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SEC Filings

10-Q
FORTERRA, INC. filed this Form 10-Q on 11/09/2017
Entire Document
 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the SEC on March 31, 2017, or the 2016 10-K.

This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See the section entitled “Cautionary Statement Concerning Forward-Looking Statements” for a discussion of the risks, uncertainties and assumptions associated with those statements.


Overview

Our Company

We are a leading manufacturer of pipe and precast products by sales volume in the United States and Eastern Canada for a variety of water-related infrastructure applications, including water transmission, distribution and drainage. We provide critical infrastructure components for a broad spectrum of construction projects across residential, non-residential and infrastructure markets. Our extensive suite of products range from large diameter pipe that transports water to and from treatment centers and manages drainage along major transportation corridors, to smaller diameter pipe that delivers potable water to, and removes wastewater from, end users in residential and commercial settings.

Our Segments

Our operations are organized into the following reportable segments:

Drainage Pipe & Products - We are a producer of concrete drainage pipe and precast products.

Water Pipe & Products - We are a producer of ductile iron pipe (DIP) and concrete and steel pressure pipe.

Corporate and Other - Primarily consists of corporate offices and our roof tile operations which were sold in April 2016.

Basis of Presentation

Lone Star Fund IX (U.S.), L.P. (together with its affiliates and associates, but excluding the Company and other companies that it owns as a result of its investment activity (Lone Star”)), through LSF9 Concrete Holdings Ltd. (LSF9”), a wholly owned subsidiary, acquired our business (the Acquisition”), along with the business of Forterra, plc, the operator of the former building products business of HeidelbergCement AG (HeidelbergCement”), in the United Kingdom (Forterra UK”), on March 13, 2015 from HeidelbergCement for aggregate cash consideration of $1.33 billion, subject to a $100.0 million earn-out that is currently subject to dispute, as discussed in greater detail in Note 14, Commitments and contingencies, to the condensed consolidated financial statements. Prior to the Acquisition, we were HeidelbergCement’s building products operations in the United States and Eastern Canada. LSF9 was formed on February 6, 2015 for the purpose of consummating the Acquisition and had no operations prior to the date of Acquisition.

Prior to our initial public offering of common stock on October 25, 2016 (the “IPO”), LSF9 transferred its building products operations in the United States and Eastern Canada to Forterra, Inc. in an internal reorganization transaction (the “Reorganization”). Forterra, Inc. was formed on June 21, 2016 for purposes of the Reorganization and did not have any operations prior to the date of the Reorganization.
    
Unless otherwise specified or where the context otherwise requires, references in this Report to “our,” “we,” “us,” “Forterra”, the “Company” and “our business” (i) for periods prior to the Reorganization refer to the building

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