x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 26-1561397 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | o (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 period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. | ¨ |
Class | Outstanding at March 2, 2018 | |
Common Stock, par value $0.01 per share | 35,075,703 |
PART I. | ||
Item 1: | Financial Statements (Unaudited) | |
Condensed Consolidated Balance Sheets – January 31, 2018 and October 31, 2017 | ||
Condensed Consolidated Statements of Income (Loss) – Three Months Ended January 31, 2018 and 2017 | ||
Condensed Consolidated Statements of Comprehensive Income (Loss) - Three Months Ended January 31, 2018 and 2017 | ||
Condensed Consolidated Statements of Cash Flow – Three Months Ended January 31, 2018 and 2017 | ||
Condensed Consolidated Statement of Stockholders’ Equity – Three Months Ended January 31, 2018 | ||
Item 2: | ||
Item 3: | ||
Item 4: | ||
PART II. | ||
Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 6: |
January 31, 2018 | October 31, 2017 | ||||||
(In thousands, except share amounts) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 13,757 | $ | 17,455 | |||
Accounts receivable, net of allowance for doubtful accounts of $377 and $333 | 62,119 | 79,411 | |||||
Inventories, net (Note 3) | 95,843 | 87,529 | |||||
Prepaid and other current assets | 7,451 | 7,406 | |||||
Total current assets | 179,170 | 191,801 | |||||
Property, plant and equipment, net of accumulated depreciation of $270,490 and $264,047 | 213,014 | 211,131 | |||||
Goodwill (Note 4) | 226,927 | 222,194 | |||||
Intangible assets, net (Note 4) | 138,743 | 139,778 | |||||
Other assets | 9,180 | 8,975 | |||||
Total assets | $ | 767,034 | $ | 773,879 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 39,868 | $ | 44,150 | |||
Accrued liabilities | 29,559 | 38,871 | |||||
Income taxes payable (Note 8) | 2,664 | 2,192 | |||||
Current maturities of long-term debt (Note 5) | 20,773 | 21,242 | |||||
Total current liabilities | 92,864 | 106,455 | |||||
Long-term debt (Note 5) | 215,362 | 218,184 | |||||
Deferred pension and postretirement benefits (Note 6) | 5,293 | 4,433 | |||||
Deferred income taxes (Note 8) | 14,771 | 21,960 | |||||
Other liabilities | 15,787 | 16,000 | |||||
Total liabilities | 344,077 | 367,032 | |||||
Commitments and contingencies (Note 9) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, no par value, shares authorized 1,000,000; issued and outstanding - none | — | — | |||||
Common stock, $0.01 par value, shares authorized 125,000,000; issued 37,477,459 and 37,508,877, respectively; outstanding 35,082,403 and 34,838,134, respectively | 375 | 375 | |||||
Additional paid-in-capital | 253,638 | 255,719 | |||||
Retained earnings | 228,293 | 225,704 | |||||
Accumulated other comprehensive loss | (14,623 | ) | (25,076 | ) | |||
Less: Treasury stock at cost, 2,395,056 and 2,670,743 shares, respectively | (44,726 | ) | (49,875 | ) | |||
Total stockholders’ equity | 422,957 | 406,847 | |||||
Total liabilities and stockholders' equity | $ | 767,034 | $ | 773,879 |
Three Months Ended | |||||||
January 31, | |||||||
2018 | 2017 | ||||||
(In thousands, except per share amounts) | |||||||
Net sales | $ | 191,666 | $ | 195,096 | |||
Cost and expenses: | |||||||
Cost of sales (excluding depreciation and amortization) | 154,440 | 154,947 | |||||
Selling, general and administrative | 24,076 | 27,445 | |||||
Restructuring charges | 366 | 1,139 | |||||
Depreciation and amortization | 13,273 | 15,406 | |||||
Operating loss | (489 | ) | (3,841 | ) | |||
Non-operating (expense) income: | |||||||
Interest expense | (2,441 | ) | (2,160 | ) | |||
Other, net | 317 | 661 | |||||
Loss before income taxes | (2,613 | ) | (5,340 | ) | |||
Income tax benefit | 7,560 | 1,614 | |||||
Net income (loss) | $ | 4,947 | $ | (3,726 | ) | ||
Basic income (loss) per common share | $ | 0.14 | $ | (0.11 | ) | ||
Diluted income (loss) per common share: | $ | 0.14 | $ | (0.11 | ) | ||
Weighted-average common shares outstanding: | |||||||
Basic | 34,662 | 34,055 | |||||
Diluted | 35,286 | 34,055 | |||||
Cash dividends per share | $ | 0.04 | $ | 0.04 |
Three Months Ended | |||||||
January 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Net income (loss) | $ | 4,947 | $ | (3,726 | ) | ||
Other comprehensive income (loss): | |||||||
Foreign currency translation adjustments gain | 11,150 | 2,832 | |||||
Change in pension from net unamortized gain tax (expense) | (697 | ) | — | ||||
Other comprehensive income | 10,453 | 2,832 | |||||
Comprehensive income (loss) | $ | 15,400 | $ | (894 | ) |
Three Months Ended | |||||||
January 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Operating activities: | |||||||
Net income (loss) | $ | 4,947 | $ | (3,726 | ) | ||
Adjustments to reconcile net income (loss) to cash provided by operating activities: | |||||||
Depreciation and amortization | 13,273 | 15,406 | |||||
Stock-based compensation | 580 | 2,226 | |||||
Deferred income tax | (8,483 | ) | (3,684 | ) | |||
Other, net | 130 | 1,241 | |||||
Changes in assets and liabilities: | |||||||
Decrease in accounts receivable | 18,378 | 21,143 | |||||
Increase in inventory | (6,926 | ) | (7,622 | ) | |||
Decrease (increase) in other current assets | 73 | (438 | ) | ||||
Decrease in accounts payable | (4,523 | ) | (7,232 | ) | |||
Decrease in accrued liabilities | (10,629 | ) | (17,971 | ) | |||
Increase in income taxes payable | 344 | 2,761 | |||||
Increase in deferred pension and postretirement benefits | 860 | 837 | |||||
Increase in other long-term liabilities | 181 | 366 | |||||
Other, net | (13 | ) | (226 | ) | |||
Cash provided by operating activities | 8,192 | 3,081 | |||||
Investing activities: | |||||||
Acquisitions, net of cash acquired | — | (8,497 | ) | ||||
Capital expenditures | (7,811 | ) | (8,141 | ) | |||
Proceeds from disposition of capital assets | 65 | 390 | |||||
Cash used for investing activities | (7,746 | ) | (16,248 | ) | |||
Financing activities: | |||||||
Borrowings under credit facilities | 9,500 | 24,000 | |||||
Repayments of credit facility borrowings | (13,750 | ) | (20,875 | ) | |||
Repayments of other long-term debt | (255 | ) | (429 | ) | |||
Common stock dividends paid | (1,397 | ) | (1,372 | ) | |||
Issuance of common stock | 2,231 | 1,383 | |||||
Payroll tax paid to settle shares forfeited upon vesting of stock | (706 | ) | (957 | ) | |||
Cash (used for) provided by financing activities | (4,377 | ) | 1,750 | ||||
Effect of exchange rate changes on cash and cash equivalents | 233 | (35 | ) | ||||
Decrease in cash and cash equivalents | (3,698 | ) | (11,452 | ) | |||
Cash and cash equivalents at beginning of period | 17,455 | 25,526 | |||||
Cash and cash equivalents at end of period | $ | 13,757 | $ | 14,074 |
Three Months Ended January 31, 2018 | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||
(In thousands, no per share amounts shown except in verbiage) | |||||||||||||||||||||||
Balance at October 31, 2017 | $ | 375 | $ | 255,719 | $ | 225,704 | $ | (25,076 | ) | $ | (49,875 | ) | $ | 406,847 | |||||||||
Net income | — | — | 4,947 | — | — | 4,947 | |||||||||||||||||
Foreign currency translation adjustment | — | — | — | 11,150 | — | 11,150 | |||||||||||||||||
Common dividends ($0.04 per share) | — | — | (1,397 | ) | — | — | (1,397 | ) | |||||||||||||||
Change in pension from net unamortized gain tax (expense) | — | — | — | (697 | ) | — | (697 | ) | |||||||||||||||
Stock-based compensation activity: | |||||||||||||||||||||||
Expense related to stock-based compensation | — | 580 | — | — | — | 580 | |||||||||||||||||
Stock options exercised | — | (149 | ) | (924 | ) | — | 3,304 | 2,231 | |||||||||||||||
Restricted stock awards granted | — | (1,371 | ) | — | — | 1,371 | — | ||||||||||||||||
Performance share awards vested | — | (473 | ) | — | — | 473 | — | ||||||||||||||||
Other | — | (668 | ) | (37 | ) | — | 1 | (704 | ) | ||||||||||||||
Balance at January 31, 2018 | $ | 375 | $ | 253,638 | $ | 228,293 | $ | (14,623 | ) | $ | (44,726 | ) | $ | 422,957 |
January 31, 2018 | October 31, 2017 | ||||||
(In thousands) | |||||||
Raw materials | $ | 52,507 | $ | 50,472 | |||
Finished goods and work in process | 46,438 | 40,087 | |||||
Supplies and other | 3,467 | 2,655 | |||||
Total | 102,412 | 93,214 | |||||
Less: Inventory reserves | 6,569 | 5,685 | |||||
Inventories, net | $ | 95,843 | $ | 87,529 |
January 31, 2018 | October 31, 2017 | ||||||
(In thousands) | |||||||
LIFO | $ | 4,564 | $ | 4,444 | |||
FIFO | 91,279 | 83,085 | |||||
Total | $ | 95,843 | $ | 87,529 |
Three Months Ended | |||
January 31, 2018 | |||
(In thousands) | |||
Beginning balance as of November 1, 2017 | $ | 222,194 | |
Foreign currency translation adjustment | 4,733 | ||
Balance as of the end of the period | $ | 226,927 |
January 31, 2018 | October 31, 2017 | ||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||
(In thousands) | |||||||||||||||
Customer relationships | $ | 157,954 | $ | 51,625 | $ | 155,230 | $ | 48,479 | |||||||
Trademarks and trade names | 56,894 | 30,533 | 56,058 | 29,509 | |||||||||||
Patents and other technology | 22,346 | 16,293 | 22,624 | 16,146 | |||||||||||
Total | $ | 237,194 | $ | 98,451 | $ | 233,912 | $ | 94,134 |
Estimated Amortization Expense | |||
2018 (remaining nine months) | $ | 12,219 | |
2019 | 15,587 | ||
2020 | 14,530 | ||
2021 | 12,809 | ||
2022 | 12,185 | ||
Thereafter | 71,413 | ||
Total | $ | 138,743 |
January 31, 2018 | October 31, 2017 | ||||||
(In thousands) | |||||||
Revolving Credit Facility | $ | 83,500 | $ | 84,000 | |||
Term Loan A | 135,000 | 138,750 | |||||
Capital lease obligations and other | 19,584 | 18,764 | |||||
Unamortized deferred financing fees | (1,949 | ) | (2,088 | ) | |||
Total debt | $ | 236,135 | $ | 239,426 | |||
Less: Current maturities of long-term debt | 20,773 | 21,242 | |||||
Long-term debt | $ | 215,362 | $ | 218,184 |
Pricing Level | Consolidated Leverage Ratio | Commitment Fee | LIBOR Rate Loans | Base Rate Loans | ||||
I | Less than or equal to 1.50 to 1.00 | 0.200% | 1.50% | 0.50% | ||||
II | Greater than 1.50 to 1.00, but less than or equal to 2.25 to 1.00 | 0.225% | 1.75% | 0.75% | ||||
III | Greater than 2.25 to 1.00, but less than or equal to 3.00 to 1.00 | 0.250% | 2.00% | 1.00% | ||||
IV | Greater than 3.00 to 1.00 | 0.300% | 2.25% | 1.25% |
Period | Maximum Ratio | |
January 31, 2017 through January 30, 2018 | 3.25 to 1.00 | |
January 31, 2018 and thereafter | 3.00 to 1.00 |
Three Months Ended | |||||||
January 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Service cost | $ | 949 | $ | 926 | |||
Interest cost | 215 | 212 | |||||
Expected return on plan assets | (466 | ) | (457 | ) | |||
Amortization of net loss | 144 | 143 | |||||
Net periodic benefit cost | $ | 842 | $ | 824 |
Three Months Ended | |||
January 31, 2018 | |||
(In thousands) | |||
Beginning balance as of November 1, 2017 | $ | 323 | |
Provision for warranty expense | 20 | ||
Warranty costs paid | (4 | ) | |
Total accrued warranty as of the end of the period | $ | 339 | |
Less: Current portion of accrued warranty | 153 | ||
Long-term portion of accrued warranty | $ | 186 |
Three months ended January 31, | |||||
2018 | 2017 | ||||
United States tax at statutory rate | 23.3 | % | 35.0 | % | |
State and local income tax | 2.5 | 1.7 | |||
Non-United States income tax | (1.0 | ) | (6.0 | ) | |
General business credits | — | (0.4 | ) | ||
Other permanent differences | (0.8 | ) | (0.1 | ) | |
Deferred rate impact of enactment of tax reform | 297.4 | — | |||
Tax impact of stock based compensation | 4.2 | — | |||
Impact of deemed repatriation | (46.9 | ) | — | ||
Return to actual adjustments | 10.6 | — | |||
Effective tax benefit rate | 289.3 | % | 30.2 | % |
Three Months Ended | ||||||
January 31, | ||||||
Location of (losses) gains: | 2018 | 2017 | ||||
Other, net | Foreign currency derivatives | (55 | ) | 144 |
Notional as indicated | Fair Value in $ | |||||||||||||||
January 31, 2018 | October 31, 2017 | January 31, 2018 | October 31, 2017 | |||||||||||||
Foreign currency derivatives: | ||||||||||||||||
Sell EUR, buy USD | EUR | $ | 104 | $ | 1,271 | $ | (1 | ) | $ | 24 | ||||||
Sell CAD, buy USD | CAD | 231 | 320 | — | 1 | |||||||||||
Sell GBP, buy USD | GBP | 47 | 75 | — | — | |||||||||||
Buy EUR, sell GBP | EUR | 36 | 30 | — | (1 | ) | ||||||||||
Buy USD, sell EUR | USD | 1 | — | — | — | |||||||||||
Buy GBP, sell EUR | GBP | 1 | — | — | — |
• | Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
• | Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates) and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
• | Level 3 - Inputs that are both significant to the fair value measurement and unobservable. |
Restricted Stock Awards | Weighted Average Grant Date Fair Value per Share | |||||
Non-vested at October 31, 2017 | 284,300 | $ | 19.66 | |||
Granted | 73,400 | 20.70 | ||||
Vested | (61,800 | ) | 20.28 | |||
Non-vested at January 31, 2018 | 295,900 | $ | 19.79 |
Three Months Ended | |
January 31, 2017 | |
Weighted-average expected volatility | 34.7% |
Weighted-average expected term (in years) | 5.7 |
Risk-free interest rate | 2.0% |
Expected dividend yield over expected term | 1.0% |
Weighted average grant date fair value | $6.25 |
Stock Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (000s) | |||||||||
Outstanding at October 31, 2017 | 2,152,758 | $ | 17.44 | |||||||||
Granted | — | — | ||||||||||
Exercised | (176,947 | ) | 12.61 | |||||||||
Forfeited/Expired | — | — | ||||||||||
Outstanding at January 31, 2018 | 1,975,811 | $ | 17.88 | 5.2 | $ | 5,692 | ||||||
Vested or expected to vest at January 31, 2018 | 1,975,811 | $ | 17.88 | 5.2 | $ | 5,692 | ||||||
Exercisable at January 31, 2018 | 1,691,433 | $ | 17.62 | 4.7 | $ | 5,316 |
Grant Date Fair Value | |||||||||||||
Grant Date | Shares Awarded | EPS | R-TSR | Shares Forfeited | |||||||||
December 2, 2015 | 158,100 | $ | 19.31 | $ | 23.72 | 11,100 | |||||||
January 25, 2016 | 4,300 | 17.46 | 26.65 | — | |||||||||
November 30, 2016 | 186,500 | 19.45 | 26.61 | 2,400 | |||||||||
December 7, 2017 | 146,500 | $ | 20.70 | $ | 21.81 | — |
Three Months Ended | ||
January 31, 2018 | ||
Beginning balance as of November 1, 2017 | 2,670,743 | |
Restricted stock awards granted | (73,400 | ) |
Performance share awards vested | (25,340 | ) |
Stock options exercised | (176,947 | ) |
Balance at January 31, 2018 | 2,395,056 |
Three Months Ended | |||||||
January 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Foreign currency transaction gains | $ | 354 | $ | 486 | |||
Foreign currency derivative (losses) gains | (55 | ) | 144 | ||||
Interest income | 15 | 27 | |||||
Other | 3 | 4 | |||||
Other, net | $ | 317 | $ | 661 |
NA Eng. Comp. | EU Eng. Comp. | NA Cabinet Comp. | Unallocated Corp. & Other | Total | |||||||||||||||
Three Months Ended January 31, 2018 | |||||||||||||||||||
Net sales | $ | 102,727 | $ | 33,996 | $ | 55,922 | $ | (979 | ) | $ | 191,666 | ||||||||
Depreciation and amortization | 7,012 | 2,449 | 3,686 | 126 | 13,273 | ||||||||||||||
Operating income (loss) | 1,611 | 1,264 | (2,877 | ) | (487 | ) | (489 | ) | |||||||||||
Capital expenditures | 3,897 | 2,408 | 1,458 | 48 | 7,811 | ||||||||||||||
Three Months Ended January 31, 2017 | |||||||||||||||||||
Net sales | $ | 106,083 | $ | 31,569 | $ | 58,630 | $ | (1,186 | ) | $ | 195,096 | ||||||||
Depreciation and amortization | 9,938 | 2,056 | 3,275 | 137 | 15,406 | ||||||||||||||
Operating income (loss) | 70 | 2,203 | (827 | ) | (5,287 | ) | (3,841 | ) | |||||||||||
Capital expenditures | 3,711 | 3,144 | 1,084 | 202 | 8,141 | ||||||||||||||
As of January 31, 2018 | |||||||||||||||||||
Total assets | $ | 246,021 | $ | 229,510 | $ | 284,132 | $ | 7,371 | $ | 767,034 | |||||||||
As of October 31, 2017 | |||||||||||||||||||
Total assets | $ | 258,315 | $ | 219,622 | $ | 285,457 | $ | 10,485 | $ | 773,879 |
Three Months Ended January 31, 2017 | As Previously Reported | Reclassification | Current Presentation | ||||||||
(in thousands) | |||||||||||
NA Engineered Components | |||||||||||
Net sales | $ | 111,073 | $ | (4,990 | ) | $ | 106,083 | ||||
Depreciation and amortization | 10,078 | (140 | ) | 9,938 | |||||||
Operating income (loss) | 301 | (231 | ) | 70 | |||||||
Capital expenditures | $ | 3,756 | $ | (45 | ) | $ | 3,711 | ||||
EU Engineered Components | |||||||||||
Net sales | $ | 31,569 | $ | — | $ | 31,569 | |||||
Depreciation and amortization | 2,056 | — | 2,056 | ||||||||
Operating income (loss) | 2,203 | — | 2,203 | ||||||||
Capital expenditures | $ | 3,144 | $ | — | $ | 3,144 | |||||
NA Cabinet Components | |||||||||||
Net sales | $ | 52,997 | $ | 5,633 | $ | 58,630 | |||||
Depreciation and amortization | 3,135 | 140 | 3,275 | ||||||||
Operating income (loss) | (1,058 | ) | 231 | (827 | ) | ||||||
Capital expenditures | $ | 1,039 | $ | 45 | $ | 1,084 | |||||
Unallocated Corporate & Other | |||||||||||
Net sales | $ | (543 | ) | $ | (643 | ) | $ | (1,186 | ) | ||
Depreciation and amortization | 137 | — | 137 | ||||||||
Operating income (loss) | (5,287 | ) | — | (5,287 | ) | ||||||
Capital expenditures | $ | 202 | $ | — | $ | 202 |
NA Eng. Comp. | EU Eng. Comp. | NA Cabinet Comp. | Unallocated Corp. & Other | Total | |||||||||||||||
Balance as of October 31, 2017 | $ | 38,712 | $ | 69,735 | $ | 113,747 | $ | — | $ | 222,194 | |||||||||
Foreign currency translation adjustment | — | 4,733 | — | — | 4,733 | ||||||||||||||
Balance as of January 31, 2018 | $ | 38,712 | $ | 74,468 | $ | 113,747 | $ | — | $ | 226,927 |
Three Months Ended | |||||||
January 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Operating loss | $ | (489 | ) | $ | (3,841 | ) | |
Interest expense | (2,441 | ) | (2,160 | ) | |||
Other, net | 317 | 661 | |||||
Income tax benefit | 7,560 | 1,614 | |||||
Net income (loss) | $ | 4,947 | $ | (3,726 | ) |
Three Months Ended | |||||||
January 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
NA Engineered Components: | |||||||
United States - fenestration | $ | 88,216 | $ | 89,711 | |||
International - fenestration | 7,008 | 6,341 | |||||
United States - non-fenestration | 4,147 | 5,831 | |||||
International - non-fenestration | 3,356 | 4,200 | |||||
$ | 102,727 | $ | 106,083 | ||||
EU Engineered Components: | |||||||
United States - fenestration | $ | — | $ | 35 | |||
International - fenestration | 29,869 | 28,905 | |||||
International - non-fenestration | 4,127 | 2,629 | |||||
$ | 33,996 | $ | 31,569 | ||||
NA Cabinet Components: | |||||||
United States - fenestration | $ | 3,445 | $ | 3,332 | |||
United States - non-fenestration | 52,006 | 54,691 | |||||
International - non-fenestration | 471 | 607 | |||||
$ | 55,922 | $ | 58,630 | ||||
Unallocated Corporate & Other | |||||||
Eliminations | $ | (979 | ) | $ | (1,186 | ) | |
$ | (979 | ) | $ | (1,186 | ) | ||
Net sales | $ | 191,666 | $ | 195,096 |
Three Months Ended January 31, 2018 | ||||||||||
Net Income | Weighted Average Shares | Per Share | ||||||||
Basic earnings per common share | $ | 4,947 | 34,662 | $ | 0.14 | |||||
Effect of dilutive securities: | ||||||||||
Stock options | — | 442 | ||||||||
Restricted stock awards | — | 154 | ||||||||
Performance shares | — | 28 | ||||||||
Diluted earnings per common share | $ | 4,947 | 35,286 | $ | 0.14 |
• | Excess tax benefits or deficiencies for share-based payments are to be recorded in the income tax provision, rather than as an adjustment to additional paid-in-capital. We made this change on a prospective basis; |
• | Cash flows related to excess tax benefits or deficiencies are included in net cash provided by operating activities rather than as a financing activity. We adopted this change retrospectively, which resulted in an increase to net cash provided by operating activities and a corresponding decrease to net cash provided by financing activities of less than $0.1 million for the three months ended January 31, 2017; |
• | Cash paid to taxing authorities when withholding shares from an employee’s vesting or exercise of equity-based compensation awards for tax-withholding purposes is to be classified as net cash used in financing activities rather than as an operating activity. We adopted this change retrospectively, which resulted in an increase to net cash provided by operating activities and a corresponding decrease to net cash provided by financing activities of $1.0 million for the three months ended January 31, 2017; |
• | We elected to continue to withhold shares associated with stock-based compensation vesting or exercises to satisfy the minimum statutory tax withholding requirements, rather than electing to withhold at a higher rate; and |
• | We elected to continue to estimate forfeitures rather than account for forfeitures as they occur. |
• | changes in market conditions, particularly in the new home construction, and residential remodeling and replacement (R&R) activity markets in the United States, United Kingdom and Germany; |
• | changes in non-pass-through raw material costs; |
• | changes in domestic and international economic conditions; |
• | changes in purchases by our principal customers; |
• | fluctuations in foreign currency exchange rates; |
• | our ability to maintain an effective system of internal controls; |
• | our ability to successfully implement our internal operating plans and acquisition strategies; |
• | our ability to successfully implement our plans with respect to information technology (IT) systems and processes; |
• | our ability to control costs and increase profitability; |
• | changes in environmental laws and regulations; |
• | changes in warranty obligations; |
• | changes in energy costs; |
• | changes in tax laws, and interpretations thereof; |
• | changes in interest rates; |
• | our ability to service our debt facilities and remain in good standing with our lenders; |
• | changes in the availability or applicability of our insurance coverage; |
• | our ability to maintain a good relationship with our suppliers, subcontractors, and key customers; and |
• | the resolution of litigation and other legal proceedings. |
Three Months Ended January 31, | ||||||||||||||
2018 | 2017 | Change $ | % Variance | |||||||||||
(Dollars in millions) | ||||||||||||||
Net sales | $ | 191.7 | $ | 195.1 | $ | (3.4 | ) | (2 | )% | |||||
Cost of sales (excluding depreciation and amortization) | 154.4 | 154.9 | (0.5 | ) | — | % | ||||||||
Selling, general and administrative | 24.1 | 27.5 | (3.4 | ) | 12 | % | ||||||||
Restructuring charges | 0.4 | 1.1 | (0.7 | ) | 64 | % | ||||||||
Depreciation and amortization | 13.3 | 15.4 | (2.1 | ) | 14 | % | ||||||||
Operating loss | $ | (0.5 | ) | $ | (3.8 | ) | $ | 3.3 | 87 | % | ||||
Interest expense | (2.4 | ) | (2.2 | ) | (0.2 | ) | (9 | )% | ||||||
Other, net | 0.3 | 0.7 | (0.4 | ) | (57 | )% | ||||||||
Income tax benefit | 7.6 | 1.6 | 6.0 | 375 | % | |||||||||
Net income (loss) | $ | 5.0 | $ | (3.7 | ) | $ | 8.7 | 235 | % |
Three Months Ended January 31, | |||||||||||||
2018 | 2017 | $ Change | % Variance | ||||||||||
(Dollars in millions) | |||||||||||||
Net sales | $ | 102.7 | $ | 106.0 | $ | (3.3 | ) | (3)% | |||||
Cost of sales (excluding depreciation and amortization) | 80.0 | 82.0 | (2.0 | ) | 2% | ||||||||
Selling, general and administrative | 13.8 | 13.5 | 0.3 | (2)% | |||||||||
Restructuring charges | 0.3 | 0.5 | (0.2 | ) | 40% | ||||||||
Depreciation and amortization | 7.0 | 9.9 | (2.9 | ) | 29% | ||||||||
Operating income | $ | 1.6 | $ | 0.1 | $ | 1.5 | 1,500% | ||||||
Operating income margin | 2 | % | — | % |
Three Months Ended January 31, | |||||||||||||
2018 | 2017 | $ Change | Variance % | ||||||||||
(Dollars in millions) | |||||||||||||
Net sales | $ | 34.0 | $ | 31.6 | $ | 2.4 | 8% | ||||||
Cost of sales (excluding depreciation and amortization) | 24.8 | 22.5 | 2.3 | (10)% | |||||||||
Selling, general and administrative | 5.5 | 4.8 | 0.7 | (15)% | |||||||||
Depreciation and amortization | 2.4 | 2.1 | 0.3 | (14)% | |||||||||
Operating income | $ | 1.3 | $ | 2.2 | $ | (0.9 | ) | (41)% | |||||
Operating income margin | 4 | % | 7 | % |
Three Months Ended January 31, | |||||||||||||
2018 | 2017 | $ Change | Variance % | ||||||||||
(Dollars in millions) | |||||||||||||
Net sales | $ | 55.9 | $ | 58.6 | $ | (2.7 | ) | (5)% | |||||
Cost of sales (excluding depreciation and amortization) | 50.2 | 51.3 | (1.1 | ) | 2% | ||||||||
Selling, general and administrative | 4.8 | 4.3 | 0.5 | (12)% | |||||||||
Restructuring charges | 0.1 | 0.6 | (0.5 | ) | 83% | ||||||||
Depreciation and amortization | 3.7 | 3.2 | 0.5 | (16)% | |||||||||
Operating loss | $ | (2.9 | ) | $ | (0.8 | ) | $ | (2.1 | ) | (263)% | |||
Operating loss margin | (5 | )% | (1 | )% |
Three Months Ended January 31, | |||||||||||||
2018 | 2017 | $ Change | Variance % | ||||||||||
(Dollars in millions) | |||||||||||||
Net sales | $ | (0.9 | ) | $ | (1.1 | ) | $ | 0.2 | 18% | ||||
Cost of sales (excluding depreciation and amortization) | (0.6 | ) | (0.9 | ) | 0.3 | (33)% | |||||||
Selling, general and administrative | — | 4.9 | (4.9 | ) | 100% | ||||||||
Depreciation and amortization | 0.2 | 0.2 | — | —% | |||||||||
Operating loss | $ | (0.5 | ) | $ | (5.3 | ) | $ | 4.8 | 91% |
Three Months Ended | |||||||
January 31, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Cash provided by operating activities | $ | 8.2 | $ | 3.1 | |||
Cash used for investing activities | $ | (7.7 | ) | $ | (16.2 | ) | |
Cash (used for) provided by financing activities | $ | (4.4 | ) | $ | 1.8 |
Notional as indicated | Fair Value in $ | |||||||||||||||
January 31, 2018 | October 31, 2017 | January 31, 2018 | October 31, 2017 | |||||||||||||
Foreign currency derivatives: | ||||||||||||||||
Sell EUR, buy USD | EUR | $ | 104 | $ | 1,271 | $ | (1 | ) | $ | 24 | ||||||
Sell CAD, buy USD | CAD | 231 | 320 | — | 1 | |||||||||||
Sell GBP, buy USD | GBP | 47 | 75 | — | — | |||||||||||
Buy EUR, sell GBP | EUR | 36 | 30 | — | (1 | ) | ||||||||||
Buy USD, sell EUR | USD | 1 | — | — | — | |||||||||||
Buy GBP, sell EUR | GBP | 1 | — | — | — |
Period | (a) Total Number of Shares Purchased (1) | (b) Average Price Paid per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum US Dollars Remaining that May Yet Be Used to Purchase Shares Under the Plans or Programs | ||||
November 1, 2017 through November 30, 2017 | — | — | — | — | ||||
December 1, 2017 through December 31, 2017 | 31,418 | $22.47 | — | — | ||||
January 1, 2018 through January 31, 2018 | — | — | — | — | ||||
Total | 31,418 | $22.47 | — |
QUANEX BUILDING PRODUCTS CORPORATION | |||
Date: | March 6, 2018 | /s/ Brent L. Korb | |
Brent L. Korb | |||
Senior Vice President – Finance and Chief Financial Officer (Principal Financial Officer) |
*101.INS | XBRL Instance Document | |
*101.SCH | XBRL Taxonomy Extension Schema Document | |
*101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
*101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
*101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
*101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
1. | I have reviewed this quarterly report on Form 10-Q of Quanex Building Products Corporation (the “Registrant”); |
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; and |
d. | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. | The Registrant’s other certifying officer 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. |
/s/ William C. Griffiths | |
William C. Griffiths Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Quanex Building Products Corporation (the “Registrant”); |
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; and |
d. | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. | The Registrant’s other certifying officer 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. |
/s/ Brent L. Korb | |
Brent L. Korb Senior Vice President – Finance and Chief Financial Officer (Principal Financial Officer) |
/s/ William C. Griffiths | /s/ Brent L. Korb | |
William C. Griffiths Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) | Brent L. Korb Senior Vice President—Finance and Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information - shares |
3 Months Ended | |
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Jan. 31, 2018 |
Mar. 02, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Quanex Building Products Corporation | |
Trading Symbol | NX | |
Entity Central Index Key | 0001423221 | |
Current Fiscal Year End Date | --10-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jan. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 35,075,703 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jan. 31, 2018 |
Oct. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 377 | $ 333 |
Accumulated depreciation of property, plant and equipment | $ 270,490 | $ 264,047 |
Preferred stock, no par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 125,000,000 | 125,000,000 |
Common stock, shares issued | 37,477,459 | 37,508,877 |
Common stock, shares outstanding | 35,082,403 | 34,838,134 |
Treasury stock, shares | 2,395,056 | 2,670,743 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Tax | $ (697) | $ 0 |
Net income (loss) | 4,947 | (3,726) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments gain | 11,150 | 2,832 |
Other comprehensive income | 10,453 | 2,832 |
Comprehensive income (loss) | $ 15,400 | $ (894) |
Condensed Consolidated Statement of Stockholders' Equity (Parenthetical) - $ / shares |
3 Months Ended | |
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Jan. 31, 2018 |
Jan. 31, 2017 |
|
Statement of Stockholders' Equity [Abstract] | ||
Common stock, dividends per share (in usd per share) | $ 0.04 | $ 0.04 |
Nature of Operations and Basis of Presentation |
3 Months Ended |
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Jan. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Basis of Presentation | Nature of Operations and Basis of Presentation Quanex Building Products Corporation is a component supplier to original equipment manufacturers (OEMs) in the building products industry. These components can be categorized as window and door (fenestration) components and kitchen and bath cabinet components. Examples of fenestration components include: (1) energy-efficient flexible insulating glass spacers, (2) extruded vinyl profiles, (3) window and door screens, and (4) precision-formed metal and wood products. We also manufacture cabinet doors and other components for OEMs in the kitchen and bathroom cabinet industry. In addition, we provide certain other non-fenestration components and products, which include solar panel sealants, trim moldings, vinyl decking, fencing, water retention barriers, and conservatory roof components. We have organized our business into three reportable business segments. For additional discussion of our reportable business segments, see Note 14, "Segment Information." We use low-cost, short lead-time production processes and engineering expertise to provide our customers with specialized products for their specific window, door, and cabinet applications. We believe these capabilities provide us with unique competitive advantages. We serve a primary customer base in North America and the United Kingdom, and also serve customers in international markets through our operating plants in the United Kingdom and Germany, as well as through sales and marketing efforts in other countries. Unless the context indicates otherwise, references to "Quanex", the "Company", "we", "us" and "our" refer to the consolidated business operations of Quanex Building Products Corporation and its subsidiaries. The accompanying interim condensed consolidated financial statements include the accounts of Quanex Building Products Corporation. All intercompany accounts and transactions have been eliminated in consolidation. These financial statements have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of October 31, 2017 was derived from audited financial information, but does not include all disclosures required by U.S. GAAP. The accompanying financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto, included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2017. In our opinion, the accompanying financial statements contain all adjustments (which consist of normal recurring adjustments, except as disclosed herein) necessary to fairly present our financial position, results of operations and cash flows for the interim periods. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year or for any future periods. In preparing financial statements, we make informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. We review our estimates on an on-going basis, including those related to impairment of long lived assets and goodwill, contingencies and income taxes. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates. Restructuring We accrue one-time severance costs pursuant to an approved plan of restructuring at the communication date, when affected employees have been notified of the potential severance and sufficient information has been provided for the employee to calculate severance benefits, in the event the employee is involuntarily terminated. In addition, we accrue costs associated with the termination of contractual commitments including operating leases at the time the lease is terminated pursuant to the lease provisions or in accordance with another agreement with the landlord. Otherwise, we continue to recognize operating lease expense through the cease-use date. After the cease-use date, we determine if our operating lease payments are at market. We assume sublet of the facility at the market rate. To the extent our lease obligations exceed the fair value rentals, we discount to arrive at the present value and record a liability. If the facility is not sublet, we expense the amount of the rental in the current period. For other costs directly related to the restructuring effort, such as equipment moving costs, we expense in the period incurred. We closed a kitchen and bathroom cabinet door business in Mexico in October 2016 and another plant in Lansing, Kansas in September 2017. We closed two United States vinyl operations plants in November 2016 and January 2017. During the three months ended January 31, 2018 and 2017, we expensed $0.4 million and $1.1 million, respectively, pursuant to these restructuring efforts. Our facility lease obligations were deemed to be at fair market value and we have not yet negotiated exit from our remaining lease obligations at two of these facilities. We expect to continue to incur costs related to these operating leases and other costs associated with these restructuring efforts during fiscal 2018. In 2017, we evaluated the remaining depreciable lives of property, plant and equipment that will be abandoned or otherwise disposed as of the plant closures and recorded a change in estimate associated with the remaining useful lives of these assets. We recorded accelerated depreciation of $1.6 million related to this change in estimate for the three months ended January 31, 2017. In addition, we evaluated the remaining service lives of intangible assets with defined lives associated with our United States vinyl extrusion business and recorded a change in estimate associated with the remaining useful lives of a customer relationship intangible and a utility process intangible asset which resulted in an increase in amortization expense of $0.9 million for the three months ended January 31, 2017. We do not expect to incur incremental depreciation and amortization expense in fiscal 2018 associated with these restructuring efforts. |
Acquisitions |
3 Months Ended |
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Jan. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions and Dispositions HLP As more fully described in our Annual Report on Form 10-K for the year ended October 31, 2017, we acquired the outstanding ownership shares of an extruder of vinyl lineal products and manufacturer of other plastic products incorporated and registered in England and Wales ("HLP") on June 15, 2015. The purchase agreement contained an earn-out provision which is calculated as a percentage of earnings before interest, tax and depreciation and amortization for a specified period, as defined in the purchase agreement. Pursuant to this earn-out provision, the former owner could select a base year upon which to calculate the earn-out (one of the next three succeeding twelve-month periods ended July 31). In August 2016, the former owner selected the twelve-month period ended July 31, 2016 as the measurement period for the earn-out calculation. On November 7, 2016, we paid $8.5 million to settle the earn-out, which included a foreign currency adjustment of $0.1 million. We have included this earn-out payment under the caption "Acquisitions, net of cash acquired" in the accompanying cash flow statement for the three months ending January 31, 2017. We are party to operating leases associated with the HLP acquisition for which our lessors are entities that were either wholly-owned subsidiaries or affiliates of HLP prior to the acquisition, and in which a former owner, who is now our employee, has an ownership interest. These leases include our primary operating facilities, a finished goods warehouse, a mixing plant, and a manufacturing facility. The lease for the manufacturing facility which has a 20-year term began in 2007, the lease for the manufacturing facility which has a 15-year term began in 2012, the lease for the mixing plant has a 13.5-year term which began in 2013, and the lease for the warehouse has a 20-year life which began in 2017. We have recorded rent expense pursuant to these agreements of approximately $0.6 million and $0.3 million, for the three-month periods ended January 31, 2018 and 2017, respectively. Commitments under these lease arrangements are included in our operating lease commitments as disclosed in our Annual Report on Form 10-K for the year ended October 31, 2017. Shawano On October 31, 2017, we sold certain net assets of a wood-flooring manufacturing plant in Shawano, Wisconsin to an unrelated equity investment firm for $0.6 million in cash, and the issuance of a receivable totaling $1.2 million. The receivable is collectible over a five-year term, with annual payments equal to 3% of gross sales, with a minimum payment in year five equal to the greater of: (a) $1.6 million less annual payments made during the preceding four years, or (b) 3% of gross sales for year five. The receivable has been discounted at our incremental borrowing rate. We provided transitional services associated with this sale through December 31, 2017 and recorded a current receivable associated with these services of $0.2 million as of January 31, 2018. The transaction was subject to a working capital adjustment as defined in the agreement which totaled less than $0.1 million at January 31, 2018. Pursuant to the agreement, we will supply wood products to this plant at cost throughout fiscal 2018. |
Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consisted of the following at January 31, 2018 and October 31, 2017:
Fixed costs related to excess manufacturing capacity, if any, have been expensed in the period they were incurred and, therefore, are not capitalized into inventory. Our inventories at January 31, 2018 and October 31, 2017 were valued using the following costing methods:
During interim periods, we estimate a LIFO reserve based on our expectations of year-end inventory levels and costs. If our calculations indicate that an adjustment at year-end will be required, we may record a proportionate share of this amount during the period. At year-end, we calculate the actual LIFO reserve and record an adjustment for the difference between the annual calculation and any estimates recognized during the interim periods. Because the interim projections are subject to many factors beyond our control, the results could differ significantly from the year-end LIFO calculation. We recorded no interim LIFO reserve adjustment for the three-month periods ended January 31, 2018 and 2017. For inventories valued under the LIFO method, replacement cost exceeded the LIFO value by approximately $1.1 million at January 31, 2018 and October 31, 2017. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The change in the carrying amount of goodwill for the three months ended January 31, 2018 was as follows:
At our annual test date, August 31, 2017, we evaluated the recoverability of goodwill at each of our five reportable units with goodwill balances. We determined that our goodwill was not impaired. There have been no triggering events to indicate impairment during the three months ended January 31, 2018. Therefore, no additional testing was deemed necessary. For a summary of the change in the carrying amount of goodwill by segment, see Note 14, "Segment Information", included herewith. Identifiable Intangible Assets Amortizable intangible assets consisted of the following as of January 31, 2018 and October 31, 2017:
Pursuant to a change in estimate with regard to the remaining service lives of certain intangible assets, we recorded incremental amortization expense of $0.9 million for the three months ended January 31, 2017. See additional disclosure at Note 1, "Nature of Operations, Basis of Presentation and Significant Accounting Policies - Restructuring." During the three months ended January 31, 2018, we retired identifiable intangible assets of $0.3 million related to patents and other technology. For each of the three-month periods ended January 31, 2018 and 2017, we had aggregate amortization expense related to intangible assets of $4.1 million and $5.4 million, respectively. Estimated remaining amortization expense, assuming current intangible balances and no new acquisitions, for each of the fiscal years ending October 31, is as follows (in thousands):
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Debt and Capital Lease Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Capital Lease Obligations | Debt and Capital Lease Obligations Debt consisted of the following at January 31, 2018 and October 31, 2017:
As more fully described in our Annual Report on Form 10-K for the year ended October 31, 2017, we maintain a $450.0 million credit agreement comprising a $150.0 million Term Loan A and a $300.0 million revolving credit facility (collectively, the “Credit Agreement”), with Wells Fargo Bank, National Association, as Agent, Swingline Lender and Issuing Lender, and Bank of America, N.A. serving as Syndication Agent. The Credit Agreement has a five-year term, maturing on July 29, 2021, and requires interest payments calculated, at our election and depending upon our Consolidated Leverage Ratio, at either a Base Rate plus an applicable margin or the LIBOR Rate plus an applicable margin. At the time of the initial borrowing, the applicable rate was LIBOR + 2.00%. In addition, we are subject to commitment fees for the unused portion of the Credit Agreement. The applicable margin and commitment fees are outlined in the following table:
In the event of default, outstanding borrowings would accrue interest at the Default Rate, as defined, whereby the obligations will bear interest at a per annum rate equal to 2% above the total per annum rate otherwise applicable. The term loan portion of the Credit Agreement requires quarterly principal payments on the last business day of each fiscal quarter in accordance with a stated repayment schedule. Required aggregate principal repayments total $15.0 million for the succeeding twelve-month period, and are included in the accompanying condensed consolidated balance sheet under the caption “Current Maturities of Long-term Debt.” No stated principal payments are required under the revolving credit portion of the Credit Agreement, except upon maturity. If our Consolidated Leverage Ratio is less than 2.25 to 1.00, then we are required to make mandatory prepayments of “excess cash flow” as defined in the agreement. The Credit Agreement contains a: (1) Consolidated Fixed Charge Coverage Ratio requirement whereby we must not permit the Consolidated Fixed Charge Coverage Ratio, as defined, to be less than 1.10 to 1.00, and (2) Consolidated Leverage Ratio requirement, as summarized by period in the following table:
In addition to maintaining these financial covenants, the Credit Agreement also limits our ability to enter into certain business transactions, such as to incur indebtedness or liens, to acquire businesses or dispose of material assets, make restricted payments, pay dividends (limited to $10.0 million per year) and other transactions as further defined in the Credit Agreement. Substantially all of our domestic assets, with the exception of real property, are utilized as collateral for the Credit Agreement. As of January 31, 2018, we had $218.5 million of borrowings outstanding under the Credit Agreement (reduced by unamortized debt issuance costs of $1.9 million), $5.3 million of outstanding letters of credit and $19.6 million outstanding primarily under capital leases. We had $211.2 million available for use under the Credit Agreement at January 31, 2018. Outstanding borrowings under the Credit Agreement accrue interest at 3.57% per annum. Our weighted average borrowing rate for borrowings outstanding during the three months ended January 31, 2018 and 2017 was 3.40% and 2.65%, respectively. We were in compliance with our debt covenants as of January 31, 2018. Other Debt Instruments Historically, we have maintained certain capital lease obligations related to equipment purchases. On February 20, 2017, we entered into a capital lease for warehouse space at HLP with a related-party company that is owned by our employee, the former owner of HLP. This new warehouse was anticipated at the time of the HLP acquisition in June 2015, and the lease was negotiated at arms-length. The lease accrues interest at 3.57% per annum, and extends for a twenty-year period through the year 2036. We recorded the leased asset at inception at fair value of $16.6 million and recorded a corresponding liability for our obligation under this lease. We are recognizing interest expense using the effective interest method over the term. Our cash commitments under this lease are £0.9 million per year for an aggregate of £17.8 million (or approximately $25.3 million). The cost and accumulated depreciation of property, plant and equipment under all outstanding capital leases at January 31, 2018 was $19.3 million and $3.4 million, respectively, including $12.8 million and $0.9 million, respectively, related to the HLP warehouse lease. Our total obligations under capital leases and other total $19.6 million at January 31, 2018, of which $1.8 million is classified in the current portion of long-term debt and $17.8 million is classified as long-term debt on the accompanying unaudited condensed consolidated balance sheet. These obligations accrue interest at an average rate of 3.6%, and extend through the year 2036. |
Retirement Plans |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans | Retirement Plans Pension Plan Our non-contributory, single employer defined benefit pension plan covers a majority of our employees in the United States excluding employees of recent acquisitions. Employees of acquired companies may be covered after a transitional period. The net periodic pension cost for this plan for the three-month periods ended January 31, 2018 and 2017 was as follows:
During 2017, we contributed $3.6 million to fund our plan, and we expect to make a contribution to our plan in September 2018 of approximately $3.6 million. Other Plans We also have a supplemental benefit plan covering certain executive officers and a non-qualified deferred compensation plan covering members of the Board of Directors and certain key employees. As of January 31, 2018 and October 31, 2017, our liability under the supplemental benefit plan was approximately $3.6 million and $3.4 million, respectively. The liability associated with the deferred compensation plan was approximately $4.0 million as of January 31, 2018 and October 31, 2017. We record the current portion of liabilities associated with these plans under the caption "Accrued Liabilities," and the long-term portion under the caption "Other Liabilities" in the accompanying condensed consolidated balance sheets. |
Warranty Obligations |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Warranty Obligations | Warranty Obligations We accrue warranty obligations as we recognize revenue associated with certain products. We make provisions for our warranty obligations based upon historical experience of costs incurred for such obligations adjusted, as necessary, for current conditions and factors. There are significant uncertainties and judgments involved in estimating our warranty obligations, including changing product designs, differences in customer installation processes and future claims experience which may vary from historical claims experience. Therefore, the ultimate amount we incur as warranty costs in the near and long-term may not be consistent with our current estimate. A reconciliation of the activity related to our accrued warranty, including both the current and long-term portions (reported in accrued liabilities and other liabilities, respectively, on the accompanying condensed consolidated balance sheet) follows:
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes To determine our income tax expense or benefit for interim periods, consistent with accounting standards, we apply the estimated annual effective income tax rate to year-to-date results. Our estimated annual effective tax rates for the three-month periods ended January 31, 2018 and 2017 were 24.0% and 30.2%, respectively, excluding discrete items. The change in the annual rate was due largely to the effect of the Tax Cuts and Jobs Act (the Act) which was signed into law on December 22, 2017. The Act reduced our federal income tax rate from 35.0% to 23.3% for the fiscal year ending October 31, 2018. Discrete items contributing to the income tax benefit for the three months ended January 31, 2018 included $7.7 million for the re-measurement of our deferred income tax assets and liabilities due to the decrease in the federal corporate income tax rate, a benefit of $0.3 million for the true up of our accruals and related deferred taxes from prior year filings and settled tax audits, a benefit of $0.1 million for the excess tax benefits related to the vesting or exercise of equity-based compensation awards, partially offset by a tax expense of $1.2 million for the one-time mandatory transition tax on deemed repatriation of previously tax-deferred and unremitted foreign earnings. The following table reconciles our effective income tax benefit rate to the federal statutory rate of 23.3% and 35.0% for the three month periods ended January 31, 2018 and 2017, respectively:
The United States statutory rate of 23.3% reflects the period November 1, 2017 to December 31, 2017 at the previous 35.0% rate and the period January 1, 2018 to October 31, 2018 at the new 21.0% rate. Given the significance of the Act, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allows registrants to record provisional amounts during a one year “measurement period”. During the measurement period, impacts of the Act are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Act. As of January 31, 2018, we have not completed the accounting for the tax effects of the Act. However, we have made an initial assessment of the Act and recorded a discrete benefit of $6.5 million during the three month period ended January 31, 2018. We believe that our assessment of the re-measurement of our deferred income tax assets and liabilities to be complete, while we consider our tax expense related to the one-time mandatory transition tax on deemed repatriation of previously tax-deferred and unremitted foreign earnings and our tax benefit of stock based compensation to be provisional. At this time, our estimate does not reflect changes in current interpretations of compensation deduction limitations, effects of any state tax law changes and uncertainties regarding interpretations that may arise as a result of federal tax reform. Any additional impact of the enactment of the Act will be recorded as they are identified during the one-year measurement period provided for in SAB 118. In light of the Act, we are evaluating our foreign cash position and potential repatriation of foreign earnings during fiscal 2018. With the exception of the one-time mandatory transition tax on deemed repatriation of previously tax-deferred and unremitted foreign earnings, we do not anticipate any material tax impact from any potential repatriation of previous unremitted foreign earnings. As of January 31, 2018, our liability for uncertain tax positions (UTP) of $0.6 million relates to certain state tax items regarding the interpretation of tax laws and regulations. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns. The final outcome of the future tax consequences of legal proceedings, if any, as well as the outcome of competent authority proceedings, changes in regulatory tax laws, or interpretation of those tax laws could impact our financial statements. We are subject to the effect of these matters occurring in various jurisdictions. The disallowance of the UTP would not materially affect the annual effective tax rate. We do not believe any of the UTP at January 31, 2018 will be recognized within the next twelve months. We evaluate the likelihood of realization of our deferred tax assets by considering both positive and negative evidence. We believe there is no need for a valuation allowance of the federal net operating losses. We will continue to evaluate our position throughout the year. We maintain a valuation allowance for certain state net operating losses which totaled $1.3 million at January 31, 2018. The audit of our federal income tax return for the pre-acquisition short period of January 1, 2015 to November 2, 2015 for Woodcraft by the United States Internal Revenue Service has been completed with no significant impact to the company. |
Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Remediation and Environmental Compliance Costs Under applicable state and federal laws, we may be responsible for, among other things, all or part of the costs required to remove or remediate wastes or hazardous substances at locations we, or our predecessors, have owned or operated. From time to time, we also have been alleged to be liable for all or part of the costs incurred to clean up third-party sites where there might have been an alleged improper disposal of hazardous substances. At present, we are not involved in any such matters. From time to time, we incur routine expenses and capital expenditures associated with compliance with existing environmental regulations, including control of air emissions and water discharges, and plant decommissioning costs. We have not incurred any material expenses or capital expenditures related to environmental matters during the past three fiscal years, and do not expect to incur a material amount of such costs in fiscal 2018. While we will continue to have future expenditures related to environmental matters, any such amounts are impossible to reasonably estimate at this time. Based upon our experience to date, we do not believe that our compliance with environmental requirements will have a material adverse effect on our operations, financial condition or cash flows. Spacer Migration We were notified by certain customers through our German operation that the vapor barrier employed on certain spacer products manufactured prior to March 2014 may permit spacer migration in certain extreme circumstances. This product does not have a specific customer warranty, but we have received claims from customers related to this issue, which we continue to investigate. The balance of the accrual for this matter was $1.3 million and $1.4 million at October 31, 2017 and January 31, 2018. During the three months ended January 31, 2018, we incurred additional claims of $0.5 million, which were offset by payments of $0.5 million. The additional change in the accrual during the three months ended January 31, 2018 reflects the impact of foreign currency exchange rates. We cannot estimate any future liability with regard to unasserted claims. We evaluate this reserve at each balance sheet date. We investigate any claims, but we are not obligated to honor any future claims. Litigation From time to time, we, along with our subsidiaries, are involved in various litigation matters arising in the ordinary course of our business, including those arising from or related to contractual matters, commercial disputes, intellectual property, personal injury, environmental matters, product performance or warranties, product liability, insurance coverage and personnel and employment disputes. We regularly review with legal counsel the status of all ongoing proceedings, and we maintain insurance against these risks to the extent deemed prudent by our management and to the extent such insurance is available. However, there is no assurance that we will prevail in these matters or that our insurers will accept full coverage of these matters, and we could, in the future, incur judgments, enter into settlements of claims, or revise our expectations regarding the outcome or insurability of matters we face, which could materially impact our results of operations. We have been and are currently party to multiple claims, some of which are in litigation, relating to alleged defects in a commercial sealant product that was manufactured and sold during the 2000's. During the three months ended January 31, 2018, our insurance carrier reimbursed fees and expenses originally incurred as part of our defense of these various commercial sealant claims totaling $0.5 million to us and additional payments directly to our external counsel. While we believe that our product was not defective and that we would prevail in these commercial sealant product claims if taken to trial, the timing, ultimate resolution and potential impact of these claims is not currently determinable. Nevertheless, after taking into account all currently available information, including our defenses, the advice of our counsel, and the extent and currently-expected availability of our existing insurance coverage, we believe that the eventual outcome of these commercial sealant claims will not have a material adverse effect on our overall financial condition, results of operations or cash flows, and we have not recorded any accrual with regard to these claims. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments Our derivative activities are subject to the management, direction, and control of the Chief Financial Officer and Chief Executive Officer. Certain transactions in excess of specified levels require further approval from the Board of Directors. The nature of our business activities requires the management of various financial and market risks, including those related to changes in foreign currency exchange rates. We have historically used foreign currency forwards and options to mitigate or eliminate certain of those risks at our subsidiaries. We use foreign currency contracts to offset fluctuations in the value of accounts receivable and accounts payable balances that are denominated in currencies other than the United States dollar, including the Euro, British Pound and Canadian Dollar. Currently, we do not enter into derivative transactions for speculative or trading purposes. We are exposed to credit loss in the event of nonperformance by the counterparties to our derivative transactions. We attempt to mitigate this risk by monitoring the creditworthiness of our counterparties and limiting our exposure to individual counterparties. In addition, we have established master netting agreements in certain cases to facilitate the settlement of gains and losses on specific derivative contracts. We have not designated any of our derivative contracts as hedges for accounting purposes in accordance with the provisions under the Accounting Standards Codification Topic 815 "Derivatives and Hedging" (ASC 815). Therefore, changes in the fair value of these contracts and the realized gains and losses are recorded in the unaudited condensed consolidated statements of income (loss) for the three-month periods ended January 31, 2018 and 2017 as follows (in thousands):
We have chosen not to offset any of our derivative instruments in accordance with the provisions of ASC 815. Therefore, the assets and liabilities are presented on a gross basis on the accompanying condensed consolidated balance sheets. Less than $0.1 million of fair value related to foreign currency derivatives was included in prepaid and other current assets as of October 31, 2017. Less than $0.1 million of fair value related to foreign currency derivatives was included in accrued liabilities as of January 31, 2018 and October 31, 2017. The following table summarizes the notional amounts and fair value of outstanding derivative contracts at January 31, 2018 and October 31, 2017 (in thousands):
For the classification in the fair value hierarchy, see Note 11, "Fair Value Measurement of Assets and Liabilities", included herewith. |
Fair Value Measurement of Assets and Liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||
Fair Value Measurement of Assets and Liabilities | Fair Value Measurement of Assets and Liabilities Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market data developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to Level 1 and the lowest priority to Level 3. The three levels of the fair value hierarchy are described below:
As of January 31, 2018 and October 31, 2017, foreign currency derivatives were the only instruments being measured on a recurring basis. Less than $0.1 million of foreign currency derivatives were included in total liabilities as of January 31, 2018 and less than $0.1 million of foreign currency derivatives were included in total assets and total liabilities as of October 31, 2017. All of our derivative contracts are valued using quoted market prices from brokers or exchanges and are classified within Level 2 of the fair value hierarchy. We have recorded land totaling approximately $2.4 million at fair value on a non-recurring basis which is classified as Level 3 measurement as of January 31, 2018 and October 31, 2017. The fair value was based on broker opinions. Carrying amounts reported on the balance sheet for cash, cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. Our outstanding debt is variable rate debt that re-prices frequently, thereby limiting our exposure to significant change in interest rate risk. As a result, the fair value of our debt instruments approximates carrying value at January 31, 2018, and October 31, 2017 (Level 3 measurement). |
Stock-Based Compensation |
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Stock-Based Compensation | Stock-Based Compensation We have established and maintain an Omnibus Incentive Plan (2008 Plan) that provides for the granting of restricted stock awards, stock options, restricted stock units, performance share awards, performance restricted stock units, and other stock-based and cash-based awards. The 2008 Plan is administered by the Compensation and Management Development Committee of the Board of Directors. The aggregate number of shares of common stock authorized for grant under the 2008 Plan is 7,650,000 as approved by shareholders. Any officer, key employee and/or non-employee director is eligible for awards under the 2008 Plan. We grant restricted stock units to non-employee directors on the first business day of each fiscal year. As approved by the Compensation & Management Development Committee of our Board of Directors annually, we grant stock options, restricted stock awards, performance shares and/or performance restricted stock units to officers, management and key employees. Occasionally, we may make additional grants to key employees at other times during the year. Restricted Stock Awards Restricted stock awards are granted to key employees and officers annually, and typically cliff vest over a three-year period with service and continued employment as the only vesting criteria. The recipient of the restricted stock award is entitled to all of the rights of a shareholder, except that the award is nontransferable during the vesting period. The fair value of the restricted stock award is established on the grant date and then expensed over the vesting period resulting in an increase in additional paid-in-capital. Shares are generally issued from treasury stock at the time of grant. A summary of non-vested restricted stock awards activity during the three months ended January 31, 2018 is presented below:
The total weighted average grant-date fair value of restricted stock awards that vested during each of the three-month periods ended January 31, 2018 and 2017 was $1.3 million and $1.2 million, respectively. As of January 31, 2018, total unrecognized compensation cost related to unamortized restricted stock awards was $3.1 million. We expect to recognize this expense over the remaining weighted average vesting period of 2.1 years. Stock Options Historically, stock options have been awarded to key employees, officers and non-employee directors. Effective May 2015, the director compensation structure was revised to eliminate the annual grant of stock options to non-employee directors. Officer stock options typically vest ratably over a three-year period with service and continued employment as the vesting conditions. Our stock options may be exercised up to a maximum of ten years from the date of grant. The fair value of the stock options is determined on the grant date and expensed over the vesting period resulting in an increase in additional paid-in-capital. For employees who are nearing retirement-eligibility, we recognize stock option expense ratably over the shorter of the vesting period or the period from the grant-date to the retirement-eligibility date. During December 2017, the Compensation & Management Committee of the Board of Directors approved a change to the long-term incentive award program eliminating the grant of stock options and replacing this award with a grant of performance restricted stock units as further described below. We use a Black-Scholes pricing model to estimate the fair value of stock options. A description of the methodology for the valuation assumptions was disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2017. The following table provides a summary of assumptions used to estimate the fair value of our stock options issued during the three-month period ended January 31, 2017.
The following table summarizes our stock option activity for the three months ended January 31, 2018:
Intrinsic value is the amount by which the market price of the common stock on the date of exercise exceeds the exercise price of the stock option. The total intrinsic value of stock options exercised during the three months ended January 31, 2018 and 2017 was $1.9 million and $0.5 million. The weighted-average grant date fair value of stock options that vested during the three months ended January 31, 2018 and 2017 was $1.5 million and $1.8 million, respectively. As of January 31, 2018, total unrecognized compensation cost related to stock options was $0.6 million. We expect to recognize this expense over the remaining weighted average vesting period of 1.5 years. Restricted Stock Units Restricted stock units may be awarded to key employees and officers from time to time, and annually to non-employee directors. The non-employee director restricted stock units vest immediately but are payable only upon the director's cessation of service unless an election is made by the non-employee director to settle and pay the award on an earlier specified date. Restricted stock units awarded to employees and officers typically cliff vest after a three-year period with service and continued employment as the vesting conditions. Restricted stock units are not considered outstanding shares and do not have voting rights, although the holder does receive a cash payment equivalent to the dividend paid, on a one-for-one basis, on our outstanding common shares. Once the criteria is met, each restricted stock unit is payable to the holder in cash based on the market value of one share of our common stock. Accordingly, we record a liability for the restricted stock units on our balance sheet and recognize any changes in the market value during each reporting period as compensation expense. As of January 31, 2018, there were no non-vested restricted stock units. During the three-month periods ended January 31, 2018 and 2017, non-employee directors received 18,050 and 24,560 restricted stock units, respectively, at a grant date fair value of $21.85 and $15.65, respectively, which vested immediately. During the three-month periods ended January 31, 2018 and 2017, there were no payments to settle restricted stock units. Performance Share Awards We have awarded annual grants of performance shares to key employees and officers. These awards cliff vest after a three-year period with service and performance measures (relative total shareholder return (R-TSR) and earnings per share (EPS) growth), as vesting conditions. However, the number of shares earned is variable depending on the metrics achieved, and the settlement method is 50% in cash and 50% in our common stock. To account for these awards, we have bifurcated the portion subject to a market condition (relative total shareholder return) and the portion subject to an internal performance measure (earnings per share growth). We have further bifurcated these awards based on the settlement method, as the portion expected to settle in stock (equity component) and the portion expected to settle in cash (liability component). To value the shares subject to the market condition, we utilized a Monte Carlo simulation model to arrive at a grant-date fair value. This amount will be expensed over the three-year term of the award with a credit to additional paid-in-capital. To value the shares subject to the internal performance measure, we used the value of our common stock on the date of grant as the grant-date fair value per share. This amount is being expensed over the three-year term of the award, with a credit to additional paid-in-capital, and could fluctuate depending on the number of shares ultimately expected to vest based on our assessment of the probability that the performance conditions will be achieved. For both performance conditions, the portion of the award expected to settle in cash is recorded as a liability and is being marked to market over the three-year term of the award, and can fluctuate depending on the number of shares ultimately expected to vest. Depending on the achievement of the performance conditions, 0% to 200% of the awarded performance shares may ultimately vest. The following table summarizes our performance share grants and the grant date fair value for the EPS and R-TSR performance metrics:
On December 3, 2017, 123,600 shares vested pursuant to the December 2014 grant, resulting in the issuance of 25,340 shares of common stock and a cash payment of $0.6 million. The November 2016 and December 2017 grants include a return on invested capital (ROIC) metric which, if achieved, could enhance the number of shares that are ultimately issued but cannot exceed the maximum (200%). Due to the uncertainty with regard to achieving this metric, no value has been assigned. In the event and at such time the metric is deemed achievable, compensation expense will begin to be recognized through the remaining vesting period. For the three-month period ended January 31, 2018, we recorded a decrease in compensation expense of $0.6 million which reflects a decrease in the number of shares expected to vest in December 2018 associated with the December 2, 2015 performance share grant, as well as current expense for other outstanding performance share grants. For the three-month period ended January 31, 2017, we recorded compensation expense of $1.0 million related to our performance share awards. Performance share awards are not considered outstanding shares and do not have voting rights, although dividends are accrued over the performance period and will be payable in cash based upon the number of performance shares ultimately earned. The performance shares are excluded from the diluted weighted-average shares used to calculate earnings per share until the performance criteria is probable to result in the issuance of contingent shares. As of January 31, 2018, we have deemed 55,125 shares related to the December 2015 grant of performance shares as probable to vest. We expect to settle these shares in December 2018 by issuing 27,563 shares and paying the value of the equivalent number of shares in cash, along with accrued dividends thereon. Performance Restricted Stock Units We awarded performance restricted share units to key employees and officers in December 2017. These awards cliff vest upon a three-year service period with the absolute total shareholder return of our common stock over this three-year term as the vesting criteria. The number of shares earned is variable depending on the metric achieved, and the settlement method is 100% in our common stock, with accrued dividends paid in cash at the time of vesting, assuming the shares had been outstanding throughout the performance period. To value the shares, we utilized a Monte Carlo simulation model to arrive at a grant-date fair value. This amount will be adjusted for forfeitures and expensed over the three-year term of the award with a credit to additional paid-in-capital. Depending on the achievement of the performance conditions, a minimum of 0% and a maximum of 150% of the awarded performance restricted stock units may vest. Specifically, the awards vest on a continuum with the following milestones: if absolute total shareholder return is -20%, 50% of the award will vest; at 20% total shareholder return, 100% of the award will vest; and at 50% absolute total shareholder return, 150% of the award will vest. If absolute total shareholder return is below -20%, none of the shares will vest. In accordance with U.S. GAAP, regardless of whether the market performance measure is ultimately met, compensation expense will be recognized. On December 7, 2017, we awarded 78,200 performance restricted share units with a grant date fair value of $17.76 per share. As of January 31, 2018, we recorded compensation expense of approximately $0.1 million related to our performance share restricted units. Similar to performance shares, the performance restricted stock units are not considered outstanding shares, do not have voting rights, and are excluded from diluted weighted-average shares used to calculate earnings per share until the performance criteria is probable to result in the issuance of contingent shares. Treasury Shares We record treasury stock purchases under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. Shares are generally issued from treasury stock at the time of grant of restricted stock awards, and upon the exercise of stock options and upon the vesting of performance shares and performance restricted stock units. On the subsequent issuance of treasury shares, we record proceeds in excess of cost as an increase in additional paid in capital. A deficiency of such proceeds relative to costs would be applied to reduce paid-in-capital associated with prior issuances to the extent available, with the remainder recorded as a charge to retained earnings. We recorded a charge to retained earnings of $0.9 million during the three months ended January 31, 2018. The following table summarizes the treasury stock activity during the three months ended January 31, 2018:
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Other Income (Expense) | Other Income (Loss) Other income (loss) included under the caption "Other, net" on the accompanying condensed consolidated statements of income (loss), consisted of the following for the three-month periods ended January 31, 2018 and 2017:
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] | Segment Information We present three reportable business segments in accordance with Topic 280-10-50, "Segment Reporting" (ASC 280): (1) North American Engineered Components segment (“NA Engineered Components”), comprising four operating segments primarily focused on the fenestration market in North America including vinyl profiles, insulating glass (IG) spacers, screens & other fenestration components; (2) European Engineered Components segment (“EU Engineered Components”), comprising our United Kingdom-based vinyl extrusion business, manufacturing vinyl profiles & conservatories, and the European insulating glass business manufacturing IG spacers; and (3) North American Cabinet Components segment (“NA Cabinet Components”), comprising solely the North American cabinet door and components business acquired in November 2015. We maintain an Unallocated Corporate & Other grouping which includes LIFO inventory adjustments, corporate office charges, and inter-segment eliminations, less an allocation of a portion of the general and administrative costs associated with the corporate office which have been allocated to the reportable business segments, based upon a relative measure of profitability, in order to more accurately reflect each reportable business segment's administrative cost. Certain costs are not allocated to the reportable operating segments, but remain in Unallocated Corporate & Other, including transaction expenses, stock-based compensation, long-term incentive awards based on the performance of our common stock and other factors, certain severance and legal costs not deemed to be allocable to all segments, depreciation of corporate assets, interest expense, other, net, income taxes and inter-segment eliminations. The accounting policies of our operating segments are the same as those used to prepare the accompanying condensed consolidated financial statements. Corporate general and administrative expense allocated during the three-month periods ended January 31, 2018 and 2017 were $5.1 million and $4.4 million, respectively. ASC 280 permits aggregation of operating segments based on factors including, but not limited to: (1) similar nature of products serving the building products industry, primarily the fenestration business; (2) similar production processes, although there are some differences in the amount of automation amongst operating plants; (3) similar types or classes of customers, namely the primary OEMs; (4) similar distribution methods for product delivery, although the extent of the use of third-party distributors will vary amongst the businesses; (5) similar regulatory environment; and (6) converging long-term economic similarities. Segment information for the three months ended January 31, 2018 and 2017, and total assets as of January 31, 2018 and October 31, 2017 are summarized in the following table (in thousands):
During 2017, we transferred two operating plants that manufacture wood products (fenestration and non-fenestration products) from the NA Engineered Components segment to the NA Cabinet Components segment, to better align wood-related products under a common segment management team, which is expected to generate operational efficiencies and synergies. The operating results and total assets presented reflect this transfer as if it occurred on November 1, 2016. The following table reconciles our segment presentation, as previously reported in our Quarterly Report on Form 10-Q for the three months ended January 31, 2017, to the current presentation (in thousands):
The following table summarizes the change in the carrying amount of goodwill by segment for the three months ended January 31, 2018 (in thousands):
For further details of Goodwill, see Note 4, "Goodwill & Intangible Assets", located herewith. We did not allocate non-operating loss or income tax benefit to the reportable segments. The following table reconciles operating loss as reported above to net income (loss) for the three months ended January 31, 2018 and 2017:
Product Sales We produce a wide variety of products that are used in the fenestration industry, including window and door systems; accessory trim profiles with real wood veneers and wood grain laminate finishes; window spacer systems; extruded vinyl products; metal fabrication; and astragals, thresholds and screens. In addition, we produce certain non-fenestration products, including kitchen and bath cabinet doors and components, flooring and trim moldings, solar edge tape, plastic decking, fencing, water retention barriers, conservatory roof components, and other products. The following table summarizes our product sales for the three-month periods ended January 31, 2018 and 2017 into general groupings by segment to provide additional information to our shareholders. For all periods presented, this table reflects the reclassification of two operating plants transferred from the NA Engineered Components segment to the NA Cabinet Components segment, as applicable.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share We compute basic earnings (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per common and potential common shares include the weighted average of additional shares associated with the incremental effect of dilutive employee stock options, non-vested restricted stock as determined using the treasury stock method prescribed by U.S. GAAP and contingent shares associated with performance share awards, if dilutive. Basic and diluted earnings per share for the three-month period ended January 31, 2018 was calculated as follows (in thousands, except per share data):
Basic and diluted loss per share was $0.11 for the three months ended January 31, 2017. The computation of diluted earnings per share excludes outstanding stock options and other common stock equivalents when their inclusion would be anti-dilutive. This is always the case when an entity incurs a net loss. During the three-month period ended January 31, 2017, 420,603 shares of common stock equivalents and 121,857 shares of restricted stock, were excluded from the computation of diluted earnings per share. In addition, 62,650 potentially dilutive contingent shares related to performance share awards for the three-month period ended January 31, 2017 were excluded. We had common stock equivalents that were potentially dilutive in future earnings per share calculations of 108,267 and 1,033,246 for the three-month periods ended January 31, 2018 and 2017, respectively. Such dilution will be dependent on the excess of the market price of our stock over the exercise price and other components of the treasury stock method. |
New Accounting Guidance Adopted |
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New Accounting Guidance Adopted | New Accounting Guidance In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. This guidance prescribes a methodology to determine when revenue is recognizable and constitutes a principles-based approach to revenue recognition based on the consideration to which the entity expects to be entitled in exchange for goods or services. In addition, this guidance requires additional disclosure in the notes to the financial statements with regard to the methodology applied. This pronouncement will essentially supersede and replace existing revenue recognition rules in U.S. GAAP, including industry-specific guidance. We expect to adopt this guidance in fiscal 2019. We are currently evaluating the impact on our consolidated financial statements and have begun collecting the population of revenues by contract type for further evaluation. In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This amendment simplifies the subsequent measurement of inventories by replacing the lower of cost or market revaluation method with the lower of cost and net realizable value test. This guidance is applicable to all inventories measured using methods other than last-in first-out method and the retail inventory method. We adopted the provisions of ASU 2016-09 effective November 1, 2017, with no material impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This guidance prescribes the presentation of excess tax benefits or deficiencies derived from book and tax timing differences associated with stock-based compensation arrangements and certain related statement of cash flow implications. We adopted the provisions of ASU 2016-09 effective November 1, 2017, as noted below with no significant impact on our consolidated financial statements.
In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This amendment requires disclosure of the accounting policy for releasing income tax effects from accumulated other comprehensive income. It also provides an option for entities to reclassify the income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. We elected to early adopt this ASU effective November 1, 2017. We record income tax effects related to our unrecognized pension obligations in accumulated other comprehensive income as discussed in our Annual Report on Form 10-K for the year ended October 31, 2017. We have not elected to reclassify the income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. |
Inventories (Tables) |
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Inventories | Inventories consisted of the following at January 31, 2018 and October 31, 2017:
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Values of Inventories | Our inventories at January 31, 2018 and October 31, 2017 were valued using the following costing methods:
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Goodwill and Intangible Assets (Tables) |
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Changes in the Carrying Amount of Goodwill | The change in the carrying amount of goodwill for the three months ended January 31, 2018 was as follows:
The following table summarizes the change in the carrying amount of goodwill by segment for the three months ended January 31, 2018 (in thousands):
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Schedule of Acquired Finite-Lived Intangible Assets by Major Class | Identifiable Intangible Assets Amortizable intangible assets consisted of the following as of January 31, 2018 and October 31, 2017:
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Estimated Amortization Expense Related to Intangible Assets | Estimated remaining amortization expense, assuming current intangible balances and no new acquisitions, for each of the fiscal years ending October 31, is as follows (in thousands):
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Debt and Capital Lease Obligations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Capital Lease Obligations | Debt consisted of the following at January 31, 2018 and October 31, 2017:
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Schedule Of Applicable Margin And Commitment Fees | The applicable margin and commitment fees are outlined in the following table:
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Schedule Of Consolidated Leverage Ratio Requirements | The Credit Agreement contains a: (1) Consolidated Fixed Charge Coverage Ratio requirement whereby we must not permit the Consolidated Fixed Charge Coverage Ratio, as defined, to be less than 1.10 to 1.00, and (2) Consolidated Leverage Ratio requirement, as summarized by period in the following table:
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Retirement Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Periodic Pension Cost | The net periodic pension cost for this plan for the three-month periods ended January 31, 2018 and 2017 was as follows:
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Warranty Obligations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Activity Related to Accrued Warranty | A reconciliation of the activity related to our accrued warranty, including both the current and long-term portions (reported in accrued liabilities and other liabilities, respectively, on the accompanying condensed consolidated balance sheet) follows:
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Income Taxes Income Tax (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | The following table reconciles our effective income tax benefit rate to the federal statutory rate of 23.3% and 35.0% for the three month periods ended January 31, 2018 and 2017, respectively:
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Derivative Instruments (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block] | We have not designated any of our derivative contracts as hedges for accounting purposes in accordance with the provisions under the Accounting Standards Codification Topic 815 "Derivatives and Hedging" (ASC 815). Therefore, changes in the fair value of these contracts and the realized gains and losses are recorded in the unaudited condensed consolidated statements of income (loss) for the three-month periods ended January 31, 2018 and 2017 as follows (in thousands):
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Schedule of Notional Amounts of Oustanding Derivative Positions | The following table summarizes the notional amounts and fair value of outstanding derivative contracts at January 31, 2018 and October 31, 2017 (in thousands):
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Stock-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Restricted Share Activity | A summary of non-vested restricted stock awards activity during the three months ended January 31, 2018 is presented below:
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Schedule of Valuation Assumptions for Stock Options | The following table summarizes our performance share grants and the grant date fair value for the EPS and R-TSR performance metrics:
The following table provides a summary of assumptions used to estimate the fair value of our stock options issued during the three-month period ended January 31, 2017.
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Schedule of Stock Option Activity | The following table summarizes our stock option activity for the three months ended January 31, 2018:
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Treasury Stock Activity | The following table summarizes the treasury stock activity during the three months ended January 31, 2018:
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Other Income (Expense) (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Non-operating Income (Expense) | 13. Other Income (Loss) Other income (loss) included under the caption "Other, net" on the accompanying condensed consolidated statements of income (loss), consisted of the following for the three-month periods ended January 31, 2018 and 2017:
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | We did not allocate non-operating loss or income tax benefit to the reportable segments. The following table reconciles operating loss as reported above to net income (loss) for the three months ended January 31, 2018 and 2017:
Segment information for the three months ended January 31, 2018 and 2017, and total assets as of January 31, 2018 and October 31, 2017 are summarized in the following table (in thousands):
During 2017, we transferred two operating plants that manufacture wood products (fenestration and non-fenestration products) from the NA Engineered Components segment to the NA Cabinet Components segment, to better align wood-related products under a common segment management team, which is expected to generate operational efficiencies and synergies. The operating results and total assets presented reflect this transfer as if it occurred on November 1, 2016. The following table reconciles our segment presentation, as previously reported in our Quarterly Report on Form 10-Q for the three months ended January 31, 2017, to the current presentation (in thousands):
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Changes in the Carrying Amount of Goodwill | The change in the carrying amount of goodwill for the three months ended January 31, 2018 was as follows:
The following table summarizes the change in the carrying amount of goodwill by segment for the three months ended January 31, 2018 (in thousands):
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Schedule of Product Sales | The following table summarizes our product sales for the three-month periods ended January 31, 2018 and 2017 into general groupings by segment to provide additional information to our shareholders. For all periods presented, this table reflects the reclassification of two operating plants transferred from the NA Engineered Components segment to the NA Cabinet Components segment, as applicable.
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Earnings Per Share Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Basic and diluted earnings per share for the three-month period ended January 31, 2018 was calculated as follows (in thousands, except per share data):
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Nature of Operations and Basis of Presentation (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Costs | $ 0.4 | $ 1.1 |
Restructuring and Related Cost, Accelerated Depreciation | 1.6 | |
Additional Amortization, Restructuring | $ 0.9 |
Inventories (Detail) - USD ($) $ in Thousands |
Jan. 31, 2018 |
Oct. 31, 2017 |
---|---|---|
Inventory, Raw Materials and Supplies, Net of Reserves [Abstract] | ||
Raw materials | $ 52,507 | $ 50,472 |
Finished goods and work in process | 46,438 | 40,087 |
Supplies and other | 3,467 | 2,655 |
Total | 102,412 | 93,214 |
Less: Inventory reserves | 6,569 | 5,685 |
Inventories, net | 95,843 | 87,529 |
Inventory, Net [Abstract] | ||
LIFO | 4,564 | 4,444 |
FIFO | 91,279 | 83,085 |
Inventories, net | 95,843 | $ 87,529 |
Excess of replacement cost over LIFO value | $ 1,100 |
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands |
3 Months Ended |
---|---|
Jan. 31, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 222,194 |
Foreign currency translation adjustment | 4,733 |
Balance as of the end of the period | $ 226,927 |
Retirement Plans (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2018 |
Jan. 31, 2017 |
Oct. 31, 2015 |
Oct. 31, 2017 |
|
Compensation and Retirement Disclosure [Abstract] | ||||
Defined benefit plan, contributions by employer | $ 3,600 | |||
Defined Benefit Plans, Estimated Future Employer Contributions in Next Fiscal Year | $ 3,600 | |||
Supplemental benefit plan liability | 3,600 | $ 3,400 | ||
Deferred compensation liability | 4,000 | $ 4,000 | ||
Net periodic benefit cost: | ||||
Service cost | 949 | $ 926 | ||
Interest cost | 215 | 212 | ||
Expected return on plan assets | (466) | (457) | ||
Amortization of net loss | 144 | 143 | ||
Net periodic benefit cost | $ 842 | $ 824 |
Warranty Obligations (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jan. 31, 2018 |
Jan. 31, 2018 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Accrued warranty at beginning of period | $ 323 | |
Provision for warranty expense | 20 | |
Warranty costs paid | (4) | |
Accrued warranty at end of period | 339 | |
Total accrued warranty | $ 323 | $ 339 |
Less: Current portion of accrued warranty | 153 | |
Long-term portion of accrued warranty | $ 186 |
Contingencies (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jan. 31, 2018 |
Oct. 31, 2017 |
|
Other Commitments [Line Items] | ||
Net claim payments | $ 4 | |
Loss Contingency, Receivable, Proceeds | 500 | |
Spacer Migration | ||
Other Commitments [Line Items] | ||
Spacer specific product warranty accrual | 1,400 | $ 1,300 |
Net claim payments | 500 | |
Product Warranty Accrual, Period Increase (Decrease) | $ 500 |
Fair Value Measurement of Assets and Liabilities (Details) - USD ($) $ in Millions |
Nov. 07, 2016 |
Jan. 31, 2018 |
Oct. 31, 2017 |
---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Earn Out Foreign Currency Impact | $ (0.1) | ||
Property, plant and equipment at fair value (non-recurring) | $ 2.4 | $ 2.4 | |
Debt Instrument, Unamortized Discount (Premium), Net | 1.9 | ||
Fair Value, Inputs, Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Foreign currency derivatives, asset | 0.1 | ||
Foreign currency derivatives, liability | $ 0.1 | $ 0.1 |
Stock Based Compensation (Detail) |
3 Months Ended |
---|---|
Jan. 31, 2018
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Document Period End Date | Jan. 31, 2018 |
Number of shares authorized, originally | 7,650,000 |
Stock-Based Compensation - Restricted Stock Awards (Details) - Restricted Stock Awards (RSAs) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Number of Shares | ||
Non-vested at beginning of the period (in shares) | 284,300 | |
Granted (in shares) | 73,400 | |
Vested (in shares) | (61,800) | |
Non-vested at end of the period (in shares) | 295,900 | |
Weighted Average Grant Date Fair Value per Share | ||
Non-vested at beginning of the period (in usd per share) | $ 19.66 | |
Granted (in usd per share) | 20.70 | |
Vested (in usd per share) | 20.28 | |
Non-vested at end of the period (in usd per share) | $ 19.79 | |
Vesting period | 3 years | |
Fair value of restricted stock awards vested | $ 1.3 | $ 1.2 |
Unrecognized compensation cost - non vested restricted stock awards | $ 3.1 | |
Weighted-average period over which unrecognized cost is expected to be recognized | 2 years 1 month 6 days |
Stock-Based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cash used to settle restricted stock units | $ 0.0 | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 18,050 | 24,560 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 21.85 | $ 15.65 |
Vesting period | 3 years | |
Number of Shares | ||
Non-vested at end of the period (in shares) | 0 |
Stock-Based Compensation - Treasury Shares (Details) $ in Millions |
3 Months Ended |
---|---|
Jan. 31, 2018
USD ($)
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Document Period End Date | Jan. 31, 2018 |
Deficiency of stock option proceeds recorded to retained earnings | $ | $ 0.9 |
Treasury Stock [Abstract] | |
Beginning balance as of November 1, 2017 | 2,670,743 |
Balance at January 31, 2018 | 2,395,056 |
Restricted Stock Awards (RSAs) | |
Treasury Stock [Abstract] | |
Restricted stock awards granted | (73,400) |
Performance Shares | |
Treasury Stock [Abstract] | |
Restricted stock awards granted | (25,340) |
Stock Options | |
Treasury Stock [Abstract] | |
Shares, Issued | (176,947) |
Other Income (Expense) (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Other Income and Expenses [Abstract] | ||
Foreign currency transaction gains | $ 354 | $ 486 |
Foreign currency derivative (losses) gains | (55) | 144 |
Interest income | 15 | 27 |
Other | 3 | 4 |
Other, net | $ 317 | $ 661 |
Segment Information (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2018
USD ($)
segment
|
Jan. 31, 2017
USD ($)
|
|
Segment Reporting Information [Line Items] | ||
Number of reportable segments | 3 | |
Allocated corporate general and administrative expense | $ | $ 5.1 | $ 4.4 |
Operating Segments | NA Engineered Components | ||
Segment Reporting Information [Line Items] | ||
Number of operating segments | 4 |
Segment Information - Goodwill by Segment (Details) $ in Thousands |
3 Months Ended |
---|---|
Jan. 31, 2018
USD ($)
| |
Goodwill [Line Items] | |
Beginning balance | $ 222,194 |
Foreign currency translation adjustment | 4,733 |
Balance as of the end of the period | 226,927 |
Operating Segments | NA Engineered Components | |
Goodwill [Line Items] | |
Beginning balance | 38,712 |
Foreign currency translation adjustment | 0 |
Balance as of the end of the period | 38,712 |
Operating Segments | EU Engineered Components | |
Goodwill [Line Items] | |
Beginning balance | 69,735 |
Balance as of the end of the period | 74,468 |
Operating Segments | NA Cabinet Components | |
Goodwill [Line Items] | |
Beginning balance | 113,747 |
Foreign currency translation adjustment | 0 |
Balance as of the end of the period | 113,747 |
Corporate Non-Segment | |
Goodwill [Line Items] | |
Beginning balance | 0 |
Foreign currency translation adjustment | 0 |
Balance as of the end of the period | $ 0 |
Segment Information - Reconcilliation of Operating Loss to Net Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Segment Reporting [Abstract] | ||
Operating loss | $ (489) | $ (3,841) |
Interest expense | (2,441) | (2,160) |
Other, net | 317 | 661 |
Income tax benefit | 7,560 | 1,614 |
(Loss) income from continuing operations | $ 4,947 | $ (3,726) |
New Accounting Guidance Adopted (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2018 |
Jan. 31, 2017 |
|
New Accounting Pronouncement, Early Adoption [Line Items] | ||
Excess Tax Benefits Impact to Cash Flow | $ 0.1 | |
Payments Related to Tax Withholding for Share-based Compensation | $ (1.0) |
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