||||
Deferred income taxes | 2,020 | 1,741 | ||||||
Other, net | 131 | (280 | ) | |||||
Changes in operating assets and liabilities, net of the effects of businesses acquired: | ||||||||
Accounts receivable | 123,590 | 95,150 | ||||||
Inventories | (92,072 | ) | (2,519 | ) | ||||
Prepaid expenses and other assets | (53,062 | ) | (15,815 | ) | ||||
Accounts payable and accrued expenses | 91,950 | (61,006 | ) | |||||
Net cash provided by operating activities | 150,443 | 80,652 | ||||||
Investing Activities | ||||||||
Purchases of property and equipment | (24,231 | ) | (11,059 | ) | ||||
Acquisition of businesses, net | (58,359 | ) | (941,156 | ) | ||||
Proceeds from the sale of assets | 1,285 | 377 | ||||||
Net cash used in investing activities | (81,305 | ) | (951,838 | ) | ||||
Financing Activities | ||||||||
Borrowings under revolving lines of credit | 857,099 | 1,017,128 | ||||||
Repayments under revolving lines of credit | (948,470 | ) | (724,855 | ) | ||||
Borrowings under term loan | - | 450,000 | ||||||
Repayments under term loan | (1,125 | ) | (187,875 | ) | ||||
Borrowings under Senior Notes | - | 300,000 | ||||||
Borrowings under equipment financing facilities and other | 1,579 | - | ||||||
Repayments under equipment financing facilities and other | (6,857 | ) | (2,633 | ) | ||||
Payment of deferred financing costs | - | (27,813 | ) | |||||
Proceeds from issuance of common stock | 7,840 | 15,391 | ||||||
Taxes paid related to net share settlement of equity awards | (697 | ) | - | |||||
Excess tax benefit from stock-based compensation | - | 1,630 | ||||||
Net cash provided by (used in) financing activities | (90,631 | ) | 840,973 | |||||
Effect of exchange rate changes on cash and cash equivalents | 119 | (607 | ) | |||||
Net decrease in cash and cash equivalents | (21,374 | ) | (30,820 | ) | ||||
Cash and cash equivalents, beginning of period | 31,386 | 45,661 | ||||||
Cash and cash equivalents, end of period | $ | 10,012 | $ | 14,841 | ||||
Supplemental cash flow information | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 29,592 | $ | 22,210 | ||||
Income taxes, net of tax refunds | 36,151 | 13,728 |
During the six month period ended March 31, 2016, the Company issued Common Stock with a value of $302 million and replacement awards with a value of $5 million in connection with the acquisition of Roofing Supply Group, LLC, which are accounted for as a non-cash investing activity.
See accompanying Notes to Condensed Consolidated Financial Statements
6
Notes to Condensed Consolidated Financial Statements
(Unaudited; In thousands, except share and per share data or otherwise indicated)
1. | Company Overview |
Beacon Roofing Supply, Inc. (the “Company”) was incorporated in the state of Delaware on August 22, 1997 and is the largest publicly traded distributor of residential and non-residential roofing materials and complementary building products in the United States and Canada. The Company operates its business under regional and local trade names and as of March 31, 2017 the Company serviced customers in 47 states within the United States and 6 provinces in Canada. The Company’s current material subsidiaries are Beacon Sales Acquisition, Inc., Beacon Canada, Inc. and Beacon Roofing Supply Canada Company.
2. | Summary of Significant Accounting Policies |
Basis of Presentation
Beacon Roofing Supply, Inc. (the “Company”) prepared the condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the requirements of the Securities and Exchange Commission (“SEC”). As permitted under those rules, certain footnotes or other financial information have been condensed or omitted. The balance sheet as of March 31, 2016 has been presented for a better understanding of the impact of seasonal fluctuations on the Company's financial condition.
In management's opinion, the financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company's financial position and operating results. The results for the three and six-month periods ended March 31, 2017 are not necessarily indicative of the results to be expected for the twelve months ending September 30, 2017 (“fiscal year 2017” or “2017”).
The three-month periods ended March 31, 2017 and 2016 each had 64 business days and the six-month periods ended March 31, 2017 and March 31, 2016 had 125 and 126 business days, respectively.
These interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in the Company’s fiscal year 2016 (“2016”) Annual Report on Form 10-K for the year ended September 30, 2016.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Significant items subject to such estimates include inventories, purchase price allocations, recoverability of goodwill and intangibles, and income taxes. Actual amounts could differ from those estimates.
Recent Accounting Pronouncements - Adopted
In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, “Simplifying the Presentation of Debt Issuance Costs” to simplify the presentation of debt issuance costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the associated debt liability, consistent with the required presentation for debt discounts. This new standard is effective for financial statements issued for annual and interim reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company elected to early adopt this new guidance effective October 1, 2015 and applied the new guidance retrospectively to all prior periods presented in the financial statements. The adoption of this standard changed the Company’s previous practice of presenting debt issuance costs as an asset and resulted in the reduction of total assets and total liabilities in an amount equal to the balance of unamortized debt issuance costs at each balance sheet date presented. Debt issuance costs that are now presented as a direct reduction from the carrying amount of the associated debt liability amounted to $22.9 million as of March 31, 2017, $25.2 million as of September 30, 2016, and $28.7 million as of March 31, 2016.
In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments.” This guidance eliminates the requirement to restate prior period financial statements for measurement period adjustments related to business combinations. It requires that the cumulative impact of a measurement period adjustment, including the impact on prior periods, be recognized in the reporting period in which the adjustment is identified. In addition, the portion of the adjustment recorded in the current period that would have been recognized in prior periods had the adjustment been identified at that time must be presented, by line item, either on the face of the income statement or in the accompanying notes. This new standard is effective for annual and interim reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company elected to early adopt this new guidance effective January 1, 2016 and the impact on the financial statements and related disclosures through the quarter ended March 31, 2017 was immaterial.
7
In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes." This guidance requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. This new standard is effective for annual and interim reporting periods beginning after December 15, 2016 and early adoption is permitted. Entities are permitted to apply this guidance either prospectively or retrospectively. The Company adopted the guidance as of March 31, 2016 and applied it retrospectively to all prior periods. As a result, the Company reclassified its current deferred tax balances of $31.9 million to non-current deferred taxes as of September 30, 2015.
Recent Accounting Pronouncements - Not Yet Adopted
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers, and will replace most existing revenue recognition guidance when it becomes effective. This new standard is effective for public business entities for fiscal years beginning on or after January 1, 2018, and early adoption is permitted for annual periods beginning after December 31, 2016. The standard permits the use of either the full retrospective or modified retrospective adoption methods. The Company is continuing to perform a detailed evaluation, using a five-step model specified in the guidance, to assess the impacts of the new standard and expects to apply the guidance using the modified retrospective method. Based on the Company’s knowledge of its revenue transactions, the Company does not expect the adoption of this new guidance to have a material impact on its financial statements, but does expect that it will result in additional disclosures regarding revenue recognition policies.
In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern: Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern.” The guidance updates management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and provide related footnote disclosures. For each reporting period, management is required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from when the financial statements are issued. This new standard is effective for the annual reporting period ending after December 15, 2016 as well as all annual and interim reporting periods thereafter, and early adoption is permitted. The Company does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures.
In July 2015, the FASB issued ASU 2015-11, “Inventory: Simplifying the Measurement of Inventory.” This guidance applies to inventory valued at first-in, first-out (FIFO) or average cost and requires inventory to be measured at the lower of cost and net realizable value, rather than at the lower of cost or market. This new standard is effective on a prospective basis for annual and interim reporting periods beginning after December 15, 2016. The Company does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures.
In February 2016, the FASB issued ASU 2016-02, “Leases.” This guidance will replace most existing accounting for lease guidance when it becomes effective. This new standard is effective using the modified retrospective approach for annual and interim and reporting periods beginning after December 15, 2018 and early adoption is permitted. The guidance will require the Company to record a right of use asset and a lease liability for most of the Company’s leases, including those currently treated as operating leases. The Company is in the process of evaluating the impact of the standard and has decided that it will use the practical expedients outlined in the transition guidance. The scope of the overall impact on the Company’s financial statements and related disclosures is still being quantified.
In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” This guidance is intended to simplify several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The provisions of this standard are effective for reporting periods beginning after December 15, 2016 and early adoption is permitted in any interim or annual period, but the Company is not early adopting this guidance. The adoption of this guidance will likely have a positive impact on the Company’s income tax provision, net income and operating cash flows in periods in which employees elect to exercise their vested stock options or when restrictions on share-based awards lapse (based on our comparison of our deferred tax assets for share-based compensation to the current intrinsic value of the underlying awards).
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.” This guidance is intended to introduce a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses. This new standard is effective for annual and interim reporting periods beginning after December 15, 2019 and early adoption is permitted. The Company is currently evaluating the impact that this guidance may have on its financial statements and related disclosures.
In January 2017, the FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a Business” This guidance is intended to assist entities when evaluating when a set of transferred assets and activities constitutes a business. This new standard is effective for annual and interim reporting periods beginning after December 15, 2017 and early adoption is permitted. Based on the Company’s current business model, it does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures.
8
In January 2017, the FASB issued ASU 2017-04, “Simplifying the Accounting for Goodwill Impairment.” This guidance is intended to introduce a simplified approach to measurement of goodwill impairment, eliminating the need for a hypothetical purchase price allocation and instead measuring impairment by the amount a reporting unit’s carrying value exceeds its fair value. This new standard is effective for annual and interim reporting periods beginning after December 15, 2019 and early adoption is permitted. Based on the Company’s current business model, it does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures.
3. | Acquisitions |
Roofing Supply Group
On October 1, 2015, the Company acquired 100% of the equity of Roofing Supply Group, LLC ("RSG”), a leading roofing products distributor owned by investment firm Clayton, Dubilier & Rice ("CD&R"). RSG’s results of operations have been included with Company’s consolidated results beginning October 1, 2015. RSG distributed roofing supplies and related materials from 85 locations across 25 states as of October 1, 2015.
Total consideration paid for RSG was approximately $1.17 billion, out of which $288.2 million was in cash, $306.8 million of Company’s common stock and option replacement awards, and $574.4 million in refinancing of RSG’s debt. The RSG long-term debt was repaid simultaneously with the proceeds of a new ABL Revolver, Term Loan and Senior Notes (see Note 8).
In connection with the RSG acquisition, the Company was required to issue equity awards to certain RSG employees in replacement of RSG equity awards that were cancelled at closing. The replacement awards consisted of options to purchase 661,349 shares of the Company’s common stock. The terms and fair value of these awards approximated the cancelled RSG awards on the issuance date. The fair value of the replacement awards associated with services rendered through the date of the RSG acquisition was recognized as a component of the total acquisition consideration, and the remaining fair value of the replaced awards associated with post RSG acquisition services will be recognized as an expense on a straight-line basis over the remaining service period.
The RSG acquisition has been accounted for as a business combination in accordance with the requirements of ASC 805 Business Combinations. The acquisition price has been allocated among assets acquired and liabilities assumed at fair value based on information currently available, with the excess recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of RSG. These come from the synergies that are obtained in operating the branches as part of a larger network, and from an experienced employee base skilled at managing a distribution business. As of September 30, 2016, the Company had finalized the acquisition accounting entries for the RSG acquisition, detailed as follows (in thousands):
Cash | $ | 16,451 | ||
Accounts receivable | 177,251 | |||
Inventory | 179,651 | |||
Other current assets | 50,000 | |||
Property, plant, and equipment | 55,159 | |||
Other intangible assets | 382,600 | |||
Goodwill | 617,477 | |||
Current liabilities | (252,190 | ) | ||
Non-current liabilities | (56,949 | ) | ||
Total purchase price | $ | 1,169,450 |
RSG’s future growth attributable to new customers, geographic market presence and assembled workforce are additional assets that are not separable and which contributed to recorded goodwill, of which $86.1 million was tax deductible as of the October 1, 2015 RSG acquisition date. All of the Company’s goodwill plus the indefinite-lived trade name are tested for impairment annually, and all acquired goodwill and intangible assets are subject to review for impairment should future indicators of impairment develop. The fair value of acquired RSG accounts receivables was $177.3 million, with the gross contractual amount being $185.9 million.
Additional Acquisitions – Fiscal Year 2017
During the six months ended March 31, 2017, the Company acquired 12 branches from the following four acquisitions:
· | On December 16, 2016, the Company purchased certain assets of BJ Supply Company, a distributor of roofing and related building products with 1 branch serving Pennsylvania and New Jersey and annual sales of approximately $4 million. |
· | On January 3, 2017, the Company acquired American Building & Roofing, Inc., a distributor of mainly residential roofing and related building products with 7 branches around Washington State and annual sales of approximately $36 million. |
9
· | On January 9, 2017, the Company acquired Eco Insulation Supply, a distributor of insulation and related accessories with 1 branch serving Connecticut, Southern New England and the New York City metropolitan area and annual sales of approximately $8 million. |
· | On March 1, 2017, the Company acquired Acme Building Materials, Inc., a distributor of residential roofing and related building products with 3 branches in Eastern Michigan and annual sales of approximately $13 million. |
The Company recorded the acquired assets and liabilities related to these transactions at their estimated fair values as of the respective acquisition dates, with resulting goodwill of $31.0 million (all of which is deductible for tax purposes) and $15.9 million in intangible assets associated with these other acquisitions as of March 31, 2017.
Additional Acquisitions – Fiscal Year 2016
During fiscal year 2016, the Company acquired 42 branches from the following seven additional acquisitions:
· | On December 1, 2015, the Company purchased certain assets of RCI Roofing Supply, a distributor of residential and commercial roofing and related products with 5 branches operating in Nebraska, Iowa and Colorado and annual sales of approximately $23 million. The Company has finalized the acquisition accounting entries for this acquisition. |
· | On December 18, 2015, the Company acquired 100% of the equity interests of Roofing and Insulation Supply, a distributor primarily of residential and commercial insulation along with roofing and related products with 20 branches spanning 13 states operating across New England, the Mid-Atlantic, the Southeast, the Upper Midwest, Texas and Colorado and annual sales of approximately $70 million. The Company has finalized the acquisition accounting entries for this acquisition. |
· | On December 29, 2015, the Company purchased certain assets of Statewide Wholesale, a distributor of residential and commercial roofing and related products with 1 branch located in Denver, Colorado and annual sales of approximately $15 million. The Company has finalized the acquisition accounting entries for this acquisition. |
· | On April 1, 2016, the Company purchased certain assets of Atlantic Building Products, a distributor of decking, windows, siding, and related products with 2 branches operating in eastern Pennsylvania and annual sales of approximately $5 million. |
· | On April 1, 2016, the Company purchased certain assets of Lyf-Tym Building Products, a distributor of siding, windows, gutters, vinyl railings, and related products with 6 branches operating in North Carolina and Virginia and annual sales of approximately $20 million. |
· | On May 2, 2016, the Company purchased certain assets of Fox Brothers Company, a distributor of roofing, siding, windows, doors, and related products with 4 branches operating in Michigan and annual sales of approximately $35 million. |
· | On June 1, 2016, the Company acquired 100% of the equity interests of Woodfeathers, Inc., a distributor of primarily residential roofing and related products with 4 branches operating in Oregon and Washington and annual sales of approximately $30 million. |
The Company recorded the acquired assets and liabilities related to these transactions at their estimated fair values as of the respective acquisition dates, with resulting goodwill of $84.8 million ($59.8 million of which is deductible for tax purposes) and $60.8 million in intangible assets associated with these other acquisitions.
Acquisitions – Additional Information
For those acquisitions where the acquisition accounting entries have yet to be finalized, the Company’s allocation of the purchase price is subject to change on receipt of additional information, including, but not limited to, the finalization of asset valuations (intangible and fixed) and income tax accounting.
4. | Net Income (Loss) per Share |
Basic net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted-average number of common shares and dilutive common share equivalents then outstanding using the treasury stock method. Common share equivalents consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock awards.
10
The following table presents the basic and diluted weighted-average shares outstanding for each period presented:
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Weighted-average common shares outstanding, basic | 60,141,580 | 59,295,990 | 60,041,332 | 59,133,569 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Stock options | - | - | 633,007 | 696,112 | ||||||||||||
Restricted stock units | - | - | 395,599 | 248,171 | ||||||||||||
Weighted-average common shares outstanding, diluted | 60,141,580 | 59,295,990 | 61,069,938 | 60,077,852 |
The following table includes the number of shares that may be dilutive common shares in the future. These shares were not included in the computation of diluted net income per share because the effect was either anti-dilutive or the requisite performance conditions were not met.
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Stock options | 270,428 | 665,281 | 416,085 | 667,251 | ||||||||||||
Restricted stock units | - | 88,407 | 123,780 | 88,407 |
5. | Stockholders’ Equity |
The following table presents the activity included in stockholders’ equity during the six months ended March 31, 2017 (in thousands, except share amounts):
Accumulated | ||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||
Common Stock | Paid-in | Retained | Comprehensive | Stockholders' | ||||||||||||||||||||
Shares | Amount | Capital | Earnings | Loss | Equity | |||||||||||||||||||
Balance at September 30, 2016 | 59,890,885 | $ | 598 | $ | 694,564 | $ | 647,322 | $ | (18,657 | ) | $ | 1,323,827 | ||||||||||||
Issuance of common stock, net of shares withheld for taxes | 364,435 | 4 | 7,140 | - | - | 7,144 | ||||||||||||||||||
Stock-based compensation | - | - | 7,574 | - | - | 7,574 | ||||||||||||||||||
Other comprehensive income (loss) | - | - | - | - | (451 | ) | (451 | ) | ||||||||||||||||
Net income | - | - | - | 11,074 | - | 11,074 | ||||||||||||||||||
Balance at March 31, 2017 | 60,255,320 | $ | 602 | $ | 709,278 | $ | 658,396 | $ | (19,108 | ) | $ | 1,349,168 |
Common and Preferred Stock
The Company is authorized to issue 100 million shares of common stock and 5 million shares of preferred stock. As of March 31, 2017, September 30, 2016, and March 31, 2016 there were 60,255,320, 59,890,885 and 59,521,648 shares of common stock issued and outstanding, respectively, and no preferred stock outstanding as of any period end.
Accumulated Other Comprehensive Loss
Other comprehensive income (loss) is comprised of certain gains and losses that are excluded from net income under GAAP and instead recorded as a separate element of stockholders’ equity. The Company’s other comprehensive income (loss) consists of foreign currency translation adjustments as well as unrealized gains or losses on the Company’s derivative contracts.
11
The following table summarizes the components of and changes in accumulated other comprehensive loss (in thousands):
Accumulated | ||||||||||||
Foreign | Derivative | Other | ||||||||||
Currency | Financial | Comprehensive | ||||||||||
Translation | Instruments | Loss | ||||||||||
Balance as of September 30, 2016 | $ | (18,269 | ) | $ | (388 | ) | $ | (18,657 | ) | |||
Other comprehensive loss before reclassifications | (839 | ) | - | (839 | ) | |||||||
Reclassifications out of other comprehensive loss | - | 388 | 388 | |||||||||
Balance as of March 31, 2017 | $ | (19,108 | ) | $ | - | $ | (19,108 | ) |
6. | Stock-based Compensation |
On February 9, 2016, the shareholders of the Company approved the Amended and Restated Beacon Roofing Supply, Inc. 2014 Stock Plan (the “2014 Plan”). The 2014 Plan provides for discretionary awards of stock options, stock awards, restricted stock units, and stock appreciation rights (“SARs”) for up to 5,000,000 shares of common stock to selected employees and non-employee directors. The 2014 Plan mandates that all forfeited, expired, and withheld shares, including those from the predecessor plans, be returned to the 2014 Plan and made available for issuance. As of March 31, 2017, there were 4,051,683 shares of common stock available for issuance.
Prior to the 2014 Plan, the Company maintained the amended and restated Beacon Roofing Supply, Inc. 2004 Stock Plan (the “2004 Plan”). Upon shareholder approval of the 2014 Plan, the Company ceased issuing equity awards from the 2004 Plan and mandated that all future equity awards will be issued from the 2014 Plan.
For all equity awards granted prior to October 1, 2014, in the event of a change in control of the Company, all awards are immediately vested. Beginning in fiscal 2015, equity awards contain a “double trigger” change in control mechanism. Unless an award is continued or assumed by a public company in an equitable manner, an award shall become fully vested immediately prior to a change in control (at 100% in the case of a performance-based restricted stock award). If an award is so continued or assumed, vesting will continue in accordance with the terms of the award, unless there is a qualifying termination within one-year following the change in control, in which event the award shall become fully vested immediately (at 100% in the case of a performance-based restricted stock award).
Stock Options
Non-qualified stock options generally expire 10 years after the grant date and, except under certain conditions, the options are subject to continued employment and vest in one-third increments over a three-year period following the grant dates.
The fair values of the options granted during the six months ended March 31, 2017 were estimated on the dates of grants using the Black-Scholes option-pricing model with the following weighted-average assumptions:
Risk-free interest rate | 1.97 | % | ||
Expected volatility | 28.83 | % | ||
Expected life (in years) | 5.30 | |||
Dividend yield | — |
12
The following table summarizes all stock option activity for the period presented (in thousands, except share, per share, and time period amounts):
Options Outstanding | Weighted- Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value1 | |||||||||||||
Balance as of September 30, 2016 | 2,312,789 | $ | 25.55 | 6.3 | $ | 38,225 | ||||||||||
Granted | 245,818 | 47.40 | ||||||||||||||
Exercised | (316,827 | ) | 21.20 | |||||||||||||
Canceled | (22,271 | ) | 24.19 | |||||||||||||
Balance as of March 31, 2017 | 2,219,509 | $ | 28.60 | 6.5 | $ | 45,630 | ||||||||||
Vested and expected to vest after March 31, 2017 | 2,167,911 | $ | 28.51 | 6.5 | $ | 44,759 | ||||||||||
Exercisable as of March 31, 2017 | 1,487,885 | $ | 25.40 | 5.4 | $ | 35,350 |
1 | Aggregate intrinsic value as represents the difference between the closing fair value of the underlying common stock and the exercise price of outstanding, in-the-money options on the date of measurement |
During the three months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense related to stock options of $1.3 million and $1.6 million, respectively. During the six months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense related to stock options of $2.6 million and $7.7 million, respectively. As of March 31, 2017, there was $7.0 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.1 years.
The following table summarizes additional information on stock options for the period presented (in thousands, except per share amounts):
Six Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Weighted-average fair value of stock options granted | $ | 14.21 | $ | 12.89 | ||||
Total fair value of stock options vested | 4,998 | 11,020 | ||||||
Total intrinsic value of stock options exercised | 7,906 | 14,415 |
Restricted Stock Units
Restricted stock unit (“RSU”) awards granted to employees are subject to continued employment and generally vest after three years. The Company also grants certain RSU awards to management that contain an additional vesting condition tied directly to a defined performance metric for the Company. The actual number of RSUs that will vest can range from 0% to 150% of the grant, depending upon actual Company performance below or above the target level. The Company estimates performance in relation to the established target when determining the projected number of RSUs that will vest and calculating the compensation cost related to these awards.
RSUs granted to non-employee directors are subject to continued service and vest after one year (except under certain conditions). Generally, the common shares underlying the RSUs are not eligible for distribution until the director’s service on the Board has terminated. For non-employee director RSU grants made prior to fiscal year 2014, the share distribution date is six months after the director’s termination of service on the board. RSU grants made in fiscal year 2014 and thereafter have no such holding period requirement. Additionally, beginning in fiscal year 2016 non-employee directors holding common stock and outstanding vested unexercised/unsettled equity awards with a fair value that is greater than or equal to five times the annual cash retainer may elect to have future grants settle simultaneously with vesting.
13
The following table summarizes all restricted stock unit activity for the period presented:
RSUs Outstanding | Weighted-Average Grant Date Fair Value | |||||||
Balance at September 30, 2016 | 705,434 | $ | 34.55 | |||||
Granted | 267,042 | 47.28 | ||||||
Released | (65,651 | ) | 36.33 | |||||
Forfeited | (7,463 | ) | 44.53 | |||||
Balance at March 31, 2017 | 899,362 | $ | 38.27 | |||||
Vested and expected to vest after March 31,2017 | 832,557 | $ | 38.27 |
During the three months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense related to restricted stock units of $2.5 million and $1.9 million, respectively. During the six months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense related to restricted stock units of $5.0 million and $3.0 million, respectively. As of March 31, 2017, there was $17.5 million of total unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 2.1 years.
The following table summarizes additional information on RSUs for the period presented (in thousands):
Six Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Total fair value of RSUs released | $ | 2,385 | $ | 369 | ||||
Total intrinsic value of RSUs released | 3,071 | 403 |
7. | Goodwill and Intangible Assets |
Goodwill
The following table sets forth the change in the carrying amount of goodwill for the Company during the six months ended March 31, 2017 and 2016, respectively (in thousands):
Balance at September 30, 2015 | $ | 496,415 | ||
Acquisition of RSG | 617,634 | |||
Other acquisitions | 47,608 | |||
Translation and other adjustments | (882 | ) | ||
Balance at March 31, 2016 | $ | 1,160,775 | ||
Balance at September 30, 2016 | $ | 1,197,565 | ||
Acquisitions | 31,005 | |||
Translation and other adjustments | (511 | ) | ||
Balance at March 31, 2017 | $ | 1,228,059 |
The change in the carrying amount of goodwill for the six months ended March 31, 2017 and 2016 is primarily attributable to the Company’s acquisitions finalized during the respective periods presented (see Note 3).
Intangible Assets
In connection with transactions finalized during the six months ended March 31, 2017 and fiscal year 2016, the Company recorded intangible assets of $15.9 million (mostly customer relationships) and $442.6 million ($375.0 million of customer relationships, $4.3 million of amortizable trademarks, and $63.3 million of indefinite-lived trademarks), respectively. Intangible assets consisted of the following (in thousands, except time period amounts):
14
March 31, 2017 | September 30, 2016 | March 31, 2016 | Weighted- Average Remaining Life1 (Years) | |||||||||||||
Amortizable intangible assets: | ||||||||||||||||
Non-compete agreements | $ | 2,824 | $ | 3,324 | $ | 2,824 | 3.61 | |||||||||
Customer relationships | 582,028 | 566,964 | 541,161 | 17.91 | ||||||||||||
Trademarks | 6,670 | 5,400 | 4,600 | 6.60 | ||||||||||||
Beneficial lease arrangements | 960 | 960 | 610 | 10.40 | ||||||||||||
Total amortizable intangible assets | 592,482 | 576,648 | 549,195 | |||||||||||||
Less: Accumulated amortization | (226,025 | ) | (185,674 | ) | (149,663 | ) | ||||||||||
Total amortizable intangible assets, net | $ | 366,457 | $ | 390,974 | $ | 399,532 | ||||||||||
Indefinite lived trademarks | 73,050 | 73,050 | 73,050 | |||||||||||||
Total intangibles, net | $ | 439,507 | $ | 464,024 | $ | 472,582 |
1 | As of March 31, 2017 |
For the three month periods ended March 31, 2017 and 2016, we recorded $20.3 million and $17.1 million of amortization expense relating to the above-listed intangible assets, respectively. For the six month periods ended March 31, 2017 and 2016, we recorded $40.4 million and $32.3 million of amortization expense relating to the above-listed intangible assets, respectively. The intangible asset lives range from 1 to 20 years and have a weighted-average remaining life of 17.7 years as of March 31, 2017.
The following table presents the estimated annual amortization expense for these intangible assets (in thousands):
Year Ending September 30, | ||||
2017 (Apr - Sept) | $ | 40,750 | ||
2018 | 67,713 | |||
2019 | 55,112 | |||
2020 | 44,527 | |||
2021 | 35,378 | |||
Thereafter | 122,977 | |||
$ | 366,457 |
8. | Financing Arrangements |
In connection with the RSG Acquisition on October 1, 2015, the Company entered into various financing arrangements totaling $1.45 billion. A “Senior Secured Credit Facility” was entered into that is comprised of an asset-based revolving line of credit (“ABL”) of $700.0 million ($350.0 million of which was drawn at closing) and a new $450.0 million term loan (“Term Loan”). The Company also raised an additional $300.0 million through the issuance of senior notes (the “Senior Notes”).
The proceeds from the Senior Secured Credit Facility and Senior Notes were used to provide working capital and funds for other general corporate purposes, to refinance or otherwise extinguish all third-party indebtedness for borrowed money under Company’s and RSG’s existing senior secured credit facilities and RSG’s unsecured senior notes due 2020, to finance the acquisition, and to pay fees and expenses associated with the RSG acquisition. The Company incurred financing costs totaling approximately $31.3 million.
15
The following table summarizes all financing arrangements the Company has entered into (in thousands):
March 31, | September 30, | March 31, | ||||||||||
2017 | 2016 | 2016 | ||||||||||
Senior Secured Credit Facility | ||||||||||||
Revolving Lines of Credit: | ||||||||||||
U.S. Revolver, expires October 1, 2020 1 | $ | 269,124 | $ | 355,087 | $ | 295,690 | ||||||
Canadian Revolver, expires October 1, 20202 | - | 4,574 | - | |||||||||
Term Loan, matures October 1, 20223 | 434,912 | 436,380 | 436,632 | |||||||||
Total borrowings under Senior Secured Credit Facility | 704,036 | 796,041 | 732,322 | |||||||||
Less: current portion | (4,500 | ) | (4,500 | ) | (4,500 | ) | ||||||
Total long-term borrowings under Senior Secured Credit Facility | $ | 699,536 | $ | 791,541 | $ | 727,822 | ||||||
Senior Notes | ||||||||||||
Senior Notes, matures October 20234 | 291,689 | 291,049 | 290,410 | |||||||||
Less: current portion | - | - | - | |||||||||
Total long-term borrowings under Senior Notes | $ | 291,689 | $ | 291,049 | $ | 290,410 | ||||||
Equipment Financing Facilities and Other | ||||||||||||
Equipment financing facilities, various maturities through September 20215 | $ | 17,949 | $ | 20,419 | $ | 22,855 | ||||||
Capital lease obligations, various maturities through November 20216 | 22,204 | 25,013 | 25,130 | |||||||||
Total obligations under equipment financing facilities and other | 40,153 | 45,432 | 47,985 | |||||||||
Less: current portion | (9,514 | ) | (10,311 | ) | (7,659 | ) | ||||||
Total long-term obligations under equipment financing facilities and other | $ | 30,639 | $ | 35,121 | $ | 40,326 |
1 | - | Effective rates on borrowings are 2.97% as of March 31, 2017; 2.90% as of September 30, 2016; and 2.58% as of March 31, 2016 |
2 | - | Effective rates on borrowings are 3.20% as of March 31, 2017, September 30, 2016 and March 31, 2016 |
3 | - | Interest rate of 3.50% as of March 31, 2017; 3.50% as of September 30, 2016; 4.00% as of March 31, 2016 |
4 | - | Interest rate of 6.38% as of March 31, 2017, September 30, 2016 and March 31, 2016 |
5 | - | Fixed interest rates ranging from 2.33% to 3.25% as of March 31, 2017 and September 30, 2016; 2.33% to 4.49% as of March 31, 2016 |
6 | - | Fixed interest rates ranging from 2.72% to 10.39% as of March 31, 2017, September 30, 2016, and March 31, 2016 |
Asset-based Line of Credit (“ABL”)
On October 1, 2015, the Company entered into a $700 million ABL with Wells Fargo Bank, N.A. and a syndicate of other lenders. This ABL consists of revolving loans in both the United States (“U.S. Revolver”) in the amount of $670.0 million and Canada (“Canada Revolver”) in the amount of $30.0 million.
The ABL has a maturity date of October 1, 2020. The U.S. Revolver has various tranches of borrowings, bearing interest at rates ranging from 2.39% to 4.50%. The effective rate of these borrowings is 2.97% and is paid monthly. As of March 31, 2017, the outstanding balance on the U.S. Revolver and Canada Revolvers, net of debt issuance fees, was $269.1 million. The U.S. Revolver also has outstanding standby letters of credit in the amount of $10.4 million as of March 31, 2017. Current unused commitment fees on the revolving credit facilities are 0.25% per annum.
There is one financial covenant under the ABL, which is a Consolidated Fixed Charge Ratio. The Consolidated Fixed Charge Ratio is calculated by dividing consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) by Consolidated Fixed Charges (as defined in the agreement). Per the covenant, the Company’s Consolidated Fixed Charge Ratio must be a minimum of 1.00 at the end of each fiscal quarter, calculated on a trailing four quarter basis. The covenant is only applicable when the borrowing availability is less than 10% of the maximum loan cap or $60.0 million. The ABL is guaranteed jointly and severally and fully and unconditionally by the Company’s active United States subsidiary.
Term Loan
On October 1, 2015, the Company entered into a $450.0 million Term Loan with Citibank N.A., and a syndicate of other lenders. The Term Loan requires quarterly principal payments in the amount of $1.1 million, with the remaining outstanding principal to be paid on its maturity date of October 1, 2022. The interest rate paid is based on a LIBOR rate (with a floor) plus a fixed spread. The Company has the option of selecting a LIBOR period that determines the rate at which interest can accrue on the Term Loan as well as the period in which interest payments are made.
16
On September 16, 2016, the Company refinanced its Term Loan, lowering the LIBOR floor by 25 basis points and lowering the spread by 25 basis points. As a result of the refinancing, the Company wrote off $1.6 million of debt issuance costs in interest expense. As of March 31, 2017, the outstanding balance on the Term Loan, net of debt issuance fees, was $434.9 million. The Term Loan is guaranteed jointly and severally and fully and unconditionally by the Company’s active United States subsidiary.
Senior Notes
On October 1, 2015, the Company raised $300.0 million by issuing senior notes due 2023 (the “Senior Notes”). The Senior Notes have a coupon rate of 6.38% per annum and are payable semi-annually in arrears beginning April 1, 2016. There are early payment provisions in the Senior Note indenture in which the Company would be subject to “make whole” provisions. Management anticipates repaying the notes at the maturity date of October 1, 2023. As of March 31, 2017 the outstanding balance on the Senior Notes, net of debt issuance fees, was $291.7 million. The Senior Notes are guaranteed jointly and severally and fully and unconditionally by the Company’s active United States subsidiary.
Other Information
The Senior Secured Credit Facility and the previous credit facility it replaced had certain lenders who participated in both arrangements, therefore management accounted for a portion of this transaction as a debt modification and a portion as a debt extinguishment. In accordance with the accounting for debt modification, the Company expensed $2.2 million of direct issuance costs incurred and will amortize the previously capitalized issuance costs over the term of the Senior Secured Credit Facility. The remainder of the settlement of the Company’s previous financing arrangements was accounted for as debt extinguishment, for which the Company recognized a loss of $0.8 million in the first quarter of fiscal year 2016.
Equipment Financing Facilities and Other
As of March 31, 2017, the Company had a $17.9 million outstanding under equipment financing facilities, with fixed interest rates ranging from 2.33% to 3.25% and payments due through September 2021.
As of March 31, 2017 the Company had $22.2 million of capital lease obligations outstanding. These leases have interest rates ranging from 2.72% to 10.39% with payments due through November 2021.
9. | Commitments and Contingencies |
Operating Leases
The Company mostly operates in leased facilities, which are accounted for as operating leases. The leases typically provide for a base rent plus real estate taxes. Certain of the leases provide for escalating rents over the lives of the leases and rent expense is recognized over the terms of those leases on a straight-line basis.
For the three months ended March 31, 2017 and 2016, rent expense was $14.7 million and $14.6 million, respectively. For the six months ended March 31, 2017 and 2016, rent expense was $28.9 million and $30.6 million, respectively. Sublet income was immaterial for each of these periods.
Contingencies
The Company is subject to loss contingencies pursuant to various federal, state and local environmental laws and regulations; however, the Company is not aware of any reasonably possible losses that would have a material impact on its results of operations, financial position, or liquidity. Potential loss contingencies include possible obligations to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical or other substances by the Company or by other parties. In connection with its acquisitions, the Company’s practice is to request indemnification for any and all known material liabilities of significance as of the respective dates of acquisition. Historically, environmental liabilities have not had a material impact on the Company's results of operations, financial position or liquidity.
The Company is subject to litigation from time to time in the ordinary course of business; however the Company does not expect the results, if any, to have a material adverse impact on its results of operations, financial position or liquidity.
17
10. | Geographic Data |
The following tables summarize certain geographic information for the periods presented (in thousands):
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net sales | ||||||||||||||||
U.S. | $ | 849,226 | $ | 803,675 | $ | 1,809,461 | $ | 1,735,018 | ||||||||
Canada | 21,498 | 19,862 | 63,447 | 64,999 | ||||||||||||
Total net sales | $ | 870,724 | $ | 823,537 | $ | 1,872,908 | $ | 1,800,017 | ||||||||
March 31, | September 30, | March 31, | ||||||||||||||
2017 | 2016 | 2016 | ||||||||||||||
Long-lived assets | ||||||||||||||||
U.S. | $ | 511,507 | $ | 527,680 | $ | 536,512 | ||||||||||
Canada | 12,841 | 13,374 | 12,444 | |||||||||||||
Total long-lived assets | $ | 524,348 | $ | 541,054 | $ | 548,956 |
11. | Fair Value Measurement |
As of March 31, 2017, the carrying amount of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses approximated fair value because of the short-term nature of these instruments. The Company measures its cash equivalents at amortized cost, which approximates fair value based upon quoted market prices (Level 1). Based upon recent trading prices (Level 2 — market approach) as of March 31, 2017, the fair value of the Company’s $300.0 million Senior Notes was $321.0 million. As of March 31, 2017, the fair value of the Company’s Senior Secured Credit Facility approximated the amount outstanding. The Company estimates the fair value of its Senior Secured Credit Facility by discounting the future cash flows of each instrument using estimated market rates of debt instruments with similar maturities and credit profiles (Level 3).
12. | Supplemental Guarantor Information |
All of the Senior Notes issued on October 1, 2015 are guaranteed jointly and severally by all of the United States subsidiaries of the Company (collectively, the “Guarantors”), and not by the Canadian subsidiaries of the Company. Such guarantees are full and unconditional. Supplemental condensed consolidating financial information of the Company, including such information for the Guarantors, is presented below. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent entities. Investments in subsidiaries are presented using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. Separate financial statements of the Guarantors are not provided as the consolidating financial information contained herein provides a more meaningful disclosure to allow investors to determine the nature of the assets held by, and the operations of, the combined groups.
18
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Balance Sheets
(Unaudited; In thousands)
March 31, 2017 | ||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | - | $ | 24,181 | $ | 1,946 | $ | (16,115 | ) | $ | 10,012 | |||||||||
Accounts receivable, net | - | 490,724 | 15,437 | 225 | 506,386 | |||||||||||||||
Inventories, net | - | 556,463 | 24,426 | - | 580,889 | |||||||||||||||
Prepaid expenses and other current assets | 28,952 | 184,764 | 3,673 | - | 217,389 | |||||||||||||||
Total current assets | 28,952 | 1,256,132 | 45,482 | (15,890 | ) | 1,314,676 | ||||||||||||||
Intercompany receivable, net | - | 961,450 | - | (961,450 | ) | - | ||||||||||||||
Investments in consolidated subsidiaries | 2,959,542 | - | - | (2,959,542 | ) | - | ||||||||||||||
Deferred income taxes, net | 57,419 | - | - | (57,419 | ) | - | ||||||||||||||
Property and equipment, net | 5,614 | 140,918 | 9,848 | - | 156,380 | |||||||||||||||
Goodwill | - | 1,198,805 | 29,254 | - | 1,228,059 | |||||||||||||||
Intangibles, net | - | 436,513 | 2,994 | - | 439,507 | |||||||||||||||
Other assets, net | 1,242 | 269 | - | - | 1,511 | |||||||||||||||
Total Assets | $ | 3,052,769 | $ | 3,994,087 | $ | 87,578 | $ | (3,994,301 | ) | $ | 3,140,133 | |||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | 27,209 | $ | 468,144 | $ | 6,865 | $ | (15,890 | ) | $ | 486,328 | |||||||||
Accrued expenses | 26,226 | 103,045 | 1,993 | - | 131,264 | |||||||||||||||
Current portions of long-term debt | 4,500 | 9,514 | - | - | 14,014 | |||||||||||||||
Total current liabilities | 57,935 | 580,703 | 8,858 | (15,890 | ) | 631,606 | ||||||||||||||
Intercompany payable, net | 923,565 | - | 37,885 | (961,450 | ) | - | ||||||||||||||
Borrowings under revolving lines of credit, net | - | 269,124 | - | - | 269,124 | |||||||||||||||
Long-term debt, net | 722,101 | - | - | - | 722,101 | |||||||||||||||
Deferred income taxes, net | - | 194,556 | 358 | (57,419 | ) | 137,495 | ||||||||||||||
Long-term obligations under equipment financing and other, net | - | 30,593 | 46 | - | 30,639 | |||||||||||||||
Total liabilities | 1,703,601 | 1,074,976 | 47,147 | (1,034,759 | ) | 1,790,965 | ||||||||||||||
Total stockholders' equity | 1,349,168 | 2,919,111 | 40,431 | (2,959,542 | ) | 1,349,168 | ||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 3,052,769 | $ | 3,994,087 | $ | 87,578 | $ | (3,994,301 | ) | $ | 3,140,133 |
19
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Balance Sheets
(Unaudited; In thousands)
September 30, 2016 | ||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | - | $ | 37,447 | $ | 2,876 | $ | (8,937 | ) | $ | 31,386 | |||||||||
Accounts receivable, net | - | 593,395 | 34,710 | (1,140 | ) | 626,965 | ||||||||||||||
Inventories, net | - | 460,516 | 20,220 | - | 480,736 | |||||||||||||||
Prepaid expenses and other current assets | 3,527 | 153,681 | 5,895 | - | 163,103 | |||||||||||||||
Total current assets | 3,527 | 1,245,039 | 63,701 | (10,077 | ) | 1,302,190 | ||||||||||||||
Intercompany receivable, net | - | 878,931 | - | (878,931 | ) | - | ||||||||||||||
Investments in consolidated subsidiaries | 2,891,677 | - | - | (2,891,677 | ) | - | ||||||||||||||
Deferred income taxes, net | 59,567 | - | - | (59,567 | ) | - | ||||||||||||||
Property and equipment, net | 4,626 | 133,897 | 10,046 | - | 148,569 | |||||||||||||||
Goodwill | - | 1,167,905 | 29,660 | - | 1,197,565 | |||||||||||||||
Intangibles, net | - | 460,696 | 3,328 | - | 464,024 | |||||||||||||||
Other assets, net | 1,242 | 269 | - | - | 1,511 | |||||||||||||||
Total Assets | $ | 2,960,639 | $ | 3,886,737 | $ | 106,735 | $ | (3,840,252 | ) | $ | 3,113,859 | |||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | 26,630 | $ | 329,895 | $ | 14,467 | $ | (10,077 | ) | $ | 360,915 | |||||||||
Accrued expenses | 42,594 | 114,016 | 4,503 | - | 161,113 | |||||||||||||||
Current portions of long-term obligations | 4,500 | 10,311 | - | - | 14,811 | |||||||||||||||
Total current liabilities | 73,724 | 454,222 | 18,970 | (10,077 | ) | 536,839 | ||||||||||||||
Intercompany payable, net | 840,159 | - | 38,772 | (878,931 | ) | - | ||||||||||||||
Borrowings under revolving lines of credit, net | - | 355,087 | 4,574 | - | 359,661 | |||||||||||||||
Long-term debt, net | 722,929 | - | - | - | 722,929 | |||||||||||||||
Deferred income taxes, net | - | 194,556 | 493 | (59,567 | ) | 135,482 | ||||||||||||||
Long-term obligations under equipment financing and other, net | - | 35,074 | 47 | - | 35,121 | |||||||||||||||
Total liabilities | 1,636,812 | 1,038,939 | 62,856 | (948,575 | ) | 1,790,032 | ||||||||||||||
Total stockholders' equity | 1,323,827 | 2,847,798 | 43,879 | (2,891,677 | ) | 1,323,827 | ||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 2,960,639 | $ | 3,886,737 | $ | 106,735 | $ | (3,840,252 | ) | $ | 3,113,859 |
20
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Balance Sheets
(Unaudited; In thousands)
March 31, 2016 | ||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | - | $ | 28,831 | $ | 4,689 | $ | (18,679 | ) | $ | 14,841 | |||||||||
Accounts receivable, net | - | 476,860 | 15,130 | (1,140 | ) | 490,850 | ||||||||||||||
Inventories, net | - | 483,582 | 30,168 | - | 513,750 | |||||||||||||||
Prepaid expenses and other current assets | 16,474 | 145,102 | 3,049 | - | 164,625 | |||||||||||||||
Total current assets | 16,474 | 1,134,375 | 53,036 | (19,819 | ) | 1,184,066 | ||||||||||||||
Intercompany receivable, net | 802,015 | - | (802,015 | ) | - | |||||||||||||||
Investments in consolidated subsidiaries | 2,716,780 | - | - | (2,716,780 | ) | - | ||||||||||||||
Deferred income taxes, net | 17,403 | - | - | (17,403 | ) | - | ||||||||||||||
Property and equipment, net | 3,740 | 135,511 | 8,743 | - | 147,994 | |||||||||||||||
Goodwill | - | 1,130,818 | 29,957 | - | 1,160,775 | |||||||||||||||
Intangibles, net | - | 468,881 | 3,701 | - | 472,582 | |||||||||||||||
Other assets, net | 1,233 | 197 | - | - | 1,430 | |||||||||||||||
Total Assets | $ | 2,755,630 | $ | 3,671,797 | $ | 95,437 | $ | (3,556,017 | ) | $ | 2,966,847 | |||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | 34,045 | $ | 392,032 | $ | 11,736 | $ | (19,819 | ) | $ | 417,994 | |||||||||
Accrued expenses | 10,390 | 137,378 | 4,924 | - | 152,692 | |||||||||||||||
Current portions of long-term obligations | 4,500 | 7,659 | - | - | 12,159 | |||||||||||||||
Total current liabilities | 48,935 | 537,069 | 16,660 | (19,819 | ) | 582,845 | ||||||||||||||
Intercompany payable, net | 764,168 | - | 37,847 | (802,015 | ) | - | ||||||||||||||
Borrowings under revolving lines of credit | - | 295,690 | - | - | 295,690 | |||||||||||||||
Long-term debt, net | 722,542 | - | - | - | 722,542 | |||||||||||||||
Deferred income taxes, net | - | 119,855 | 426 | (17,403 | ) | 102,878 | ||||||||||||||
Long-term obligations under equipment financing and other, net | - | 42,860 | 47 | - | 42,907 | |||||||||||||||
Total liabilities | 1,535,645 | 995,474 | 54,980 | (839,237 | ) | 1,746,862 | ||||||||||||||
Total stockholders' equity | 1,219,985 | 2,676,323 | 40,457 | (2,716,780 | ) | 1,219,985 | ||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 2,755,630 | $ | 3,671,797 | $ | 95,437 | $ | (3,556,017 | ) | $ | 2,966,847 |
21
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Statements of Operations
(Unaudited; In thousands, except share and per share amounts)
Three Months Ended March 31, 2017 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Eliminations | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | and Other | Consolidated | ||||||||||||||||
Net sales | $ | - | $ | 849,226 | $ | 21,498 | $ | - | $ | 870,724 | ||||||||||
Cost of products sold | - | 649,595 | 16,652 | - | 666,247 | |||||||||||||||
Gross profit | - | 199,631 | 4,846 | - | 204,477 | |||||||||||||||
Operating expense | 7,010 | 193,448 | 7,075 | - | 207,533 | |||||||||||||||
Intercompany charges (income) | (12,555 | ) | 11,993 | 562 | - | - | ||||||||||||||
Income (loss) from operations | 5,545 | (5,810 | ) | (2,791 | ) | - | (3,056 | ) | ||||||||||||
Interest expense, financing costs, and other | 3,983 | 8,003 | 282 | - | 12,268 | |||||||||||||||
Intercompany interest expense (income) | (5,089 | ) | 5,089 | - | - | - | ||||||||||||||
Income (loss) before provision for income taxes | 6,651 | (18,902 | ) | (3,073 | ) | - | (15,324 | ) | ||||||||||||
Provision for (benefit from) income taxes | 2,444 | (7,568 | ) | (844 | ) | - | (5,968 | ) | ||||||||||||
Income (loss) before equity in net income of subsidiaries | 4,207 | (11,334 | ) | (2,229 | ) | - | (9,356 | ) | ||||||||||||
Equity in net loss of subsidiaries | (13,563 | ) | - | - | 13,563 | - | ||||||||||||||
Net loss | $ | (9,356 | ) | $ | (11,334 | ) | $ | (2,229 | ) | $ | 13,563 | $ | (9,356 | ) | ||||||
Weighted-average common stock outstanding: | ||||||||||||||||||||
Basic | 60,141,580 | |||||||||||||||||||
Diluted | 60,141,580 | |||||||||||||||||||
Net income (loss) per share: | ||||||||||||||||||||
Basic | $ | (0.16 | ) | |||||||||||||||||
Diluted | $ | (0.16 | ) | |||||||||||||||||
Three Months Ended March 31, 2016 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Eliminations | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | and Other | Consolidated | ||||||||||||||||
Net sales | $ | - | $ | 803,781 | $ | 19,862 | $ | (106 | ) | $ | 823,537 | |||||||||
Cost of products sold | - | 612,646 | 15,233 | (106 | ) | 627,773 | ||||||||||||||
Gross profit | - | 191,135 | 4,629 | - | 195,764 | |||||||||||||||
Operating expenses | 27,987 | 157,398 | 6,496 | - | 191,881 | |||||||||||||||
Intercompany charges (income) | (17,593 | ) | 16,270 | 1,323 | - | - | ||||||||||||||
Income (loss) from operations | (10,394 | ) | 17,467 | (3,190 | ) | - | 3,883 | |||||||||||||
Interest expense, financing costs, and other | 4,763 | 8,267 | (4 | ) | - | 13,026 | ||||||||||||||
Intercompany interest expense (income) | (4,795 | ) | 4,412 | 383 | - | - | ||||||||||||||
Income (loss) before provision for income taxes | (10,362 | ) | 4,788 | (3,569 | ) | - | (9,143 | ) | ||||||||||||
Provision for (benefit from) income taxes | (11,141 | ) | 8,663 | (946 | ) | - | (3,424 | ) | ||||||||||||
Income (loss) before equity in net income of subsidiaries | 779 | (3,875 | ) | (2,623 | ) | - | (5,719 | ) | ||||||||||||
Equity in net loss of subsidiaries | (6,498 | ) | - | - | 6,498 | - | ||||||||||||||
Net loss | $ | (5,719 | ) | $ | (3,875 | ) | $ | (2,623 | ) | $ | 6,498 | $ | (5,719 | ) | ||||||
Weighted-average common stock outstanding: | ||||||||||||||||||||
Basic | 59,295,990 | |||||||||||||||||||
Diluted | 59,295,990 | |||||||||||||||||||
Net income (loss) per share: | ||||||||||||||||||||
Basic | $ | (0.10 | ) | |||||||||||||||||
Diluted | $ | (0.10 | ) |
22
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Statements of Operations
(Unaudited; In thousands, except share and per share amounts)
Six Months Ended March 31, 2017 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Eliminations | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | and Other | Consolidated | ||||||||||||||||
Net sales | $ | - | $ | 1,809,461 | $ | 63,447 | $ | - | $ | 1,872,908 | ||||||||||
Cost of products sold | - | 1,368,129 | 49,235 | - | 1,417,364 | |||||||||||||||
Gross profit | - | 441,332 | 14,212 | - | 455,544 | |||||||||||||||
Operating expense | 15,656 | 380,521 | 15,466 | - | 411,643 | |||||||||||||||
Intercompany charges (income) | (24,508 | ) | 23,392 | 1,116 | - | - | ||||||||||||||
Income from operations | 8,852 | 37,419 | (2,370 | ) | - | 43,901 | ||||||||||||||
Interest expense, financing costs, and other | 19,337 | 5,458 | 1,047 | - | 25,842 | |||||||||||||||
Intercompany interest expense (income) | (10,682 | ) | 10,682 | - | - | - | ||||||||||||||
Income (loss) before provision for income taxes | 197 | 21,279 | (3,417 | ) | - | 18,059 | ||||||||||||||
Provision for (benefit from) income taxes | (410 | ) | 8,334 | (939 | ) | - | 6,985 | |||||||||||||
Income (loss) before equity in net income of subsidiaries | 607 | 12,945 | (2,478 | ) | - | 11,074 | ||||||||||||||
Equity in net income of subsidiaries | 10,467 | - | - | (10,467 | ) | - | ||||||||||||||
Net income (loss) | $ | 11,074 | $ | 12,945 | $ | (2,478 | ) | $ | (10,467 | ) | $ | 11,074 | ||||||||
Weighted-average common stock outstanding: | ||||||||||||||||||||
Basic | 60,041,332 | |||||||||||||||||||
Diluted | 61,069,938 | |||||||||||||||||||
Net income per share: | ||||||||||||||||||||
Basic | $ | 0.18 | ||||||||||||||||||
Diluted | $ | 0.18 | ||||||||||||||||||
Six Months Ended March 31, 2016 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Eliminations | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | and Other | Consolidated | ||||||||||||||||
Net sales | $ | - | $ | 1,735,265 | $ | 64,999 | $ | (247 | ) | $ | 1,800,017 | |||||||||
Cost of products sold | - | 1,321,029 | 50,283 | (247 | ) | 1,371,065 | ||||||||||||||
Gross profit | - | 414,236 | 14,716 | - | 428,952 | |||||||||||||||
Operating expenses | 59,159 | 324,412 | 14,654 | - | 398,225 | |||||||||||||||
Intercompany charges (income) | (25,440 | ) | 23,456 | 1,984 | - | - | ||||||||||||||
Income (loss) from operations | (33,719 | ) | 66,368 | (1,922 | ) | - | 30,727 | |||||||||||||
Interest expense, financing costs, and other | 14,637 | 14,505 | 140 | - | 29,282 | |||||||||||||||
Intercompany interest expense (income) | (8,721 | ) | 7,949 | 772 | - | - | ||||||||||||||
Income (loss) before provision for income taxes | (39,635 | ) | 43,914 | (2,834 | ) | - | 1,445 | |||||||||||||
Provision for (benefit from) income taxes | (20,873 | ) | 21,670 | (751 | ) | - | 46 | |||||||||||||
Income (loss) before equity in net income of subsidiaries | (18,762 | ) | 22,244 | (2,083 | ) | - | 1,399 | |||||||||||||
Equity in net income of subsidiaries | 20,161 | - | - | (20,161 | ) | - | ||||||||||||||
Net income (loss) | $ | 1,399 | $ | 22,244 | $ | (2,083 | ) | $ | (20,161 | ) | $ | 1,399 | ||||||||
Weighted-average common stock outstanding: | ||||||||||||||||||||
Basic | 59,133,569 | |||||||||||||||||||
Diluted | 60,077,852 | |||||||||||||||||||
Net income per share: | ||||||||||||||||||||
Basic | $ | 0.02 | ||||||||||||||||||
Diluted | $ | 0.02 |
23
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Statements of Comprehensive Income
(Unaudited; In thousands)
Three Months Ended March 31, 2017 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Eliminations | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | and Other | Consolidated | ||||||||||||||||
Net loss | $ | (9,356 | ) | $ | (11,334 | ) | $ | (2,229 | ) | $ | 13,563 | $ | (9,356 | ) | ||||||
Other comprehensive income: | ||||||||||||||||||||
Foreign currency translation adjustment | 813 | - | 813 | (813 | ) | 813 | ||||||||||||||
Total other comprehensive income | 813 | - | 813 | (813 | ) | 813 | ||||||||||||||
Comprehensive loss | $ | (8,543 | ) | $ | (11,334 | ) | $ | (1,416 | ) | $ | 12,750 | $ | (8,543 | ) |
Three Months Ended March 31, 2016 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Eliminations | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | and Other | Consolidated | ||||||||||||||||
Net loss | $ | (5,719 | ) | $ | (3,875 | ) | $ | (2,623 | ) | $ | 6,498 | $ | (5,719 | ) | ||||||
Other comprehensive income: | ||||||||||||||||||||
Foreign currency translation adjustment | 4,226 | - | 4,226 | (4,226 | ) | 4,226 | ||||||||||||||
Total other comprehensive income | 4,226 | - | 4,226 | (4,226 | ) | 4,226 | ||||||||||||||
Comprehensive income (loss) | $ | (1,493 | ) | $ | (3,875 | ) | $ | 1,603 | $ | 2,272 | $ | (1,493 | ) |
Six Months Ended March 31, 2017 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Eliminations | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | and Other | Consolidated | ||||||||||||||||
Net income (loss) | $ | 11,074 | $ | 12,945 | $ | (2,478 | ) | $ | (10,467 | ) | $ | 11,074 | ||||||||
Other comprehensive income: | ||||||||||||||||||||
Foreign currency translation adjustment | (839 | ) | - | (839 | ) | 839 | (839 | ) | ||||||||||||
Total other comprehensive loss | (839 | ) | - | (839 | ) | 839 | (839 | ) | ||||||||||||
Comprehensive income (loss) | $ | 10,235 | $ | 12,945 | $ | (3,317 | ) | $ | (9,628 | ) | $ | 10,235 |
Six Months Ended March 31, 2016 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Eliminations | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | and Other | Consolidated | ||||||||||||||||
Net income (loss) | $ | 1,399 | $ | 22,244 | $ | (2,083 | ) | $ | (20,161 | ) | $ | 1,399 | ||||||||
Other comprehensive income: | ||||||||||||||||||||
Foreign currency translation adjustment | 1,757 | - | 1,757 | (1,757 | ) | 1,757 | ||||||||||||||
Total other comprehensive income | 1,757 | - | 1,757 | (1,757 | ) | 1,757 | ||||||||||||||
Comprehensive income (loss) | $ | 3,156 | $ | 22,244 | $ | (326 | ) | $ | (21,918 | ) | $ | 3,156 |
24
BEACON ROOFING SUPPLY, INC.
Condensed Consolidating Statements of Cash Flows
(Unaudited; In thousands)
Six Months Ended March 31, 2017 | ||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||||
Net cash provided by (used in) operating activities | $ | (29,347 | ) | $ | 181,847 | $ | 5,121 | $ | (7,178 | ) | $ | 150,443 | ||||||||
Investing Activities | ||||||||||||||||||||
Purchases of property and equipment | (1,709 | ) | (21,742 | ) | (780 | ) | - | (24,231 | ) | |||||||||||
Acquisition of businesses | (58,359 | ) | - | - | - | (58,359 | ) | |||||||||||||
Proceeds from the sale of assets | - | 1,274 | 11 | - | 1,285 | |||||||||||||||
Intercompany activity | 83,397 | - | - | (83,397 | ) | - | ||||||||||||||
Net cash provided by (used in) investing activities | 23,329 | (20,468 | ) | (769 | ) | (83,397 | ) | (81,305 | ) | |||||||||||
Financing Activities | ||||||||||||||||||||
Borrowings under revolving lines of credit | - | 852,583 | 4,516 | - | 857,099 | |||||||||||||||
Repayments under revolving lines of credit | - | (939,438 | ) | (9,032 | ) | - | (948,470 | ) | ||||||||||||
Repayments under term loan | (1,125 | ) | - | - | - | (1,125 | ) | |||||||||||||
Borrowings under equipment financing facilities and other | - | 1,579 | - | - | 1,579 | |||||||||||||||
Repayments under equipment financing facilities and other | - | (6,857 | ) | - | - | (6,857 | ) | |||||||||||||
Proceeds from issuance of common stock | 7,840 | - | - | - | 7,840 | |||||||||||||||
Taxes paid related to net share settelement of equity awards | (697 | ) | - | - | - | (697 | ) | |||||||||||||
Intercompany activity | - | (82,512 | ) | (885 | ) | 83,397 | - | |||||||||||||
Net cash provided by (used in) financing activities | 6,018 | (174,645 | ) | (5,401 | ) | 83,397 | (90,631 | ) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | - | - | 119 | - | 119 | |||||||||||||||
Net decrease in cash and cash equivalents | - | (13,266 | ) | (930 | ) | (7,178 | ) | (21,374 | ) | |||||||||||
Cash and cash equivalents, beginning of period | - | 37,447 | 2,876 | (8,937 | ) | 31,386 | ||||||||||||||
Cash and cash equivalents, end of period | $ | - | $ | 24,181 | $ | 1,946 | $ | (16,115 | ) | $ | 10,012 |
Six Months Ended March 31, 2016 | ||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations and Other | Consolidated | ||||||||||||||||
Net cash provided by (used in) operating activities | $ | (41,213 | ) | $ | 127,076 | $ | 9,262 | $ | (14,473 | ) | $ | 80,652 | ||||||||
Investing Activities | ||||||||||||||||||||
Purchases of property and equipment | (1,507 | ) | (9,093 | ) | (459 | ) | - | (11,059 | ) | |||||||||||
Acquisition of businesses | (941,156 | ) | - | - | - | (941,156 | ) | |||||||||||||
Proceeds from the sale of assets | - | 377 | - | - | 377 | |||||||||||||||
Intercompany activity | 423,620 | - | - | (423,620 | ) | - | ||||||||||||||
Net cash used in investing activities | (519,043 | ) | (8,716 | ) | (459 | ) | (423,620 | ) | (951,838 | ) | ||||||||||
Financing Activities | ||||||||||||||||||||
Borrowings under revolving lines of credit | - | 1,017,128 | - | - | 1,017,128 | |||||||||||||||
Repayments under revolving lines of credit | - | (713,407 | ) | (11,448 | ) | - | (724,855 | ) | ||||||||||||
Borrowings under term loan | 450,000 | - | - | - | 450,000 | |||||||||||||||
Repayments under term loan | (187,875 | ) | - | - | - | (187,875 | ) | |||||||||||||
Borrowings under Senior Notes | 300,000 | - | - | - | 300,000 | |||||||||||||||
Repayments under equipment financing facilities and other | - | (2,633 | ) | - | - | (2,633 | ) | |||||||||||||
Payment of deferred financing costs | (18,890 | ) | (8,923 | ) | - | - | (27,813 | ) | ||||||||||||
Proceeds from issuance of common stock | 15,391 | - | - | - | 15,391 | |||||||||||||||
Excess tax benefit from stock-based compensation | 1,630 | - | - | - | 1,630 | |||||||||||||||
Intercompany activity | - | (424,510 | ) | 890 | 423,620 | - | ||||||||||||||
Net cash provided by (used in) financing activities | 560,256 | (132,345 | ) | (10,558 | ) | 423,620 | 840,973 | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | - | - | (607 | ) | - | (607 | ) | |||||||||||||
Net decrease in cash and cash equivalents | - | (13,985 | ) | (2,362 | ) | (14,473 | ) | (30,820 | ) | |||||||||||
Cash and cash equivalents, beginning of period | - | 42,816 | 7,051 | (4,206 | ) | 45,661 | ||||||||||||||
Cash and cash equivalents, end of period | $ | - | $ | 28,831 | $ | 4,689 | $ | (18,679 | ) | $ | 14,841 |
25
13. | Subsequent Events |
On May 1, 2017, the Company purchased certain assets of Lowry’s Inc., a distributor of waterproofing and concrete restoration materials with 11 branches operating in California, Arizona, Utah and Hawaii and annual sales of approximately $76 million.
26
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion and analysis should be read in conjunction with Management’s Discussion and Analysis included in our 2016 Annual Report on Form 10-K and our condensed consolidated financial statements and the notes thereto included elsewhere in this document. Unless otherwise indicated, references to “2017” refer to the three and six month periods ended March 31, 2017 being discussed and references to “2016” refer to the three and six month periods ended March 31, 2016 being discussed. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.
Overview
We are the largest publicly traded distributor of residential and non-residential roofing materials in the United States and Canada. We also distribute complementary building products, including siding, windows, specialty exterior building products, insulation, and waterproofing systems for residential and non-residential building exteriors. We are among the oldest and most established distributors in the industry. We purchase products from a large number of manufacturers and then distribute these goods to a customer base consisting of contractors and, to a lesser extent, general contractors, retailers, and building materials suppliers.
As of March 31, 2017, we operated 375 branches in 47 states throughout the United States and 6 provinces in Canada. We stock one of the most extensive assortments of high quality branded products in the industry, with over 46,000 SKUs available across our branch network, enabling us to deliver products to serve nearly 67,000 customers on a timely basis. For 2016, approximately 97% of our net sales came from customers located in the United States.
Effective execution of both the sales and operating plans enables us to grow beyond the relative strength of the residential and non-residential roofing markets we serve. Our business model is a bottom-up approach, where each of our branches uses its regional knowledge and experience to assist with the development of a marketing plan and stocking a product mix that is best suited for its respective market. Local alignment with overall strategic goals provides the foundation for significant ownership of results at the branch level.
Our distinctive operational model combined with significant branch level autonomy differentiates us from the competition. We provide our customers with value-added services, including, but not limited to, job site delivery, custom designed tapered roofing systems, metal fabrication, and trade credit. We consider customer relations and our employees' knowledge of roofing and exterior building materials to be vital to our ability to increase customer loyalty and maintain customer satisfaction. Our customers’ business success can be enhanced when they are supported by our efficient and effective distribution network. We invest significant resources in professional development, management skills, product knowledge and operational proficiency. We pride ourselves on providing these capabilities developed on a foundation of continuous improvement driving service excellence, productivity and efficiencies.
We seek opportunities to expand our business operations through both acquisitions and organic growth (by opening branches, growing sales with existing customers, adding new customers and introducing new products). Our main acquisition strategy is to target market leaders who do business in geographic areas that we currently do not service or that complement our existing regional operations. The following highlights our recent success in delivering on our growth strategy:
· | Acquisition Growth - 2017: |
- | On December 16, 2016, the Company purchased certain assets of BJ Supply Company, a distributor of roofing and related building products with 1 branch serving Pennsylvania and New Jersey and annual sales of $4 million. |
- | On January 3, 2017, the Company acquired American Building & Roofing, Inc., a distributor of mainly residential roofing and related building products with 7 branches around Washington State and annual sales of $36 million. |
- | On January 9, 2017, the Company acquired Eco Insulation Supply, a distributor of insulation and related accessories with 1 branch serving Connecticut, Southern New England and the New York City metropolitan area and annual sales of $8 million. |
- | On March 1, 2017, the Company acquired Acme Building Materials, Inc., a distributor of residential roofing and related building products with 3 branches in Eastern Michigan and annual sales of $13 million. |
27
· | Acquisition Growth - 2016: |
- | On October 1, 2015, we completed our acquisition of Roofing Supply Group ("RSG"), a leading roofing products distributor, in a cash and stock transaction valued at approximately $1.17 billion. Completion of the RSG acquisition strengthened our position as the largest publicly traded roofing materials and related products distributor in the U.S., with approximately $3.71 billion in combined pro forma net sales at the time of the acquisition. The RSG Acquisition has provided us the opportunity to create a stronger roofing distribution company built upon the foundation of two strong, growing distribution platforms with an extensive national footprint and continued growth potential. On the date of the acquisition, RSG operated 85 branches across 25 states, with 300 to 2,200 SKUs per branch. This acquisition has allowed us to expand our product offerings and increase our cross selling opportunities while maintaining our standards for exceptional customer service and roofing expertise. |
- | We finalized seven additional strategic acquisitions in fiscal year 2016, acquiring 42 branches that significantly enhanced our geographic footprint, particularly in the Southern, Western, and Pacific Northwest regions of the United States: |
o |
On December 1, 2015, we purchased certain assets of RCI Roofing Supply, a distributor of residential and commercial roofing and related products with 5 branches operating in Nebraska, Iowa and Colorado and annual sales of approximately $23 million.
| |
o | On December 18, 2015, we acquired 100% of the equity interests of Roofing and Insulation Supply, a distributor primarily of residential and commercial insulation along with roofing and related products with 20 branches spanning 13 states operating across New England, the Mid-Atlantic, the Southeast, the Upper Midwest, Texas and Colorado and annual sales of approximately $70 million.
| |
o |
On December 29, 2015, we purchased certain assets of Statewide Wholesale, a distributor of residential and commercial roofing and related products with 1 branch located in Denver, Colorado and annual sales of approximately $15 million.
| |
o |
On April 1, 2016, we purchased certain assets of Atlantic Building Products, a distributor of decking, windows, siding, and related products with 2 branches operating in eastern Pennsylvania and annual sales of approximately $5 million.
| |
o |
On April 1, 2016, we purchased certain assets of Lyf-Tym Building Products, a distributor of siding, windows, gutters, vinyl railings, and related products with 6 branches operating in North Carolina and Virginia and annual sales of approximately $20 million.
| |
o |
On May 2, 2016, we purchased certain assets of Fox Brothers Company, a distributor of roofing, siding, windows, doors, and related products with 4 branches operating in Michigan and annual sales of approximately $35 million.
| |
o |
On June 1, 2016, we acquired 100% of the equity interests of Woodfeathers, Inc., a distributor of primarily residential roofing and related products with 4 branches operating in Oregon and Washington and annual sales of approximately $30 million. |
Results of Operations
Comparison of the Three Months Ended March 31, 2017 and 2016
The following tables set forth selected consolidated statement of operations data and such data as a percentage of total revenue for each of the periods indicated:
28
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
(In thousands) | ||||||||
Net sales | $ | 870,724 | $ | 823,537 | ||||
Cost of products sold | 666,247 | 627,773 | ||||||
Gross profit | 204,477 | 195,764 | ||||||
Operating expense | 207,533 | 191,881 | ||||||
Income (loss) from operations | (3,056 | ) | 3,883 | |||||
Interest expense, financing costs, and other | 12,268 | 13,026 | ||||||
Loss before provision for income taxes | (15,324 | ) | (9,143 | ) | ||||
Benefit from income taxes | (5,968 | ) | (3,424 | ) | ||||
Net loss | (9,356 | ) | (5,719 | ) |
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
% of Net Sales | ||||||||
Net sales | 100.0 | % | 100.0 | % | ||||
Cost of products sold | 76.5 | % | 76.2 | % | ||||
Gross profit | 23.5 | % | 23.8 | % | ||||
Operating expense | 23.8 | % | 23.3 | % | ||||
Income (loss) from operations | -0.3 | % | 0.5 | % | ||||
Interest expense, financing costs, and other | 1.4 | % | 1.6 | % | ||||
Loss before provision for income taxes | -1.7 | % | -1.1 | % | ||||
Benefit from income taxes | -0.6 | % | -0.4 | % | ||||
Net loss | -1.1 | % | -0.7 | % |
In managing our business, we consider all growth, including the opening of new branches, to be organic growth unless it results from an acquisition. When we refer to growth in existing markets or organic growth, we include growth from existing and newly opened branches but exclude growth from acquired branches until they have been under our ownership for at least four full fiscal quarters at the start of the fiscal reporting period. When we refer to regions, we are referring to our geographic regions.
As of March 31, 2017, we had a total of 375 branches in operation. Our existing market calculations include 344 branches and exclude 31 branches because they were acquired after the start of the second quarter of fiscal year 2016. When we refer to our net product costs, we are referring to our invoice cost less the impact of short-term buying programs (also referred to as “special buys” given the manner in which they are offered).
The following table presents a summary of our results of operations for the periods presented, broken down by existing markets and acquired markets:
Existing Markets | Acquired Markets | Consolidated | ||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Net sales | $ | 843,368 | $ | 823,537 | $ | 27,356 | $ | - | $ | 870,724 | $ | 823,537 | ||||||||||||
Gross profit | $ | 196,410 | $ | 195,764 | $ | 8,067 | $ | - | $ | 204,477 | $ | 195,764 | ||||||||||||
Gross margin | 23.3 | % | 23.8 | % | 29.5 | % | N/A | 23.5 | % | 23.8 | % | |||||||||||||
Operating expense (1) | $ | 198,868 | $ | 191,881 | $ | 8,665 | $ | - | $ | 207,533 | $ | 191,881 | ||||||||||||
Operating expense as a % of net sales | 23.6 | % | 23.3 | % | 31.7 | % | N/A | 23.8 | % | 23.3 | % | |||||||||||||
Operating income (loss) | $ | (2,458 | ) | $ | 3,883 | $ | (598 | ) | $ | - | $ | (3,056 | ) | $ | 3,883 | |||||||||
Operating margin | -0.3 | % | 0.5 | % | -2.2 | % | N/A | -0.4 | % | 0.5 | % |
1 | During 2017 and 2016, we recorded amortization expense related to intangible assets recorded under purchase accounting of $20.3 million ($1.0 million from acquired markets) and $17.1 million (none from acquired markets), respectively. In addition, existing market operating expense for 2017 and 2016 included non-recurring charges of $9.5 million ($5.8 million, net of taxes) and $11.2 million ($6.7 million, net of taxes), respectively, for the recognition of certain costs related to major acquisitions completed in fiscal years 2016 and 2017 (none from acquired markets for both years). |
29
Net Sales
Consolidated net sales increased $47.2 million, or 5.7%, to $870.7 in 2017 from $823.5 million in 2016. Existing market sales increased $19.8 million, or 2.4% over the same comparative period. We believe the increase in our 2017 existing market sales was influenced primarily by the following factors:
· | increased demand in our residential and complementary product groups; and |
· | favorable weather conditions in most regions and continued re-roof demand from 2016 storms; |
partially offset by:
· | lower average selling prices; |
· | lower commercial product demand; and |
· | unfavorable weather conditions in California, negatively impacting overall demand in the West region |
Net sales within our acquired markets were $27.3 million in 2017, an increase from 2016 due to the sales impact from recent acquisitions.
We estimate the impact of inflation or deflation on our sales and gross profit by looking at changes in our average selling prices and gross margins (discussed below). Average overall selling prices in existing markets declined approximately 1% in 2017 compared to 2016, driven primarily by decreases in residential and non-residential selling prices which were both down approximately 1% year-over-year. The average selling prices of complementary products increased slightly year-over-year. During the same period, net product costs decreased less than 1% year-over-year.
Existing markets net sales by geographical region increased (decreased) from 2016 to 2017 as follows: Northeast (6.0)%; Mid-Atlantic 3.6%; Southeast 7.9%; Southwest 4.9%; Midwest 9.7%; West (18.8)%; and Canada 8.2%. These variations were primarily caused by short-term factors such as local market conditions, weather conditions and storm activity.
Product group sales for our existing markets were as follows:
Three Months Ended March 31, | ||||||||||||||||||||||||
2017 | 2016 | Change | ||||||||||||||||||||||
Net Sales | % | Net Sales | % | $ | % | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Residential roofing products | 473,126 | 56.1 | % | $ | 432,774 | 52.6 | % | $ | 40,352 | 9.3 | % | |||||||||||||
Non-residential roofing products | 243,482 | 28.9 | % | 269,270 | 32.7 | % | (25,788 | ) | -9.6 | % | ||||||||||||||
Complementary building products | 126,760 | 15.0 | % | 121,493 | 14.7 | % | 5,267 | 4.3 | % | |||||||||||||||
Total existing market sales | 843,368 | 100.0 | % | $ | 823,537 | 100.0 | % | $ | 19,831 | 2.4 | % |
For 2017, our acquired markets recognized sales of $10.8 million, $0.5 million and $16.1 million in residential roofing products, non-residential roofing products and complementary building products, respectively. The combination of our 2017 existing market sales of $843.4 million plus the sales from acquired markets of $27.3 million equals our total 2017 sales of $870.7 million. We believe the existing market information is useful to investors because it helps explain organic growth or decline.
30
Gross Profit
Gross profit and gross margin for our consolidated and existing markets were as follows:
Three Months Ended | ||||||||||||||||
March 31, | Change1 | |||||||||||||||
2017 | 2016 | $ | % | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Gross profit - consolidated | $ | 204,477 | $ | 195,764 | $ | 8,713 | 4.5 | % | ||||||||
Gross profit - existing markets | 196,410 | 195,764 | 646 | 0.3 | % | |||||||||||
Gross margin - consolidated | 23.5 | % | 23.8 | % | N/A | -0.3 | % | |||||||||
Gross margin - existing markets | 23.3 | % | 23.8 | % | N/A | -0.5 | % |
1 | Percentage changes for dollar amounts represents the ratable increase or decrease from period-to-period. Percentage changes for percentages represent the net period-to-period change in basis points |
Our existing market gross profit increased $0.6 million, or 0.3%, to $196.4 million in 2017, and gross profit within our acquired markets was $8.1 million for the same period. Our overall gross margins decreased to 23.5% in 2017, mainly due to decrease in residential shingle pricing. Gross margins within our existing markets for 2017 decreased to 23.3%.
Direct sales (products shipped by our vendors directly to our customers), which typically have substantially lower gross margins (and operating expense) compared to our warehouse sales, represented 17.8% and 18.0% of our net sales in 2017 and 2016, respectively. We believe variations in direct sales activity to be primarily caused by short-term factors such as local market conditions, weather conditions and storm activity. None of these variations were driven by material regional impacts from changes in the direct sales mix of our geographical regions.
Operating Expense
Operating expense for consolidated and existing markets was as follows:
Three Months Ended | ||||||||||||||||
March 31, | Change1 | |||||||||||||||
2017 | 2016 | $ | % | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Operating expense - consolidated | $ | 207,533 | $ | 191,881 | $ | 15,652 | 8.2 | % | ||||||||
Operating expense - existing markets | 198,868 | 191,881 | 6,987 | 3.6 | % | |||||||||||
Operating expense as a % of net sales - consolidated | 23.8 | % | 23.3 | % | N/A | 0.5 | % | |||||||||
Operating expense as a % of net sales - existing markets | 23.6 | % | 23.3 | % | N/A | 0.3 | % |
1 | Percentage changes for dollar amounts represents the ratable increase or decrease from period-to-period. Percentage changes for percentages represent the net period-to-period change in basis points |
Operating expense in our existing markets increased by $7.0 million, or 3.6% in 2017, to $198.9 million, as compared to $191.9 million in 2016, while operating expense within our acquired markets was $9.0 million in 2017. The following factors were the leading causes of the increase in operating expense in our existing markets:
· | an increase in depreciation and amortization expense of $3.4 million due to the incremental amortization of intangibles related to the RSG acquisition; |
· |
an increase in selling expense of $1.8 million due to higher sales volume and related employee costs; and
| |
· | an increase in bad debt expense of $1.3 million due to the aging of accounts determined to be uncollectible. |
During 2017 and 2016, we recorded amortization expense related to the intangible assets recorded under purchase accounting within our existing markets of $19.3 million and $17.1 million, respectively. Our existing markets operating expense as a percentage of the related net sales in 2017 was 23.6%, compared to 23.3% in 2016.
31
Interest Expense, Financing Costs and Other
Interest expense, financing costs and other expense was $12.3 million in 2017, as compared to $13.0 million in 2016. The primary driver of the slight decrease is a the lower interest rate from the September 2016 refinancing of our Term Loan and the decrease in outstanding debt as a result of recent principal payments.
Income Taxes
There was an income tax benefit of $6.0 million in 2017, as compared to $3.4 million benefit in 2016. The tax benefit increase was primarily due to the $6.2 million difference in pre-tax net loss for the comparative periods. The effective tax rate before discrete items was relatively flat for the comparative periods. We expect our fiscal year 2017 effective annual income tax rate to average approximately 39.0%, excluding any discrete items.
Comparison of the Six Months Ended March 31, 2017 and 2016
The following tables set forth selected consolidated statement of operations data and such data as a percentage of total revenue for each of the periods indicated:
Six Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
(In thousands) | ||||||||
Net sales | $ | 1,872,908 | $ | 1,800,017 | ||||
Cost of products sold | 1,417,364 | 1,371,065 | ||||||
Gross profit | 455,544 | 428,952 | ||||||
Operating expense | 411,643 | 398,225 | ||||||
Income from operations | 43,901 | 30,727 | ||||||
Interest expense, financing costs, and other | 25,842 | 29,282 | ||||||
Income before provision for income taxes | 18,059 | 1,445 | ||||||
Provision for income taxes | 6,985 | 46 | ||||||
Net income | 11,074 | 1,399 |
Six Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
% of Net Sales | ||||||||
Net sales | 100.0 | % | 100.0 | % | ||||
Cost of products sold | 75.7 | % | 76.2 | % | ||||
Gross profit | 24.3 | % | 23.8 | % | ||||
Operating expense | 22.0 | % | 22.1 | % | ||||
Income from operations | 2.3 | % | 1.7 | % | ||||
Interest expense, financing costs, and other | 1.4 | % | 1.6 | % | ||||
Income before provision for income taxes | 0.9 | % | 0.1 | % | ||||
Provision for income taxes | 0.3 | % | 0.0 | % | ||||
Net income | 0.6 | % | 0.1 | % |
In managing our business, we consider all growth, including the opening of new branches, to be organic growth unless it results from an acquisition. When we refer to growth in existing markets or organic growth, we include growth from existing and newly opened branches but exclude growth from acquired branches until they have been under our ownership for at least four full fiscal quarters at the start of the fiscal reporting period. When we refer to regions, we are referring to our geographic regions.
As of March 31, 2017, we had a total of 375 branches in operation. Our existing market calculations include 321 branches and exclude 54 branches because they were acquired after the start of fiscal year 2016. When we refer to our net product costs, we are referring to our invoice cost less the impact of short-term buying programs (also referred to as “special buys” given the manner in which they are offered).
32
The following table presents a summary of our results of operations for the periods presented, broken down by existing markets and acquired markets:
Existing Markets | Acquired Markets | Consolidated | ||||||||||||||||||||||
Six Months Ended March 31, | ||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Net sales | $ | 1,776,621 | $ | 1,775,700 | $ | 96,287 | $ | 24,317 | $ | 1,872,908 | $ | 1,800,017 | ||||||||||||
Gross profit | $ | 427,660 | $ | 422,310 | $ | 27,884 | $ | 6,642 | $ | 455,544 | $ | 428,952 | ||||||||||||
Gross margin | 24.1 | % | 23.8 | % | 29.0 | % | 27.3 | % | 24.3 | % | 23.8 | % | ||||||||||||
Operating expense (1) | $ | 383,578 | $ | 390,259 | $ | 28,065 | $ | 7,966 | $ | 411,643 | $ | 398,225 | ||||||||||||
Operating expense as a % of net sales | 21.6 | % | 22.0 | % | 29.1 | % | 32.8 | % | 22.0 | % | 22.1 | % | ||||||||||||
Operating income (loss) | $ | 44,081 | $ | 32,051 | $ | (180 | ) | $ | (1,324 | ) | $ | 43,901 | $ | 30,727 | ||||||||||
Operating margin | 2.5 | % | 1.8 | % | -0.2 | % | -5.4 | % | 2.3 | % | 1.7 | % |
1 | During 2017 and 2016, we recorded amortization expense related to intangible assets recorded under purchase accounting of $40.4 million ($4.8 million from acquired markets) and $32.3 million ($1.3 million from acquired markets), respectively. In addition, existing market operating expense for 2017 and 2016 included non-recurring charges of $18.6 million ($11.4 million, net of taxes) and $36.9 million ($22.0 million, net of taxes), respectively, for the recognition of certain costs related to major acquisitions completed in fiscal years 2016 and 2017 (none from acquired markets). |
Net Sales
Consolidated net sales increased $72.9 million, or 4.0%, to $1.87 billion in 2017 from $1.80 billion in 2016. Existing market sales remained relatively flat, increasing $0.9 million, 0.1% over the same comparative period. We believe the slight increase in our 2017 existing market sales was influenced primarily by the following factors:
· | increased residential and complementary product demand |
partially offset by:
· | lower average selling prices |
· | lower commercial product demand; and. |
· | unfavorable weather conditions in our West region, negatively impacting overall demand in that region |
Net sales within our acquired markets were $96.3 million in 2017, an increase from 2016 due to the sales impact from recent acquisitions. In 2016, we acquired a total of 112 branches and closed 29 branches. Closures were primarily a result of facility consolidations due to the acquisitions.
We estimate the impact of inflation or deflation on our sales and gross profit by looking at changes in our average selling prices and gross margins (discussed below). Average overall selling prices in existing markets declined approximately 1% in 2017 compared to 2016, driven primarily by decreases in residential and non-residential selling prices which were both down approximately 1% year-over-year. The average selling prices of complementary products increased slightly year-over-year. During the same period, net product costs decreased less than 1% year-over-year.
Existing markets net sales by geographical region increased (decreased) from 2016 to 2017 as follows: Northeast (9.8)%; Mid-Atlantic 4.9%; Southeast 5.7%; Southwest 9.6%; Midwest 2.9%; West (22.5)%; and Canada (2.4)%. These variations were primarily caused by short-term factors such as local market conditions, weather conditions and storm activity.
33
Product group sales for our existing markets were as follows:
Six Months Ended March 31, | ||||||||||||||||||||||||
2017 | 2016 | Change | ||||||||||||||||||||||
Net Sales | % | Net Sales | % | $ | % | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Residential roofing products | $ | 983,115 | 55.3 | % | $ | 925,484 | 52.1 | % | $ | 57,631 | 6.2 | % | ||||||||||||
Non-residential roofing products | 553,053 | 31.1 | % | 617,096 | 34.8 | % | (64,043 | ) | -10.4 | % | ||||||||||||||
Complementary building products | 240,453 | 13.6 | % | 233,120 | 13.1 | % | 7,333 | 3.1 | % | |||||||||||||||
Total existing market sales | $ | 1,776,621 | 100.0 | % | $ | 1,775,700 | 100.0 | % | $ | 921 | 0.1 | % |
For 2017, our acquired markets recognized sales of $30.0 million, $2.9 million and $63.4 million in residential roofing products, non-residential roofing products and complementary building products, respectively. The combination of our 2017 existing market sales of $1.77 billion plus the sales from acquired markets of $96.3 million equals our total 2017 sales of $1.87 billion. We believe the existing market information is useful to investors because it helps explain organic growth or decline.
Gross Profit
Gross profit and gross margin for our consolidated and existing markets were as follows:
Six Months Ended March 31, | Change1 | |||||||||||||||
2017 | 2016 | $ | % | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Gross profit - consolidated | $ | 455,544 | $ | 428,952 | $ | 26,592 | 6.2 | % | ||||||||
Gross profit - exisiting markets | 427,660 | 422,310 | 5,350 | 1.3 | % | |||||||||||
Gross margin - consolidated | 24.3 | % | 23.8 | % | N/A | 0.5 | % | |||||||||
Gross margin - exisiting markets | 24.1 | % | 23.8 | % | N/A | 0.3 | % |
1 | Percentage changes for dollar amounts represents the ratable increase or decrease from period-to-period. Percentage changes for percentages represent the net period-to-period change in basis points |
Our existing market gross profit increased $5.4 million, or 1.3%, to $427.7 million in 2017, and gross profit within our acquired markets was $27.9 million for the same period. Our overall gross margins improved to 24.3% in 2017, mainly due to a favorable shift in sales mix to residential products. Gross margins within our existing markets for 2017 increased to 24.1%.
Direct sales (products shipped by our vendors directly to our customers), which typically have substantially lower gross margins (and operating expense) compared to our warehouse sales, represented 15.8% and 16.4% of our net sales in 2017 and 2016, respectively. We believe variations in direct sales activity to be primarily caused by short-term factors such as local market conditions, weather conditions and storm activity. None of these variations were driven by material regional impacts from changes in the direct sales mix of our geographical regions.
34
Operating Expense
Operating expense for consolidated and existing markets was as follows:
Six Months Ended March 31, | Change1 | |||||||||||||||
2017 | 2016 | $ | % | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Operating expense - consolidated | $ | 411,643 | $ | 398,225 | $ | 13,418 | 3.4 | % | ||||||||
Operating expense - exisiting markets | 383,578 | 390,259 | (6,681 | ) | -1.7 | % | ||||||||||
Operating expense as a % of net sales - consolidated | 22.0 | % | 22.1 | % | N/A | -0.1 | % | |||||||||
Operating expense as a % of net sales - existing markets | 21.6 | % | 22.0 | % | N/A | -0.4 | % |
1 Percentage changes for dollar amounts represents the ratable increase or decrease from period-to-period. Percentage changes for percentages represent the net period-to-period change in basis points
Operating expense in our existing markets decreased by $6.7 million, or 1.7% in 2017, to $383.6 million, as compared to $390.3 million in 2016, while operating expense within our acquired markets was $28.1 million in 2017. The following factors were the leading causes of the decrease in operating expense in our existing markets:
· |
a decrease in payroll, employee benefits costs, and stock compensation expense of $9.3 million due to additional compensation costs recognized in 2016 as a result of the RSG acquisition; and
| |
· | a decrease in general and administrative, warehouse and other expenses of $7.6 million due to the continued realization of cost synergies and consolidation of certain branches related to recent acquisitions. |
partially offset by:
· | an increase in depreciation and amortization expense of $5.0 million due to the incremental amortization of intangibles related to the RSG acquisition; | |
· |
an increase in selling expense of $3.6 million due to higher sales volume and related employee costs; and | |
· | an increase in bad debt expense of $1.1 million due to the timing of accounts determined to be uncollectible. |
During 2017 and 2016, we recorded amortization expense related to the intangible assets recorded under purchase accounting within our existing markets of $35.6 million and $30.9 million, respectively. Our existing markets operating expense as a percentage of the related net sales in 2017 was 21.6%, compared to 22.0% in 2016.
Interest Expense, Financing Costs and Other
Interest expense, financing costs and other expense was $25.8 million in 2017, as compared to $29.3 million in 2016. The primary driver of the decrease is a lower interest rate from the September 2016 refinancing of our Term Loan and the decrease in outstanding debt as a result of recent principal payments.
Income Taxes
Provision for income taxes was $7.0 million in 2017, as compared to less than $0.1 million in 2016. The increase was primarily due to a $16.6 million increase in pre-tax net income for the comparative periods. The effective tax rate before discrete items was relatively flat for the comparative periods. We expect our fiscal year 2017 effective annual income tax rate to average approximately 39.0%, excluding any discrete items.
Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, we prepare certain financial measures that are not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), specifically:
· | Adjusted Net Income (Loss)/Adjusted EPS | |
· | Adjusted EBITDA |
35
We define Adjusted Net Income (Loss) as net income that excludes certain non-recurring costs and the incremental amortization of intangibles related to major acquisitions completed in fiscal years 2016 and 2017. Adjusted net income per share (“Adjusted EPS”) is calculated by dividing the Adjusted Net Income (Loss) for the period by the weighted-average diluted shares outstanding for the period.
We define Adjusted EBITDA as net income plus interest expense (net of interest income), income taxes, depreciation and amortization, adjustments to contingent consideration, stock-based compensation and certain non-recurring costs from major acquisitions completed in fiscal years 2016 and 2017. EBITDA is a measure commonly used in the distribution industry.
We use these supplemental measures to evaluate performance period over period and to analyze the underlying trends in our business and to establish operational goals and forecasts that are used in allocating resources. We expect to compute our non-GAAP financial measures using the same consistent method from quarter to quarter and year to year.
We feel these measures are useful because they allow investors to better understand year-over-year changes in underlying operating performance. We believe that these non-GAAP measures provide investors and analysts with a measure of operating results unaffected by differences in capital structures and capital investment cycles among otherwise comparable companies. Further, we believe these measures are useful to investors because they improve comparability of results of operations since they eliminate the impact of purchase accounting adjustments that can render operating results non-comparable between periods.
While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for the related financial information prepared in accordance with GAAP. You should not consider any of these measures as a substitute alongside other financial performance measures presented in accordance with GAAP.
The following tables present a reconciliation of net income, the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted Net Income (Loss)/Adjusted EPS and Adjusted EBITDA for each of the periods indicated (in thousands, except per share amounts):
Adjusted Net Income (Loss)/Adjusted EPS
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||||||
Amount | Per Share | Amount | Per Share | Amount | Per Share | Amount | Per Share | |||||||||||||||||||||||||
Net income (loss) | $ | (9,356 | ) | $ | (0.16 | ) | $ | (5,719 | ) | $ | (0.10 | ) | $ | 11,074 | $ | 0.18 | $ | 1,399 | $ | 0.02 | ||||||||||||
Company adjustments, net of income taxes: | ||||||||||||||||||||||||||||||||
Acquisition costs1 | 6,777 | 0.12 | 7,401 | 0.13 | 13,314 | 0.22 | 24,961 | 0.42 | ||||||||||||||||||||||||
Adjusted Net Income (Loss) | $ | (2,579 | ) | $ | (0.04 | ) | $ | 1,682 | $ | 0.03 | $ | 24,388 | $ | 0.40 | $ | 26,360 | $ | 0.44 |
1 Acquisition costs reflect certain non-recurring charges and the incremental amortization of intangibles related to major acquisitions completed in fiscal years 2016 and 2017, net of $4.3 million and $5.0 million in tax for the three months ended March 31, 2017 and 2016, respectively and $8.4 million and $16.9 million in tax for the six months ended March 31, 2017 and 2016, respectively.
Adjusted EBITDA
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income (loss) | $ | (9,356 | ) | $ | (5,719 | ) | $ | 11,074 | $ | 1,399 | ||||||
Acquisition costs1 | 1,584 | 5,451 | 2,744 | 21,155 | ||||||||||||
Interest expense, net | 13,245 | 13,128 | 26,484 | 29,328 | ||||||||||||
Income taxes | (5,968 | ) | (3,424 | ) | 6,985 | 46 | ||||||||||
Depreciation and amortization | 28,530 | 23,966 | 56,955 | 47,637 | ||||||||||||
Stock-based compensation | 3,758 | 3,516 | 7,574 | 10,696 | ||||||||||||
Adjusted EBITDA | $ | 31,793 | $ | 36,918 | $ | 111,816 | $ | 110,261 | ||||||||
Adjusted EBITDA as a % of net sales | 3.7 | % | 4.5 | % | 6.0 | % | 6.1 | % |
1 | Acquisition costs reflect certain non-recurring charges related to major acquisitions completed in fiscal years 2016 and 2017 (excluding the impact of tax) that are not embedded in other balances of the table. Certain portions of the total acquisition costs incurred are included in interest expense, income taxes, depreciation and amortization, and stock-based compensation. |
36
Seasonality and Quarterly Fluctuations
In general, sales and net income are highest during our first, third and fourth fiscal quarters, which represent the peak months of construction and re-roofing, especially in our branches in the northern and mid-western U.S. and in Canada. We have historically incurred low net income levels or net losses during the second quarter when our sales are substantially lower.
We generally experience an increase in inventory, accounts receivable and accounts payable during the third and fourth quarters of the year as a result of the seasonality of our business. Our peak cash usage generally occurs during the third quarter, primarily because accounts payable terms offered by our suppliers typically have due dates in April, May and June, while our peak accounts receivable collections typically occur from June through November.
We generally experience a slowing of our accounts receivable collections during our second quarter, mainly due to the inability of some of our customers to conduct their businesses effectively in inclement weather in certain divisions. We continue to attempt to collect those receivables, which require payment under our standard terms. We do not provide material concessions to our customers during this quarter of the year.
We generally experience our peak working capital needs during the third quarter after we build our inventories following the winter season but before we begin collecting on most of our spring receivables.
Certain Quarterly Financial Data
The following table sets forth certain unaudited quarterly data for fiscal year 2017 (ending September 30, 2017) and fiscal year 2016 which, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of this data. Results of any one or more quarters are not necessarily indicative of results for an entire fiscal year or of continuing trends.
2017 | 2016 | |||||||||||||||||||||||
Qtr 1 | Qtr 2 | Qtr 1 | Qtr 2 | Qtr 3 | Qtr 4 | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Net sales | $ | 1,002,184 | $ | 870,724 | $ | 976,480 | $ | 823,537 | $ | 1,152,726 | $ | 1,174,366 | ||||||||||||
% of year’s sales | 53.5 | % | 46.5 | % | 23.7 | % | 20.0 | % | 27.9 | % | 28.4 | % | ||||||||||||
Gross profit | $ | 251,067 | $ | 204,477 | $ | 233,188 | $ | 195,764 | $ | 282,075 | $ | 302,042 | ||||||||||||
% of year’s gross profit | 55.1 | % | 44.9 | % | 23.0 | % | 19.3 | % | 27.8 | % | 29.9 | % | ||||||||||||
Income (loss) from operations | $ | 46,957 | $ | (3,056 | ) | $ | 26,844 | $ | 3,883 | $ | 78,379 | $ | 95,878 | |||||||||||
% of year’s income from operations | 107.0 | % | -7.0 | % | 13.1 | % | 1.9 | % | 38.2 | % | 46.8 | % | ||||||||||||
Net income (loss) | $ | 20,430 | $ | (9,356 | ) | $ | 7,118 | $ | (5,719 | ) | $ | 41,126 | $ | 47,392 | ||||||||||
Net income (loss) per share - basic | $ | 0.34 | $ | (0.16 | ) | $ | 0.12 | $ | (0.10 | ) | $ | 0.69 | $ | 0.79 | ||||||||||
Net income (loss) per share - diluted | $ | 0.33 | $ | (0.16 | ) | $ | 0.12 | $ | (0.10 | ) | $ | 0.68 | $ | 0.78 |
Liquidity
Liquidity is defined as the current amount of readily available cash and the ability to generate adequate amounts of cash to meet the current needs for cash. We assess our liquidity in terms of our cash and cash equivalents on hand and the ability to generate cash to fund our operating activities, taking into consideration the seasonal nature of our business.
Our principal sources of liquidity as of March 31, 2017 were our cash and cash equivalents of $10.0 million and our available borrowings of $404.3 million under our asset based lending revolving credit facility.
Significant factors which could affect future liquidity include the following:
· | the adequacy of available bank lines of credit; |
· | the ability to attract long-term capital with satisfactory terms; |
· | cash flows generated from operating activities; |
37
· | acquisitions; and |
· | capital expenditures. |
Our primary capital needs are for working capital obligations and other general corporate purposes, including acquisitions and capital expenditures. Our primary sources of working capital are cash from operations and cash equivalents supplemented by bank borrowings. In the past, we have financed larger acquisitions initially through increased bank borrowings and the issuance of common stock. We then repay any such borrowings with cash flows from operations. We have funded most of our capital expenditures with cash on hand or through increased bank borrowings, including equipment financing, and then have reduced those obligations with cash flows from operations.
We believe we have adequate current liquidity and availability of capital to fund our present operations, meet our commitments on our existing debt and fund anticipated growth, including expansion in existing and targeted market areas. We seek potential acquisitions from time to time and hold discussions with certain acquisition candidates. If suitable acquisition opportunities or working capital needs arise that require additional financing, we believe that our financial position and earnings history provide a sufficient base for obtaining additional financing resources at reasonable rates and terms. We may also choose to issue additional shares of common stock or preferred stock in order to raise funds.
The following table summarizes our cash flows for the periods indicated (in thousands):
Six Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Net cash provided by operating activities | $ | 150,443 | $ | 80,652 | ||||
Net cash used in investing activities | (81,305 | ) | (951,838 | ) | ||||
Net cash provided by (used in) financing activities | (90,631 | ) | 840,973 | |||||
Effect of exchange rate changes on cash and equivalents | 119 | (607 | ) | |||||
Net decrease in cash and cash equivalents | $ | (21,374 | ) | $ | (30,820 | ) |
Operating Activities
Our net cash provided by operating activities was $150.4 million in 2017, compared to $80.7 million provided by operating activities in 2016. Cash from operations increased $69.7 million due to an increase in net income after adjustments for non-cash items of $15.2 million and a decrease in working capital that provided an incremental source of cash of $54.6 million.
Investing Activities
Net cash used in investing activities was $81.3 million in 2017, compared to $951.8 million in 2016. During 2017, we spent $58.4 million on acquisitions compared to $941.2 million in 2016. This decrease was partially offset by a $13.2 million increase in capital expenditures, which were $24.2 million in 2017 as compared to $11.1 million in 2016.
Financing Activities
Net cash used in financing activities was $90.6 million in 2017, compared to $841.0 million provided by financing activities in 2016. The net decrease of $931.6 million was primarily due to the new financing agreements that we entered into as a result of the RSG acquisition in 2016, offset by repayments and payment of deferred financing costs. In addition, proceeds from the issuance of common stock decreased by $7.6 million to $7.8 million in 2017, as compared to $15.4 million in 2016. This decrease is due to the additional stock option exercise activity that occurred in 2016 in relation to the RSG acquisition.
Capital Resources
We currently have access to the following financing arrangements:
· | an asset-based revolving line of credit in the United States; |
· | an asset-based revolving line of credit in Canada; |
· | a term loan; and |
· | senior notes |
38
In connection with the RSG acquisition on October 1, 2015, we entered into various financing arrangements totaling $1.45 billion. These arrangements allowed us to refinance our existing debt and substantially pay off all the RSG debt at closing. Prior to the RSG acquisition, we had a credit facility with a syndicate of commercial banks that included a revolver and a long term note. As of the date of the RSG acquisition, approximately $185.6 million was outstanding on the long-term note payable and approximately $11.2 million was outstanding under the revolver.
We entered into a “Senior Secured Credit Facility”, comprised of an asset-based revolving line of credit (“ABL”) of $700.0 million ($350.0 million of which was drawn at closing) and a new $450.0 million term loan (“Term Loan”). We also raised an additional $300.0 million through the issuance of senior notes (the “Senior Notes”).
Asset-based Line of Credit (“ABL”)
On October 1, 2015, we entered into a $700.0 million ABL with Wells Fargo Bank, N.A. and a syndicate of other lenders. This ABL consists of revolving loans in both the United States (“U.S. Revolver”) in the amount of $670.0 million and Canada (“Canada Revolver”) in the amount of $30.0 million. The ABL has a maturity date of October 1, 2020.
The U.S. Revolver has various tranches of borrowings, bearing interest at rates ranging from 2.39% to 4.50%. The effective rate of these borrowings is 2.97% and is paid monthly. As of March 31, 2017, the outstanding balance on the U.S. Revolver and Canada Revolvers, net of debt issuance fees, was $269.1 million. The U.S. Revolver also has outstanding standby letters of credit in the amount of $10.4 million as of March 31, 2017. Current unused commitment fees on the revolving credit facilities are 0.25% per annum.
There is one financial covenant under the ABL, which is a Consolidated Fixed Charge Ratio. The Consolidated Fixed Charge Ratio is calculated by dividing consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) by Consolidated Fixed Charges (as defined in the agreement). Per the covenant, the Consolidated Fixed Charge Ratio must be a minimum of 1.00 at the end of each fiscal quarter, calculated on a trailing four quarter basis. The covenant is only applicable when the borrowing availability is less than 10% of the maximum loan cap or $60.0 million.
The ABL is guaranteed jointly and severally and fully and unconditionally by our active United States subsidiary.
Term Loan
On October 1, 2015, we entered into a $450.0 million Term Loan with Citibank N.A., and a syndicate of other lenders. The Term Loan requires quarterly principal payments in the amount of $1.1 million, with the remaining outstanding principal to be paid on its maturity date of October 1, 2022. The interest rate paid is based on a LIBOR rate (with a floor) plus a fixed spread. We have the option of selecting a LIBOR period that determines the rate at which interest can accrue on the Term Loan as well as the period in which interest payments are made.
On September 16, 2016, we refinanced our Term Loan and lowered the LIBOR floor by 25 basis points and lowered the spread by 25 basis points. As a result of the refinancing we wrote off $1.6 million of debt issuance costs in interest expense. As of March 31, 2017 the outstanding balance on the Term Loan, net of debt issuance fees, was $434.9 million.
The Term Loan is guaranteed jointly and severally and fully and unconditionally by our active United States subsidiary.
Senior Notes
We also raised $300.0 million in Senior Notes, which mature on October 1, 2023. These notes bear interest at the rate of 6.38% per year, payable semi-annually in arrears on April 1 and October 1 of each year, beginning April 1, 2016. There are early payment provisions in the Senior Note indenture in which we would be subject to “make whole” provisions. Management anticipates repaying the notes at the maturity date of October 1, 2023. As of March 31, 2017 the outstanding balance on the Senior Notes, net of debt issuance fees, was $291.7 million.
The Senior Notes are guaranteed jointly and severally and fully and unconditionally by our active United States subsidiary.
Equipment Financing Facilities and Other
As of March 31, 2017, we had $17.9 million outstanding under equipment financing facilities, with fixed interest rates ranging from 2.33% to 3.25% and payments due through September 2021.
As of March 31, 2017, we had $22.2 million of capital lease obligations outstanding. These leases have interest rates ranging from 2.72% to 10.39% with payments due through November 2021.
39
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995
Our disclosure and analysis in this report contains forward-looking information that involves risks and uncertainties. Our forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of future performance, statements of management's plans and objectives, future contracts, and forecasts of trends and other matters. You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use words such as "anticipate," "estimate," "expect," "believe," "will likely result," "outlook," "project" and other words and expressions of similar meaning. No assurance can be given that the results in any forward-looking statements will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act.
Certain factors that may affect our business and could cause actual results to differ materially from those expressed in any forward-looking statements include those set forth under the heading "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2016.
40
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
The Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of its 2016 Annual Report on Form 10-K have not changed materially during the six month period ended March 31, 2017.
Item 4. | Controls and Procedures |
As of March 31, 2017, management, including the CEO and CFO, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the "Act")). Based on that evaluation, management, including the CEO and CFO, concluded that as of March 31, 2017, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. We maintain a system of internal control over financial reporting that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Based on the most recent evaluation, we have concluded that no significant change in our internal control over financial reporting occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
41
Part II. OTHER INFORMATION
Item 6. | Exhibits |
Incorporated by Reference | ||||||||||||
Exhibit Number |
Description | Form | File No. | Exhibit | Filing Date | |||||||
10.1*+ | Form of Beacon Roofing Supply, Inc. Amended and Restated 2014 Stock Plan Restricted Stock Unit Award Agreement for Non-Employee Directors (Settle at Retirement) | |||||||||||
10.2*+ |
Form of Beacon Roofing Supply, Inc. Amended and Restated 2014 Stock Plan Restricted Stock Unit Award Agreement for Non-Employee Directors (Settle at Vest)
|
|||||||||||
10.3*+ | Form of Beacon Roofing Supply, Inc. Amended and Restated 2014 Stock Plan Performance-Based Restricted Stock Unit Award Agreement for Employees | |||||||||||
10.4*+ | Form of Beacon Roofing Supply, Inc. Amended and Restated 2014 Stock Plan Time-Based Restricted Stock Unit Award Agreement for Employees | |||||||||||
10.5*+ | Form of Beacon Roofing Supply, Inc. Amended and Restated 2014 Stock Plan Stock Option Agreement | |||||||||||
10.6+ | Senior Executive Annual Incentive Plan | DEF 14A | 000-50924 | Appendix A | January 6, 2017 | |||||||
31.1* | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) | |||||||||||
31.2* | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) | |||||||||||
32.1* | Certification pursuant to 18 U.S.C. Section 1350 | |||||||||||
101* | 101.INS XBRL Instance | |||||||||||
101.SCH XBRL Taxonomy Extension Schema | ||||||||||||
101.CAL XBRL Taxonomy Extension Calculation | ||||||||||||
101.LAB XBRL Taxonomy Extension Labels | ||||||||||||
101.PRE XBRL Taxonomy Extension Presentation | ||||||||||||
101.DEF XBRL Taxonomy Extension Definition | ||||||||||||
+ Management contract or compensatory plan/arrangement
* Filed herewith
Pursuant to Rule 405 of Regulation S-T, the following interactive data files formatted in Extensible Business Reporting Language (XBRL) are attached as Exhibit 101 to this Quarterly Report on Form 10-Q: (i) the Consolidated Balance Sheets as of March 31, 2017; September 30, 2016; and March 31, 2016, (ii) the Consolidated Statements of Operations for the three and six months ended March 31, 2017 and March 31, 2016, (iii) the Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2017 and March 31, 2016, (iv) the Consolidated Statements of Cash Flows for the six months ended March 31, 2017 and March 31, 2016, and (iv) the Notes to Condensed Consolidated Financial Statements.
42
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BEACON ROOFING SUPPLY, INC. | ||
Date: May 5, 2017 | BY: | /s/ JOSEPH M. NOWICKI |
Joseph M. Nowicki | ||
Executive Vice President & Chief Financial Officer |
43
EXHIBIT 10.1
BEACON ROOFING SUPPLY, INC.
AMENDED AND RESTATED 2014 STOCK PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
(Settlement at Retirement)
Grant Information:
Name: | |
Grant Date: | |
Amount (# Granted): |
Vesting Schedule:
Vesting Date1 | Vesting Quantity |
1 In the event the Grantee’s term as a Director ends prior to the Vesting Date as the result of not standing for re-election at an annual meeting of stockholders, the Vesting Date shall be deemed to be the date of such annual meeting.
A Restricted Stock Unit (RSU) Award (the “Award”) granted by Beacon Roofing Supply, Inc., a Delaware corporation (the “Company”), to the non-employee Director named above (the “Grantee”), relating to the common stock, par value $.01 per share (the “Common Stock”), of the Company, shall be subject to the following terms and conditions and the provisions of the Beacon Roofing Supply, Inc. Amended and Restated 2014 Stock Plan (“Plan”), a copy of which is attached hereto and the terms of which are hereby incorporated by reference:
1. | Acceptance by Grantee |
The receipt of the Award is conditioned upon its acceptance by the Grantee no later than 30 days from the date the Agreement was delivered. If the Grantee shall fail to accept this Award by the due date, the Grantee’s Award shall be forfeited to the Company.
2. | Grant of RSUs |
The Company hereby grants to the Grantee the Award of RSUs, as set forth above. An RSU is the right, subject to the terms and conditions of the Plan and this Agreement, to receive a distribution of a share of Common Stock for each RSU as described in Section 6 of this Agreement.
3. | RSU Account |
The Company shall maintain an account (“RSU Account”) on its books in the name of the Grantee which shall reflect the number of RSUs awarded to the Grantee and any dividend equivalents paid to the Grantee as described in Section 4.
4. | Dividend Equivalents |
Upon the payment of any dividends on Common Stock occurring during the period preceding the date the RSUs are settled in Common Stock and distributed to the Grantee as described in Section 6, the Company shall credit the Grantee’s RSU Account with an amount equal in value to the dividends that the Grantee would have received had the Grantee been the actual owner of the number of shares of Common Stock represented by the RSUs in the Grantee’s RSU Account on that date. Such amounts shall be paid to the Grantee in cash at the time and to the extent the RSUs are distributed to the Grantee. Any dividend equivalents relating to RSUs that are forfeited shall also be forfeited.
5. | Vesting |
(a) | Except as described in (b) and (c) below, the Grantee shall become vested in this Award as set forth above if the Grantee remains in continuous service on the Board until such date. |
(b) | If the Grantee’s service on the Board terminates prior to the Vesting Date due to death or disability, the Award shall become fully vested on such date. For this purpose “disability” means (as determined by the Committee in its sole discretion) the inability of the Grantee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or disability or which has lasted or can be expected to last for a continuous period of not less than 12 months. |
(c) | The Award shall be forfeited to the Company upon the Grantee’s termination of service on the Board for any reason other than the Grantee’s death or disability (as described above) that occurs prior to the Vesting Date. |
6. | Settlement of RSUs |
No later than 10 business days following the date of the Grantee’s termination of service on the Board, the Company shall distribute to the Grantee or the Grantee’s personal representative, beneficiary or estate, as applicable, (a) a number of shares of Common Stock equal to the number of vested RSUs subject to the Award and held in the Grantee’s RSU Account, and (b) a cash payment equal to the dividend equivalents credited to the Grantee’s RSU Account attributable to such vested RSUs.
7. | Change in Control |
Notwithstanding the foregoing provisions of the Agreement, upon a Change in Control of the Company, (a) the Grantee shall become vested in any then unvested Award and (b) the Company shall immediately distribute to the RSU Account to the Grantee as described in Section 6; provided, however, that if the Change in Control does not constitute a “change in control” as described in Treas. Reg. §1.409A-3(i)(5), then distribution of the RSU Account shall be deferred until the date of the Grantee’s termination of service on the Board.
- 2 - |
8. | Rights as Stockholder |
The Grantee shall not be entitled to any of the rights of a stockholder of the Company with respect to the Award, including the right to vote and to receive dividends and other distributions, until and to the extent the Award is settled in shares of Common Stock.
9. | Award Not Transferable |
The Award may not be transferred other than by will or the applicable laws of descent or distribution or pursuant to a qualified domestic relations order. The Award shall not otherwise be assigned, transferred, or pledged for any purpose whatsoever and is not subject, in whole or in part, to attachment, execution or levy of any kind. Any attempted assignment, transfer, pledge, or encumbrance of the Award, other than in accordance with its terms, shall be void and of no effect.
10. | Share Delivery |
Delivery of shares pursuant to Section 6 will be by book-entry credit to an account in the Grantee’s name established by the Company with the Company’s transfer agent; provided that the Company shall, upon written request from the Grantee (or the Grantee’s estate or personal representative, as the case may be), issue certificates in the name of the Grantee (or the Grantee’s estate or personal representative) representing such shares.
11. | Administration |
The Award shall be administered in accordance with such regulations as the Committee shall from time to time adopt.
12. | Governing Law |
This Agreement, and the Award, shall be construed, administered and governed in all respects under and by the laws of the State of Delaware.
By accepting this agreement, the Grantee agrees to be bound by the terms hereof.
BEACON ROOFING SUPPLY, INC.
- 3 - |
EXHIBIT 10.2
BEACON ROOFING SUPPLY, INC.
AMENDED AND RESTATED 2014 STOCK PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
(Settlement at Vest)
Grant Information:
Name: | |
Grant Date: | |
Amount (# Granted): |
Vesting Schedule:
Vesting Date1 | Vesting Quantity |
1 In the event the Grantee’s term as a Director ends prior to the Vesting Date as the result of not standing for re-election at an annual meeting of stockholders, the Vesting Date shall be deemed to be the date of such annual meeting.
A Restricted Stock Unit (RSU) Award (the “Award”) granted by Beacon Roofing Supply, Inc., a Delaware corporation (the “Company”), to the non-employee Director named above (the “Grantee”), relating to the common stock, par value $.01 per share (the “Common Stock”), of the Company, shall be subject to the following terms and conditions and the provisions of the Beacon Roofing Supply, Inc. Amended and Restated 2014 Stock Plan (“Plan”), a copy of which is attached hereto and the terms of which are hereby incorporated by reference:
1. | Acceptance by Grantee |
The receipt of the Award is conditioned upon its acceptance by the Grantee no later than 30 days from the date the Agreement was delivered. If the Grantee shall fail to accept this Award by the due date, the Grantee’s Award shall be forfeited to the Company.
2. | Grant of RSUs |
The Company hereby grants to the Grantee the Award of RSUs, as set forth above. An RSU is the right, subject to the terms and conditions of the Plan and this Agreement, to receive a distribution of a share of Common Stock for each RSU as described in Section 6 of this Agreement.
3. | RSU Account |
The Company shall maintain an account (“RSU Account”) on its books in the name of the Grantee which shall reflect the number of RSUs awarded to the Grantee and any dividend equivalents paid to the Grantee as described in Section 4.
4. | Dividend Equivalents |
Upon the payment of any dividends on Common Stock occurring during the period preceding the date the RSUs are settled in Common Stock and distributed to the Grantee as described in Section 6, the Company shall credit the Grantee’s RSU Account with an amount equal in value to the dividends that the Grantee would have received had the Grantee been the actual owner of the number of shares of Common Stock represented by the RSUs in the Grantee’s RSU Account on that date. Such amounts shall be paid to the Grantee in cash at the time and to the extent the RSUs are distributed to the Grantee. Any dividend equivalents relating to RSUs that are forfeited shall also be forfeited.
5. | Vesting |
(a) | Except as described in (b) and (c) below, the Grantee shall become vested in this Award as set forth above if the Grantee remains in continuous service on the Board until such date. |
(b) | If the Grantee’s service on the Board terminates prior to the Vesting Date due to death or disability, the Award shall become fully vested on such date. For this purpose “disability” means (as determined by the Committee in its sole discretion) the inability of the Grantee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or disability or which has lasted or can be expected to last for a continuous period of not less than 12 months. |
(c) | The Award shall be forfeited to the Company upon the Grantee’s termination of service on the Board for any reason other than the Grantee’s death or disability (as described above) that occurs prior to the Vesting Date. |
6. | Settlement of RSUs |
No later than 10 business days following the Vesting Date of this Grant, the Company shall distribute to the Grantee or the Grantee’s personal representative, beneficiary or estate, as applicable, (a) a number of shares of Common Stock equal to the number of vested RSUs subject to the Award and held in the Grantee’s RSU Account, and (b) a cash payment equal to the dividend equivalents credited to the Grantee’s RSU Account attributable to such vested RSUs.
7. | Change in Control |
Notwithstanding the foregoing provisions of the Agreement, upon a Change in Control of the Company, (a) the Grantee shall become vested in any then unvested Award and (b) the Company shall immediately distribute to the RSU Account to the Grantee as described in Section 6; provided, however, that if the Change in Control does not constitute a “change in control” as described in Treas. Reg. §1.409A-3(i)(5), then distribution of the RSU Account shall be deferred until the date of the Grantee’s termination of service on the Board.
- 2 - |
8. | Rights as Stockholder |
The Grantee shall not be entitled to any of the rights of a stockholder of the Company with respect to the Award, including the right to vote and to receive dividends and other distributions, until and to the extent the Award is settled in shares of Common Stock.
9. | Award Not Transferable |
The Award may not be transferred other than by will or the applicable laws of descent or distribution or pursuant to a qualified domestic relations order. The Award shall not otherwise be assigned, transferred, or pledged for any purpose whatsoever and is not subject, in whole or in part, to attachment, execution or levy of any kind. Any attempted assignment, transfer, pledge, or encumbrance of the Award, other than in accordance with its terms, shall be void and of no effect.
10. | Share Delivery |
Delivery of shares pursuant to Section 6 will be by book-entry credit to an account in the Grantee’s name established by the Company with the Company’s transfer agent; provided that the Company shall, upon written request from the Grantee (or the Grantee’s estate or personal representative, as the case may be), issue certificates in the name of the Grantee (or the Grantee’s estate or personal representative) representing such shares.
11. | Administration |
The Award shall be administered in accordance with such regulations as the Committee shall from time to time adopt.
12. | Governing Law |
This Agreement, and the Award, shall be construed, administered and governed in all respects under and by the laws of the State of Delaware.
By accepting this agreement, the Grantee agrees to be bound by the terms hereof.
BEACON ROOFING SUPPLY, INC.
- 3 - |
EXHIBIT 10.3
BEACON ROOFING SUPPLY, INC.
AMENDED AND RESTATED 2014 STOCK PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
(Performance-based Vesting)
Grant Information:
Name: | |
Grant Date: | |
Target Amount: |
Vesting Date1: _________________
1 Actual vesting subject to additional provisions found in Section 5 and Section 6 of this agreement
A Restricted Stock Unit (RSU) Award (the “Award”) granted by Beacon Roofing Supply, Inc., a Delaware corporation (the “Company”), to the employee named above (the “Grantee”), relating to the common stock, par value $.01 per share (the “Common Stock”), of the Company, shall be subject to the following terms and conditions and the provisions of the Beacon Roofing Supply, Inc. Amended and Restated 2014 Stock Plan (“Plan”), a copy of which is attached hereto and the terms of which are hereby incorporated by reference:
1. | Acceptance by Grantee |
The receipt of the Award is conditioned upon its acceptance by the Grantee no later than 30 days from the date the Agreement was delivered. If the Grantee shall fail to accept this Award by the due date, the Grantee’s Award shall be forfeited to the Company.
2. | Grant of RSUs |
The Company hereby grants to the Grantee the Award of RSUs, as set forth above. An RSU is the right, subject to the terms and conditions of the Plan and this Agreement, to receive a distribution of a share of Common Stock for each RSU as described in Section 7 of this Agreement. The Award shall vest in accordance with Section 5 of this Agreement and the vested award shall be adjusted in accordance with Section 6 of this Agreement.
3. | RSU Account |
The Company shall maintain an account (“RSU Account”) on its books in the name of the Grantee which shall reflect the number of RSUs awarded to the Grantee and any dividend equivalents paid to the Grantee as described in Section 4.
4. | Dividend Equivalents |
Upon the payment of any dividends on Common Stock occurring during the period preceding the date the RSUs are settled in Common Stock and distributed to the Grantee as described in Section 7, the Company shall credit the Grantee’s RSU Account with an amount equal in value to the dividends that the Grantee would have received had the Grantee been the actual owner of the number of shares of Common Stock represented by the RSUs in the Grantee’s RSU Account on that date. Such amounts shall be paid to the Grantee in cash at the time and to the extent the RSUs are distributed to the Grantee. Any dividend equivalents relating to RSUs that are forfeited shall also be forfeited.
5. | Vesting |
(a) | Except as described in (b), (c) and (d) below, the Grantee shall become vested in the Award on the third anniversary of the date of grant as set forth above (the “Vesting Date”) if the Grantee remains in continuous employment with the Company or its affiliates until such date. |
(b) | If the Grantee’s employment with the Company and its affiliates terminates prior to the Vesting Date due to death or disability, the Award shall become vested on the date of such termination of employment. For this purpose “disability” means (as determined by the Committee in its sole discretion) the inability of the Grantee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or disability or which has lasted or can be expected to last for a continuous period of not less than 12 months. |
(c) | If the Grantee’s employment with the Company and its affiliates terminates prior to the Vesting Date due to the Grantee’s retirement, the Award shall become vested on the Vesting Date (in which case the Award shall be adjusted as described in Section 6), or if earlier, the date of the Grantee’s death (in which case the Award shall not be adjusted as described in Section 6). For this purpose, “retirement” means termination of the Grantee’s employment for any reason other than cause (as determined by the Company in its sole discretion) on or after the Grantee’s attainment age of 65. |
(d) | The Award shall be forfeited to the Company upon the Grantee’s termination of employment with the Company and its affiliates for any reason other than the Grantee’s death, disability or retirement (as described above) that occurs prior to the Vesting Date. |
The foregoing provisions of this Section 5 shall be subject to the provisions of any written employment security agreement or severance agreement that has been or may be executed by the Grantee and the Company, and the provisions in such employment security agreement or severance agreement concerning the lapse of restrictions of an Award in connection with the Grantee’s termination of employment shall supersede any inconsistent or contrary provision of this Section 5.
6. | Adjustment of RSUs |
The number of RSUs subject to the Award shall be adjusted by the Committee following the end of the three year period that begins on October 1, ____ and ends on September 30, ____ based on the level of performance goal achievement as described in Exhibit A to this Agreement. Any Award that vests in accordance with Section 5(b) prior to the Vesting Date shall not be adjusted pursuant to this Section 6.
7. | Settlement of RSUs |
If a Grantee becomes vested in this Award in accordance with Section 5, the Company shall distribute to Grantee, or the Grantee’s personal representative, beneficiary or estate, as applicable, a number of shares of Common Stock equal to the number of vested RSUs subject to the Award, as adjusted in accordance with Section 6, if applicable. Such shares shall be delivered within 30 days following the date of vesting.
8. | Forfeiture of Award |
Except as described in Section 5(b) and (c), a Grantee’s Award shall be forfeited to the Company if the Grantee does not remain in continuous employment with the Company or its affiliates until the Vesting Date.
9. | Withholding Taxes |
The Grantee shall pay to the Company an amount sufficient to satisfy all minimum Federal, state and local withholding tax requirements prior to the delivery of any certificate for shares. Payment of such taxes may be made by one or more of the following methods: (a) in cash, (b) in cash received from a broker-dealer to whom the Grantee has submitted irrevocable instructions to deliver the amount of tax to the Company from the proceeds of the sale of shares subject to the Award, (c) by directing the Company to withhold a number of shares otherwise issuable pursuant to the Award with a Fair Market Value equal to the tax required to be withheld, (d) by delivery to the Company of other Common Stock owned by the Grantee that is acceptable to the Company, valued at its Fair Market Value on the date of payment, or (e) by certifying to ownership by attestation of such previously owned Common Stock.
10. | Change in Control |
(a) | In the event of a Change in Control, as defined in the Plan, unless the Award is continued or assumed by a public company in an equitable manner, the RSU shall become fully vested immediately prior to the Change in Control as if the performance criteria set forth in Exhibit A had been met at 100 percent. The Award shall settle in accordance with Section 7. |
(b) | If the Award is continued or assumed by a public company in an equitable manner, then the performance criteria set forth in Exhibit A shall be deemed to have been satisfied at 100 percent and the vesting of the Award shall be contingent only upon the Grantee’s employment through the end of the three year period set forth in Section 6 unless there is a Qualifying Termination within one-year following the Change in Control. If a Qualifying Termination occurs within one-year following the Change in Control, the Award shall become fully vested immediately and be settled in accordance with Section 7. |
For purposes of this Section 10: (1) “Qualifying Termination” means the termination of a Grantee’s employment (a) by the employer for any reason other than Cause; or (b) by a Grantee who was an officer of the Company immediately prior to the Change in Control for Good Reason; (2) “Cause” means (unless otherwise expressly provided in the Grantee’s employment agreement) the termination of the Grantee’s employment following the occurrence of any one or more of the following: (a) the Grantee’s conviction of, or plea of guilty or nolo contendere to, a felony; (b) the Grantee’s willful and continual failure to substantially perform the Grantee’s duties after written notification; (c) the Grantee’s willful engagement in conduct that is materially injurious to the employer, monetarily or otherwise; (d) the Grantee’s commission of an act of gross misconduct in connection with the performance of the Grantee’s duties; or (e) the Grantee’s material breach of any employment, confidentiality, or other similar agreement with the employer that, if capable of cure, remains uncured 10 days after written notice thereof; (3) “Good Reason” means, without the Grantee’s consent, (a) a material reduction in the position, duties, or responsibilities of the Grantee from those in effect immediately prior to such change; (b) a reduction in the Grantee’s base salary; (c) a relocation of the Grantee’s primary work location to a distance of more than 50 miles from its location as of immediately prior to such change; or (d) a material breach by the Grantee’s employer of any employment agreement between such employer and the Grantee provided, however, in all cases, a Grantee must give the Company written notice of the circumstances giving rise to the Good Reason event and thirty (30) days to cure such circumstance.
11. | Rights as Stockholder |
The Grantee shall not be entitled to any of the rights of a stockholder of the Company with respect to the Award, including the right to vote and to receive dividends and other distributions, until and to the extent the Award is settled in shares of Common Stock.
12. | Award Not Transferable |
The Award may not be transferred other than by will or the applicable laws of descent or distribution or pursuant to a qualified domestic relations order. The Award shall not otherwise be assigned, transferred, or pledged for any purpose whatsoever and is not subject, in whole or in part, to attachment, execution or levy of any kind. Any attempted assignment, transfer, pledge, or encumbrance of the Award, other than in accordance with its terms, shall be void and of no effect.
13. | Share Delivery |
Delivery of shares pursuant to Section 7 will be by book-entry credit to an account in the Grantee’s name established by the Company with the Company’s transfer agent; provided that the Company shall, upon written request from the Grantee (or the Grantee’s estate or personal representative, as the case may be), issue certificates in the name of the Grantee (or the Grantee’s estate or personal representative) representing such shares.
14. | Administration |
The Award shall be administered in accordance with such regulations as the Committee shall from time to time adopt.
15. | Governing Law |
This Agreement, and the Award, shall be construed, administered and governed in all respects under and by the laws of the State of Delaware.
By accepting this agreement, the Grantee agrees to be bound by the terms hereof.
BEACON ROOFING SUPPLY, INC.
EXHIBIT 10.4
BEACON ROOFING SUPPLY, INC.
AMENDED AND RESTATED 2014 STOCK PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
(Time-based Vesting)
Grant Information:
Name: | |
Grant Date: | |
Amount (# Granted): |
Vesting Schedule:
Vesting Date | Vesting Quantity |
A Restricted Stock Unit (RSU) Award (the “Award”) granted by Beacon Roofing Supply, Inc., a Delaware corporation (the “Company”), to the employee named above (the “Grantee”), relating to the common stock, par value $.01 per share (the “Common Stock”), of the Company, shall be subject to the following terms and conditions and the provisions of the Beacon Roofing Supply, Inc. Amended and Restated 2014 Stock Plan (“Plan”), a copy of which is attached hereto and the terms of which are hereby incorporated by reference:
1. | Acceptance by Grantee |
The receipt of the Award is conditioned upon its acceptance by the Grantee no later than 30 days from the date the Agreement was delivered. If the Grantee shall fail to accept this Award by the due date, the Grantee’s Award shall be forfeited to the Company.
2. | Grant of RSUs |
The Company hereby grants to the Grantee the Award of RSUs, as set forth above. An RSU is the right, subject to the terms and conditions of the Plan and this Agreement, to receive a distribution of a share of Common Stock for each RSU as described in Section 6 of this Agreement.
3. | RSU Account |
The Company shall maintain an account (“RSU Account”) on its books in the name of the Grantee which shall reflect the number of RSUs awarded to the Grantee and any dividend equivalents paid to the Grantee as described in Section 4.
4. | Dividend Equivalents |
Upon the payment of any dividends on Common Stock occurring during the period preceding the date the RSUs are settled in Common Stock and distributed to the Grantee as described in Section 6, the Company shall credit the Grantee’s RSU Account with an amount equal in value to the dividends that the Grantee would have received had the Grantee been the actual owner of the number of shares of Common Stock represented by the RSUs in the Grantee’s RSU Account on that date. Such amounts shall be paid to the Grantee in cash at the time and to the extent the RSUs are distributed to the Grantee. Any dividend equivalents relating to RSUs that are forfeited shall also be forfeited.
5. | Vesting |
(a) | Except as described in (b) and (c) below, the Grantee shall become vested in this Award as set forth above (each date on which a portion of an Award vests is a “Vesting Date”), if the Grantee remains in continuous employment with the Company or its affiliates until such date. |
(b) | If the Grantee’s employment with the Company and its affiliates terminates prior to a Vesting Date due to death, disability or retirement, the then unvested portion of the Award shall become vested on the date of such termination of employment. For this purpose (i) “disability” means (as determined by the Committee in its sole discretion) the inability of the Grantee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or disability or which has lasted or can be expected to last for a continuous period of not less than 12 months and (ii) “retirement” means termination of the Grantee’s employment for any reason other than cause (as determined by the Company in its sole discretion) on or after the Grantee’s attainment age of 65. |
(c) | The then unvested portion of the Award shall be forfeited to the Company upon the Grantee’s termination of employment with the Company and its affiliates for any reason other than the Grantee’s death, disability or retirement (as described above) that occurs prior to a Vesting Date. |
The foregoing provisions of this Section 5 shall be subject to the provisions of any written employment security agreement or severance agreement that has been or may be executed by the Grantee and the Company, and the provisions in such employment security agreement or severance agreement concerning the lapse of restrictions of an Award in connection with the Grantee’s termination of employment shall supersede any inconsistent or contrary provision of this Section 5.
6. | Settlement of RSUs |
If a Grantee becomes vested in this Award (or portion thereof) in accordance with Section 5, the Company shall distribute to the Grantee, or the Grantee’s personal representative, beneficiary or estate, as applicable, a number of shares of Common Stock equal to the number of vested RSUs subject to the Award. Such shares shall be delivered within 30 days following a Vesting Date.
- 2 - |
7. | Forfeiture of Award |
Except as described in Section 5(b), the then unvested portion of the Grantee’s Award shall be forfeited to the Company if the Grantee does not remain in continuous employment with the Company or its affiliates until the applicable Vesting Date.
8. | Withholding Taxes |
The Grantee shall pay to the Company an amount sufficient to satisfy all minimum Federal, state and local withholding tax requirements prior to the delivery of any certificate for shares. Payment of such taxes may be made by one or more of the following methods: (a) in cash, (b) in cash received from a broker-dealer to whom the Grantee has submitted irrevocable instructions to deliver the amount of tax to the Company from the proceeds of the sale of shares subject to the Award, (c) by directing the Company to withhold a number of shares otherwise issuable pursuant to the Award with a Fair Market Value equal to the tax required to be withheld, (d) by delivery to the Company of other Common Stock owned by the Grantee that is acceptable to the Company, valued at its Fair Market Value on the date of payment, or (e) by certifying to ownership by attestation of such previously owned Common Stock.
9. | Change in Control |
(a) | In the event of a Change in Control, as defined in the Plan, unless the Award is continued or assumed by a public company in an equitable manner, the RSU shall become fully vested immediately prior to the Change in Control as if the time vesting criterion set forth in Section 5(a) had been met. The Award shall settle in accordance with Section 6. |
(b) | If the Award is continued or assumed by a public company in an equitable manner, then the vesting of the Award shall be contingent only upon the Grantee’s employment through the applicable Vesting Date(s) unless there is a Qualifying Termination within one year following the Change in Control. If a Qualifying Termination occurs within one year following the Change in Control, the Award shall become fully vested immediately and be settled in accordance with Section 6. |
(c) | For purposes of this Section 10: (1) “Qualifying Termination” means the termination of a Grantee’s employment (a) by the employer for any reason other than Cause; or (b) by a Grantee who was an officer of the Company immediately prior to the Change in Control for Good Reason; (2) “Cause” means (unless otherwise expressly provided in the Grantee’s employment agreement) the termination of the Grantee’s employment following the occurrence of any one or more of the following: (a) the Grantee’s conviction of, or plea of guilty or nolo contendere to, a felony; (b) the Grantee’s willful and continual failure to substantially perform the Grantee’s duties after written notification; (c) the Grantee’s willful engagement in conduct that is materially injurious to the employer, monetarily or otherwise; (d) the Grantee’s commission of an act of gross misconduct in connection with the performance of the Grantee’s duties; or (e) the Grantee’s material breach of any employment, confidentiality, or other similar agreement with the employer that, if capable of cure, remains uncured 10 days after written notice thereof; (3) “Good Reason” means, without the Grantee’s consent, (a) a material reduction in the position, duties, or responsibilities of the Grantee from those in effect immediately prior to such change; (b) a reduction in the Grantee’s base salary; (c) a relocation of the Grantee’s primary work location to a distance of more than 50 miles from its location as of immediately prior to such change; or (d) a material breach by the Grantee’s employer of any employment agreement between such employer and the Grantee provided, however, in all cases, a Grantee must give the Company written notice of the circumstances giving rise to the Good Reason event and thirty (30) days to cure such circumstance. |
- 3 - |
10. | Rights as Stockholder |
The Grantee shall not be entitled to any of the rights of a stockholder of the Company with respect to the Award, including the right to vote and to receive dividends and other distributions, until and to the extent the Award is settled in shares of Common Stock.
11. | Award Not Transferable |
The Award may not be transferred other than by will or the applicable laws of descent or distribution or pursuant to a qualified domestic relations order. The Award shall not otherwise be assigned, transferred, or pledged for any purpose whatsoever and is not subject, in whole or in part, to attachment, execution or levy of any kind. Any attempted assignment, transfer, pledge, or encumbrance of the Award, other than in accordance with its terms, shall be void and of no effect.
12. | Share Delivery |
Delivery of shares pursuant to Section 6 will be by book-entry credit to an account in the Grantee’s name established by the Company with the Company’s transfer agent; provided that the Company shall, upon written request from the Grantee (or the Grantee’s estate or personal representative, as the case may be), issue certificates in the name of the Grantee (or the Grantee’s estate or personal representative) representing such shares.
13. | Administration |
The Award shall be administered in accordance with such regulations as the Committee shall from time to time adopt.
14. | Governing Law |
This Agreement, and the Award, shall be construed, administered and governed in all respects under and by the laws of the State of Delaware.
By accepting this agreement, the Grantee agrees to be bound by the terms hereof.
BEACON ROOFING SUPPLY, INC.
- 4 - |
EXHIBIT 10.5
BEACON ROOFING SUPPLY, INC.
AMENDED AND RESTATED 2014 STOCK PLAN
STOCK OPTION AGREEMENT
Grant Information:
Name: | |
Grant Date: | |
Type: | |
Exercise Price/Share: | |
Amount (# Granted): | |
Expiration Date: |
Vesting Schedule:
Vesting Date | Vesting Quantity |
A Stock Option (the “Option”) granted as of the date set forth above by Beacon Roofing Supply, Inc., a Delaware corporation (the “Company”), to the employee named above (the “Optionee”), for common stock, par value $.01 per share (the “Common Stock”), of the Company shall be subject to the following terms and conditions:
1. | Stock Option Grant |
Subject to the provisions set forth herein and the terms and conditions of the Beacon Roofing Supply, Inc. Amended and Restated 2014 Stock Plan, (the “Plan”), a copy of which is attached hereto, and in consideration of the agreements of the Optionee herein provided, the Company hereby grants to the Optionee an Option to purchase from the Company the number of shares of Common Stock, at the purchase price per share, and on the schedule, set forth above. Any Incentive Stock Option is intended to be an incentive stock option within the meaning of Section 422A of the Internal Revenue Code of 1986.
2. | Acceptance by Optionee |
The exercise of the Option is conditioned upon its acceptance by the Optionee no later than 30 days from the date the Agreement was delivered. If the Optionee shall fail to accept this Option by the due date, the Optionee’s Option shall be forfeited to the Company.
3. | Exercise of Options |
Written notice of an election to exercise any portion of the Option shall be given by the Optionee, or the Optionee’s personal representative in the event of the Optionee’s death, in accordance with procedures established by the Compensation Committee of the Board of Directors of the Company (the “Committee”) as in effect at the time of such exercise.
At the time of exercise of the Option, payment of the purchase price for the shares of Common Stock with respect to which the Option is exercised must be made by one or more of the following methods: (i) in cash, or (ii) in cash received from a broker-dealer to whom the Optionee has submitted an exercise notice and irrevocable instructions to deliver the purchase price to the Company from the proceeds of the sale of shares subject to the Option.
If applicable, an amount sufficient to satisfy all minimum Federal, state and local withholding tax requirements prior to delivery of any certificate for shares of Common Stock must also accompany the exercise. Payment of such taxes can be made by a method specified above, and/or by directing the Company to withhold such number of shares of Common Stock otherwise issuable upon exercise of the Option with a fair market value equal to the amount of tax to be withheld.
4. | Exercise Upon Termination of Employment |
Except as set forth in Section 6 below, if the Optionee’s employment with the Company and all affiliates terminates for any reason other than death, disability or retirement, the then vested portion of the Option shall continue to be exercisable until the earlier of the 90th day after the date of the Optionee’s termination or the date the Option expires by its terms.
In the event of the Optionee’s death, disability or retirement during employment with the Company or any affiliate, the outstanding portion of the Option shall become fully vested on such date and shall continue to be exercisable until the earlier of the first anniversary of the date of the Optionee’s death, disability or retirement or the date the Option expires by its terms. For this purpose (i) “disability” means (as determined by the Committee in its sole discretion) the inability of the Optionee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or disability or which has lasted or can be expected to last for a continuous period of not less than 12 months, and (ii) “retirement” means the Optionee’s termination from employment with the Company and all affiliates without cause (as determined by the Committee in its sole discretion) when the Optionee is 65 or older. (Full vesting of an Incentive Stock Option may result in all or part of the Option being treated as a Non-Qualified Stock Option in accordance with Section 5.4 of the Plan.)
5. | Option Not Transferable |
The Option may be exercised only by the Optionee and may not be transferred other than by will or the applicable laws of descent or distribution or pursuant to a qualified domestic relations order. The Option shall not otherwise be assigned, transferred, or pledged for any purpose whatsoever and is not subject, in whole or in part, to attachment, execution or levy of any kind. Any attempted assignment, transfer, pledge, or encumbrance of the Option, other than in accordance with its terms, shall be void and of no effect.
6. | Surrender of or Changes to Agreement |
In the event the Option shall be exercised in whole, this Agreement shall be surrendered to the Company for cancellation. In the event this Option shall be exercised in part, this Agreement shall be delivered by the Optionee to the Company for the purpose of making appropriate notation thereon, or of otherwise reflecting, in such manner as the Company shall determine, the change in the number of shares.
7. | Forfeiture of Options |
If an Optionee's employment with the Company or its subsidiaries terminates due to Cause, all of the Optionee's Options, including the vested and unvested portions, shall be forfeited as of the date of such termination. For purposes hereof, “Cause” shall mean: (a) conviction of a felony connected with Optionee’s employment with the Company or its subsidiaries, (b) misappropriation or theft of property of the Company or its subsidiaries, (c) gross negligence or willful misconduct in the performance of employee's duties, (d) any act of fraud against the Company or its subsidiaries, and (e) any unauthorized dissemination of confidential information or trade or business secrets of the Company or its subsidiaries.
8. | Change in Control |
(a) | In the event of a Change in Control, as defined in the Plan, unless the Grant is continued or assumed by a public company in an equitable manner, the Grant shall become fully vested and exercisable immediately prior to the Change in Control. |
(b) | If the Grant is continued or assumed by a public company in an equitable manner, then the Grant shall continue pursuant to its terms unless there is a Qualifying Termination within one-year following the Change in Control. If a Qualifying Termination occurs within one-year following the Change in Control, the Grant shall become fully vested and exercisable immediately. |
(c) | For purposes of this Section 8: (1) “Qualifying Termination” means the termination of a Grantee’s employment (a) by the employer for any reason other than Cause; or (b) by a Grantee who was an officer of the Company immediately prior to the Change in Control for Good Reason; (2) “Cause” means (unless otherwise expressly provided in the Grantee’s employment agreement) the termination of the Grantee’s employment following the occurrence of any one or more of the following: (a) the Grantee’s conviction of, or plea of guilty or nolo contendere to, a felony; (b) the Grantee’s willful and continual failure to substantially perform the Grantee’s duties after written notification; (c) the Grantee’s willful engagement in conduct that is materially injurious to the employer, monetarily or otherwise; (d) the Grantee’s commission of an act of gross misconduct in connection with the performance of the Grantee’s duties; or (e) the Grantee’s material breach of any employment, confidentiality, or other similar agreement with the employer that, if capable of cure, remains uncured 10 days after written notice thereof; (3) “Good Reason” means, without the Grantee’s consent, (a) a material reduction in the position, duties, or responsibilities of the Grantee from those in effect immediately prior to such change; (b) a reduction in the Grantee’s base salary; (c) a relocation of the Grantee’s primary work location to a distance of more than 50 miles from its location as of immediately prior to such change; or (d) a material breach by the Grantee’s employer of any employment agreement between such employer and the Grantee provided, however, in all cases, a Grantee must give the Company written notice of the circumstances giving rise to the Good Reason event and thirty (30) days to cure such circumstance. |
9. | Administration |
The Option shall be exercised in accordance with such administrative regulations as the Committee shall from time to time adopt.
10. | Governing Law |
This Agreement, and the Option, shall be construed, administered and governed in all respects under and by the laws of the State of Delaware.
By accepting this agreement, the Optionee agrees to be bound by the terms hereof.
BEACON ROOFING SUPPLY, INC.
EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul M. Isabella, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Beacon Roofing Supply, 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 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; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(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; |
(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 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 |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: May 5, 2017 | /s/ PAUL M. ISABELLA |
Paul M. Isabella President & Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Joseph M. Nowicki, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Beacon Roofing Supply, 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 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; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(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; |
(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 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 |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: May 5, 2017 | /s/ JOSEPH M. NOWICKI |
Joseph M. Nowicki Executive Vice President & Chief Financial Officer |
EXHIBIT 32.1
Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350
(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the Quarterly Report on Form 10-Q of Beacon Roofing Supply, Inc. (the "Company") for the period ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Paul M. Isabella, as President & Chief Executive Officer of the Company, and Joseph M. Nowicki, as Executive Vice President & Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 5, 2017 | /s/ PAUL M. ISABELLA |
Paul M. Isabella President & Chief Executive Officer | |
/s/ JOSEPH M. NOWICKI | |
Joseph M. Nowicki | |
Executive Vice President & Chief Financial Officer |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to Beacon Roofing Supply, Inc. and will be retained by Beacon Roofing Supply, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
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end
Document And Entity Information - shares |
6 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 01, 2017 |
|
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | BEACON ROOFING SUPPLY INC | |
Entity Central Index Key | 0001124941 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Large Accelerated Filer | |
Trading Symbol | BECN | |
Entity Common Stock, Shares Outstanding | 60,283,487 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Sep. 30, 2016 |
Mar. 31, 2016 |
---|---|---|---|
Accounts receivable, allowances | $ 17,140 | $ 14,812 | $ 9,396 |
Common stock (voting), par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock (voting), shares authorized | 100,000,000 | 100,000,000 | 100,000,000 |
Common stock (voting), issued | 60,255,320 | 59,890,885 | 59,521,648 |
Common Stock (voting), outstanding | 60,255,320 | 59,890,885 | 59,521,648 |
Undesignated Preferred Stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Undesignated Preferred Stock, issued | 0 | 0 | 0 |
Undesignated Preferred Stock, outstanding | 0 | 0 | 0 |
Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Net sales | $ 870,724 | $ 823,537 | $ 1,872,908 | $ 1,800,017 |
Cost of products sold | 666,247 | 627,773 | 1,417,364 | 1,371,065 |
Gross profit | 204,477 | 195,764 | 455,544 | 428,952 |
Operating expense | 207,533 | 191,881 | 411,643 | 398,225 |
Income (loss) from operations | (3,056) | 3,883 | 43,901 | 30,727 |
Interest expense, financing costs, and other | 12,268 | 13,026 | 25,842 | 29,282 |
Income (loss) before provision for income taxes | (15,324) | (9,143) | 18,059 | 1,445 |
Provision for (benefit from) income taxes | (5,968) | (3,424) | 6,985 | 46 |
Net income (loss) | $ (9,356) | $ (5,719) | $ 11,074 | $ 1,399 |
Weighted-average common stock outstanding: | ||||
Basic | 60,141,580 | 59,295,990 | 60,041,332 | 59,133,569 |
Diluted | 60,141,580 | 59,295,990 | 61,069,938 | 60,077,852 |
Net income (loss) per share: | ||||
Basic | $ (0.16) | $ (0.10) | $ 0.18 | $ 0.02 |
Diluted | $ (0.16) | $ (0.10) | $ 0.18 | $ 0.02 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Net income (loss) | $ (9,356) | $ (5,719) | $ 11,074 | $ 1,399 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 813 | 4,226 | (839) | 1,757 |
Total other comprehensive income (loss) | 813 | 4,226 | (839) | 1,757 |
Comprehensive income (loss) | $ (8,543) | $ (1,493) | $ 10,235 | $ 3,156 |
Consolidated Statements of Cash Flows (Parenthetical) $ in Millions |
6 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Non Cash Or Part Non Cash Acquisition Non Cash Financial Or Equity Instrument Consideration Shares Issued Value | $ 302 |
Non Cash Or Part Non Cash Acquisition Non Cash Financial Or Equity Instrument Consideration Replacement Awards Value | $ 5 |
Company Overview |
6 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2017 | ||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Basis of Presentation |
Beacon Roofing Supply, Inc. (the “Company”) was incorporated in the state of Delaware on August 22, 1997 and is the largest publicly traded distributor of residential and non-residential roofing materials and complementary building products in the United States and Canada. The Company operates its business under regional and local trade names and as of March 31, 2017 the Company serviced customers in 47 states within the United States and 6 provinces in Canada. The Company’s current material subsidiaries are Beacon Sales Acquisition, Inc., Beacon Canada, Inc. and Beacon Roofing Supply Canada Company. |
Summary of Significant Accounting Policies |
6 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2017 | ||||
Accounting Policies [Abstract] | ||||
Summary of Significant Accounting Policies |
Basis of Presentation Beacon Roofing Supply, Inc. (the “Company”) prepared the condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the requirements of the Securities and Exchange Commission (“SEC”). As permitted under those rules, certain footnotes or other financial information have been condensed or omitted. The balance sheet as of March 31, 2016 has been presented for a better understanding of the impact of seasonal fluctuations on the Company's financial condition. In management's opinion, the financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company's financial position and operating results. The results for the three and six-month periods ended March 31, 2017 are not necessarily indicative of the results to be expected for the twelve months ending September 30, 2017 (“fiscal year 2017” or “2017”). The three-month periods ended March 31, 2017 and 2016 each had 64 business days and the six-month periods ended March 31, 2017 and March 31, 2016 had 125 and 126 business days, respectively. These interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in the Company’s fiscal year 2016 (“2016”) Annual Report on Form 10-K for the year ended September 30, 2016. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Significant items subject to such estimates include inventories, purchase price allocations, recoverability of goodwill and intangibles, and income taxes. Actual amounts could differ from those estimates. Recent Accounting Pronouncements - Adopted In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, “Simplifying the Presentation of Debt Issuance Costs” to simplify the presentation of debt issuance costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the associated debt liability, consistent with the required presentation for debt discounts. This new standard is effective for financial statements issued for annual and interim reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company elected to early adopt this new guidance effective October 1, 2015 and applied the new guidance retrospectively to all prior periods presented in the financial statements. The adoption of this standard changed the Company’s previous practice of presenting debt issuance costs as an asset and resulted in the reduction of total assets and total liabilities in an amount equal to the balance of unamortized debt issuance costs at each balance sheet date presented. Debt issuance costs that are now presented as a direct reduction from the carrying amount of the associated debt liability amounted to $22.9 million as of March 31, 2017, $25.2 million as of September 30, 2016, and $28.7 million as of March 31, 2016. In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments.” This guidance eliminates the requirement to restate prior period financial statements for measurement period adjustments related to business combinations. It requires that the cumulative impact of a measurement period adjustment, including the impact on prior periods, be recognized in the reporting period in which the adjustment is identified. In addition, the portion of the adjustment recorded in the current period that would have been recognized in prior periods had the adjustment been identified at that time must be presented, by line item, either on the face of the income statement or in the accompanying notes. This new standard is effective for annual and interim reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company elected to early adopt this new guidance effective January 1, 2016 and the impact on the financial statements and related disclosures through the quarter ended March 31, 2017 was immaterial. In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes." This guidance requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. This new standard is effective for annual and interim reporting periods beginning after December 15, 2016 and early adoption is permitted. Entities are permitted to apply this guidance either prospectively or retrospectively. The Company adopted the guidance as of March 31, 2016 and applied it retrospectively to all prior periods. As a result, the Company reclassified its current deferred tax balances of $31.9 million to non-current deferred taxes as of September 30, 2015. Recent Accounting Pronouncements - Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers, and will replace most existing revenue recognition guidance when it becomes effective. This new standard is effective for public business entities for fiscal years beginning on or after January 1, 2018, and early adoption is permitted for annual periods beginning after December 31, 2016. The standard permits the use of either the full retrospective or modified retrospective adoption methods. The Company is continuing to perform a detailed evaluation, using a five-step model specified in the guidance, to assess the impacts of the new standard and expects to apply the guidance using the modified retrospective method. Based on the Company’s knowledge of its revenue transactions, the Company does not expect the adoption of this new guidance to have a material impact on its financial statements, but does expect that it will result in additional disclosures regarding revenue recognition policies. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial StatementsGoing Concern: Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern.” The guidance updates management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and provide related footnote disclosures. For each reporting period, management is required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from when the financial statements are issued. This new standard is effective for the annual reporting period ending after December 15, 2016 as well as all annual and interim reporting periods thereafter, and early adoption is permitted. The Company does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures. In July 2015, the FASB issued ASU 2015-11, “Inventory: Simplifying the Measurement of Inventory.” This guidance applies to inventory valued at first-in, first-out (FIFO) or average cost and requires inventory to be measured at the lower of cost and net realizable value, rather than at the lower of cost or market. This new standard is effective on a prospective basis for annual and interim reporting periods beginning after December 15, 2016. The Company does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, “Leases.” This guidance will replace most existing accounting for lease guidance when it becomes effective. This new standard is effective using the modified retrospective approach for annual and interim and reporting periods beginning after December 15, 2018 and early adoption is permitted. The guidance will require the Company to record a right of use asset and a lease liability for most of the Company’s leases, including those currently treated as operating leases. The Company is in the process of evaluating the impact of the standard and has decided that it will use the practical expedients outlined in the transition guidance. The scope of the overall impact on the Company’s financial statements and related disclosures is still being quantified. In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” This guidance is intended to simplify several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The provisions of this standard are effective for reporting periods beginning after December 15, 2016 and early adoption is permitted in any interim or annual period, but the Company is not early adopting this guidance. The adoption of this guidance will likely have a positive impact on the Company’s income tax provision, net income and operating cash flows in periods in which employees elect to exercise their vested stock options or when restrictions on share-based awards lapse (based on our comparison of our deferred tax assets for share-based compensation to the current intrinsic value of the underlying awards). In June 2016, the FASB issued ASU 2016-13, “Financial Instruments Credit Losses: Measurement of Credit Losses on Financial Instruments.” This guidance is intended to introduce a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses. This new standard is effective for annual and interim reporting periods beginning after December 15, 2019 and early adoption is permitted. The Company is currently evaluating the impact that this guidance may have on its financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a Business” This guidance is intended to assist entities when evaluating when a set of transferred assets and activities constitutes a business. This new standard is effective for annual and interim reporting periods beginning after December 15, 2017 and early adoption is permitted. Based on the Company’s current business model, it does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, “Simplifying the Accounting for Goodwill Impairment.” This guidance is intended to introduce a simplified approach to measurement of goodwill impairment, eliminating the need for a hypothetical purchase price allocation and instead measuring impairment by the amount a reporting unit’s carrying value exceeds its fair value. This new standard is effective for annual and interim reporting periods beginning after December 15, 2019 and early adoption is permitted. Based on the Company’s current business model, it does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures. |
Acquisitions |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions |
Roofing Supply Group On October 1, 2015, the Company acquired 100% of the equity of Roofing Supply Group, LLC ("RSG”), a leading roofing products distributor owned by investment firm Clayton, Dubilier & Rice ("CD&R"). RSG’s results of operations have been included with Company’s consolidated results beginning October 1, 2015. RSG distributed roofing supplies and related materials from 85 locations across 25 states as of October 1, 2015. Total consideration paid for RSG was approximately $1.17 billion, out of which $288.2 million was in cash, $306.8 million of Company’s common stock and option replacement awards, and $574.4 million in refinancing of RSG’s debt. The RSG long-term debt was repaid simultaneously with the proceeds of a new ABL Revolver, Term Loan and Senior Notes (see Note 8). In connection with the RSG acquisition, the Company was required to issue equity awards to certain RSG employees in replacement of RSG equity awards that were cancelled at closing. The replacement awards consisted of options to purchase 661,349 shares of the Company’s common stock. The terms and fair value of these awards approximated the cancelled RSG awards on the issuance date. The fair value of the replacement awards associated with services rendered through the date of the RSG acquisition was recognized as a component of the total acquisition consideration, and the remaining fair value of the replaced awards associated with post RSG acquisition services will be recognized as an expense on a straight-line basis over the remaining service period. The RSG acquisition has been accounted for as a business combination in accordance with the requirements of ASC 805 Business Combinations. The acquisition price has been allocated among assets acquired and liabilities assumed at fair value based on information currently available, with the excess recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of RSG. These come from the synergies that are obtained in operating the branches as part of a larger network, and from an experienced employee base skilled at managing a distribution business. As of September 30, 2016, the Company had finalized the acquisition accounting entries for the RSG acquisition, detailed as follows (in thousands):
RSG’s future growth attributable to new customers, geographic market presence and assembled workforce are additional assets that are not separable and which contributed to recorded goodwill, of which $86.1 million was tax deductible as of the October 1, 2015 RSG acquisition date. All of the Company’s goodwill plus the indefinite-lived trade name are tested for impairment annually, and all acquired goodwill and intangible assets are subject to review for impairment should future indicators of impairment develop. The fair value of acquired RSG accounts receivables was $177.3 million, with the gross contractual amount being $185.9 million. Additional Acquisitions Fiscal Year 2017 During the six months ended March 31, 2017, the Company acquired 12 branches from the following four acquisitions:
The Company recorded the acquired assets and liabilities related to these transactions at their estimated fair values as of the respective acquisition dates, with resulting goodwill of $31.0 million (all of which is deductible for tax purposes) and $15.9 million in intangible assets associated with these other acquisitions as of March 31, 2017. Additional Acquisitions Fiscal Year 2016 During fiscal year 2016, the Company acquired 42 branches from the following seven additional acquisitions:
The Company recorded the acquired assets and liabilities related to these transactions at their estimated fair values as of the respective acquisition dates, with resulting goodwill of $84.8 million ($59.8 million of which is deductible for tax purposes) and $60.8 million in intangible assets associated with these other acquisitions. Acquisitions Additional Information For those acquisitions where the acquisition accounting entries have yet to be finalized, the Company’s allocation of the purchase price is subject to change on receipt of additional information, including, but not limited to, the finalization of asset valuations (intangible and fixed) and income tax accounting. |
Net Income (Loss) per Share |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) per Share |
Basic net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted-average number of common shares and dilutive common share equivalents then outstanding using the treasury stock method. Common share equivalents consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock awards. The following table presents the basic and diluted weighted-average shares outstanding for each period presented:
The following table includes the number of shares that may be dilutive common shares in the future. These shares were not included in the computation of diluted net income per share because the effect was either anti-dilutive or the requisite performance conditions were not met.
|
Stockholders' Equity |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ Equity |
The following table presents the activity included in stockholders’ equity during the six months ended March 31, 2017 (in thousands, except share amounts):
Common and Preferred Stock The Company is authorized to issue 100 million shares of common stock and 5 million shares of preferred stock. As of March 31, 2017, September 30, 2016, and March 31, 2016 there were 60,255,320, 59,890,885 and 59,521,648 shares of common stock issued and outstanding, respectively, and no preferred stock outstanding as of any period end. Accumulated Other Comprehensive Loss Other comprehensive income (loss) is comprised of certain gains and losses that are excluded from net income under GAAP and instead recorded as a separate element of stockholders’ equity. The Company’s other comprehensive income (loss) consists of foreign currency translation adjustments as well as unrealized gains or losses on the Company’s derivative contracts. The following table summarizes the components of and changes in accumulated other comprehensive loss (in thousands):
|
Stock-based Compensation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
On February 9, 2016, the shareholders of the Company approved the Amended and Restated Beacon Roofing Supply, Inc. 2014 Stock Plan (the “2014 Plan”). The 2014 Plan provides for discretionary awards of stock options, stock awards, restricted stock units, and stock appreciation rights (“SARs”) for up to 5,000,000 shares of common stock to selected employees and non-employee directors. The 2014 Plan mandates that all forfeited, expired, and withheld shares, including those from the predecessor plans, be returned to the 2014 Plan and made available for issuance. As of March 31, 2017, there were 4,051,683 shares of common stock available for issuance. Prior to the 2014 Plan, the Company maintained the amended and restated Beacon Roofing Supply, Inc. 2004 Stock Plan (the “2004 Plan”). Upon shareholder approval of the 2014 Plan, the Company ceased issuing equity awards from the 2004 Plan and mandated that all future equity awards will be issued from the 2014 Plan. For all equity awards granted prior to October 1, 2014, in the event of a change in control of the Company, all awards are immediately vested. Beginning in fiscal 2015, equity awards contain a “double trigger” change in control mechanism. Unless an award is continued or assumed by a public company in an equitable manner, an award shall become fully vested immediately prior to a change in control (at 100% in the case of a performance-based restricted stock award). If an award is so continued or assumed, vesting will continue in accordance with the terms of the award, unless there is a qualifying termination within one-year following the change in control, in which event the award shall become fully vested immediately (at 100% in the case of a performance-based restricted stock award). Stock Options Non-qualified stock options generally expire 10 years after the grant date and, except under certain conditions, the options are subject to continued employment and vest in one-third increments over a three-year period following the grant dates. The fair values of the options granted during the six months ended March 31, 2017 were estimated on the dates of grants using the Black-Scholes option-pricing model with the following weighted-average assumptions:
The following table summarizes all stock option activity for the period presented (in thousands, except share, per share, and time period amounts):
During the three months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense related to stock options of $1.3 million and $1.6 million, respectively. During the six months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense related to stock options of $2.6 million and $7.7 million, respectively. As of March 31, 2017, there was $7.0 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.1 years. The following table summarizes additional information on stock options for the period presented (in thousands, except per share amounts):
Restricted Stock Units Restricted stock unit (“RSU”) awards granted to employees are subject to continued employment and generally vest after three years. The Company also grants certain RSU awards to management that contain an additional vesting condition tied directly to a defined performance metric for the Company. The actual number of RSUs that will vest can range from 0% to 150% of the grant, depending upon actual Company performance below or above the target level. The Company estimates performance in relation to the established target when determining the projected number of RSUs that will vest and calculating the compensation cost related to these awards. RSUs granted to non-employee directors are subject to continued service and vest after one year (except under certain conditions). Generally, the common shares underlying the RSUs are not eligible for distribution until the director’s service on the Board has terminated. For non-employee director RSU grants made prior to fiscal year 2014, the share distribution date is six months after the director’s termination of service on the board. RSU grants made in fiscal year 2014 and thereafter have no such holding period requirement. Additionally, beginning in fiscal year 2016 non-employee directors holding common stock and outstanding vested unexercised/unsettled equity awards with a fair value that is greater than or equal to five times the annual cash retainer may elect to have future grants settle simultaneously with vesting. The following table summarizes all restricted stock unit activity for the period presented:
During the three months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense related to restricted stock units of $2.5 million and $1.9 million, respectively. During the six months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense related to restricted stock units of $5.0 million and $3.0 million, respectively. As of March 31, 2017, there was $17.5 million of total unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 2.1 years. The following table summarizes additional information on RSUs for the period presented (in thousands):
|
Goodwill and Intangible Assets |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets |
Goodwill The following table sets forth the change in the carrying amount of goodwill for the Company during the six months ended March 31, 2017 and 2016, respectively (in thousands):
The change in the carrying amount of goodwill for the six months ended March 31, 2017 and 2016 is primarily attributable to the Company’s acquisitions finalized during the respective periods presented (see Note 3). Intangible Assets In connection with transactions finalized during the six months ended March 31, 2017 and fiscal year 2016, the Company recorded intangible assets of $15.9 million (mostly customer relationships) and $442.6 million ($375.0 million of customer relationships, $4.3 million of amortizable trademarks, and $63.3 million of indefinite-lived trademarks), respectively. Intangible assets consisted of the following (in thousands, except time period amounts):
For the three month periods ended March 31, 2017 and 2016, we recorded $20.3 million and $17.1 million of amortization expense relating to the above-listed intangible assets, respectively. For the six month periods ended March 31, 2017 and 2016, we recorded $40.4 million and $32.3 million of amortization expense relating to the above-listed intangible assets, respectively. The intangible asset lives range from 1 to 20 years and have a weighted-average remaining life of 17.7 years as of March 31, 2017. The following table presents the estimated annual amortization expense for these intangible assets (in thousands):
|
Financing Arrangements |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Arrangements |
In connection with the RSG Acquisition on October 1, 2015, the Company entered into various financing arrangements totaling $1.45 billion. A “Senior Secured Credit Facility” was entered into that is comprised of an asset-based revolving line of credit (“ABL”) of $700.0 million ($350.0 million of which was drawn at closing) and a new $450.0 million term loan (“Term Loan”). The Company also raised an additional $300.0 million through the issuance of senior notes (the “Senior Notes”). The proceeds from the Senior Secured Credit Facility and Senior Notes were used to provide working capital and funds for other general corporate purposes, to refinance or otherwise extinguish all third-party indebtedness for borrowed money under Company’s and RSG’s existing senior secured credit facilities and RSG’s unsecured senior notes due 2020, to finance the acquisition, and to pay fees and expenses associated with the RSG acquisition. The Company incurred financing costs totaling approximately $31.3 million. The following table summarizes all financing arrangements the Company has entered into (in thousands):
On October 1, 2015, the Company entered into a $700 million ABL with Wells Fargo Bank, N.A. and a syndicate of other lenders. This ABL consists of revolving loans in both the United States (“U.S. Revolver”) in the amount of $670.0 million and Canada (“Canada Revolver”) in the amount of $30.0 million. The ABL has a maturity date of October 1, 2020. The U.S. Revolver has various tranches of borrowings, bearing interest at rates ranging from 2.39% to 4.50%. The effective rate of these borrowings is 2.97% and is paid monthly. As of March 31, 2017, the outstanding balance on the U.S. Revolver and Canada Revolvers, net of debt issuance fees, was $269.1 million. The U.S. Revolver also has outstanding standby letters of credit in the amount of $10.4 million as of March 31, 2017. Current unused commitment fees on the revolving credit facilities are 0.25% per annum. There is one financial covenant under the ABL, which is a Consolidated Fixed Charge Ratio. The Consolidated Fixed Charge Ratio is calculated by dividing consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) by Consolidated Fixed Charges (as defined in the agreement). Per the covenant, the Company’s Consolidated Fixed Charge Ratio must be a minimum of 1.00 at the end of each fiscal quarter, calculated on a trailing four quarter basis. The covenant is only applicable when the borrowing availability is less than 10% of the maximum loan cap or $60.0 million. The ABL is guaranteed jointly and severally and fully and unconditionally by the Company’s active United States subsidiary. Term Loan On October 1, 2015, the Company entered into a $450.0 million Term Loan with Citibank N.A., and a syndicate of other lenders. The Term Loan requires quarterly principal payments in the amount of $1.1 million, with the remaining outstanding principal to be paid on its maturity date of October 1, 2022. The interest rate paid is based on a LIBOR rate (with a floor) plus a fixed spread. The Company has the option of selecting a LIBOR period that determines the rate at which interest can accrue on the Term Loan as well as the period in which interest payments are made. On September 16, 2016, the Company refinanced its Term Loan, lowering the LIBOR floor by 25 basis points and lowering the spread by 25 basis points. As a result of the refinancing, the Company wrote off $1.6 million of debt issuance costs in interest expense. As of March 31, 2017, the outstanding balance on the Term Loan, net of debt issuance fees, was $434.9 million. The Term Loan is guaranteed jointly and severally and fully and unconditionally by the Company’s active United States subsidiary. Senior Notes On October 1, 2015, the Company raised $300.0 million by issuing senior notes due 2023 (the “Senior Notes”). The Senior Notes have a coupon rate of 6.38% per annum and are payable semi-annually in arrears beginning April 1, 2016. There are early payment provisions in the Senior Note indenture in which the Company would be subject to “make whole” provisions. Management anticipates repaying the notes at the maturity date of October 1, 2023. As of March 31, 2017 the outstanding balance on the Senior Notes, net of debt issuance fees, was $291.7 million. The Senior Notes are guaranteed jointly and severally and fully and unconditionally by the Company’s active United States subsidiary. Other Information The Senior Secured Credit Facility and the previous credit facility it replaced had certain lenders who participated in both arrangements, therefore management accounted for a portion of this transaction as a debt modification and a portion as a debt extinguishment. In accordance with the accounting for debt modification, the Company expensed $2.2 million of direct issuance costs incurred and will amortize the previously capitalized issuance costs over the term of the Senior Secured Credit Facility. The remainder of the settlement of the Company’s previous financing arrangements was accounted for as debt extinguishment, for which the Company recognized a loss of $0.8 million in the first quarter of fiscal year 2016. Equipment Financing Facilities and Other As of March 31, 2017, the Company had a $17.9 million outstanding under equipment financing facilities, with fixed interest rates ranging from 2.33% to 3.25% and payments due through September 2021. As of March 31, 2017 the Company had $22.2 million of capital lease obligations outstanding. These leases have interest rates ranging from 2.72% to 10.39% with payments due through November 2021. |
Commitments and Contingencies |
6 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2017 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Commitments and Contingencies |
Operating Leases The Company mostly operates in leased facilities, which are accounted for as operating leases. The leases typically provide for a base rent plus real estate taxes. Certain of the leases provide for escalating rents over the lives of the leases and rent expense is recognized over the terms of those leases on a straight-line basis. For the three months ended March 31, 2017 and 2016, rent expense was $14.7 million and $14.6 million, respectively. For the six months ended March 31, 2017 and 2016, rent expense was $28.9 million and $30.6 million, respectively. Sublet income was immaterial for each of these periods. Contingencies The Company is subject to loss contingencies pursuant to various federal, state and local environmental laws and regulations; however, the Company is not aware of any reasonably possible losses that would have a material impact on its results of operations, financial position, or liquidity. Potential loss contingencies include possible obligations to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical or other substances by the Company or by other parties. In connection with its acquisitions, the Company’s practice is to request indemnification for any and all known material liabilities of significance as of the respective dates of acquisition. Historically, environmental liabilities have not had a material impact on the Company's results of operations, financial position or liquidity. The Company is subject to litigation from time to time in the ordinary course of business; however the Company does not expect the results, if any, to have a material adverse impact on its results of operations, financial position or liquidity. |
Geographic Data |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic Data |
The following tables summarize certain geographic information for the periods presented (in thousands):
|
Fair Value Measurement |
6 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2017 | ||||
Fair Value Disclosures [Abstract] | ||||
Fair Value |
As of March 31, 2017, the carrying amount of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses approximated fair value because of the short-term nature of these instruments. The Company measures its cash equivalents at amortized cost, which approximates fair value based upon quoted market prices (Level 1). Based upon recent trading prices (Level 2 market approach) as of March 31, 2017, the fair value of the Company’s $300.0 million Senior Notes was $321.0 million. As of March 31, 2017, the fair value of the Company’s Senior Secured Credit Facility approximated the amount outstanding. The Company estimates the fair value of its Senior Secured Credit Facility by discounting the future cash flows of each instrument using estimated market rates of debt instruments with similar maturities and credit profiles (Level 3). |
Supplemental Guarantor Information |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Guarantor Information |
All of the Senior Notes issued on October 1, 2015 are guaranteed jointly and severally by all of the United States subsidiaries of the Company (collectively, the “Guarantors”), and not by the Canadian subsidiaries of the Company. Such guarantees are full and unconditional. Supplemental condensed consolidating financial information of the Company, including such information for the Guarantors, is presented below. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the non-guarantor subsidiaries operated as independent entities. Investments in subsidiaries are presented using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. Separate financial statements of the Guarantors are not provided as the consolidating financial information contained herein provides a more meaningful disclosure to allow investors to determine the nature of the assets held by, and the operations of, the combined groups. BEACON ROOFING SUPPLY, INC. Condensed Consolidating Balance Sheets (Unaudited; In thousands)
BEACON ROOFING SUPPLY, INC. Condensed Consolidating Balance Sheets (Unaudited; In thousands)
BEACON ROOFING SUPPLY, INC. Condensed Consolidating Balance Sheets (Unaudited; In thousands)
BEACON ROOFING SUPPLY, INC. Condensed Consolidating Statements of Operations (Unaudited; In thousands, except share and per share amounts)
BEACON ROOFING SUPPLY, INC. Condensed Consolidating Statements of Operations (Unaudited; In thousands, except share and per share amounts)
BEACON ROOFING SUPPLY, INC. Condensed Consolidating Statements of Comprehensive Income (Unaudited; In thousands)
BEACON ROOFING SUPPLY, INC. Condensed Consolidating Statements of Cash Flows (Unaudited; In thousands)
|
Subsequent Events |
6 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2017 | ||||
Subsequent Events [Abstract] | ||||
Subsequent Events |
On May 1, 2017, the Company purchased certain assets of Lowry’s Inc., a distributor of waterproofing and concrete restoration materials with 11 branches operating in California, Arizona, Utah and Hawaii and annual sales of approximately $76 million. |
Summary of Significant Accounting Policies (Policies) |
6 Months Ended | |
---|---|---|
Mar. 31, 2017 | ||
Accounting Policies [Abstract] | ||
Basis of Presentation | Basis of Presentation Beacon Roofing Supply, Inc. (the “Company”) prepared the condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the requirements of the Securities and Exchange Commission (“SEC”). As permitted under those rules, certain footnotes or other financial information have been condensed or omitted. The balance sheet as of March 31, 2016 has been presented for a better understanding of the impact of seasonal fluctuations on the Company's financial condition. In management's opinion, the financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company's financial position and operating results. The results for the three and six-month periods ended March 31, 2017 are not necessarily indicative of the results to be expected for the twelve months ending September 30, 2017 (“fiscal year 2017” or “2017”). The three-month periods ended March 31, 2017 and 2016 each had 64 business days and the six-month periods ended March 31, 2017 and March 31, 2016 had 125 and 126 business days, respectively. These interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in the Company’s fiscal year 2016 (“2016”) Annual Report on Form 10-K for the year ended September 30, 2016. |
|
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Significant items subject to such estimates include inventories, purchase price allocations, recoverability of goodwill and intangibles, and income taxes. Actual amounts could differ from those estimates. |
|
Recent Issued Accounting Pronouncements | Recent Accounting Pronouncements - Adopted In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, “Simplifying the Presentation of Debt Issuance Costs” to simplify the presentation of debt issuance costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the associated debt liability, consistent with the required presentation for debt discounts. This new standard is effective for financial statements issued for annual and interim reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company elected to early adopt this new guidance effective October 1, 2015 and applied the new guidance retrospectively to all prior periods presented in the financial statements. The adoption of this standard changed the Company’s previous practice of presenting debt issuance costs as an asset and resulted in the reduction of total assets and total liabilities in an amount equal to the balance of unamortized debt issuance costs at each balance sheet date presented. Debt issuance costs that are now presented as a direct reduction from the carrying amount of the associated debt liability amounted to $22.9 million as of March 31, 2017, $25.2 million as of September 30, 2016, and $28.7 million as of March 31, 2016. In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments.” This guidance eliminates the requirement to restate prior period financial statements for measurement period adjustments related to business combinations. It requires that the cumulative impact of a measurement period adjustment, including the impact on prior periods, be recognized in the reporting period in which the adjustment is identified. In addition, the portion of the adjustment recorded in the current period that would have been recognized in prior periods had the adjustment been identified at that time must be presented, by line item, either on the face of the income statement or in the accompanying notes. This new standard is effective for annual and interim reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company elected to early adopt this new guidance effective January 1, 2016 and the impact on the financial statements and related disclosures through the quarter ended March 31, 2017 was immaterial. In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes." This guidance requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. This new standard is effective for annual and interim reporting periods beginning after December 15, 2016 and early adoption is permitted. Entities are permitted to apply this guidance either prospectively or retrospectively. The Company adopted the guidance as of March 31, 2016 and applied it retrospectively to all prior periods. As a result, the Company reclassified its current deferred tax balances of $31.9 million to non-current deferred taxes as of September 30, 2015. Recent Accounting Pronouncements - Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers, and will replace most existing revenue recognition guidance when it becomes effective. This new standard is effective for public business entities for fiscal years beginning on or after January 1, 2018, and early adoption is permitted for annual periods beginning after December 31, 2016. The standard permits the use of either the full retrospective or modified retrospective adoption methods. The Company is continuing to perform a detailed evaluation, using a five-step model specified in the guidance, to assess the impacts of the new standard and expects to apply the guidance using the modified retrospective method. Based on the Company’s knowledge of its revenue transactions, the Company does not expect the adoption of this new guidance to have a material impact on its financial statements, but does expect that it will result in additional disclosures regarding revenue recognition policies. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial StatementsGoing Concern: Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern.” The guidance updates management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and provide related footnote disclosures. For each reporting period, management is required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from when the financial statements are issued. This new standard is effective for the annual reporting period ending after December 15, 2016 as well as all annual and interim reporting periods thereafter, and early adoption is permitted. The Company does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures. In July 2015, the FASB issued ASU 2015-11, “Inventory: Simplifying the Measurement of Inventory.” This guidance applies to inventory valued at first-in, first-out (FIFO) or average cost and requires inventory to be measured at the lower of cost and net realizable value, rather than at the lower of cost or market. This new standard is effective on a prospective basis for annual and interim reporting periods beginning after December 15, 2016. The Company does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, “Leases.” This guidance will replace most existing accounting for lease guidance when it becomes effective. This new standard is effective using the modified retrospective approach for annual and interim and reporting periods beginning after December 15, 2018 and early adoption is permitted. The guidance will require the Company to record a right of use asset and a lease liability for most of the Company’s leases, including those currently treated as operating leases. The Company is in the process of evaluating the impact of the standard and has decided that it will use the practical expedients outlined in the transition guidance. The scope of the overall impact on the Company’s financial statements and related disclosures is still being quantified. In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” This guidance is intended to simplify several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The provisions of this standard are effective for reporting periods beginning after December 15, 2016 and early adoption is permitted in any interim or annual period, but the Company is not early adopting this guidance. The adoption of this guidance will likely have a positive impact on the Company’s income tax provision, net income and operating cash flows in periods in which employees elect to exercise their vested stock options or when restrictions on share-based awards lapse (based on our comparison of our deferred tax assets for share-based compensation to the current intrinsic value of the underlying awards). In June 2016, the FASB issued ASU 2016-13, “Financial Instruments Credit Losses: Measurement of Credit Losses on Financial Instruments.” This guidance is intended to introduce a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses. This new standard is effective for annual and interim reporting periods beginning after December 15, 2019 and early adoption is permitted. The Company is currently evaluating the impact that this guidance may have on its financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a Business” This guidance is intended to assist entities when evaluating when a set of transferred assets and activities constitutes a business. This new standard is effective for annual and interim reporting periods beginning after December 15, 2017 and early adoption is permitted. Based on the Company’s current business model, it does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, “Simplifying the Accounting for Goodwill Impairment.” This guidance is intended to introduce a simplified approach to measurement of goodwill impairment, eliminating the need for a hypothetical purchase price allocation and instead measuring impairment by the amount a reporting unit’s carrying value exceeds its fair value. This new standard is effective for annual and interim reporting periods beginning after December 15, 2019 and early adoption is permitted. Based on the Company’s current business model, it does not expect the adoption of this new guidance to have a material impact on its financial statements and related disclosures. |
Acquisitions (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | As of September 30, 2016, the Company had finalized the acquisition accounting entries for the RSG acquisition, detailed as follows (in thousands):
|
Net Income (Loss) per Share (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Weighted-Average Shares Outstanding | The following table presents the basic and diluted weighted-average shares outstanding for each period presented:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | These shares were not included in the computation of diluted net income per share because the effect was either anti-dilutive or the requisite performance conditions were not met.
|
Stockholders' Equity (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders Equity | The following table presents the activity included in stockholders’ equity during the six months ended March 31, 2017 (in thousands, except share amounts):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification out of Accumulated Other Comprehensive Income | The following table summarizes the components of and changes in accumulated other comprehensive loss (in thousands):
|
Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Options, Black-Scholes Option-Pricing Model, Weighted-Average Assumptions | The fair values of the options granted during the six months ended March 31, 2017 were estimated on the dates of grants using the Black-Scholes option-pricing model with the following weighted-average assumptions:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options Outstanding and Activity During the Period | The following table summarizes all stock option activity for the period presented (in thousands, except share, per share, and time period amounts):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Grants, Vesting, and Exercises | The following table summarizes additional information on stock options for the period presented (in thousands, except per share amounts):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Shares and Units Outstanding and Activity During the Period | The following table summarizes all restricted stock unit activity for the period presented:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Restricted Stock Units Additional Information | The following table summarizes additional information on RSUs for the period presented (in thousands):
|
Goodwill and Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in goodwill | The following table sets forth the change in the carrying amount of goodwill for the Company during the six months ended March 31, 2017 and 2016, respectively (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangibles and Other Assets, Included in Other Long-term Assets | Intangible assets consisted of the following (in thousands, except time period amounts):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Future Annual Amortization | The following table presents the estimated annual amortization expense for these intangible assets (in thousands):
|
Financing Arrangements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | The following table summarizes all financing arrangements the Company has entered into (in thousands):
|
Geographic Data (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Geographic Information | The following tables summarize certain geographic information for the periods presented (in thousands):
|
Supplemental Guarantor Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidated Balance Sheets | BEACON ROOFING SUPPLY, INC. Condensed Consolidating Balance Sheets (Unaudited; In thousands)
BEACON ROOFING SUPPLY, INC. Condensed Consolidating Balance Sheets (Unaudited; In thousands)
BEACON ROOFING SUPPLY, INC. Condensed Consolidating Balance Sheets (Unaudited; In thousands)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidated Statements of Operations | BEACON ROOFING SUPPLY, INC. Condensed Consolidating Statements of Operations (Unaudited; In thousands, except share and per share amounts)
BEACON ROOFING SUPPLY, INC. Condensed Consolidating Statements of Operations (Unaudited; In thousands, except share and per share amounts)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidated Statements of Comprehensive Income | BEACON ROOFING SUPPLY, INC. Condensed Consolidating Statements of Comprehensive Income (Unaudited; In thousands)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidated Statements of Cash Flows | BEACON ROOFING SUPPLY, INC. Condensed Consolidating Statements of Cash Flows (Unaudited; In thousands)
|
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Significant Accounting Policies [Line Items] | ||||
Debt Related Commitment Fees and Debt Issuance Costs | $ 22,900 | $ 28,700 | $ 25,200 | |
Deferred Tax Assets, Net, Noncurrent | $ 0 | $ 0 | $ 0 | $ 31,900 |
Acquisitions (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Sep. 30, 2016 |
Mar. 31, 2016 |
Sep. 30, 2015 |
---|---|---|---|---|
Goodwill | $ 1,228,059 | $ 1,197,565 | $ 1,160,775 | $ 496,415 |
RSG Acquisition [Member] | ||||
Cash | 16,451 | |||
Accounts receivable | 177,251 | |||
Inventory | 179,651 | |||
Other current assets | 50,000 | |||
Property, plant, and equipment | 55,159 | |||
Other intangible assets | 382,600 | |||
Goodwill | 617,477 | |||
Current liabilities | (252,190) | |||
Non-current liabilities | (56,949) | |||
Total purchase price | $ 1,169,450 |
Net Income (Loss) per Share (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Weighted-average common shares outstanding, basic | 60,141,580 | 59,295,990 | 60,041,332 | 59,133,569 |
Effect of dilutive securities: | ||||
Weighted-average common shares outstanding, diluted | 60,141,580 | 59,295,990 | 61,069,938 | 60,077,852 |
Employee Stock Option [Member] | ||||
Effect of dilutive securities: | ||||
Weighted Average Number Diluted Shares Outstanding Adjustment | 0 | 0 | 633,007 | 696,112 |
Restricted Stock [Member] | ||||
Effect of dilutive securities: | ||||
Weighted Average Number Diluted Shares Outstanding Adjustment | 0 | 0 | 395,599 | 248,171 |
Net Income (Loss) per Share (Details 1) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Employee Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 270,428 | 665,281 | 416,085 | 667,251 |
Restricted Stock [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 88,407 | 123,780 | 88,407 |
Stockholders' Equity (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Foreign Currency Translation | ||||
Beginning balance | $ (18,269) | |||
Other comprehensive loss before reclassifications | (839) | |||
Reclassifications out of other comprehensive loss | 0 | |||
Ending balance | $ (19,108) | (19,108) | ||
Derivative Financial Instruments | ||||
Beginning balance | (388) | |||
Other comprehensive loss before reclassifications | 0 | |||
Reclassifications out of other comprehensive loss | 388 | |||
Ending balance | 0 | 0 | ||
Accumulated Other Comprehensive Loss | ||||
Beginning balance | (18,657) | |||
Other comprehensive income before reclassifications | 813 | $ 4,226 | (839) | $ 1,757 |
Reclassifications out of other comprehensive loss | 388 | |||
Ending balance | $ (19,108) | $ (18,162) | $ (19,108) | $ (18,162) |
Stockholders' Equity - Additional Information (Details) - shares |
Mar. 31, 2017 |
Sep. 30, 2016 |
Mar. 31, 2016 |
---|---|---|---|
Common Stock (Voting), Shares Authorized | 100,000,000 | 100,000,000 | 100,000,000 |
Undesignated Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Common Stock (Voting), Issued | 60,255,320 | 59,890,885 | 59,521,648 |
Common Stock, Shares, Outstanding | 60,255,320 | 59,890,885 | 59,521,648 |
Undesignated Preferred Stock, Outstanding | 0 | 0 | 0 |
Stock-based Compensation (Details) |
6 Months Ended |
---|---|
Mar. 31, 2017 | |
Risk-free interest rate | 1.97% |
Expected volatility | 28.83% |
Expected life (in years) | 5 years 3 months 18 days |
Dividend yield | 0.00% |
Stock-based Compensation (Details 1) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2017 |
Sep. 30, 2016 |
||||
Options Outstanding | |||||
Balance as of September 30, 2016 | 2,312,789 | ||||
Granted | 245,818 | ||||
Exercised | (316,827) | ||||
Canceled | (22,271) | ||||
Balance as of March 31, 2017 | 2,219,509 | 2,312,789 | |||
Vested and expected to vest after March 31, 2017 | 2,167,911 | ||||
Exercisable as of March 31, 2017 | 1,487,885 | ||||
Weighted-Average Exercise Price | |||||
Balance as of September 30, 2016 | $ 25.55 | ||||
Granted | 47.4 | ||||
Exercised | 21.2 | ||||
Canceled | 24.19 | ||||
Balance as of March 31, 2017 | 28.6 | $ 25.55 | |||
Vested and expected to vest after March 31, 2017 | 28.51 | ||||
Exercisable as of March 31, 2017 | $ 25.4 | ||||
Weighted-Average Remaining Contractual Life | |||||
Balance | 6 years 6 months | 6 years 3 months 18 days | |||
Vested and expected to vest after March 31, 2017 | 6 years 6 months | ||||
Exercisable as of March 31, 2017 | 5 years 4 months 24 days | ||||
Aggregate Intrinsic Value | |||||
Balance | [1] | $ 45,630 | $ 38,225 | ||
Vested and expected to vest after March 31, 2017 | [1] | 44,759 | |||
Exercisable as of March 31, 2017 | [1] | $ 35,350 | |||
|
Stock-based Compensation (Details 2) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Weighted-average fair value of stock options granted | $ 14.21 | $ 12.89 |
Total fair value of stock options vested | $ 4,998 | $ 11,020 |
Total intrinsic value of stock options exercised | $ 7,906 | $ 14,415 |
Stock-based Compensation (Details 3) - Restricted Stock Units (RSUs) [Member] |
6 Months Ended |
---|---|
Mar. 31, 2017
$ / shares
shares
| |
Outstanding | |
Balance as of September 30, 2016 | shares | 705,434 |
Granted | shares | 267,042 |
Released | shares | (65,651) |
Forfeited | shares | (7,463) |
Balance at March 31, 2017 | shares | 899,362 |
Vested and expected to vest after March 31,2017 | shares | 832,557 |
Weighted - Average Grant Date Fair Value | |
Balance at September 30, 2016 | $ / shares | $ 34.55 |
Granted | $ / shares | 47.28 |
Released | $ / shares | 36.33 |
Forfeited | $ / shares | 44.53 |
Balance at March 31, 2017 | $ / shares | 38.27 |
Vested and expected to vest after March 31,2017 | $ / shares | $ 38.27 |
Stock-based Compensation (Details 4) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items] | ||
Total fair value of RSUs released | $ 2,385 | $ 369 |
Total intrinsic value of RSUs released | $ 3,071 | $ 403 |
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Beginning balance | $ 1,197,565 | $ 496,415 |
Acquisition of RSG | 31,005 | 617,634 |
Other acquisitions | 47,608 | |
Translation and other adjustments | (511) | (882) |
Ending balance | $ 1,228,059 | $ 1,160,775 |
Goodwill and Intangible Assets (Details 2) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Sep. 30, 2016 |
Mar. 31, 2016 |
---|---|---|---|
Year Ending September 30, | |||
2017 (Apr - Sept) | $ 40,750 | ||
2018 | 67,713 | ||
2019 | 55,112 | ||
2020 | 44,527 | ||
2021 | 35,378 | ||
Thereafter | 122,977 | ||
Total amortizable intangible assets, net | $ 366,457 | $ 390,974 | $ 399,532 |
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 |
[1] | Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Sep. 30, 2016 |
|||||
Goodwill And Intangible Assets [Line Items] | ||||||||||
Amortization of Intangible Assets | $ 20.3 | $ 17.1 | $ 40.4 | $ 32.3 | ||||||
Finite-lived Intangible Assets Acquired | $ 15.9 | |||||||||
Indefinite-lived Intangible Assets Acquired | $ 442.6 | |||||||||
Customer Relationships [Member] | ||||||||||
Goodwill And Intangible Assets [Line Items] | ||||||||||
Finite-Lived Intangible Asset, Useful Life | [2] | 17 years 10 months 28 days | ||||||||
Finite-lived Intangible Assets Acquired | 375.0 | |||||||||
Trade Names [Member] | ||||||||||
Goodwill And Intangible Assets [Line Items] | ||||||||||
Indefinite-lived Intangible Assets Acquired | 4.3 | |||||||||
Trademarks [Member] | ||||||||||
Goodwill And Intangible Assets [Line Items] | ||||||||||
Indefinite-lived Intangible Assets Acquired | $ 63.3 | |||||||||
Minimum [Member] | ||||||||||
Goodwill And Intangible Assets [Line Items] | ||||||||||
Finite-Lived Intangible Asset, Useful Life | 1 year | |||||||||
Maximum [Member] | ||||||||||
Goodwill And Intangible Assets [Line Items] | ||||||||||
Finite-Lived Intangible Asset, Useful Life | 20 years | |||||||||
Weighted Average [Member] | ||||||||||
Goodwill And Intangible Assets [Line Items] | ||||||||||
Finite-Lived Intangible Asset, Useful Life | 17 years 8 months 12 days | |||||||||
|
Financing Arrangements (Details) - USD ($) |
Mar. 31, 2017 |
Sep. 30, 2016 |
Mar. 31, 2016 |
Oct. 31, 2015 |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Long-term debt, net of current | $ 722,101,000 | $ 722,929,000 | $ 722,542,000 | ||||||||||||||
Total obligations under equipment financing facilities other | 22.2 | ||||||||||||||||
Senior Secured Credit Facility [Member] | |||||||||||||||||
Total borrowings under Senior Secured Credit Facility | 704,036,000 | 796,041,000 | 732,322,000 | ||||||||||||||
Less: current portion | (4,500,000) | (4,500,000) | (4,500,000) | ||||||||||||||
Total long-term borrowings under Senior Secured Credit Facility | 699,536,000 | 791,541,000 | 727,822,000 | ||||||||||||||
Senior Notes [Member] | |||||||||||||||||
Total long-term borrowings under Senior Secured Credit Facility | 300,000,000 | $ 300,000,000 | |||||||||||||||
Total | [1] | 291,689,000 | 291,049,000 | 290,410,000 | |||||||||||||
Less: current portion | 0 | 0 | 0 | ||||||||||||||
Long-term debt, net of current | 291,689,000 | 291,049,000 | 290,410,000 | ||||||||||||||
US Revolver 1 [Member] | Senior Secured Credit Facility [Member] | |||||||||||||||||
Total borrowings under Senior Secured Credit Facility | [2] | 269,124,000 | 355,087,000 | 295,690,000 | |||||||||||||
Canada Revolver 1 [Member] | Senior Secured Credit Facility [Member] | |||||||||||||||||
Total borrowings under Senior Secured Credit Facility | [3] | 0 | 4,574,000 | 0 | |||||||||||||
Term Loan 1 [Member] | Senior Secured Credit Facility [Member] | |||||||||||||||||
Total borrowings under Senior Secured Credit Facility | [4] | 434,912,000 | 436,380,000 | 436,632,000 | |||||||||||||
Equipment Financing Facilities 1 [Member] | |||||||||||||||||
Total obligations under equipment financing facilities other | [5] | 17,949,000 | 20,419,000 | 22,855,000 | |||||||||||||
Equipment Financing Facilities 2 [Member] | |||||||||||||||||
Total obligations under equipment financing facilities other | [6] | 22,204,000 | 25,013,000 | 25,130,000 | |||||||||||||
Equipment Financing Facilities [Member] | |||||||||||||||||
Total obligations under equipment financing facilities other | 40,153,000 | 45,432,000 | 47,985,000 | ||||||||||||||
Less: current portion | (9,514,000) | (10,311,000) | (7,659,000) | ||||||||||||||
Total long-term obligations under equipment financing facilities other | $ 30,639,000 | $ 35,121,000 | $ 40,326,000 | ||||||||||||||
|
Financing Arrangements (Details) (Parenthetical) |
6 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Sep. 30, 2016 |
Mar. 31, 2016 |
|
Senior Notes [Member] | |||
Line of Credit Facility, Interest Rate at Period End | 6.38% | 6.38% | 6.38% |
Line of Credit Facility, Expiration Date | Oct. 01, 2023 | ||
US Revolver 1 [Member] | |||
Line of Credit Facility, Interest Rate at Period End | 2.97% | 2.90% | 2.58% |
Line of Credit Facility, Expiration Date | Oct. 01, 2020 | ||
Canada Revolver 1 [Member] | |||
Line of Credit Facility, Interest Rate at Period End | 3.20% | 3.20% | 3.20% |
Line of Credit Facility, Expiration Date | Oct. 01, 2020 | ||
Term Loan 1 [Member] | |||
Line of Credit Facility, Interest Rate at Period End | 3.50% | 3.50% | 4.00% |
Line of Credit Facility, Expiration Date | Oct. 01, 2022 | ||
Equipment Financing Facilities 1 [Member] | |||
Line of Credit Facility, Expiration Date | Sep. 01, 2021 | ||
Equipment Financing Facilities 1 [Member] | Maximum [Member] | |||
Line of Credit Facility, Interest Rate at Period End | 3.25% | 3.25% | 4.49% |
Equipment Financing Facilities 1 [Member] | Minimum [Member] | |||
Line of Credit Facility, Interest Rate at Period End | 2.33% | 2.33% | 2.33% |
Equipment Financing Facilities 2 [Member] | |||
Line of Credit Facility, Expiration Date | Nov. 01, 2021 | ||
Equipment Financing Facilities 2 [Member] | Maximum [Member] | |||
Line of Credit Facility, Interest Rate at Period End | 10.39% | 10.39% | 10.39% |
Equipment Financing Facilities 2 [Member] | Minimum [Member] | |||
Line of Credit Facility, Interest Rate at Period End | 2.72% | 2.72% | 2.72% |
Financing Arrangements - Additional Information (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|---|
Oct. 02, 2015 |
Oct. 31, 2015 |
Mar. 31, 2017 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Sep. 30, 2016 |
|||
Line of credit facility, unused fees | 0.25% | |||||||
Debt instrument, amount outstanding | $ 10,400,000 | $ 10,400,000 | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,450,000,000 | |||||||
Debt Related Commitment Fees and Debt Issuance Costs | 22,900,000 | $ 28,700,000 | $ 25,200,000 | |||||
Amortization of Debt Issuance Costs | 1,600,000 | |||||||
Payments of Financing Costs, Total | 0 | 27,813,000 | ||||||
Capitalized Costs, Support Equipment and Facilities | 17.9 | 17.9 | ||||||
Capital Lease Obligations | 22.2 | 22.2 | ||||||
Roofing Supply Group [Member] | ||||||||
Payments of Financing Costs, Total | $ 31,300,000 | |||||||
Revolving Credit Facility [Member] | ||||||||
Long-term Line of Credit | $ 269,100,000 | $ 269,100,000 | ||||||
Line of Credit Facility, Interest Rate at Period End | 2.97% | |||||||
Debt Instrument, Maturity Date | Oct. 01, 2022 | |||||||
Debt Instrument, Covenant Description | There is one financial covenant under the ABL, which is a Consolidated Fixed Charge Ratio. The Consolidated Fixed Charge Ratio is calculated by dividing consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) by Consolidated Fixed Charges (as defined in the agreement). Per the covenant, the Companys Consolidated Fixed Charge Ratio must be a minimum of 1.00 at the end of each fiscal quarter, calculated on a trailing four quarter basis. The covenant is only applicable when the borrowing availability is less than 10% of the maximum loan cap or $60.0million. | |||||||
ABL Facility [Member] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 700,000,000 | 700,000,000 | ||||||
Proceeds from Lines of Credit | 350,000,000 | |||||||
Senior Notes [Member] | ||||||||
Line of Credit Facility, Interest Rate at Period End | 6.38% | 6.38% | ||||||
Long-term Debt, Total | [1] | $ 291,689,000 | $ 291,689,000 | $ 290,410,000 | $ 291,049,000 | |||
Senior Notes Payable, Net Of Current Portion | $ 300,000,000 | 300,000,000 | $ 300,000,000 | |||||
Debt Instrument, Maturity Date | Oct. 01, 2023 | |||||||
Senior Notes [Member] | New Senior Credit Facilities [Member] | ||||||||
Gains (Losses) on Extinguishment of Debt | $ 800,000 | |||||||
Debt Related Commitment Fees and Debt Issuance Costs | 2,200,000 | |||||||
Term Loan B Facility [Member] | ||||||||
Long-term Line of Credit | 450,000,000 | |||||||
Long-term Debt, Total | $ 450,000,000 | |||||||
Term Loan [Member] | ||||||||
Long-term Debt, Total | $ 434,900,000 | $ 434,900,000 | ||||||
Debt Instrument, Maturity Date | Oct. 01, 2020 | |||||||
Debt Instrument, Description Of Change In Interest Rate | lowering the LIBOR floor by 25 basis points and lowering the spread by 25 basis points | |||||||
Debt Instrument, Frequency of Periodic Payment | quarterly | |||||||
Debt Instrument, Periodic Payment | $ 1,100,000 | |||||||
Maximum [Member] | ||||||||
Percentage of Fixed Interest Rate of Equipment Financing Facilities | 3.25% | |||||||
Capital Leases of Lessor, Contingent Rentals, Basis Spread on Variable Rate | 10.39% | 10.39% | ||||||
Maximum [Member] | Revolving Credit Facility [Member] | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | 4.50% | ||||||
Minimum [Member] | ||||||||
Percentage of Fixed Interest Rate of Equipment Financing Facilities | 2.33% | |||||||
Capital Leases of Lessor, Contingent Rentals, Basis Spread on Variable Rate | 2.72% | 2.72% | ||||||
Minimum [Member] | Revolving Credit Facility [Member] | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.39% | 2.39% | ||||||
US Revolver [Member] | ||||||||
Long-term Line of Credit | 670,000,000 | |||||||
Line of Credit Facility, Interest Rate at Period End | 2.58% | |||||||
Canada Revolver [Member] | ||||||||
Long-term Line of Credit | $ 30,000,000 | |||||||
|
Commitments and Contingencies Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Operating Leases, Rent Expense, Net, Total | $ 14.7 | $ 14.6 | $ 28.9 | $ 30.6 |
Geographic Data (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Sep. 30, 2016 |
|
Segment Reporting Information [Line Items] | |||||
Net sales | $ 870,724 | $ 823,537 | $ 1,872,908 | $ 1,800,017 | |
Long-lived assets | 524,348 | 548,956 | 524,348 | 548,956 | $ 541,054 |
Canada [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 21,498 | 19,862 | 63,447 | 64,999 | |
Long-lived assets | 12,841 | 12,444 | 12,841 | 12,444 | 13,374 |
U.S. [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 849,226 | 803,675 | 1,809,461 | 1,735,018 | |
Long-lived assets | $ 511,507 | $ 536,512 | $ 511,507 | $ 536,512 | $ 527,680 |
Fair Value Measurement - Additional Information (Details) - Senior Notes [Member] - USD ($) $ in Millions |
Mar. 31, 2017 |
Oct. 31, 2015 |
---|---|---|
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Senior Notes Payable, Net Of Current Portion | $ 300.0 | $ 300.0 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Senior Notes Payable, Net Of Current Portion | 300.0 | |
Long-term Debt, Fair Value | $ 321.0 |
Supplemental Guarantor Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Sep. 30, 2016 |
Mar. 31, 2016 |
Sep. 30, 2015 |
---|---|---|---|---|
Current assets: | ||||
Cash and cash equivalents | $ 10,012 | $ 31,386 | $ 14,841 | $ 45,661 |
Accounts receivable, net | 506,386 | 626,965 | 490,850 | |
Inventories, net | 580,889 | 480,736 | 513,750 | |
Prepaid expenses and other current assets | 217,389 | 163,103 | 164,625 | |
Total current assets | 1,314,676 | 1,302,190 | 1,184,066 | |
Intercompany receivable, net | 0 | 0 | 0 | |
Investments in consolidated subsidiaries | 0 | 0 | 0 | |
Deferred income taxes, net | 0 | 0 | 0 | 31,900 |
Property and equipment, net | 156,380 | 148,569 | 147,994 | |
Goodwill | 1,228,059 | 1,197,565 | 1,160,775 | $ 496,415 |
Intangibles, net | 439,507 | 464,024 | 472,582 | |
Other assets, net | 1,511 | 1,511 | 1,430 | |
Total Assets | 3,140,133 | 3,113,859 | 2,966,847 | |
Current liabilities: | ||||
Accounts payable | 486,328 | 360,915 | 417,994 | |
Accrued expenses | 131,264 | 161,113 | 152,692 | |
Current portions of long-term debt | 14,014 | 14,811 | 12,159 | |
Total current liabilities | 631,606 | 536,839 | 582,845 | |
Intercompany payable, net | 0 | 0 | 0 | |
Borrowings under revolving lines of credit, net | 269,124 | 359,661 | 295,690 | |
Long-term debt, net | 722,101 | 722,929 | 722,542 | |
Deferred income taxes, net | 137,495 | 135,482 | 102,878 | |
Long-term obligations under equipment financing and other, net | 30,639 | 35,121 | 42,907 | |
Total liabilities | 1,790,965 | 1,790,032 | 1,746,862 | |
Total stockholders' equity | 1,349,168 | 1,323,827 | 1,219,985 | |
Total Liabilities and Stockholders' Equity | 3,140,133 | 3,113,859 | 2,966,847 | |
Parent Company [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 0 | 0 | 0 | |
Accounts receivable, net | 0 | 0 | 0 | |
Inventories, net | 0 | 0 | 0 | |
Prepaid expenses and other current assets | 28,952 | 3,527 | 16,474 | |
Total current assets | 28,952 | 3,527 | 16,474 | |
Intercompany receivable, net | 0 | 0 | 0 | |
Investments in consolidated subsidiaries | 2,959,542 | 2,891,677 | 2,716,780 | |
Deferred income taxes, net | 57,419 | 59,567 | 17,403 | |
Property and equipment, net | 5,614 | 4,626 | 3,740 | |
Goodwill | 0 | 0 | 0 | |
Intangibles, net | 0 | 0 | 0 | |
Other assets, net | 1,242 | 1,242 | 1,233 | |
Total Assets | 3,052,769 | 2,960,639 | 2,755,630 | |
Current liabilities: | ||||
Accounts payable | 27,209 | 26,630 | 34,045 | |
Accrued expenses | 26,226 | 42,594 | 10,390 | |
Current portions of long-term debt | 4,500 | 4,500 | 4,500 | |
Total current liabilities | 57,935 | 73,724 | 48,935 | |
Intercompany payable, net | 923,565 | 840,159 | 764,168 | |
Borrowings under revolving lines of credit, net | 0 | 0 | 0 | |
Long-term debt, net | 722,101 | 722,929 | 722,542 | |
Deferred income taxes, net | 0 | 0 | 0 | |
Long-term obligations under equipment financing and other, net | 0 | 0 | 0 | |
Total liabilities | 1,703,601 | 1,636,812 | 1,535,645 | |
Total stockholders' equity | 1,349,168 | 1,323,827 | 1,219,985 | |
Total Liabilities and Stockholders' Equity | 3,052,769 | 2,960,639 | 2,755,630 | |
Guarantor Subsidiaries [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 24,181 | 37,447 | 28,831 | |
Accounts receivable, net | 490,724 | 593,395 | 476,860 | |
Inventories, net | 556,463 | 460,516 | 483,582 | |
Prepaid expenses and other current assets | 184,764 | 153,681 | 145,102 | |
Total current assets | 1,256,132 | 1,245,039 | 1,134,375 | |
Intercompany receivable, net | 961,450 | 878,931 | 802,015 | |
Investments in consolidated subsidiaries | 0 | 0 | 0 | |
Deferred income taxes, net | 0 | 0 | 0 | |
Property and equipment, net | 140,918 | 133,897 | 135,511 | |
Goodwill | 1,198,805 | 1,167,905 | 1,130,818 | |
Intangibles, net | 436,513 | 460,696 | 468,881 | |
Other assets, net | 269 | 269 | 197 | |
Total Assets | 3,994,087 | 3,886,737 | 3,671,797 | |
Current liabilities: | ||||
Accounts payable | 468,144 | 329,895 | 392,032 | |
Accrued expenses | 103,045 | 114,016 | 137,378 | |
Current portions of long-term debt | 9,514 | 10,311 | 7,659 | |
Total current liabilities | 580,703 | 454,222 | 537,069 | |
Intercompany payable, net | 0 | 0 | 0 | |
Borrowings under revolving lines of credit, net | 269,124 | 355,087 | 295,690 | |
Long-term debt, net | 0 | 0 | 0 | |
Deferred income taxes, net | 194,556 | 194,556 | 119,855 | |
Long-term obligations under equipment financing and other, net | 30,593 | 35,074 | 42,860 | |
Total liabilities | 1,074,976 | 1,038,939 | 995,474 | |
Total stockholders' equity | 2,919,111 | 2,847,798 | 2,676,323 | |
Total Liabilities and Stockholders' Equity | 3,994,087 | 3,886,737 | 3,671,797 | |
Non-Guarantor Subsidiaries [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 1,946 | 2,876 | 4,689 | |
Accounts receivable, net | 15,437 | 34,710 | 15,130 | |
Inventories, net | 24,426 | 20,220 | 30,168 | |
Prepaid expenses and other current assets | 3,673 | 5,895 | 3,049 | |
Total current assets | 45,482 | 63,701 | 53,036 | |
Intercompany receivable, net | 0 | 0 | 0 | |
Investments in consolidated subsidiaries | 0 | 0 | 0 | |
Deferred income taxes, net | 0 | 0 | 0 | |
Property and equipment, net | 9,848 | 10,046 | 8,743 | |
Goodwill | 29,254 | 29,660 | 29,957 | |
Intangibles, net | 2,994 | 3,328 | 3,701 | |
Other assets, net | 0 | 0 | 0 | |
Total Assets | 87,578 | 106,735 | 95,437 | |
Current liabilities: | ||||
Accounts payable | 6,865 | 14,467 | 11,736 | |
Accrued expenses | 1,993 | 4,503 | 4,924 | |
Current portions of long-term debt | 0 | 0 | 0 | |
Total current liabilities | 8,858 | 18,970 | 16,660 | |
Intercompany payable, net | 37,885 | 38,772 | 37,847 | |
Borrowings under revolving lines of credit, net | 0 | 4,574 | 0 | |
Long-term debt, net | 0 | 0 | 0 | |
Deferred income taxes, net | 358 | 493 | 426 | |
Long-term obligations under equipment financing and other, net | 46 | 47 | 47 | |
Total liabilities | 47,147 | 62,856 | 54,980 | |
Total stockholders' equity | 40,431 | 43,879 | 40,457 | |
Total Liabilities and Stockholders' Equity | 87,578 | 106,735 | 95,437 | |
Eliminations and Other [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | (16,115) | (8,937) | (18,679) | |
Accounts receivable, net | 225 | (1,140) | (1,140) | |
Inventories, net | 0 | 0 | 0 | |
Prepaid expenses and other current assets | 0 | 0 | 0 | |
Total current assets | (15,890) | (10,077) | (19,819) | |
Intercompany receivable, net | (961,450) | (878,931) | (802,015) | |
Investments in consolidated subsidiaries | (2,959,542) | (2,891,677) | (2,716,780) | |
Deferred income taxes, net | (57,419) | (59,567) | (17,403) | |
Property and equipment, net | 0 | 0 | 0 | |
Goodwill | 0 | 0 | 0 | |
Intangibles, net | 0 | 0 | 0 | |
Other assets, net | 0 | 0 | 0 | |
Total Assets | (3,994,301) | (3,840,252) | (3,556,017) | |
Current liabilities: | ||||
Accounts payable | (15,890) | (10,077) | (19,819) | |
Accrued expenses | 0 | 0 | 0 | |
Current portions of long-term debt | 0 | 0 | 0 | |
Total current liabilities | (15,890) | (10,077) | (19,819) | |
Intercompany payable, net | (961,450) | (878,931) | (802,015) | |
Borrowings under revolving lines of credit, net | 0 | 0 | 0 | |
Long-term debt, net | 0 | 0 | 0 | |
Deferred income taxes, net | (57,419) | (59,567) | (17,403) | |
Long-term obligations under equipment financing and other, net | 0 | 0 | 0 | |
Total liabilities | (1,034,759) | (948,575) | (839,237) | |
Total stockholders' equity | (2,959,542) | (2,891,677) | (2,716,780) | |
Total Liabilities and Stockholders' Equity | $ (3,994,301) | $ (3,840,252) | $ (3,556,017) |
Supplemental Guarantor Information (Details 1) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Net sales | $ 870,724 | $ 823,537 | $ 1,872,908 | $ 1,800,017 |
Cost of products sold | 666,247 | 627,773 | 1,417,364 | 1,371,065 |
Gross profit | 204,477 | 195,764 | 455,544 | 428,952 |
Operating expense | 207,533 | 191,881 | 411,643 | 398,225 |
Intercompany charges (income) | 0 | 0 | 0 | 0 |
Income (loss) from operations | (3,056) | 3,883 | 43,901 | 30,727 |
Interest expense, financing costs, and other | 12,268 | 13,026 | 25,842 | 29,282 |
Intercompany interest expense (income) | 0 | 0 | 0 | 0 |
Income (loss) before provision for income taxes | (15,324) | (9,143) | 18,059 | 1,445 |
Provision for (benefit from) income taxes | (5,968) | (3,424) | 6,985 | 46 |
Income (loss) before equity in net income of subsidiaries | (9,356) | (5,719) | 11,074 | 1,399 |
Equity in net loss of subsidiaries | 0 | 0 | 0 | 0 |
Net income (loss) | $ (9,356) | $ (5,719) | $ 11,074 | $ 1,399 |
Weighted-average common stock outstanding: | ||||
Basic | 60,141,580 | 59,295,990 | 60,041,332 | 59,133,569 |
Diluted | 60,141,580 | 59,295,990 | 61,069,938 | 60,077,852 |
Net income (loss) per share: | ||||
Basic | $ (0.16) | $ (0.10) | $ 0.18 | $ 0.02 |
Diluted | $ (0.16) | $ (0.10) | $ 0.18 | $ 0.02 |
Parent Company [Member] | ||||
Net sales | $ 0 | $ 0 | $ 0 | $ 0 |
Cost of products sold | 0 | 0 | 0 | 0 |
Gross profit | 0 | 0 | 0 | 0 |
Operating expense | 7,010 | 27,987 | 15,656 | 59,159 |
Intercompany charges (income) | (12,555) | (17,593) | (24,508) | (25,440) |
Income (loss) from operations | 5,545 | (10,394) | 8,852 | (33,719) |
Interest expense, financing costs, and other | 3,983 | 4,763 | 19,337 | 14,637 |
Intercompany interest expense (income) | (5,089) | (4,795) | (10,682) | (8,721) |
Income (loss) before provision for income taxes | 6,651 | (10,362) | 197 | (39,635) |
Provision for (benefit from) income taxes | 2,444 | (11,141) | (410) | (20,873) |
Income (loss) before equity in net income of subsidiaries | 4,207 | 779 | 607 | (18,762) |
Equity in net loss of subsidiaries | (13,563) | (6,498) | 10,467 | 20,161 |
Net income (loss) | (9,356) | (5,719) | 11,074 | 1,399 |
Guarantor Subsidiaries [Member] | ||||
Net sales | 849,226 | 803,781 | 1,809,461 | 1,735,265 |
Cost of products sold | 649,595 | 612,646 | 1,368,129 | 1,321,029 |
Gross profit | 199,631 | 191,135 | 441,332 | 414,236 |
Operating expense | 193,448 | 157,398 | 380,521 | 324,412 |
Intercompany charges (income) | 11,993 | 16,270 | 23,392 | 23,456 |
Income (loss) from operations | (5,810) | 17,467 | 37,419 | 66,368 |
Interest expense, financing costs, and other | 8,003 | 8,267 | 5,458 | 14,505 |
Intercompany interest expense (income) | 5,089 | 4,412 | 10,682 | 7,949 |
Income (loss) before provision for income taxes | (18,902) | 4,788 | 21,279 | 43,914 |
Provision for (benefit from) income taxes | (7,568) | 8,663 | 8,334 | 21,670 |
Income (loss) before equity in net income of subsidiaries | (11,334) | (3,875) | 12,945 | 22,244 |
Equity in net loss of subsidiaries | 0 | 0 | 0 | 0 |
Net income (loss) | (11,334) | (3,875) | 12,945 | 22,244 |
Non-Guarantor Subsidiaries [Member] | ||||
Net sales | 21,498 | 19,862 | 63,447 | 64,999 |
Cost of products sold | 16,652 | 15,233 | 49,235 | 50,283 |
Gross profit | 4,846 | 4,629 | 14,212 | 14,716 |
Operating expense | 7,075 | 6,496 | 15,466 | 14,654 |
Intercompany charges (income) | 562 | 1,323 | 1,116 | 1,984 |
Income (loss) from operations | (2,791) | (3,190) | (2,370) | (1,922) |
Interest expense, financing costs, and other | 282 | (4) | 1,047 | 140 |
Intercompany interest expense (income) | 0 | 383 | 0 | 772 |
Income (loss) before provision for income taxes | (3,073) | (3,569) | (3,417) | (2,834) |
Provision for (benefit from) income taxes | (844) | (946) | (939) | (751) |
Income (loss) before equity in net income of subsidiaries | (2,229) | (2,623) | (2,478) | (2,083) |
Equity in net loss of subsidiaries | 0 | 0 | 0 | 0 |
Net income (loss) | (2,229) | (2,623) | (2,478) | (2,083) |
Eliminations and Other [Member] | ||||
Net sales | 0 | (106) | 0 | (247) |
Cost of products sold | 0 | (106) | 0 | (247) |
Gross profit | 0 | 0 | 0 | 0 |
Operating expense | 0 | 0 | 0 | 0 |
Intercompany charges (income) | 0 | 0 | 0 | 0 |
Income (loss) from operations | 0 | 0 | 0 | 0 |
Interest expense, financing costs, and other | 0 | 0 | 0 | 0 |
Intercompany interest expense (income) | 0 | 0 | 0 | 0 |
Income (loss) before provision for income taxes | 0 | 0 | 0 | 0 |
Provision for (benefit from) income taxes | 0 | 0 | 0 | 0 |
Income (loss) before equity in net income of subsidiaries | 0 | 0 | 0 | 0 |
Equity in net loss of subsidiaries | 13,563 | 6,498 | (10,467) | (20,161) |
Net income (loss) | $ 13,563 | $ 6,498 | $ (10,467) | $ (20,161) |
Supplemental Guarantor Information (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Net income (loss) | $ (9,356) | $ (5,719) | $ 11,074 | $ 1,399 |
Other comprehensive income: | ||||
Foreign currency translation adjustment | 813 | 4,226 | (839) | 1,757 |
Total other comprehensive income (loss) | 813 | 4,226 | (839) | 1,757 |
Comprehensive income (loss) | (8,543) | (1,493) | 10,235 | 3,156 |
Parent Company [Member] | ||||
Net income (loss) | (9,356) | (5,719) | 11,074 | 1,399 |
Other comprehensive income: | ||||
Foreign currency translation adjustment | 813 | 4,226 | (839) | 1,757 |
Total other comprehensive income (loss) | 813 | 4,226 | (839) | 1,757 |
Comprehensive income (loss) | (8,543) | (1,493) | 10,235 | 3,156 |
Guarantor Subsidiaries [Member] | ||||
Net income (loss) | (11,334) | (3,875) | 12,945 | 22,244 |
Other comprehensive income: | ||||
Foreign currency translation adjustment | 0 | 0 | 0 | 0 |
Total other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Comprehensive income (loss) | (11,334) | (3,875) | 12,945 | 22,244 |
Non-Guarantor Subsidiaries [Member] | ||||
Net income (loss) | (2,229) | (2,623) | (2,478) | (2,083) |
Other comprehensive income: | ||||
Foreign currency translation adjustment | 813 | 4,226 | (839) | 1,757 |
Total other comprehensive income (loss) | 813 | 4,226 | (839) | 1,757 |
Comprehensive income (loss) | (1,416) | 1,603 | (3,317) | (326) |
Eliminations and Other [Member] | ||||
Net income (loss) | 13,563 | 6,498 | (10,467) | (20,161) |
Other comprehensive income: | ||||
Foreign currency translation adjustment | (813) | (4,226) | 839 | (1,757) |
Total other comprehensive income (loss) | (813) | (4,226) | 839 | (1,757) |
Comprehensive income (loss) | $ 12,750 | $ 2,272 | $ (9,628) | $ (21,918) |
Supplemental Guarantor Information (Details 3) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Net cash provided by (used in) operating activities | $ 150,443 | $ 80,652 |
Investing Activities | ||
Purchases of property and equipment | (24,231) | (11,059) |
Acquisition of businesses | (58,359) | (941,156) |
Proceeds from the sale of assets | 1,285 | 377 |
Intercompany activity | 0 | 0 |
Net cash provided by (used in) investing activities | (81,305) | (951,838) |
Financing Activities | ||
Borrowings under revolving lines of credit | 857,099 | 1,017,128 |
Repayments under revolving lines of credit | (948,470) | (724,855) |
Borrowings under term loan | 0 | 450,000 |
Repayments under term loan | (1,125) | (187,875) |
Borrowings under Senior Notes | 0 | 300,000 |
Borrowings under equipment financing facilities and other | 1,579 | 0 |
Repayments under equipment financing facilities and other | (6,857) | (2,633) |
Payment of deferred financing costs | 0 | (27,813) |
Proceeds from issuance of common stock | 7,840 | 15,391 |
Taxes paid related to net share settlement of equity awards | (697) | 0 |
Excess tax benefit from stock-based compensation | 0 | 1,630 |
Intercompany activity | 0 | 0 |
Net cash provided by (used in) financing activities | (90,631) | 840,973 |
Effect of exchange rate changes on cash and cash equivalents | 119 | (607) |
Net decrease in cash and cash equivalents | (21,374) | (30,820) |
Cash and cash equivalents, beginning of period | 31,386 | 45,661 |
Cash and cash equivalents, end of period | 10,012 | 14,841 |
Parent Company [Member] | ||
Net cash provided by (used in) operating activities | (29,347) | (41,213) |
Investing Activities | ||
Purchases of property and equipment | (1,709) | (1,507) |
Acquisition of businesses | (58,359) | (941,156) |
Proceeds from the sale of assets | 0 | 0 |
Intercompany activity | 83,397 | 423,620 |
Net cash provided by (used in) investing activities | 23,329 | (519,043) |
Financing Activities | ||
Borrowings under revolving lines of credit | 0 | 0 |
Repayments under revolving lines of credit | 0 | 0 |
Borrowings under term loan | 450,000 | |
Repayments under term loan | (1,125) | (187,875) |
Borrowings under Senior Notes | 300,000 | |
Borrowings under equipment financing facilities and other | 0 | |
Repayments under equipment financing facilities and other | 0 | 0 |
Payment of deferred financing costs | (18,890) | |
Proceeds from issuance of common stock | 7,840 | 15,391 |
Taxes paid related to net share settlement of equity awards | (697) | |
Excess tax benefit from stock-based compensation | 1,630 | |
Intercompany activity | 0 | 0 |
Net cash provided by (used in) financing activities | 6,018 | 560,256 |
Effect of exchange rate changes on cash and cash equivalents | 0 | 0 |
Net decrease in cash and cash equivalents | 0 | 0 |
Cash and cash equivalents, beginning of period | 0 | 0 |
Cash and cash equivalents, end of period | 0 | 0 |
Guarantor Subsidiaries [Member] | ||
Net cash provided by (used in) operating activities | 181,847 | 127,076 |
Investing Activities | ||
Purchases of property and equipment | (21,742) | (9,093) |
Acquisition of businesses | 0 | 0 |
Proceeds from the sale of assets | 1,274 | 377 |
Intercompany activity | 0 | 0 |
Net cash provided by (used in) investing activities | (20,468) | (8,716) |
Financing Activities | ||
Borrowings under revolving lines of credit | 852,583 | 1,017,128 |
Repayments under revolving lines of credit | (939,438) | (713,407) |
Borrowings under term loan | 0 | |
Repayments under term loan | 0 | 0 |
Borrowings under Senior Notes | 0 | |
Borrowings under equipment financing facilities and other | 1,579 | |
Repayments under equipment financing facilities and other | (6,857) | (2,633) |
Payment of deferred financing costs | (8,923) | |
Proceeds from issuance of common stock | 0 | 0 |
Taxes paid related to net share settlement of equity awards | 0 | |
Excess tax benefit from stock-based compensation | 0 | |
Intercompany activity | (82,512) | (424,510) |
Net cash provided by (used in) financing activities | (174,645) | (132,345) |
Effect of exchange rate changes on cash and cash equivalents | 0 | 0 |
Net decrease in cash and cash equivalents | (13,266) | (13,985) |
Cash and cash equivalents, beginning of period | 37,447 | 42,816 |
Cash and cash equivalents, end of period | 24,181 | 28,831 |
Non-Guarantor Subsidiaries [Member] | ||
Net cash provided by (used in) operating activities | 5,121 | 9,262 |
Investing Activities | ||
Purchases of property and equipment | (780) | (459) |
Acquisition of businesses | 0 | 0 |
Proceeds from the sale of assets | 11 | 0 |
Intercompany activity | 0 | 0 |
Net cash provided by (used in) investing activities | (769) | (459) |
Financing Activities | ||
Borrowings under revolving lines of credit | 4,516 | 0 |
Repayments under revolving lines of credit | (9,032) | (11,448) |
Borrowings under term loan | 0 | |
Repayments under term loan | 0 | 0 |
Borrowings under Senior Notes | 0 | |
Borrowings under equipment financing facilities and other | 0 | |
Repayments under equipment financing facilities and other | 0 | 0 |
Payment of deferred financing costs | 0 | |
Proceeds from issuance of common stock | 0 | 0 |
Taxes paid related to net share settlement of equity awards | 0 | |
Excess tax benefit from stock-based compensation | 0 | |
Intercompany activity | (885) | 890 |
Net cash provided by (used in) financing activities | (5,401) | (10,558) |
Effect of exchange rate changes on cash and cash equivalents | 119 | (607) |
Net decrease in cash and cash equivalents | (930) | (2,362) |
Cash and cash equivalents, beginning of period | 2,876 | 7,051 |
Cash and cash equivalents, end of period | 1,946 | 4,689 |
Eliminations and Other [Member] | ||
Net cash provided by (used in) operating activities | (7,178) | (14,473) |
Investing Activities | ||
Purchases of property and equipment | 0 | 0 |
Acquisition of businesses | 0 | 0 |
Proceeds from the sale of assets | 0 | 0 |
Intercompany activity | (83,397) | (423,620) |
Net cash provided by (used in) investing activities | (83,397) | (423,620) |
Financing Activities | ||
Borrowings under revolving lines of credit | 0 | 0 |
Repayments under revolving lines of credit | 0 | 0 |
Borrowings under term loan | 0 | |
Repayments under term loan | 0 | 0 |
Borrowings under Senior Notes | 0 | |
Borrowings under equipment financing facilities and other | 0 | |
Repayments under equipment financing facilities and other | 0 | 0 |
Payment of deferred financing costs | 0 | |
Proceeds from issuance of common stock | 0 | 0 |
Taxes paid related to net share settlement of equity awards | 0 | |
Excess tax benefit from stock-based compensation | 0 | |
Intercompany activity | 83,397 | 423,620 |
Net cash provided by (used in) financing activities | 83,397 | 423,620 |
Effect of exchange rate changes on cash and cash equivalents | 0 | 0 |
Net decrease in cash and cash equivalents | (7,178) | (14,473) |
Cash and cash equivalents, beginning of period | (8,937) | (4,206) |
Cash and cash equivalents, end of period | $ (16,115) | $ (18,679) |
Subsequent Events - Additional Information (Details) - Lowrys Inc [Member] - Subsequent Event [Member] $ in Millions |
May 01, 2017
USD ($)
|
---|---|
Number Of Branches | 11 |
Revenues | $ 76 |
=PPIA@A D" U!
MV"&(>F74F,1@2H/Y@E( 392$NFM*:7X/X:?84S6;NU^(#
M<1+GV
/;F5I$XEJ4-)ME&2WC<)LG"CY!Z4!/%&"5J=$@J\-1=*>!6[#%+_
MCU5VN;//D3YEF_Q!W65[]3YH[$/P'?.V'X1W9E*=87/2&L8D*(G!@]+8J;=G
M"0@T4D\S->?V!MI LG%^7-#RPI7_ %!+ P04 " "Q@*5*R:V=1"T# #9
M#0 &0 'AL+W=O
&PO=V]R:W-H965T
M)6XW+B=DRTH;(7"HWI$CJ>-)-(\FELO$)!P1+NGPJ