What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-04 compared with 2020-05-05 · 141 added, 99 removed, 191 unchanged (56% of the section changed)

4 unchanged sentences

Factors that could cause or contribute to these differences include those factors discussed below and included or referenced elsewhere in this report, particularly in the sections entitled "Forward-Looking Statements" and "Risk Factors".

Recent Developments

Impacts of COVID-19

The recent outbreak of the novel coronavirus (COVID-19) has continued to spread and is currently classified as a pandemic which is contributing to significant volatility and uncertainty in markets and the global economy.

This heightened volatility and uncertainty makes it difficult for us to predict the extent of COVID-19’s impact on our operations going forward.

As of the date of this filing, we have seen some order softness in our business, but it is too early to make any judgment on how significant this will become.

As of the date of this filing, we have seen volume declines in our business across several product categories, as customers and end markets face some uncertainty and delays in timing of work.

In particular, some construction site closures or project delays have occurred, and job sites have had to adjust to increased physical distancing and health-related precautions.

Given the continued volatility within the economic impacts of the pandemic it is too early to make any judgment on how significant COVID-19 effect will become.

Factors that contribute to our ability to adjust to the outbreak include currently being deemed an “essential business”, benefiting from mostly localized supply chains, and continuing to take actions within our control to minimize the disruptive impacts of the outbreak.

However, there can be no assurance that we will not be materially and adversely impacted in the future.

The extent to which COVID-19 will impact our business will depend on future developments and public health advancements, which are highly uncertain and cannot be predicted with confidence.

Currently, we have no COVID-19 related facility closures as we look to serve our current levels of demand.

In response to COVID-19, we have implemented a variety of countermeasures to promote the health and safety of our employees during this pandemic, including health screening, physical distancing practices, enhanced cleaning, use of personal protective equipment, business travel restrictions, and remote work capabilities.

Results of Operations

The results of operations for the three months ended March 27, 2020 and March 29, 2019 were as follows:

The results of operations for the three months ended June 26, 2020 and June 28, 2019 were as follows:

Three months ended

($ in thousands)

March 27, 2020

March 29, 2019

($ in thousands) June 26, 2020 June 28, 2019 Change % Change

Net sales $ 384,899 $ 493,491 $ (108,592) (22.0) %

Cost of sales 289,086 367,357 (78,271) (21.3) %

Gross profit 95,813 126,134 (30,321) (24.0) %

Selling, general and administrative 46,159 59,049 (12,890) (21.8) %

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Income tax expense 8,672 11,106 (2,434) (21.9) %

Net income $ 24,078 $ 36,550 $ (12,472) (34.1) %

Volume (20.7) %

Average selling prices (1.8) %

Foreign exchange (0.3) %

Net sales decreased by $13.7 million , or 2.9% , to $455.7 million for the three months ended March 27, 2020 , compared to $469.3 million for the three months ended March 29, 2019 .

The decrease is primarily attributed to $18.6 million of lower average selling prices resulting from lower commodity input costs of steel and resin.

Additionally, net sales decreased by $3.6 million due to lower volume, primarily in the armored cable and fittings product category sold within the Electrical Raceway segment, partially offset by higher volume in the mechanical pipe product category sold within the Mechanical

Products & Solutions segment.

Acquisitions 1.0 %

Other (0.2) %

Net sales (22.0) %

Net sales decreased by $108.6 million, or 22.0%, to $384.9 million for the three months ended June 26, 2020, compared to $493.5 million for the three months ended June 28, 2019.

The decrease in net sales is primarily attributed to $102.3 million of lower volume attributed predominantly to the impacts of COVID-19.

The Company saw volume declines primarily in the armored cable and fittings and the metal electrical conduit and fittings product categories within the Electrical Raceway segment and the construction services and barbed tape product categories within the MP&S segment.

Additionally, net sales decreased $9.1 million due to lower average selling prices resulting from lower input costs of steel and resin.

The decrease in net sales was partially offset by increased sales of $5.1 million from the acquisition of the assets of United Structural Products, LLC.

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Cost of sales

Volume (20.5) %

Average input costs 1.1 %

Foreign exchange

Acquisitions 1.2 %

Other (3.1) %

Cost of sales (21.3) %

Cost of sales decreased by $28.2 million , or 8.0% , to $324.1 million for the three months ended March 27, 2020 compared to $352.2 million for the three months ended March 29, 2019 .

The decrease was primarily due to the lower input costs of steel and resin of $29.8 million , lower volume of $4.0 million , and $3.6 million from inventory adjustments related to changes in market prices.

The decrease in cost of sales is partially offset by incremental costs of $9.0 million due to the 2019 acquisitions.

Cost of sales decreased by $78.3 million, or 21.3%, to $289.1 million for the three months ended June 26, 2020 compared to $367.4 million for the three months ended June 28, 2019.

The decrease was primarily due to lower volume of $75.2 million and the associated freight costs of $6.4 million.

Additionally, cost of sales decreased by $1.2 million due to $5.3 million from favorable inventory adjustments related to changes in market prices, partially offset by higher input costs of steel and resin of $4.1 million above the pass through impact of average selling prices.

The decrease in cost of sales is partially offset by incremental costs of $4.5 million due to the 2019 acquisitions and higher input costs of steel and resin.

Selling, general and administrative

Selling, general and administrative expenses increased by $6.0 million , or 10.7% , to $62.4 million for the three months ended March 27, 2020 compared to $56.4 million for the three months ended March 29, 2019 .

The increase was primarily due to higher stock compensation expense of $2.7 million , incremental costs resulting from fiscal 2019 acquisitions of $2.3 million , and higher restructuring costs of $1.6 million .

Selling, general and administrative expenses decreased by $12.9 million, or 21.8%, to $46.2 million for the three months ended June 26, 2020 compared to $59.0 million for the three months ended June 28, 2019.

The decrease was primarily due to cost reduction initiatives as a result of COVID-19, in particular lower variable compensation of $5.1 million, lower medical costs of $1.4 million, reduced travel costs of $1.0 million and lower consulting costs of $1.0 million.

Additionally, due to sales volume declines associated with COVID-19, commissions expense decreased $3.1 million.

Intangible asset amortization

Intangible asset amortization expense decreased by $0.1 million , or 1.5% , to $8.1 million for the three months ended March 27, 2020 compared to $8.2 million for the three months ended March 29, 2019 .

The decrease in intangible asset amortization is primarily due to certain assets that reached the end of their amortized lives by the conclusion of fiscal 2019, partially offset by additional amortization resulting from fiscal 2019 acquisitions.

Intangible asset amortization expense increased by $0.1 million, or 2.0%, to $8.0 million for the three months ended June 26, 2020 compared to $7.9 million for the three months ended June 28, 2019.

The increase in intangible asset amortization is primarily due to additional amortization resulting from fiscal 2019 acquisitions, partially offset by certain assets that reached the end of their amortized lives by the conclusion of fiscal 2019.

Interest expense, net

Interest expense, net decreased by $2.8 million , or 20.7% to $10.6 million for the three months ended March 27, 2020 compared to $13.3 million for the three months ended March 29, 2019 .

Interest expense, net decreased by $3.4 million, or 26.3% to $9.4 million for the three months ended June 26, 2020 compared to $12.8 million for the three months ended June 28, 2019.

The decrease is primarily due to the Company's principal payments in fiscal 2019 resulting in a lower principal balance in fiscal 2020 from which interest expense was derived.

Other income, net

Other income, net increased by $1.1 million to $1.7 million for the three months ended March 27, 2020 compared to $0.6 million for the three months ended March 29, 2019 primarily due to gains from the Company's u ndesignated foreign currency derivative instruments partially offset by foreign exchange losses on intercompany loans.

Other income, net decreased by $0.7 million to $0.5 million for the three months ended June 26, 2020 compared to $1.2 million for the three months ended June 28, 2019 primarily due to gains from the Company's undesignated foreign currency derivative instruments partially offset by foreign exchange losses on intercompany loans.

Income tax expense

The Company's income tax rate decreased to 25.1% for the three months ended March 27, 2020 compared to 25.8% for the three months ended March 29, 2019 .

The decrease in the current period effective tax rate was primarily due to an increase in the excess tax benefit associated with stock compensation .

The Company's income tax rate increased to 26.5% for the three months ended June 26, 2020 compared to 23.3% for the three months ended June 28, 2019.

The increase in the current period effective tax rate was primarily due to an increase in losses incurred by our foreign jurisdictions for which we are not able to realize the related tax benefit.

Segment results

Both segments use Adjusted EBITDA as the primary measure of profit and loss.

Segment Adjusted EBITDA is the sum of income (loss) before income taxes, adjusted to exclude unallocated expenses, depreciation and amortization, interest expense, net, restructuring charges, stock-based compensation, certain legal matters, transaction costs and other items, such as inventory reserves and adjustments, release of indemnified uncertain tax positions, and the impact of foreign exchange gains or losses.

Segment Adjusted EBITDA is the sum of income (loss) before income taxes, adjusted to exclude unallocated expenses, depreciation and amortization, interest expense, net, restructuring charges, stock-based compensation, certain legal matters, transaction costs and other items, such as inventory reserves and adjustments, loss on disposal of property, plant and equipment, insurance recovery related to damages of property, plant and equipment, release of indemnified uncertain tax positions, and realized or unrealized gain (loss) on foreign currency transactions.

We define segment Adjusted EBITDA margin as segment Adjusted EBITDA as a percentage of segment Net sales.

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Three months ended

($ in thousands)

March 27, 2020

March 29, 2019

($ in thousands) June 26, 2020 June 28, 2019 Change % Change

Net sales $ 286,046 $ 373,229 $ (87,183) (23.4) %

Adjusted EBITDA $ 57,455 $ 76,721 $ (19,266) (25.1) %

Adjusted EBITDA margin 20.1 % 20.6 %

Volume (23.5) %

Average selling prices (1.0) %

Foreign exchange (0.4) %

Net sales decreased by $13.8 million , or 3.9% , to $339.7 million for the three months ended March 27, 2020 compared to $353.5 million for the three months ended March 29, 2019 .

The decrease in net sales is primarily driven by $13.5 million in lower volume, primarily in the armored cable and fitting product category, and lower average selling prices resulting from lower commodity input costs of steel and resin of $9.4 million .

The decrease in net sales was partially offset by the 2019 acquisitions, which contributed $10.6 million in sales for the three months ended March 27, 2020 .

Acquisitions 1.4 %

Net sales (23.4) %

Net sales decreased by $87.2 million, or 23.4%, to $286.0 million for the three months ended June 26, 2020 compared to $373.2 million for the three months ended June 28, 2019.

The decrease in net sales is primarily driven by $87.6 million in lower volume attributed primarily to impacts of COVID-19.

The Electrical Raceway segment saw volume declines in the armored cable and fittings and the metal electrical conduit and fittings product categories.

Additionally net sales decreased $3.6 million due to lower average selling prices resulting from lower input costs of steel and resin.

The decrease in net sales was partially offset by the 2019 acquisitions, which contributed $5.1 million in sales for the three months ended June 26, 2020.

Adjusted EBITDA

Adjusted EBITDA for the three months ended March 27, 2020 increased by $11.6 million , or 17.2% , to $79.0 million from $67.4 million for the three months ended March 29, 2019 .

Adjusted EBITDA margins increased to 23.2% for the three months ended March 27, 2020 compared to 19.1% for the three months ended March 29, 2019 .

The increase in Adjusted EBITDA was largely due to the benefit of lower material costs, operational efficiencies, and the contributions from the 2019 acquisitions.

Adjusted EBITDA for the three months ended June 26, 2020 decreased by $19.3 million, or 25.1%, to $57.5 million from $76.7 million for the three months ended June 28, 2019.

Adjusted EBITDA margins decreased to 20.1% for the three months ended June 26, 2020 compared to 20.6% for the three months ended June 28, 2019.

The decrease in Adjusted EBITDA was largely due to lower volume, partially offset by the benefit of lower material costs in excess of declines in average selling prices, operational efficiencies and cost reductions in response to COVID-19, and the contributions from the 2019 acquisitions.

Mechanical Products & Solutions

Three months ended

($ in thousands)

March 27, 2020

March 29, 2019

($ in thousands) June 26, 2020 June 28, 2019 Change % Change

Net sales $ 99,487 $ 120,596 $ (21,109) (17.5) %

Adjusted EBITDA $ 12,243 $ 20,595 $ (8,352) (40.6) %

Adjusted EBITDA margin 12.3 % 17.1 %

Volume (12.2) %

Average selling prices (4.6) %

Net sales increased by $0.5 million , or 0.4% , for the three months ended March 27, 2020 to $116.6 million compared to $116.2 million for the three months ended March 29, 2019 .

The increase is primarily attributed to higher volume of $9.8 million primarily in the mechanical pipe product category, partially offset by the pass-through impact of lower average input costs of steel products of $9.2 million .

Other (0.7) %

Net sales (17.5) %

Net sales decreased by $21.1 million, or 17.5%, for the three months ended June 26, 2020 to $99.5 million compared to $120.6 million for the three months ended June 28, 2019.

The decrease is primarily attributed to lower volume of $14.7 million primarily attributed to the impacts of COVID-19 and certain one-time projects in the prior year period within the construction services and barbed tape product categories.

Additionally, net sales decreased due to lower average selling prices resulting from the lower input cost of steel of $5.5 million.

Adjusted EBITDA

Adjusted EBITDA decreased by $1.3 million , or 7.3% , to $16.1 million for the three months ended March 27, 2020 compared to $17.4 million for the three months ended March 29, 2019 .

Adjusted EBITDA margins decreased to 13.8% for the three months ended March 27, 2020 compared to 15.0% for the three months ended March 29, 2019 .

The Adjusted EBITDA decrease is primarily due to additional costs related to equipment maintenance at one of our facilities in the current period.

The results of operations for the six months ended March 27, 2020 and March 29, 2019 were as follows:

Six months ended

($ in thousands)

March 27, 2020

March 29, 2019

Adjusted EBITDA decreased by $8.4 million, or 40.6%, to $12.2 million for the three months ended June 26, 2020 compared to $20.6 million for the three months ended June 28, 2019.

Adjusted EBITDA margins decreased to 12.3% for the three months ended June 26, 2020 compared to 17.1% for the three months ended June 28, 2019.

The Adjusted EBITDA decrease is primarily due to the lower volume and the mix of products sold in the prior year period, partially offset by cost reductions in response to COVID-19.

The results of operations for the nine months ended June 26, 2020 and June 28, 2019 were as follows:

Nine months ended

($ in thousands) June 26, 2020 June 28, 2019 Change % Change

Net sales $ 1,288,001 $ 1,414,828 $ (126,827) (9.0) %

Cost of sales 943,741 1,061,350 (117,609) (11.1) %

Gross profit 344,260 353,478 (9,218) (2.6) %

Selling, general and administrative 164,734 171,778 (7,044) (4.1) %

5 unchanged sentences

Income tax expense 29,112 29,513 (401) (1.4) %

Net income $ 98,061 $ 93,054 $ 5,007 5.4 %

Volume (6.6) %

Average selling prices (4.1) %

Foreign exchange (0.2) %

Net sales decreased by $18.2 million , or 2.0% , to $903.1 million for the six months ended March 27, 2020 compared to $921.3 million for the six months ended March 29, 2019 .

The decrease is primarily attributed to $48.7 million of lower average selling prices resulting from lower commodity input costs of steel and resin.

The decrease in net sales was partially offset by increased sales of $23.0 million from the 2019 acquisitions and an increase in volume of $11.8 million primarily in the mechanical pipe product category sold within the Mechanical Products & Solutions segment.

Acquisitions 2.0 %

Other (0.1) %

Net sales (9.0) %

Net sales decreased by $126.8 million, or 9.0%, to $1,288.0 million for the nine months ended June 26, 2020 compared to $1,414.8 million for the nine months ended June 28, 2019.

The decrease is primarily attributed to lower volume of $92.8 million predominantly due to the impacts of COVID-19.

The Company experienced volume declines in the armored cable and fittings and the metal electrical conduit and fittings product categories within the Electrical Raceway segment and the construction services and barbed tape product categories within the MP&S segment.

The decrease in volume is partially offset by volume gains in the PVC electrical conduit and fittings product category within the Electrical Raceway segment and the mechanical pipe product category within the MP&S segment.

Additionally, net sales decreased $57.8 million due to lower average selling prices resulting from lower input costs of steel and resin.

The decrease in net sales was partially offset by $28.1 million of sales from the 2019 acquisitions.

Cost of sales

Volume (6.5) %

Average input costs (6.0) %

Foreign exchange (0.2) %

Acquisitions 2.2 %

Other (0.6) %

Cost of sales (11.1) %

Cost of sales decreased by $39.3 million , or 5.7% to $654.7 million for the six months ended March 27, 2020 compared to $694.0 million for the six months ended March 29, 2019 .

The decrease was primarily due to the lower input costs of steel and resin of $69.0 million .

The decrease was partially offset by incremental costs related to the 2019 acquisitions of $19.0 million and higher volume of $7.5 million .

Cost of sales decreased by $117.6 million, or 11.1% to $943.7 million for the nine months ended June 26, 2020 compared to $1,061.4 million for the nine months ended June 28, 2019.

The decrease was primarily due to lower volume of $69.1 million, the lower input costs of steel and resin of $63.3 million, and $6.9 million f rom favorable inventory adjustments related to changes in market prices.

The decrease was partially offset by incremental costs related to the 2019 acquisitions of $23.5 million.

Selling, general and administrative

Selling, general and administrative expenses increased by $5.8 million , or 5.2% to $118.6 million for the six months ended March 27, 2020 compared to $112.7 million for the six months ended March 29, 2019 .

The increase was primarily due to $3.9 million increase in selling, general and administrative expenses resulting from the 2019 acquisitions and an increase of $2.9 million in stock-based compensation expense.

Selling, general and administrative expenses decreased by $7.0 million, or 4.1% to $164.7 million for the nine months ended June 26, 2020 compared to $171.8 million for the nine months ended June 28, 2019.

The decrease in selling, general and administrative expenses was primarily due to cost reduction incentives as a result of COVID-19, in particular lower variable compensation related expenses of $6.7 million.

Intangible asset amortization

Intangible asset amortization expense decreased by $0.2 million, or 1.4% to $16.2 million for the six months ended March 27, 2020 compared to $16.4 million for the six months ended March 29, 2019 .

Intangible asset amortization expense decreased by $0.1 million, or 0.3% to $24.2 million for the nine months ended June 26, 2020 compared to $24.3 million for the nine months ended June 28, 2019.

Interest expense, net

Interest expense, net, decreased by $4.3 million , or 16.9% to $21.2 million for the six months ended March 27, 2020 compared to $25.5 million for the six months ended March 29, 2019 .

Interest expense, net, decreased by $7.7 million, or 20.0% to $30.6 million for the nine months ended June 26, 2020 compared to $38.3 million for the nine months ended June 28, 2019.

The decrease is primarily due to the Company's principal payments in fiscal 2019 resulting in a lower principal balance in fiscal 2020 from which interest expense was derived.

Other income, net

Other income, net decreased by $0.3 million to $1.9 million for the six months ended March 27, 2020 compared to $2.2 million for the six months ended March 29, 2019 primarily due to lower gains from undesignated foreign currency derivative instruments, partially offset by foreign exchange gains on intercompany loans in the six months ended March 29, 2019 .

Other income, net decreased by $1.0 million to $2.5 million for the nine months ended June 26, 2020 compared to $3.4 million for the nine months ended June 28, 2019 primarily due to lower gains from undesignated foreign currency derivative instruments, partially offset by foreign exchange gains on intercompany loans in the nine months ended June 28, 2019.

Income tax expense

The Company's income tax rate decreased to 21.6% for the six months ended March 27, 2020 compared to 24.6% for the six months ended March 29, 2019 .

The decrease in the current period effective tax rate was primarily due to an increase in the excess tax benefit associated with stock compensation .

The Company's income tax rate decreased to 22.9% for the nine months ended June 26, 2020 compared to 24.1% for the nine months ended June 28, 2019.

The decrease in the current period effective tax rate was primarily due to an increase in the excess tax benefit associated with stock compensation, partially offset by the increase in losses incurred by our foreign jurisdictions for which we are not able to realize the related tax benefit.

Electrical Raceway

Six months ended

($ in thousands)

March 27, 2020

March 29, 2019

Nine months ended

($ in thousands) June 26, 2020 June 28, 2019 Change % Change

Net sales $ 967,127 $ 1,070,149 $ (103,022) (9.6) %

Adjusted EBITDA $ 206,630 $ 212,585 $ (5,955) (2.8) %

Adjusted EBITDA margin 21.4 % 19.9 %

Volume (8.8) %

Average selling prices (3.0) %

Foreign exchange (0.3) %

Net sales decreased by $15.8 million , or 2.3% , to $681.1 million for the six months ended March 27, 2020 compared to $696.9 million for the six months ended March 29, 2019 .

The decrease in net sales is primarily driven by $28.6 million of lower average selling prices resulting from lower commodity input costs of steel and resin.

Additionally, net sales decreased by $6.7 million due to lower volume, primarily in the armored cable and fitting product category.

The decrease in net sales was partially offset by the 2019 acquisitions, which contributed $23.0 million in sales for the six months ended March 27, 2020 .

Acquisitions 2.6 %

Other (0.1) %

Net sales (9.6) %

Net sales decreased by $103.0 million, or 9.6%, to $967.1 million for the nine months ended June 26, 2020 compared to $1,070.1 million for the nine months ended June 28, 2019.

Net sales decreased by $94.4 million due to lower volume primarily attributed to the impacts of COVID-19.

The Electrical Raceway segment experienced declines predominately in the armored cable and fittings and the metal electrical conduit and fittings product categories, partially offset by volume gains in the PVC electrical conduit and fittings product category within the first six months of the year.

Additionally, net sales decreased by $32.2 million as a result of lower average selling prices resulting from lower input costs of steel and resin.

The decrease in net sales was partially offset by the 2019 acquisitions, which contributed $28.1 million in sales for the nine months ended June 26, 2020.

Adjusted EBITDA

Adjusted EBITDA for the six months ended March 27, 2020 increased $13.3 million , or 9.8% , to $149.2 million from $135.9 million for the six months ended March 29, 2019 .

The increase was largely due to higher gross profit, operational efficiencies and incremental Adjusted EBITDA resulting from the 2019 acquisitions.

Adjusted EBITDA for the nine months ended June 26, 2020 decreased by $6.0 million, or 2.8%, to $206.6 million from $212.6 million for the nine months ended June 28, 2019.

The decrease in Adjusted EBITDA was largely due to lower volume, partially offset by the benefit of lower material costs in excess of declines in average selling prices, operational efficiencies, and the contributions from the 2019 acquisitions.

Mechanical Products & Solutions

Six months ended

($ in thousands)

March 27, 2020

March 29, 2019

Nine months ended

($ in thousands) June 26, 2020 June 28, 2019 Change % Change

Net sales $ 322,796 $ 345,599 $ (22,803) (6.6) %

Adjusted EBITDA $ 45,041 $ 48,903 $ (3,862) (7.9) %

1 unchanged sentence

Average selling prices (7.4) %

Net sales decreased by $1.7 million , or 0.8% , for the six months ended March 27, 2020 to $223.3 million compared to $225.0 million for the six months ended March 29, 2019 .

The decrease is primarily attributed to the pass-through impact of lower average input costs of steel products of $20.1 million , partially offset by higher volume of $18.6 million primarily in the mechanical pipe product category.

Net sales (6.6) %

Net sales decreased by $22.8 million, or 6.6%, for the nine months ended June 26, 2020 to $322.8 million compared to $345.6 million for the nine months ended June 28, 2019.

The decrease is primarily attributed to the pass-through impact of lower average input costs of steel products of $25.6 million.

The decrease in net sales is partially offset by higher volume of $1.6 million primarily in the mechanical pipe product category.

Adjusted EBITDA

Adjusted EBITDA increased $4.5 million , or 15.9% , to $32.8 million for the six months ended March 27, 2020 compared to $28.3 million for the six months ended March 29, 2019 .

Adjusted EBITDA increased primarily due to the higher gross profit and operational efficiencies.

Adjusted EBITDA decreased $3.9 million, or 7.9%, to $45.0 million for the nine months ended June 26, 2020 compared to $48.9 million for the nine months ended June 28, 2019.

Adjusted EBITDA decreased primarily due to a change in the mix of products sold partially offset by operational efficiencies.

Other Matters

Our collective bargaining agreement in Harvey, Illinois expired in April 2020.

On July 14, 2020, the Company and the United Steelworkers Union reached agreement on the terms of a new collective bargaining agreement which expires in April 2024.

Liquidity and Capital Resources

We believe we have sufficient liquidity to support our ongoing operations and to invest in future growth and create value for stockholders.

Our cash and cash equivalents were $137.2 million as of March 27, 2020 , of which $43.4 million was held at non-U.S.

Our cash and cash equivalents were $237.3 million as of June 26, 2020, of which $43.4 million was held at non-U.S.

subsidiaries.

2 unchanged sentences

We have access to the ABL Credit Facility to fund operational needs.

As of March 27, 2020 , there were no outstanding borrowings under the ABL Credit Facility and $9.5 million of letters of credit issued under the ABL Credit Facility.

The borrowing base was estimated to be $307.7 million and approximately $298.2 million was available under the ABL Credit Facility as of March 27, 2020 .

As of June 26, 2020, there were no outstanding borrowings under the ABL Credit Facility and $9.5 million of letters of credit issued under the ABL Credit Facility.

The borrowing base was estimated to be $257.3 million and approximately $247.8 million was available under the ABL Credit Facility as of June 26, 2020.

Outstanding letters of credit count as utilization of the commitments under the ABL Credit Facility and reduce the amount available for borrowings.

17 unchanged sentences

The table below summarizes cash flow information derived from our statements of cash flows for the periods indicated:

Six months ended

(in thousands)

March 27, 2020

March 29, 2019

Nine months ended

(in thousands) June 26, 2020 June 28, 2019

Cash flows provided by (used in):

3 unchanged sentences

Operating activities

During the six months ended March 27, 2020 , the Company was provided $49.3 million by operating activities compared to $42.8 million during the six months ended March 29, 2019 .

The $6.5 million increase in cash provided was primarily due to higher gross profit, partially offset by lower cash flows from working capital.

During the nine months ended June 26, 2020, the Company was provided $156.0 million by operating activities compared to $120.2 million during the nine months ended June 28, 2019.

The $35.8 million increase in cash provided was primarily due to higher cash flows from reductions in working capital.

Investing activities

During the six months ended March 27, 2020 , the Company used $17.1 million in investing activities compared to $72.8 million during the six months ended March 29, 2019 .

The decrease in cash used in investing activities is primarily due the acquisition of Vergokan for $58.7 million during the six months ended March 29, 2019 .

During the nine months ended June 26, 2020, the Company used $24.8 million in investing activities compared to $105.2 million during the nine months ended June 28, 2019.

The decrease in cash used in investing activities is primarily due the acquisition of Vergokan and US Tray for $83.4 million during the nine months ended June 28, 2019.

Financing Activities

During the six months ended March 27, 2020 , the Company used $17.4 million in financing activities compared to $44.8 million used during the six months ended March 29, 2019 .

The decrease in cash used in financing activities is primarily due to $24.4 million of share repurchases and $21.0 million of debt repayments during the six months ended March 29, 2019 , compared to $15.0 million of share repurchases during the six months ended March 27, 2020 .

During the nine months ended June 26, 2020, the Company used $16.9 million in financing activities compared to $40.3 million used during the nine months ended June 28, 2019.

The decrease in cash used in financing activities is primarily due to $24.4 million of share repurchases and $21.0 million of debt repayments during the nine months ended June 28, 2019, compared to $15.0 million of share repurchases during the nine months ended June 26, 2020.

Contractual Obligations and Commitments

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The Company can elect to perform a quantitative or qualitative test of impairment.

The Company considered whether the adverse economic impacts of the novel coronavirus (COVID-19) outbreak, which were developing during the three months ended March 27, 2020, would indicate whether it is more likely than not that the fair value of its reporting units or its indefinite lived intangible assets would be below the carrying value.

The Company considered whether the adverse economic impacts of the novel coronavirus (COVID-19) outbreak, which were developing during the three months ended March 27, 2020 and continued to develop during the three months ended June 26, 2020, would indicate whether it’s more likely than not that the fair value of its reporting units or its indefinite lived intangible assets would be below the carrying value.

For a majority of the Company’s operations, the fair values of its related reporting units and indefinite lived intangible assets significantly exceeded their respective carrying values as of the most recent impairment testing period in July 2019.

For these reporting units and the indefinite lived intangibles, the Company concluded that it was not more likely than not that the fair value of these reporting units or indefinite lived intangible assets was less than the carrying value and therefore there was not a triggering event requiring the performance of an impairment test as of June 26, 2020.

The economic impacts of the COVID-19 outbreak were more substantial for the Company’s reporting unit related to its operations in Europe, Middle East, and Africa (EMEA), due to the cross-border transactions that occur within those operations, the cross-border interactions needed to fully realize the synergies associated with recent in-region acquisitions and the COVID-19 related closing of these borders.

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The Discount Rate is developed using market observable inputs, as well as considering whether or not there is a measure of risk related to the specific reporting unit’s forecasted performance.

Fair value under the guideline public company method is determined for the unit by applying market multiples for comparable public companies to the unit’s financial results.

The key uncertainties in the income approach and the guideline company method calculations are the assumptions used in determining the reporting unit’s forecasted future performance, including revenue growth and EBITDA margins, as well as the perceived risk associated with those forecasts, along with selecting representative market multiples.

Fair value under the guideline public company method is determined for the reporting unit by applying market multiples for comparable public companies to the unit’s financial results.

The key uncertainties in these calculations are the assumptions used in determining the reporting unit’s forecasted future performance, including revenue growth and EBITDA margins, as well as the perceived risk associated with those forecasts, along with selecting representative market multiples.

Fair value under the transactional analysis is determined based on exchange prices in actual transactions and on asking prices for controlling interests in public or private companies currently offered for sale by applying market multiples for comparable public companies to the unit’s financial results.

The key uncertainties in the transactional analysis calculations are the assumptions used in determining the reporting unit's comparable public companies, comparable transactions and the selection of the market multiples.

The EMEA reporting unit’s impairment test revealed that its fair value was greater than carrying value by an amount of less than 10%.

The goodwill allocated to the EMEA reporting unit as of March 27, 2020 was $35.0 million .

As a result, the impairment analysis is sensitive to changes in both business and valuation assumptions.

The key uncertainties in the guideline public company method and the transactional analysis calculations are the assumptions used in determining the reporting unit's comparable public companies, comparable transactions and the selection of the market multiples.

The EMEA reporting unit’s impairment test as of March 27, 2020 revealed that its fair value was greater than carrying value by an amount of less than 10 %.

During the three months ended June 26, 2020, the Company continued to assess information related to the current and anticipated economic impacts of COVID-19 on the EMEA reporting unit and revised its financial projections.

As a result of this assessment, the Company concluded that it was not more likely than not that the fair value of the EMEA reporting unit was less than the carrying value and therefore deemed that there was not a triggering event requiring the performance of an updated impairment test.

The goodwill allocated to the EMEA reporting unit as of June 26, 2020 was $ 34,836 .

The impairment analysis is sensitive to changes in both business and valuation assumptions.

Changes to these assumptions could result in revisions of management's estimates of the fair value of the reporting unit and could result in impairment charges in the future, which could be material to our results of operations.

We will continue to monitor for such changes in facts or circumstances.

Goodwill impairment charges may be recognized in future periods to the extent changes in facts or circumstances occur, including deterioration in the macroeconomic environment, industry, and deterioration in our performance or our future projections.

The Company will continue to monitor for such changes in facts or circumstances.

Recent Accounting Standards

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Additional factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation:

widespread outbreak of diseases, such as the recent novel coronavirus (COVID-19) pandemic;

• widespread outbreak of diseases, such as the novel coronavirus (COVID-19) pandemic;

• declines in, and uncertainty regarding, the general business and economic conditions in the United States and international markets in which we operate;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis