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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2020

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                

Commission File Number 0-51357

 

BUILDERS FIRSTSOURCE, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

52-2084569

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

2001 Bryan Street, Suite 1600

 

 

Dallas, Texas

 

75201

(Address of principal executive offices)

 

(Zip Code)

(214880-3500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common stock, par value $0.01 per share

BLDR

NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

☐  

  

Small reporting company

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes      No  

 

The number of shares of the issuer’s common stock, par value $0.01, outstanding as of October 28, 2020 was 116,809,399.

 

 

 

 


 

BUILDERS FIRSTSOURCE, INC.

Index to Form 10-Q

 

 

 

 

 

Page

 

 

PART I — FINANCIAL INFORMATION

 

 

Item 1.

 

Financial Statements

 

3

 

 

Condensed Consolidated Statement of Operations and Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2020 and 2019

 

3

 

 

Condensed Consolidated Balance Sheet (Unaudited) as of September 30, 2020 and December 31, 2019

 

4

 

 

Condensed Consolidated Statement of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2020 and 2019

 

5

 

 

Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2020 and 2019

 

6

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

7

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

17

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

25

Item 4.

 

Controls and Procedures

 

26

 

 

PART II — OTHER INFORMATION

 

 

Item 1.

 

Legal Proceedings

 

27

Item 1A.

 

Risk Factors

 

27

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

29

Item 3.

 

Defaults Upon Senior Securities

 

29

Item 4.

 

Mine Safety Disclosures

 

29

Item 5.

 

Other Information

 

29

Item 6.

 

Exhibits

 

30

 

 

 

2


 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements (unaudited)

BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

(Unaudited)

 

 

 

 

(In thousands, except per share amounts)

 

 

Net sales

 

$

2,295,450

 

 

$

1,981,035

 

 

$

6,028,114

 

 

$

5,516,858

 

 

Cost of sales

 

 

1,724,799

 

 

 

1,439,893

 

 

 

4,474,718

 

 

 

4,016,585

 

 

Gross margin

 

 

570,651

 

 

 

541,142

 

 

 

1,553,396

 

 

 

1,500,273

 

 

Selling, general and administrative expenses

 

 

430,893

 

 

 

411,510

 

 

 

1,223,436

 

 

 

1,183,105

 

 

Income from operations

 

 

139,758

 

 

 

129,632

 

 

 

329,960

 

 

 

317,168

 

 

Interest expense, net

 

 

28,043

 

 

 

27,788

 

 

 

106,786

 

 

 

82,071

 

 

Income before income taxes

 

 

111,715

 

 

 

101,844

 

 

 

223,174

 

 

 

235,097

 

 

Income tax expense

 

 

25,783

 

 

 

23,714

 

 

 

49,551

 

 

 

54,655

 

 

Net income

 

$

85,932

 

 

$

78,130

 

 

$

173,623

 

 

$

180,442

 

 

Comprehensive income

 

$

85,932

 

 

$

78,130

 

 

$

173,623

 

 

$

180,442

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.74

 

 

$

0.68

 

 

$

1.49

 

 

$

1.56

 

 

Diluted

 

$

0.73

 

 

$

0.67

 

 

$

1.48

 

 

$

1.54

 

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

116,731

 

 

 

115,732

 

 

 

116,542

 

 

 

115,639

 

 

Diluted

 

 

118,026

 

 

 

117,154

 

 

 

117,690

 

 

 

116,870

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3


 

BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(Unaudited)

 

 

 

(In thousands, except per share amounts)

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

340,927

 

 

$

14,096

 

Accounts receivable, less allowances of $17,325 and $13,492 at September 30, 2020 and December 31, 2019, respectively

 

 

860,842

 

 

 

614,946

 

Other receivables

 

 

64,626

 

 

 

77,447

 

Inventories, net

 

 

751,149

 

 

 

561,255

 

Other current assets

 

 

44,198

 

 

 

39,123

 

              Total current assets

 

 

2,061,742

 

 

 

1,306,867

 

Property, plant and equipment, net

 

 

750,841

 

 

 

721,887

 

Operating lease right-of-use assets, net

 

 

278,075

 

 

 

292,684

 

Goodwill

 

 

777,283

 

 

 

769,022

 

Intangible assets, net

 

 

121,145

 

 

 

128,388

 

Deferred income taxes

 

 

5,977

 

 

 

8,417

 

Other assets, net

 

 

19,871

 

 

 

22,225

 

      Total assets

 

$

4,014,934

 

 

$

3,249,490

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

651,332

 

 

$

436,823

 

Accrued liabilities

 

 

342,059

 

 

 

308,950

 

Current portion of operating lease liabilities

 

 

61,953

 

 

 

61,653

 

Current maturities of long-term debt

 

 

29,527

 

 

 

13,875

 

              Total current liabilities

 

 

1,084,871

 

 

 

821,301

 

Noncurrent portion of operating lease liabilities

 

 

222,132

 

 

 

236,948

 

Long-term debt, net of current maturities, debt discount, and debt issuance costs

 

 

1,574,146

 

 

 

1,277,398

 

Deferred income taxes

 

 

37,360

 

 

 

36,645

 

Other long-term liabilities

 

 

88,560

 

 

 

52,245

 

      Total liabilities

 

 

3,007,069

 

 

 

2,424,537

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 10,000 shares authorized; zero shares issued and outstanding

 

 

 

 

 

 

Common stock, $0.01 par value, 200,000 shares authorized; 116,803 and 116,052 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

 

 

1,168

 

 

 

1,161

 

Additional paid-in capital

 

 

584,237

 

 

 

574,955

 

Retained earnings

 

 

422,460

 

 

 

248,837

 

      Total stockholders' equity

 

 

1,007,865

 

 

 

824,953

 

      Total liabilities and stockholders' equity

 

$

4,014,934

 

 

$

3,249,490

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

4


 

BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

 

(Unaudited)

(In thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

173,623

 

 

$

180,442

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

87,298

 

 

 

71,771

 

Amortization of debt issuance costs and debt discount

 

 

2,535

 

 

 

3,060

 

Loss on extinguishment of debt, net

 

 

5,349

 

 

 

4,654

 

Deferred income taxes

 

 

3,155

 

 

 

36,547

 

Stock compensation expense

 

 

12,098

 

 

 

9,380

 

Net gain on sale of assets and asset impairments

 

 

(1,413

)

 

 

(1,502

)

  Changes in assets and liabilities, net of assets acquired and liabilities assumed:

 

 

 

 

 

 

 

 

Receivables

 

 

(230,627

)

 

 

(41,083

)

Inventories

 

 

(189,692

)

 

 

22,263

 

Other current assets

 

 

(5,076

)

 

 

8,968

 

Other assets and liabilities

 

 

60,439

 

 

 

1,756

 

Accounts payable

 

 

205,570

 

 

 

73,913

 

Accrued liabilities

 

 

31,887

 

 

 

(9,905

)

             Net cash provided by operating activities

 

 

155,146

 

 

 

360,264

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(83,508

)

 

 

(77,937

)

Proceeds from sale of property, plant and equipment

 

 

3,298

 

 

 

5,474

 

Cash used for acquisitions

 

 

(15,893

)

 

 

(33,931

)

             Net cash used in investing activities

 

 

(96,103

)

 

 

(106,394

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Borrowings under revolving credit facility

 

 

791,000

 

 

 

885,000

 

Repayments under revolving credit facility

 

 

(818,000

)

 

 

(1,064,000

)

Proceeds from issuance of notes

 

 

895,625

 

 

 

478,375

 

Repayments of long-term debt and other loans

 

 

(561,541

)

 

 

(502,062

)

Payments of debt extinguishment costs

 

 

(22,686

)

 

 

(2,301

)

Payments of loan costs

 

 

(13,800

)

 

 

(8,566

)

Exercise of stock options

 

 

1,343

 

 

 

3,220

 

Repurchase of common stock

 

 

(4,153

)

 

 

(10,392

)

             Net cash provided by (used in) financing activities

 

 

267,788

 

 

 

(220,726

)

Net change in cash and cash equivalents

 

 

326,831

 

 

 

33,144

 

Cash and cash equivalents at beginning of the period

 

 

14,096

 

 

 

10,127

 

Cash and cash equivalents at end of the period

 

$

340,927

 

 

$

43,271

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

77,734

 

 

$

76,326

 

Cash paid for income taxes

 

 

21,280

 

 

 

9,989

 

Supplemental disclosures of non-cash activities:

 

 

 

 

 

 

 

 

Accrued purchases of property, plant and equipment

 

$

1,336

 

 

$

2,127

 

Acquisition of assets under operating lease obligations

 

 

33,379

 

 

 

64,940

 

Acquisition of assets under finance lease obligations

 

 

16,096

 

 

 

11,653

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Additional Paid

 

 

 

 

 

 

 

 

 

Common Stock

 

 

in

 

 

Retained

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Total

 

 

 

(Unaudited)

 

 

 

(In thousands)

 

Balance at December 31, 2018

 

 

115,078

 

 

$

1,151

 

 

$

560,221

 

 

$

34,966

 

 

$

596,338

 

Vesting of restricted stock units

 

 

662

 

 

 

7

 

 

 

(7

)

 

 

 

 

 

 

Stock compensation expense

 

 

 

 

 

 

 

 

2,659

 

 

 

 

 

 

2,659

 

Exercise of stock options

 

 

59

 

 

 

 

 

 

216

 

 

 

 

 

 

216

 

Shares withheld for restricted stock units vested

 

 

(196

)

 

 

(2

)

 

 

(2,448

)

 

 

 

 

 

(2,450

)

Net income

 

 

 

 

 

 

 

 

 

 

 

35,708

 

 

 

35,708

 

Balance at March 31, 2019

 

 

115,603

 

 

 

1,156

 

 

 

560,641

 

 

 

70,674

 

 

 

632,471

 

Vesting of restricted stock units

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation expense

 

 

 

 

 

 

 

 

3,379

 

 

 

 

 

 

3,379

 

Exercise of stock options

 

 

266

 

 

 

3

 

 

 

1,674

 

 

 

 

 

 

1,677

 

Net income

 

 

 

 

 

 

 

 

 

 

 

66,604

 

 

 

66,604

 

Balance at June 30, 2019

 

 

115,880

 

 

 

1,159

 

 

 

565,694

 

 

 

137,278

 

 

 

704,131

 

Vesting of restricted stock units

 

 

59

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of common stock (1)

 

 

(460

)

 

 

(4)

 

 

 

 

 

 

(7,938)

 

 

 

(7,942

)

Stock compensation expense

 

 

 

 

 

 

 

 

3,342

 

 

 

 

 

 

3,342

 

Exercise of stock options

 

 

288

 

 

 

3

 

 

 

1,337

 

 

 

 

 

 

1,340

 

Net income

 

 

 

 

 

 

 

 

 

 

 

78,130

 

 

 

78,130

 

Balance at September 30, 2019

 

 

115,767

 

 

$

1,158

 

 

$

570,373

 

 

$

207,470

 

 

$

779,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

116,052

 

 

$

1,161

 

 

$

574,955

 

 

$

248,837

 

 

$

824,953

 

Vesting of restricted stock units

 

 

579

 

 

 

6

 

 

 

(6

)

 

 

 

 

 

 

Stock compensation expense

 

 

 

 

 

 

 

 

3,254

 

 

 

 

 

 

3,254

 

Exercise of stock options

 

 

82

 

 

 

 

 

 

398

 

 

 

 

 

 

398

 

Shares withheld for restricted stock units vested

 

 

(168

)

 

 

(2

)

 

 

(3,832

)

 

 

 

 

 

(3,834

)

Net income

 

 

 

 

 

 

 

 

 

 

 

8,767

 

 

 

8,767

 

Balance at March 31, 2020

 

 

116,545

 

 

 

1,165

 

 

 

574,769

 

 

 

257,604

 

 

 

833,538

 

Vesting of restricted stock units

 

 

130

 

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

Stock compensation expense

 

 

 

 

 

 

 

 

3,466

 

 

 

 

 

 

3,466

 

Exercise of stock options

 

 

48

 

 

 

 

 

 

325

 

 

 

 

 

 

325

 

Shares withheld for restricted stock units vested

 

 

(22

)

 

 

 

 

 

(319

)

 

 

 

 

 

(319

)

Net income

 

 

 

 

 

 

 

 

 

 

 

78,924

 

 

 

78,924

 

Balance at June 30, 2020

 

 

116,701

 

 

 

1,167

 

 

 

578,239

 

 

 

336,528

 

 

 

915,934

 

Vesting of restricted stock units

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation expense

 

 

 

 

 

 

 

 

5,379

 

 

 

 

 

 

5,379

 

Exercise of stock options

 

 

89

 

 

 

1

 

 

 

619

 

 

 

 

 

 

620

 

Net income

 

 

 

 

 

 

 

 

 

 

 

85,932

 

 

 

85,932

 

Balance at September 30, 2020

 

 

116,803

 

 

$

1,168

 

 

$

584,237

 

 

$

422,460

 

 

$

1,007,865

 

 

(1) During the three and nine months ended September 30, 2019 we repurchased and retired 460,000 shares of our common stock at an average price of $17.24 per share for $7.9 million pursuant to the repurchase program authorized by our board of directors in February 2019. The primary purpose of the repurchase program is to offset dilution from employee stock awards.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

6


 

BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1. Basis of Presentation

Builders FirstSource, Inc., a Delaware corporation formed in 1998, is a leading supplier and manufacturer of building materials, manufactured components and construction services to professional homebuilders, sub-contractors, remodelers and consumers.  The Company operates approximately 400 locations in 40 states across the United States. In this quarterly report, references to the “Company,” “we,” “our,” “ours” or “us” refer to Builders FirstSource, Inc. and its consolidated subsidiaries unless otherwise stated or the context otherwise requires.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the dates and periods presented. Results for interim periods are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period. Intercompany transactions are eliminated in consolidation.

The condensed consolidated balance sheet as of December 31, 2019 is derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. This condensed consolidated balance sheet as of December 31, 2019 and the unaudited condensed consolidated financial statements included herein should be read in conjunction with the more detailed audited consolidated financial statements for the year ended December 31, 2019 included in our most recent annual report on Form 10-K. Accounting policies used in the preparation of these unaudited condensed consolidated financial statements are consistent with the accounting policies described in the Notes to Consolidated Financial Statements included in our Form 10-K.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The purpose of ASU 2020-04 is to provide optional guidance for a period of time related to accounting for reference rate reform on financial reporting. It is intended to reduce the potential burden of reviewing contract modifications related to discontinued rates. The amendments and expedients in this update are effective as of March 12, 2020 through December 31, 2022 and may be elected by topic. We are currently evaluating the impact of this guidance on our consolidated financial statements.

In December 2019, the FASB issued an update to existing guidance under the Income Taxes topic of the FASB Accounting Standards Codification (“Codification”). This updated guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in the Income Taxes topic. This guidance is effective for public companies annual and interim periods beginning after December 15, 2020 with early adoption permitted. We are currently evaluating the impact of this update on our consolidated financial statements.

In June 2016, the FASB issued an update to existing guidance under the Investments topic of the Codification. This update introduced a new impairment model for financial assets, known as the current expected credit losses (“CECL”) model that is based on expected losses rather than incurred losses. The CECL model requires an entity to estimate credit losses on financial assets, including trade accounts receivable, based on historical information, current information and reasonable and supportable forecasts. Under this guidance companies record an allowance through earnings for expected credit losses upon initial recognition of the financial asset. We adopted the aspects of this guidance applicable to us on a modified retrospective basis as of January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

 

2. Proposed Merger with BMC Stock Holdings, Inc. and other Business Combinations

On August 26, 2020 Builders FirstSource and BMC Stock Holdings, Inc., a Delaware corporation (“BMC”), entered into an agreement and plan of merger (the “Merger Agreement”). The Merger Agreement provides for, among other things and subject to the satisfaction or waiver of specified conditions, the merger of BMC with and into a subsidiary of Builders FirstSource (the “Merger”), with BMC surviving the Merger as a wholly-owned subsidiary of Builders FirstSource.

At the effective time of the Merger (the “Effective Time”), each share of common stock of BMC issued and outstanding immediately prior to the Effective Time (except for shares held by BMC as treasury stock) will be converted into the right to receive 1.3125 shares of common stock of Builders FirstSource, less any applicable withholding taxes. At the Effective Time, Builders FirstSource stockholders will hold approximately 57% and BMC’s stockholders will hold approximately 43%, of the outstanding shares of common stock of Builders FirstSource.

7


 

The consummation of the Merger is subject to the completion of customary conditions, including the approval of the Merger by BMC stockholders, the approval of the issuance of shares of Builders FirstSource common stock in connection with the Merger by Builders FirstSource stockholders, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of other required regulatory approvals.

On January 9, 2020, we acquired certain assets and operations of Bianchi & Company, Inc. (“Bianchi”) for $15.9 million in cash. Located in Charlotte, North Carolina, Bianchi is a supplier and installer of interior and exterior millwork. This acquisition was funded with a combination of cash on hand and borrowings under our 2023 facility.

This transaction was accounted for by the acquisition method, and accordingly the results of operations have been included in the Company’s consolidated financial statements from the acquisition date. The purchase price was allocated to the assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with the excess of purchase price over the estimated fair value of the net assets acquired recorded as goodwill. The fair value of acquired intangible assets of $9.4 million, primarily related to customer relationships, was estimated by applying an income approach. That measure is based on significant Level 3 inputs not observable in the market. Key assumptions developed based on the Company’s historical experience, future projections and comparable market data include future cash flows, long-term growth rates, attrition rates and discount rates. Pro forma results of operations as well as net sales and income attributable to Bianchi are not presented as this acquisition did not have a material impact on our results of operations. We did not incur any significant acquisition related costs attributable to this transaction.

 

The following table summarizes the aggregate fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):

 

Accounts receivable

$

2,353

 

Inventory

 

202

 

Property, plant and equipment

 

74

 

Other assets

 

94

 

Goodwill (Note 6)

 

8,261

 

Intangible assets (Note 7)

 

9,440

 

Total assets acquired

 

20,424

 

Accounts payable and accrued liabilities

 

(4,531

)

Total liabilities assumed

 

(4,531

)

Total net assets acquired

$

15,893

 

 

3. Revenue

The following table disaggregates our sales by product category (in thousands):

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Lumber & lumber sheet goods

$

851,594

 

 

$

605,494

 

 

$

2,026,233

 

 

$

1,724,670

 

Manufactured products

 

421,296

 

 

 

401,245

 

 

 

1,141,535

 

 

 

1,092,896

 

Windows, doors & millwork

 

420,158

 

 

 

407,397

 

 

 

1,215,528

 

 

 

1,151,836

 

Gypsum, roofing & insulation

 

149,545

 

 

 

149,676

 

 

 

386,186

 

 

 

408,983

 

Siding, metal & concrete products

 

212,383

 

 

 

201,068

 

 

 

581,844

 

 

 

542,275

 

Other building products & services

 

240,474

 

 

 

216,155

 

 

 

676,788

 

 

 

596,198

 

Net sales

$

2,295,450

 

 

$

1,981,035

 

 

$

6,028,114

 

 

$

5,516,858

 

 

Information regarding disaggregation of sales by segment is discussed in Note 11 to the condensed consolidated financial statements. Sales related to contracts with service elements represents less than 10% of the Company’s net sales for each period presented.

8


 

The timing of revenue recognition, billings and cash collections results in accounts receivable, unbilled receivables, contract assets and contract liabilities. Contract asset balances were not significant as of September 30, 2020 or December 31, 2019. Contract liabilities consist of deferred revenue and customer advances and deposits. Contract liability balances are included in accrued liabilities on our consolidated balance sheet and were $60.1 million and $38.6 million as of September 30, 2020 and December 31, 2019, respectively.

4. Net Income per Common Share

Net income per common share (“EPS”) is calculated in accordance with the Earnings per Share topic of the Codification, which requires the presentation of basic and diluted EPS. Basic EPS is computed using the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential common shares.

The table below presents the calculation of basic and diluted EPS (in thousands, except per share amounts):  

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Net income

$

85,932

 

 

$

78,130

 

 

$

173,623

 

 

$

180,442

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Weighted average shares outstanding, basic

 

116,731

 

 

 

115,732

 

 

 

116,542

 

 

 

115,639

 

      Dilutive effect of options and RSUs

 

1,295

 

 

 

1,422

 

 

 

1,148

 

 

 

1,231

 

     Weighted average shares outstanding, diluted

 

118,026

 

 

 

117,154

 

 

 

117,690

 

 

 

116,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

$

0.74

 

 

$

0.68

 

 

$

1.49

 

 

$

1.56

 

     Diluted

$

0.73

 

 

$

0.67

 

 

$

1.48

 

 

$

1.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antidilutive and contingent options and RSUs excluded from diluted EPS

 

299

 

 

 

151

 

 

 

389

 

 

 

488

 

 

 

5. Debt

Long-term debt consisted of the following (in thousands):

 

 

September 30,

2020

 

 

December 31,

2019

 

2023 facility (1)

$

 

 

$

27,000

 

2024 notes

 

 

 

 

503,923

 

2024 term loan (2)

 

52,000

 

 

 

52,000

 

2027 notes

 

777,500