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SEC Filings

10-Q
FORTERRA, INC. filed this Form 10-Q on 11/09/2017
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Gross Profit

Gross profit decreased by $23.4 million, or 10.6%, to $196.7 million in the nine months ended September 30, 2017 from $220.1 million in the nine months ended September 30, 2016. Gross profit decreased due to higher cost of goods sold including labor, freight and raw materials, partially offset by the increased net sales from acquisitions.

Selling, General and Administrative Expenses    

Selling, general and administrative expenses were $192.0 million for the nine months ended September 30, 2017, an increase of $38.9 million or 25.4% from $153.1 million in the nine months ended September 30, 2016. The period-over-period increase was primarily attributable to an increase of $32.5 million of costs from acquired businesses. Selling, general and administrative expenses in our existing businesses increased by $6.4 million primarily due to additional consulting costs related to our Sarbanes-Oxley compliance work as well as professional fees associated with various cost saving initiatives.

Impairment and Exit Charges

We recognized $3.0 million of goodwill impairment related to our Canadian concrete and steel pressure pipe reporting unit and $7.5 million of long-lived asset impairment related to the sale of our U.S. concrete and steel pressure pipe business in the nine months ended September 30, 2017. See Note 8, Goodwill and other intangible assets and Note 20, Discontinued operations and divestitures, to the condensed consolidated financial statements. In addition, we recognized $2.5 million for the nine months ended September 30, 2017 for restructuring charges that primarily related to our cost saving initiatives compared to $0.6 million in the prior year period.

Interest Expense

Interest expense decreased by $27.7 million, or 37.5%, to $46.2 million in the nine months ended September 30, 2017 from $73.9 million in the nine months ended September 30, 2016. This decrease was primarily due to the repayment of the Junior Term Loan in connection with the IPO and the lower effective interest rates in the 2017 period under the 2016 Revolver and 2016 Senior Term Loan as compared to the 2016 period under the 2015 Revolver and the 2015 Senior Term Loan.

Other Expense, net

Other expense, net increased by $29.5 million in the nine months ended September 30, 2017 primarily due to the $31.6 million loss generated by the U.S. Pressure Pipe Divestiture during July 2017.


Income Tax Benefit

Income tax benefit decreased by $3.1 million to $25.4 million in the nine months ended September 30, 2017 from $28.6 million in the nine months ended September 30, 2016 due to a decrease in profits before tax between periods.


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