What changed in this filing

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Item 1. Financial Statements

2022-11-01 compared with 2022-08-02 · 110 added, 82 removed, 460 unchanged (29% of the section changed)

4 unchanged sentences

(In thousands, except per share data)

Three Months Ended Six Months Ended

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Three Months Ended Nine Months Ended

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Net sales $ 1,060,761 $ 970,842 $ 3,602,445 $ 3,304,224

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(In thousands, except share data)

July 2, 2022 January 1, 2022

October 1, 2022 January 1, 2022

Current assets:

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Common Stock, $ 0.01 par value, 20,000,000 shares authorized,

9,211,626 and 9,725,760 outstanding on July 2, 2022 and January 1, 2022, respectively

9,035,469 and 9,725,760 outstanding on October 1, 2022 and January 1, 2022, respectively

Additional paid-in capital 197,906 268,085

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Balance, July 2, 2022 9,212 92 199,565 ( 29,048 ) 329,108 499,717

Net income — — — — 59,509 59,509

Impact of pension plan, net of tax — — — 156 — 156

Vesting of restricted stock units 121 1 ( 1 ) — — —

Compensation related to share-based grants — — 2,092 — — 2,092

Repurchase of shares to satisfy employee tax withholdings ( 51 ) ( 1 ) ( 3,618 ) — — ( 3,619 )

Common stock repurchase and retirement ( 247 ) ( 2 ) 2 — — —

Other — — ( 134 ) ( 24 ) — ( 158 )

Balance, October 1, 2022 9,035 $ 90 $ 197,906 $ ( 28,916 ) $ 388,617 $ 557,697

Common Stock Additional

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Balance, July 3, 2021 9,710 97 264,963 ( 35,490 ) 3,612 233,182

Net income — — — — 47,198 47,198

Impact of pension plan, net of tax — — — 238 — 238

Vesting of restricted stock units 14 — — — — —

Compensation related to share-based grants — — 1,608 — — 1,608

Repurchase of shares to satisfy employee tax withholdings — — ( 3 ) — — ( 3 )

Other — — ( 4 ) 7 — 3

Balance, October 2, 2021 9,724 $ 97 $ 266,564 $ ( 35,245 ) $ 50,810 $ 282,226

See accompanying Notes.

2 unchanged sentences

(In thousands)

Six Months Ended

July 2, 2022 July 3, 2021

Nine Months Ended

October 1, 2022 October 2, 2021

Cash flows from operating activities:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 1, 2022

Basis of Presentation and Summary of Significant Accounting Policies

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and its wholly owned subsidiaries (the “Company”).

We derived the condensed consolidated balance sheet at July 2, 2022 from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 1, 2022 (the “Fiscal 2021 Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2022.

In the opinion of our management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our statements of operations and comprehensive income for the three and six months ended July 2, 2022 and July 3, 2021, our balance sheets at July 2, 2022 and January 1, 2022, our statements of stockholders’ equity for the six months ended July 2, 2022 and July 3, 2021, and our statements of cash flows for the six months ended July 2, 2022 and July 3, 2021.

We derived the condensed consolidated balance sheet at October 1, 2022 from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 1, 2022 (the “Fiscal 2021 Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2022.

In the opinion of our management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our statements of operations and comprehensive income for the three and nine months ended October 1, 2022 and October 2, 2021, our balance sheets at October 1, 2022 and January 1, 2022, our statements of stockholders’ equity for the nine months ended October 1, 2022 and October 2, 2021, and our statements of cash flows for the nine months ended October 1, 2022 and October 2, 2021.

We have condensed or omitted certain notes and other information from the interim condensed consolidated financial statements presented in this report.

Therefore, these condensed consolidated interim financial statements should be read in conjunction with the Fiscal 2021 Form 10-K.

The results for the three and six months ended July 2, 2022 are not necessarily indicative of results that may be expected for the full year ending December 31, 2022, or any other interim period.

The results for the three and nine months ended October 1, 2022 are not necessarily indicative of results that may be expected for the full year ending December 31, 2022, or any other interim period.

We operate on a 5-4-4 fiscal calendar.

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Reclassification of Prior Period Presentation

For the six months ended July 3, 2021, we have reclassified certain items within the presentation of our statement of cash flows to align with our statement of cash flows presentation for the six months ended July 2, 2022.

For the nine months ended October 2, 2021, we have reclassified certain items within the presentation of our statement of cash flows to align with our statement of cash flows presentation for the nine months ended October 1, 2022.

Our reclassifications are limited to the operating activities section and include presenting only the impact of deferred income taxes, instead of our full provision for income taxes, as a reconciling item for net income to cash provided by operating activities.

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We evaluate our inventory value at the end of each quarter to ensure that inventory, when viewed by category, is carried at the lower of cost or net realizable value, which also considers items that may be considered damaged, excess, and obsolete inventory.

During the second quarter of fiscal 2021, we recorded a lower of cost or net realizable value reserve of $ 16.7 million resulting from the decrease in the value of our structural lumber inventory related to the decline in wood-based commodity prices as of the end of the period.

In addition, during the second quarter of fiscal 2022, we recorded a lower of cost or net realizable value reserve of $ 9.8 million as of the end of the period, also resulting from the decline in wood-based commodity prices.

During the second quarter of fiscal 2022, we recorded a lower of cost or net realizable value reserve of $ 9.8 million as a result of the decrease in the value of our structural lumber and panel inventory related to the decline in wood-based commodity prices as of the end of the period.

In addition, volatility during the third quarter of fiscal 2022 also resulted in a decline in wood-based commodity prices as of the end of the period such that a lower of cost or net realizable value reserve of $ 4.1 million was required, resulting in a partial release of our reserve resulting in a net beneficial impact of $ 5.7 million for the third quarter of fiscal 2022.

For the first nine months of fiscal 2022, the net impact of our lower of cost or net realizable value reserve on cost of sales was $ 4.1 million.

During the second quarter of fiscal 2021, we recorded a lower of cost or net realizable value reserve of $ 16.7 million as a result of the decrease in the value of our structural lumber and panel inventory related to the decline in wood-based commodity prices as of the end of the period.

During the third quarter of fiscal 2021, we released a lower of cost or net realizable value reserve of $ 16.7 million, as the inventory impacted by the reserve recorded in the second quarter of fiscal 2021 was sold to customers.

For the first nine months of fiscal 2021, the net impact of our lower of cost or net realizable value reserve on cost of sales was zero .

Goodwill and Other Intangible Assets

In connection with our past merger and acquisition activity, we acquired certain intangible assets.

As of July 2, 2022, our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.

As of October 1, 2022, our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.

Goodwill is the excess of the cost of an acquired entity over the fair value of tangible and intangible assets (including customer relationships, noncompete agreements, and trade names) acquired, and liabilities assumed, under acquisition accounting for business combinations.

As of July 2, 2022, goodwill was $ 47.8 million.

As of October 1, 2022, goodwill was $ 47.8 million.

Goodwill is not subject to amortization but must be tested for impairment at least annually.

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Such events and indicators may include, without limitation, significant declines in the industries in which our products are used, significant changes in capital market conditions, and significant changes in our market capitalization.

No such indicators were present during the second quarter of fiscal 2022.

Our one reporting unit has a fair value that exceeds its carrying value as of July 2, 2022.

No such indicators were present during the third quarter of fiscal 2022.

Our one reporting unit has a fair value that exceeds its carrying value as of October 1, 2022.

Definite-Lived Intangible Assets

On July 2, 2022, the gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets were as follows:

On October 1, 2022, the gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets were as follows:

Intangible Asset Weighted Average Remaining Useful Lives (Years) Gross Carrying Amounts Accumulated

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Amortization Expense

Amortization expense for our definite-lived intangible assets was $ 0.6 million and $ 1.7 million for the three and six month periods ended July 2, 2022, respectively.

For the three and six month periods ended July 3, 2021, amortization expense was $ 1.2 million and $ 3.1 million, respectively.

Amortization expense for our definite-lived intangible assets was $ 0.5 million and $ 2.2 million for the three and nine month periods ended October 1, 2022, respectively.

For the three and nine month periods ended October 2, 2021, amortization expense was $ 1.1 million and $ 4.2 million, respectively.

Estimated amortization expense for definite-lived intangible assets for the remaining portion of 2022 and the next five fiscal years is as follows:

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For all sales channel types, consisting of warehouse, direct, and reload sales, we typically satisfy our performance obligations upon shipment.

Our customer payment terms are typical for our industry, and may vary by the type and location of our customer and the products or services offered.

Our customer payment terms are typical for our industry, and may vary by the type

and location of our customer and the products or services offered.

The term between invoicing and when payment is due is not deemed to be significant by us.

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Cash discounts and sales returns are estimated using historical experience.

Trade allowances are based on the estimated obligations and historical

Trade allowances are based on the estimated obligations and historical experience.

Adjustments to earnings resulting from revisions to estimates on discounts and returns have been insignificant for each of the reported periods.

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Sales and usage-based taxes are excluded from revenues.

Three Months Ended Six Months Ended

Product type July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Three Months Ended Nine Months Ended

Product type October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

(In thousands) (In thousands)

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Sales and usage-based taxes are excluded from revenues.

Three Months Ended Six Months Ended

Sales channel July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Three Months Ended Nine Months Ended

Sales channel October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

(In thousands) (In thousands)

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Assets Held for Sale

As of July 2, 2022, we had no assets or liabilities classified as “held for sale”.

As of October 1, 2022, we had no assets or liabilities classified as “held for sale”.

As of January 1, 2022, the net book value of total assets classified as “held for sale” was $ 2.6 million and was included in other current assets in our condensed consolidated balance sheet.

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Long-Term Debt

As of July 2, 2022 and January 1, 2022, long-term debt consisted of the following:

July 2, 2022 January 1, 2022

As of October 1, 2022 and January 1, 2022, long-term debt consisted of the following:

October 1, 2022 January 1, 2022

(In thousands)

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Long-term debt, net of current maturities $ 556,098 $ 558,124

(1) As of July 2, 2022 and January 1, 2022, our long-term debt was comprised of $ 300.0 million of senior secured notes issued in October 2021.

These notes are presented under the “Long-term debt” caption of our condensed consolidated balance sheets at $ 291.8 million and $ 291.3 million at July 2, 2022 and January 1, 2022, respectively.

This presentation is net of their discount of $ 3.8 million and $ 4.0 million and the combined carrying value of our debt issuance costs of $ 4.5 million and $ 4.7 million at July 2, 2022 and January 1, 2022, respectively.

(1) As of October 1, 2022 and January 1, 2022, our long-term debt was comprised of $ 300.0 million of senior secured notes issued in October 2021.

These notes are presented under the “Long-term debt” caption of our condensed consolidated balance sheets at $ 292.1 million and $ 291.3 million at October 1, 2022 and January 1, 2022, respectively.

This presentation is net of their discount of $ 3.6 million and $ 4.0 million and the combined carrying value of our debt issuance costs of $ 4.3 million and $ 4.7 million at October 1, 2022 and January 1, 2022, respectively.

Our senior secured notes are presented in this table at their face value.

(2) The average effective interest rate was zero percent and 2.5 percent for the quarters ended July 2, 2022 and July 3, 2021, respectively.

(2) The average effective interest rate was zero percent and 2.6 percent for the quarters ended October 1, 2022 and January 1, 2022, respectively.

(3) Refer to Note 9, Leases , for interest rates associated with finance lease obligations.

Senior Secured Notes

In October 2021, we entered into an indenture (the “Indenture”) with the guarantors party thereto and Truist Bank, as trustee and collateral agent, in connection with a private offering of $ 300 million of our six percent senior secured notes due 2029 (the “2029 Notes”).

In October 2021, we completed a private offering of $ 300 million of our six percent senior secured notes due 2029 (the “2029 Notes”), and in connection therewith we entered into an indenture (the “Indenture”) with the guarantors party thereto and Truist Bank, as trustee and collateral agent.

The 2029 Notes were issued to investors at 98.625 percent of their principal amount and will mature on November 15, 2029.

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The Revolving Credit Facility may be prepaid in whole or in part from time to time without penalty or premium, but including all breakage costs incurred by any lender thereunder.

As of July 2, 2022, we had zero outstanding borrowings and excess availability, including cash in qualified accounts, of $ 451.4 million under our Revolving Credit Facility.

As of October 1, 2022, we had zero outstanding borrowings and excess availability, including cash in qualified accounts, of $ 575.8 million under our Revolving Credit Facility.

As of January 1, 2022, we had zero outstanding borrowings and excess availability, including cash in qualified accounts, of $ 431.7 million under our Revolving Credit Facility.

Our average effective

interest rate under the facility was zero percent and 2.5 percent for the quarters ended July 2, 2022 and July 3, 2021, respectively.

Our average effective interest rate under the facility was zero percent and 2.6 percent for the quarters ended October 1, 2022 and January 1, 2022, respectively.

The Revolving Credit Facility contains certain financial and other covenants, and our right to borrow under the Revolving Credit Facility is conditioned upon, among other things, our compliance with these covenants.

We were in compliance with all covenants under the Revolving Credit Facility as of July 2, 2022.

We were in compliance with all covenants under the Revolving Credit Facility as of October 1, 2022.

Term Loan Facility

On April 2, 2021, we repaid the remaining outstanding principal balance of the term loan facility, and, as a result, as of January 1, 2022 and July 2, 2022, we had zero outstanding borrowings under the term loan facility, which has been extinguished.

On April 2, 2021, we repaid the remaining outstanding principal balance of our former term loan facility, and, as a result, as of January 1, 2022 and October 1, 2022, we had zero outstanding borrowings under the term loan facility, which has been extinguished.

In connection with our repayment of the outstanding principal balance in full on April 2, 2021, we expensed $ 5.8 million of debt issuance costs that we were amortizing in connection with our former term loan facility.

These costs are included within interest expense, net on the condensed consolidated statements of operations and reported separately as an adjustment to net income in our condensed consolidated statements of cash flows.

As the facility was paid in full as of April 2, 2021, our average effective interest rate under the facility, exclusive of fees and prepayment premiums, was zero percent for the quarters ended July 2, 2022 and July 3, 2021, respectively.

Finance Lease Obligations

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The following table shows the components of our net periodic pension benefit:

Three Months Ended Six Months Ended

Pension-related items July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Three Months Ended Nine Months Ended

Pension-related items October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

(In thousands) (In thousands)

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Stock Compensation

During the three and six month periods ended July 2, 2022, we incurred stock compensation expense of $ 1.8 million and $ 3.9 million, respectively.

For the three and six month periods ended July 3, 2021, we incurred stock compensation expense of $ 2.0 million and $ 3.4 million, respectively.

The decrease in our stock compensation expense for the three month period ended July 2, 2022 compared to the prior-year period is primarily attributable to the timing of award vesting and associated expense recognition.

The increase in our stock compensation expense for the six month period ended July 2, 2022 compared to the prior-year period is primarily attributable to an increase in the number of awards granted, as well as the increase in the grant-date fair value, or the Company’s stock price, of awards currently vesting compared to the prior year.

During the three and nine month periods ended October 1, 2022, we incurred stock compensation expense of $ 2.1 million and $ 6.0 million, respectively.

For the three and nine month periods ended October 2, 2021, we incurred stock compensation expense of $ 1.6 million and $ 5.0 million, respectively.

The increase in our stock compensation expense for the three month period ended October 1, 2022 compared to the prior-year period is primarily attributable to the timing of award vesting and associated expense recognition.

The increase in our stock compensation expense for the nine month period ended October 1, 2022 compared to the prior-year period is primarily attributable to an increase in the number of awards granted, as well as the increase in the grant-date fair value, or the Company’s stock price, of awards currently vesting compared to the prior year.

We have operating and finance leases for certain of our distribution facilities, office space, land, mobile fleet, and equipment.

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As noted in the table below, a majority of our finance leases, formally known as capital leases, relate to real estate.

The following table presents our assets and liabilities related to our leases as of July 2, 2022 and January 1, 2022:

Lease assets and liabilities July 2, 2022 January 1, 2022

The following table presents our assets and liabilities related to our leases as of October 1, 2022 and January 1, 2022:

Lease assets and liabilities October 1, 2022 January 1, 2022

(In thousands)

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Total lease liabilities $ 323,256 $ 324,388

(1) Finance lease right-of-use assets are presented net of accumulated amortization of $ 82.3 million and $ 73.7 million as of July 2, 2022 and January 1, 2022, respectively.

(1) Finance lease right-of-use assets are presented net of accumulated amortization of $ 87.4 million and $ 73.7 million as of October 1, 2022 and January 1, 2022, respectively.

The components of lease expense were as follows:

Three Months Ended Six Months Ended

Components of lease expense July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Three Months Ended Nine Months Ended

Components of lease expense October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

(In thousands) (In thousands)

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Cash flow information related to leases was as follows:

Three Months Ended Six Months Ended

Cash flow information July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Three Months Ended Nine Months Ended

Cash flow information October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

(In thousands) (In thousands)

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Non-cash supplemental cash flow information related to leases was as follows:

Three Months Ended Six Months Ended

Non-cash information July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Three Months Ended Nine Months Ended

Non-cash information October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

(In thousands) (In thousands)

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Supplemental balance sheet information related to leases was as follows:

Balance sheet information July 2, 2022 January 1, 2022

Balance sheet information October 1, 2022 January 1, 2022

(In thousands)

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Finance leases 8.94 % 10.00 %

The major categories of our finance lease liabilities as of July 2, 2022 and January 1, 2022 are as follows:

Category July 2, 2022 January 1, 2022

The major categories of our finance lease liabilities as of October 1, 2022 and January 1, 2022 are as follows:

Category October 1, 2022 January 1, 2022

(In thousands)

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Total finance leases $ 272,736 $ 274,717

As of July 2, 2022, maturities of lease liabilities were as follows:

As of October 1, 2022, maturities of lease liabilities were as follows:

Fiscal year Operating leases Finance leases

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Collective Bargaining Agreements

As of July 2, 2022, we employed approximately 2,053 associates and less than one percent of our associates are employed on a part-time basis.

Approximately 19 percent of our associates are represented by various local labor unions with terms and

conditions of employment governed by Collective Bargaining Agreements (“CBAs”).

Two CBAs covering approximately three percent of our associates are up for renewal in fiscal 2022, both of which we expect to renegotiate by the end of the year.

As of October 1, 2022, we employed approximately 2,411 associates and less than one percent of our associates are employed on a part-time basis.

Approximately 16 percent of our associates are represented by various local labor unions with terms and conditions of employment governed by Collective Bargaining Agreements (“CBAs”).

Four CBAs covering approximately six percent of our associates are up for renewal in fiscal 2023, which we expect to renegotiate by the end of fiscal 2023.

Accumulated Other Comprehensive Loss

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Accumulated other comprehensive loss is separately presented on our condensed consolidated balance sheets as part of stockholders’ equity.

The changes in balances for each component of accumulated other comprehensive loss for the six months ended July 2, 2022 were as follows:

The changes in balances for each component of accumulated other comprehensive loss for the nine months ended October 1, 2022 were as follows:

benefit pension

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Other comprehensive income, net of tax 468 ( 24 ) 444

July 2, 2022, ending balance, net of tax $ ( 29,933 ) $ 885 $ ( 29,048 )

October 1, 2022, ending balance, net of tax $ ( 29,777 ) $ 861 $ ( 28,916 )

Effective Tax Rate

Our effective tax rate for the three months ended July 2, 2022 and July 3, 2021 was 23.1 percent and 23.5 percent, respectively.

Our effective tax rate for the six months ended July 2, 2022 and July 3, 2021 was 25.1 percent and 24.4 percent, respectively.

Our effective tax rate for the three and six months ended July 2, 2022 and July 3, 2021 were impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation.

Each period also includes a benefit from the vesting of restricted stock units, which had a greater impact on the three months ended July 2, 2022 and July 3, 2021 due to the timing of the vesting of our restricted stock awards.

Our effective tax rate for the three and six months ended July 3, 2021 also benefited from the partial release of our valuation allowance for state net operating loss carryforwards we anticipated being able to utilize based on our taxable income through the end of the first and second quarters of fiscal 2021.

Our effective tax rate for the three months ended October 1, 2022 and October 2, 2021 was 26.2 percent and 25.6 percent, respectively.

Our effective tax rate for the nine months ended October 1, 2022 and October 2, 2021 was 25.4 percent and 24.7 percent, respectively.

Our effective tax rate for the three and nine months ended October 1, 2022 and October 2, 2021 were impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation.

Each nine-month period also includes a benefit from the vesting of restricted stock units.

Our effective tax rate for the three and nine months ended October 2, 2021 also benefited from the partial release of our valuation allowance for state net operating loss carryforwards we anticipated being able to utilize based on our taxable income through the end of the first nine months of fiscal 2021.

Deferred Tax Assets

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• tax planning strategies.

In addition to the positive evidence discussed above, we considered as positive evidence forecasted taxable income, the detail scheduling of timing of the reversal of our deferred tax assets and liabilities, and the evidence from business and tax planning strategies.

As of July 2, 2022, in our evaluation of the weight of available evidence, we concluded that our net deferred tax assets were not impaired.

As of October 1, 2022, in our evaluation of the weight of available evidence, we concluded that our net deferred tax assets were not impaired.

Income per Share

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We calculate diluted income per share using the treasury stock method, by dividing net income by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based awards, including restricted stock units .

On May 3, 2022, we announced that our Board of Directors increased our share repurchase authorization to $ 100.0 million, up $ 75.0 million from the previous program, and that we entered into an Accelerated Share Repurchase Agreement (“ASR Agreement”) with Jefferies LLC (“Jefferies”) to repurchase $ 60.0 million of our common stock.

On August 23, 2021, our Board of Directors approved a stock repurchase program pursuant to which we may repurchase up to $ 25.0 million of our common stock.

During the first quarter of fiscal 2022, we repurchased 81,331 shares of our common stock under this program at an average price of $ 79.03 per share.

On May 3, 2022, our Board of Directors increased our share repurchase authorization to $ 100.0 million and we entered into an Accelerated Share Repurchase Agreement (“ASR Agreement”) with Jefferies LLC to repurchase $ 60.0 million of our common stock.

Under the ASR Agreement, we received initial delivery of 553,584 shares of common stock on May 3, 2022 (the “Transaction Date”) representing approximately 65 percent of the total number of shares of common stock initially underlying the ASR Agreement based on our closing stock price of $ 70.45 on May 2, 2022.

The initial delivery of 553,584 shares reduced the number of common shares outstanding on the Transaction Date and, as a result, reduced the weighted average number of common shares outstanding used to calculate basic income per share and diluted income per share for the three and six month periods ended July 2, 2022.

The total number of shares repurchased under the ASR Agreement is based on the average of the daily volume-weighted average price of our common stock during the repurchase period under the ASR Agreement, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR Agreement.

At settlement, under certain circumstances, Jefferies may be required to deliver additional shares of common stock to us, or, under certain circumstances, we may be required to make a cash payment or to deliver shares of our common stock to Jefferies.

Final settlement of the shares of common stock repurchased under the ASR Agreement could occur as early as the third quarter of 2022.

Management has performed an analysis of the average of the daily volume-weighted average price of our common stock since the Transaction Date and has determined, as of July 2, 2022, that the final settlement of shares of common stock under the ASR Agreement is not anticipated to have a dilutive impact upon final settlement.

The reconciliation of basic net income and diluted net income per common share for the three and six month periods ended July 2, 2022 and July 3, 2021 were as follows:

Three Months Ended Six Months Ended

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Final settlement of the shares of common stock repurchased under the ASR Agreement occurred on September 15, 2022 based on the average of the daily volume-weighted average price of our common stock during the repurchase period under the ASR Agreement, less a discount and other adjustments pursuant to the terms and conditions of the ASR Agreement.

At settlement, we received an additional 247,431 shares of common stock, which reduced the weighted average number of common shares outstanding used to calculate basic income per share and diluted income per share for the three and nine month periods ended October 1, 2022.

Under our ASR Agreement, we repurchased a total of 801,015 shares of our common stock at an average price of $ 74.90 per share.

The reconciliation of basic net income and diluted net income per common share for the three and nine month periods ended October 1, 2022 and October 2, 2021 were as follows:

Three Months Ended Nine Months Ended

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

(In thousands, except per share data) (In thousands, except per share data)

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Diluted income per share $ 6.38 $ 4.74 $ 27.82 $ 22.91

Approximately 21,000 and 55,000 weighted-average share-based awards were excluded from the computation of earnings per share assuming dilution during the three months ended July 2, 2022 and July 3, 2021, respectively, as the awards would have been anti-dilutive for the periods presented.

Approximately 13,000 and 27,000 weighted-average share-based awards were excluded from the computation of earnings per share assuming dilution during the six months ended July 2, 2022 and July 3, 2021, respectively, as the awards would have been anti-dilutive for the periods presented.

Approximately 77,000 and 2,000 weighted-average share-based awards were excluded from the computation of earnings per share assuming dilution during the three months ended October 1, 2022 and October 2, 2021, respectively, as the awards would have been anti-dilutive for the periods presented.

Approximately 58,000 and 119,000 weighted-average share-based awards were excluded from the computation of earnings per share assuming dilution during the nine months ended October 1, 2022 and October 2, 2021, respectively, as the awards would have been anti-dilutive for the periods presented.

Subsequent Event

On October 3, 2022, we announced that we entered into and closed on a Stock Purchase Agreement (the “Purchase Agreement”) with Vandermeer Forest Products, Inc., a Washington corporation (“Vandermeer”), and the sole shareholder of Vandermeer.

Vandermeer is a premier wholesale distributor of building products, serving over 250 customers across the Pacific Northwest, Alaska, Hawaii, British Columbia, and Alberta.

The acquisition of Vandermeer adds three distribution branches in Washington state and provides direct access to Seattle and Portland, two of the top 15 metropolitan statistical areas in the United States.

Additionally, we now have coast-to-coast reach and serve all 50 states.

Under the Purchase Agreement, we acquired all of the outstanding capital stock of Vandermeer for an aggregate purchase price of approximately $ 63.4 million, on a debt-free, cash-free basis, subject to customary post-closing adjustments in respect of net working capital, cash, transaction expenses and indebtedness.

In addition, we acquired Vandermeer’s Spokane, Washington distribution facility and related real estate from the sole shareholder of Vandermeer for approximately $ 3.6 million, resulting in an aggregate purchase price of $ 67.0 million for the business and real property, which we funded with cash on hand.

We are currently in the process of finalizing the accounting for this transaction and expect to complete our preliminary allocation of the purchase consideration by the end of fiscal 2022.

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 1. Financial Statements