Simpson Manufacturing Co., Inc. 10-Q

Item 1. Financial Statements. Simpson Manufacturing Co., Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, unaudited) September 30, December 31, 2022 2021 2021 ASSETS Current assets Cash and cash equivalents $ 309,262 $ 294,180 $ 301,155 Trade accounts receivable, net 334,449 236,535 231,021 Inventories 540,020 385,512 443,756 Other current assets 48,416 33,427 22,903 Total current assets 1,232,147 949,654 998,835 Property, plant and equipment, net 341,233 255,547 259,869 Operating lease right-of-use assets 48,196 41,513 45,438 Goodwill 467,990 133,495 134,022 Intangible assets, net 330,533 22,077 26,269 Other noncurrent assets 84,159 19,783 19,692 Total assets $ 2,504,258 $ 1,422,069 $ 1,484,125 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Trade accounts payable $ 98,646 $ 62,405 $ 57,215 Accrued liabilities and other current liabilities 225,020 183,072 187,387 Long-term debt, current portion 22,500 — — Total current liabilities 346,166 245,477 244,602 Operating lease liabilities 38,650 33,063 37,091 Long-term debt, net of issuance costs 660,164 — — Deferred income tax and other long-term liabilities 121,723 20,526 18,434 Total liabilities 1,166,703 299,066 300,127 Commitments and contingencies (see Note 14) Stockholders’ equity Common stock, at par value 433 435 432 Additional paid-in capital 296,956 291,733 294,330 Retained earnings 1,150,115 885,472 906,841 Treasury stock ( 74,562 ) ( 37,635 ) — Accumulated other comprehensive loss ( 35,387 ) ( 17,002 ) ( 17,605 ) Total stockholders’ equity 1,337,555 1,123,003 1,183,998 Total liabilities and stockholders’ equity $ 2,504,258 $ 1,422,069 $ 1,484,125 The accompanying notes are an integral part of these condensed consolidated financial statements 4 Simpson Manufacturing Co., Inc. and Subsidiaries Condensed Consolidated Statements of Earnings and Comprehensive Income (In thousands except per-share amounts, unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net sales $ 553,662 $ 396,738 $ 1,640,464 $ 1,154,661 Cost of sales 309,139 198,706 899,828 597,901 Gross profit 244,523 198,032 740,636 556,760 Operating expenses: Research and development and other engineering 17,084 14,562 49,892 43,321 Selling 42,539 35,063 124,449 99,053 General and administrative 60,319 47,792 172,511 143,767 Total operating expenses 119,942 97,417 346,852 286,141 Acquisition and integration related costs 1,866 — 14,681 — Net gain on disposal of assets ( 100 ) ( 4 ) ( 1,227 ) ( 112 ) Income from operations 122,815 100,619 380,330 270,731 Interest expense, net and other finance costs ( 2,983 ) ( 314 ) ( 6,568 ) ( 1,079 ) Other & foreign exchange loss, net ( 1,707 ) ( 532 ) ( 3,814 ) ( 4,180 ) Income before taxes 118,125 99,773 369,948 265,472 Provision for income taxes 29,882 25,995 93,559 68,822 Net income $ 88,243 $ 73,778 $ 276,389 $ 196,650 Other comprehensive income Translation adjustment ( 26,476 ) ( 4,889 ) ( 54,345 ) ( 6,649 ) Unamortized pension adjustments 459 ( 182 ) 1,147 209 Cash flow hedge adjustment, net of tax 26,823 ( 153 ) 35,416 ( 134 ) Comprehensive net income $ 89,049 $ 68,554 $ 258,607 $ 190,076 Net income per common share: Basic $ 2.06 $ 1.70 $ 6.42 $ 4.54 Diluted $ 2.06 $ 1.70 $ 6.40 $ 4.52 Weighted average number of shares outstanding Basic 42,813 43,276 43,044 43,287 Diluted 42,916 43,485 43,173 43,500 Cash dividends declared per common share $ 0.26 $ 0.25 $ 0.77 $ 0.73 The accompanying notes are an integral part of these condensed consolidated financial statements 5 Simpson Manufacturing Co., Inc. and Subsidiaries Condensed Consolidated Statements of Stockholders’ Equity (In thousands except per-share data, unaudited) Three Months Ended September 30, 2022 and 2021 Common Stock Additional Paid-in Retained Accumulated Other Comprehensive Treasury Shares Par Value Capital Earnings Income (Loss) Stock Total Balance at June 30, 2022 42,906 $ 433 $ 293,720 $ 1,072,959 $ ( 36,193 ) $ ( 46,281 ) $ 1,284,638 Net income — — — 88,243 — — 88,243 Translation adjustment, net of tax — — — — ( 26,476 ) — ( 26,476 ) Pension adjustment and other, net of tax — — — — 459 — 459 Cash flow hedges, net of tax — — — — 26,823 — 26,823 Stock-based compensation — — 3,236 — — — 3,236 Shares issued from release of Restricted Stock Units 1 — — — — — — Repurchase of common stock ( 309 ) — — — — ( 28,281 ) ( 28,281 ) Cash dividends declared on common stock, $0.26 per share — — — ( 11,087 ) — — ( 11,087 ) Balance at September 30, 2022 42,598 $ 433 $ 296,956 $ 1,150,115 $ ( 35,387 ) $ ( 74,562 ) $ 1,337,555 Balance at June 30, 2021 43,437 $ 435 $ 289,261 $ 822,497 $ ( 11,778 ) $ ( 13,510 ) $ 1,086,905 Net income — — — 73,778 — — 73,778 Translation adjustment and other, net of tax — — — — ( 4,889 ) — ( 4,889 ) Pension adjustment and other, net of tax — — — — ( 335 ) — ( 335 ) Stock-based compensation — — 2,606 — — — 2,606 Shares issued from release of Restricted Stock Units 2 — ( 134 ) — — — ( 134 ) Repurchase of common stock ( 222 ) — — — — ( 24,125 ) ( 24,125 ) Cash dividends declared on common stock, $0.25 per share — — — ( 10,803 ) — — ( 10,803 ) Balance at September 30, 2021 43,217 $ 435 $ 291,733 $ 885,472 $ ( 17,002 ) $ ( 37,635 ) $ 1,123,003 The accompanying notes are an integral part of these condensed consolidated financial statements 6 Simpson Manufacturing Co., Inc. and Subsidiaries Condensed Consolidated Statements of Stockholders’ Equity (In thousands except per-share data, unaudited) Nine Months Ended September 30, 2022 and 2021 Common Stock Additional Paid-in Retained Accumulated Other Comprehensive Treasury Shares Par Value Capital Earnings Income (Loss) Stock Total Balance at December 31, 2021 43,217 $ 432 $ 294,330 $ 906,841 $ ( 17,605 ) $ — $ 1,183,998 Net income — — 276,389 — — 276,389 Translation adjustment, net of tax — — — — ( 54,345 ) — ( 54,345 ) Pension adjustment and other, net of tax — — — — 1,147 — 1,147 Cash flow hedges, net of tax — — — — 35,416 — 35,416 Stock-based compensation — — 11,190 — — — 11,190 Shares issued from release of Restricted Stock Units 138 1 ( 9,524 ) — — — ( 9,523 ) Repurchase of common stock ( 764 ) — — — — ( 74,562 ) ( 74,562 ) Cash dividends declared on common stock, $0.77 per share — — — ( 33,115 ) — — ( 33,115 ) Common stock issued at $139.07 per share for stock bonus 7 — 960 — — — 960 Balance at September 30, 2022 42,598 $ 433 $ 296,956 $ 1,150,115 $ ( 35,387 ) $ ( 74,562 ) $ 1,337,555 Balance at December 31, 2020 43,326 $ 433 $ 284,007 $ 720,441 $ ( 10,428 ) $ ( 13,510 ) $ 980,943 Net income — — — 196,650 — — 196,650 Translation adjustment, net of tax — — — — ( 6,649 ) — ( 6,649 ) Pension adjustment and other, net of tax — — — — 75 — 75 Stock-based compensation — — 12,432 — — — 12,432 Shares issued from release of Restricted Stock Units 106 1 ( 5,397 ) — — — ( 5,396 ) Repurchase of common stock ( 222 ) — — — — ( 24,125 ) ( 24,125 ) Cash dividends declared on common stock, $0.73 per share — — — ( 31,619 ) — — ( 31,619 ) Common stock issued at $93.45 per share for stock bonus 7 1 691 — — — 692 Balance at September 30, 2021 43,217 $ 435 $ 291,733 $ 885,472 $ ( 17,002 ) $ ( 37,635 ) $ 1,123,003 The accompanying notes are an integral part of these condensed consolidated financial statements 7 Simpson Manufacturing Co., Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands, unaudited) Nine Months Ended September 30, 2022 2021 Cash flows from operating activities Net income $ 276,389 $ 196,650 Adjustments to reconcile net income to net cash provided by operating activities: Loss/(gain) on sale of assets and other ( 1,227 ) ( 38 ) Depreciation and amortization 44,521 33,192 Noncash lease expense 7,982 7,237 Inventory step-up expense 12,151 — (Gain) Loss in equity method investment, before tax ( 229 ) 2,289 Deferred income taxes ( 13,156 ) 1,197 Noncash compensation related to stock plans 12,986 13,391 Provision for doubtful accounts 1,146 74 Deferred hedge gain ( 1,571 ) — Changes in operating assets and liabilities (net of amounts acquired from ETANCO. see Note 3) Trade accounts receivable ( 55,037 ) ( 73,219 ) Inventories ( 27,732 ) ( 104,223 ) Trade accounts payable 4,960 15,527 Other current assets ( 5,711 ) ( 11,272 ) Accrued liabilities and other current liabilities 25,283 45,924 Other noncurrent assets and liabilities ( 17,359 ) ( 4,631 ) Net cash provided by operating activities 263,396 122,098 Cash flows from investing activities Capital expenditures ( 41,571 ) ( 31,285 ) Acquisitions, net of cash (see Note 3) ( 806,544 ) ( 218 ) Equity method investments ( 2,768 ) ( 9,829 ) Proceeds from sale of property and equipment 1,834 132 Terminated forward contract 3,535 — Net cash used in investing activities ( 845,514 ) ( 41,200 ) Cash flows from financing activities Termination of cash flow hedge 21,252 — Repurchase of common stock ( 74,562 ) ( 24,125 ) Proceeds from borrowing under lines of credit and term loan 716,721 8,530 Repayments of lines of credit and capital leases ( 27,816 ) ( 8,632 ) Debt issuance costs ( 6,804 ) ( 819 ) Dividends paid ( 32,819 ) ( 30,815 ) Cash paid on behalf of employees for shares withheld ( 9,523 ) ( 5,397 ) Net cash provided by (used in) financing activities 586,449 ( 61,258 ) Effect of exchange rate changes on cash and cash equivalents 3,776 ( 99 ) Net increase in cash and cash equivalents 8,107 19,541 Cash and cash equivalents at beginning of period 301,155 274,639 Cash and cash equivalents at end of period $ 309,262 $ 294,180 Noncash activity during the period Noncash capital expenditures $ 681 $ 550 Dividends declared but not paid 11,223 10,847 Issuance of Company’s common stock for compensation 960 692 The accompanying notes are an integral part of these condensed consolidated financial statements 8 Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Basis of Presentation Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Simpson Manufacturing Co., Inc. and its subsidiaries (collectively, the “Company”). Investments in 50% or less owned entities are accounted for using either cost or the equity method. All significant intercompany transactions have been eliminated. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation under GAAP. The Company assessed certain accounting matters that require the use of estimates and assumptions in context with the known and projected future impacts of COVID-19. The Company's actual results could differ materially from those estimates. Interim Reporting Period The accompanying unaudited quarterly condensed consolidated financial statements have been prepared in accordance with GAAP pursuant to the rules and regulations for reporting interim financial information and instructions on Form 10-Q. Accordingly, certain information and footnotes required by GAAP have been condensed or omitted. These interim statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Form 10-K”). The unaudited quarterly condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, contain all adjustments (consisting of only normal recurring adjustments) necessary to state fairly the financial information set forth therein in accordance with GAAP. Certain prior period amounts in the condensed consolidated financial statements and the accompanying notes have been reclassified to conform to the current period’s presentation. The year-end condensed consolidated balance sheet data provided herein were derived from audited financial statements included in the 2021 Form 10-K, but do not include all disclosures required by GAAP. The Company’s quarterly results fluctuate. As a result, the Company believes the results of operations for this interim period presented are not indicative of the results to be expected for any future periods. Revenue Recognition Generally, the Company's revenue contract with a customer exists when (1) the goods are shipped, services are rendered, and the related invoice is generated, (2) the duration of the contract does not extend beyond the promised goods or services already transferred and (3) the transaction price of each distinct promised product or service specified in the invoice is based on its relative stated standalone selling price. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer at a point in time. Our shipping terms provide the primary indicator of the transfer of control. The Company's general shipping terms are Incoterm C.P.T. (F.O.B. shipping point), where the title, and risk and rewards of ownership transfer at the point when the products are no longer on the Company's premises. Other Incoterms are allowed as exceptions depending on the product or service being sold and the nature of the sale. The Company recognizes revenue based on the consideration specified in the invoice with a customer, excluding any sales incentives, discounts, and amounts collected on behalf of third parties (i.e., governmental tax authorities). Based on historical experience with the customer, the customer's purchasing pattern, and its significant experience selling products, the Company concluded that a significant reversal in the cumulative amount of revenue recognized would not occur when the uncertainty (if any) is resolved (that is, when the total amount of purchases is known). Refer to Note 2 for additional information. 9 Net Income Per Common Share The Company calculates net income per common share based on the weighted-average number of shares of the Company's common stock outstanding during the period. Potentially dilutive securities are included in the diluted per-share calculations using the treasury stock method for all periods when the effect of their inclusion is dilutive. Accounting for Leases The Company has operating and finance leases for certain facilities, equipment, autos and data centers. As an accounting policy for short-term leases, the Company elected to not recognize a right-of-use ("ROU") asset and liability if, at the commencement date, the lease (1) has a term of 12 months or less and (2) does not include renewal and purchase options that the Company is reasonably certain to exercise. Monthly payments on short-term leases are recognized on a straight-line basis over the full lease term. Accounting for Stock-Based Compensation The Company recognizes stock-based compensation expense related to the estimated fair value of restricted stock awards on a straight-line basis, net of estimated forfeitures, over the requisite service period of the awards, which is generally the vesting term of four years . Stock-based expense related to performance share grants are measured based on grant date fair value and expensed on a graded basis over the service period of the awards, which is generally a performance period of three years . The performance conditions are based on the Company's achievement of revenue growth and return on invested capital over the performance period, and are evaluated for the probability of vesting at the end of each reporting period with changes in expected results recognized as an adjustment to expense. The assumptions used to calculate the fair value of restricted stock grants are evaluated and revised, as necessary, to reflect market conditions and the Company’s experience. Fair Value of Financial Instruments Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified under a three-tier fair valuation hierarchy based on the observability of the inputs available in the market: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The carrying amounts of trade accounts receivable, accounts payable, accrued liabilities and other current liabilities approximate fair value due to the short-term nature of these instruments. The fair values of the interest rate and foreign currency contracts are classified as Level 2 within the fair value hierarchy. The fair values of the Company’s contingent consideration related to acquisitions and equity investments are classified as Level 3 within the fair value hierarchy, as these amounts are based on unobserved inputs such as management estimates and entity-specific assumptions and are evaluated on an ongoing basis. Derivative Instruments The Company uses derivative instruments as a risk management tool to mitigate the potential impact of certain market risks. Foreign currency and interest rate risk are the primary market risks the Company manages through the use of derivative instruments, which are accounted for as cash flow hedges or net investment hedges under the accounting standards and carried at fair value as other current or noncurrent assets or as other current or other long-term liabilities in the condensed consolidated balance sheets. Assets and liabilities with the legal right of offset are not offset in the condensed consolidated balance sheets. Net deferred gains and losses related to changes in fair value of cash flow hedges are included in accumulated other comprehensive income/loss ("OCI"), a component of stockholders' equity in the condensed consolidated balance sheets, and are reclassified into the line item in the condensed consolidated statement of earnings and comprehensive income in which the hedged items are recorded in the same period the hedged item affects earnings. The effective portion of gains and losses attributable to net investment hedges is recorded net of tax to OCI to offset the change in the carrying value of the net investment being hedged. Recognition in earnings of amounts previously recorded to OCI are limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation. Changes in fair value of any derivatives that are determined to be ineffective are immediately reclassified from OCI into earnings. 10 Cash and Cash Equivalents The Company classifies investments that are highly liquid and have maturities of three months or less at the date of purchase as cash equivalents. As of September 30, 2022 and 2021, the values of these investments were $ 31.9 million and $ 28.6 million, respectively, consisting of United States Treasury securities and money market funds. The value of the investments is based on cost, which approximates fair value based on Level 1 inputs . Current Estimated Credit Loss - Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts receivable for estimated future expected credit losses resulting from customers' failure to make payments on its accounts receivable. The Company determines the estimate of the allowance for doubtful accounts receivable by considering several factors, including (1) specific information on the financial condition and the current creditworthiness of customers, (2) credit rating, (3) payment history and historical experience, (4) aging of the accounts receivable, and (5) reasonable and supportable forecasts about collectability. The Company also reserves 100 % of the amounts deemed uncollectible due to a customer's deteriorating financial condition or bankruptcy. Every quarter, the Company evaluates the customer group using the accounts receivable aging report and its best judgment when considering changes in customers' credit ratings, level of delinquency, customers' historical payments and loss experience, current market and economic conditions, and expectations of future market and economic conditions. The changes in the allowance for doubtful accounts receivable for the nine months ended September 30, 2022 are outlined in the table below: Balance at Balance at (in thousands) December 31, 2021 Expense (Deductions), net Write-Offs 1 September 30, 2022 Allowance for Doubtful Accounts $ 1,932 1,146 214 $ 2,864 1 Amount is net of recoveries and the effect of foreign currency fluctuations. Income Taxes Income taxes are calculated using an asset and liability approach. The provision for income taxes includes federal, state and foreign taxes currently payable and deferred taxes, due to temporary differences between the financial statement and tax bases of assets and liabilities. In addition, future tax benefits are recognized to the extent that realization of such benefits is more likely than not. This method gives consideration to the future tax consequences of the deferred income tax items and immediately recognizes changes in income tax laws in the year of enactment. The Company uses an estimated annual tax rate to measure the tax benefit or tax expense recognized in each interim period. Accounting Standards Not Yet Adopted In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting in response to the market transition from the London Interbank Offered Rate (“LIBOR”). The Company's primary credit facility, which was amended and restated on March 30, 2022, is composed of $ 450.0 million revolving line of credit and a $ 450.0 million term loan (the "Amended and Restated Credit Facility"), which matures on March 30, 2027. Borrowings under the Amended and Restated Credit Facility bear interest using Secured Overnight Financing Rate ("SOFR") plus an applicable margin in lieu of LIBOR. The Company does not expect the impacts of adopting ASU 2020-04 to be material to its financial position, results of operations and cash flows All other newly issued and effective accounting standards during the third quarter of 2022 were determined to be not relevant or material to the Company. 11 2. Revenue from Contracts with Customers Disaggregated Revenue The Company disaggregates net sales into the following major product groups as described in its segment information included in these interim financial statements under Note 15. Wood Construction Products Revenue . Wood construction products represented 87 % and 86 %, respectively, of total net sales for the nine months ended September 30, 2022 and 2021. Concrete Construction Products Revenue. Concrete construction products represented 13 % and 14 %, respectively, of total net sales for both the nine months ended September 30, 2022 and 2021. Customer Acceptance Criteria. Generally, there are no customer acceptance criteria included in the Company's standard sales agreement with customers. When an arrangement with the customer does not meet the criteria to be accounted for as a revenue contract under the standard, the Company recognizes revenue in the amount of nonrefundable consideration received when the Company has transferred control of the goods or services and has stopped transferring (and has no obligation to transfer) additional goods or services. The Company offers certain customers discounts for paying invoices ahead of the due date, which are generally 30 to 60 days after the issue date. Other Revenue . Service sales, representing after-market repair and maintenance, engineering activities and software license sales and services were less than 0.1 % of net sales and recognized as the services are completed or by transferring control over a product to a customer at a point in time. Services may be sold separately or in bundled packages. The typical contract length for a service is generally less than one year. For bundled packages, the Company accounts for individual services separately when they are distinct within the context of the contract. A distinct service is separately identifiable from other items in the bundled package if a customer can benefit from it on its own or with other resources that are readily available to the customer. The consideration (including any discounts) is allocated between separate services in a bundle based on their stand-alone selling prices. The stand-alone selling prices are determined based on the prices at which the Company separately sells the services. Reconciliation of Contract Balances Contract assets are the rights to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditional on something other than the passage of time. Contract liabilities are recorded for any services billed to customers and not yet recognizable if the contract period has commenced or for the amount collected from customers in advance of the contract period commencing. As of September 30, 2022, the Company had no contract assets or contract liabilities from contracts with customers . 3. Acquisition On April 1, 2022, the Company completed its acquisition of 100 % of the outstanding equity interest of FIXCO Invest S.A.S. (together with its subsidiaries, "ETANCO") for total purchase consideration of $ 805.4 million, net of cash acquired (the "Acquisition"). The Acquisition was completed pursuant to the securities purchase agreement dated January 26, 2022, as amended (the “SPA”), by and among the Company, Fastco Investment, Fastco Financing, LRLUX and certain other security holders. The purchase price for the Acquisition was paid using cash on hand and borrowings in the amount of $ 250.0 million under the revolving credit facility and $ 450.0 million under the term loan facility. See Note 13 for further information on the Amended and Restated Credit Facility. ETANCO is a manufacturer and distributor of fastener and fixing products headquartered in France and its primary product applications directly align with the addressable markets in which the Company operates. The Acquisition will allow the Company to enter into new commercial building markets such as façades, waterproofing, safety and solar, as well as grow its share of direct business sales in Europe. ETANCO’s results of operations were included in the Company's consolidated financial statements from April 1, 2022 acquisition date. The Company's three and nine months ended September 30, 2022 results of operation only includes ETANCO's results of operations for the six months ending September 30, 2022, subsequent to the acquisition. ETANCO had net sales of $ 67.5 million and a net loss of $ 1.8 million, and net sales of $ 147.8 million and a net loss of $ 3.7 million, for the 12 three and nine months ended September 30, 2022, respectively, which includes costs related to fair-value adjustments for acquired inventory, amortization of acquired intangible assets, and expenses incurred for integration. The allocation of the purchase price is preliminary and subject to change, including any costs and expenses already recognized, as the Company refines its estimates over the measurement period, which is expected to be finalized by the end of the 2022 fiscal year. Purchase price allocation The Acquisition was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”) which requires, among other things, that assets acquired and liabilities assumed in a business combination be recorded at fair value as of the acquisition date with limited exceptions. Preliminary fair value estimates of the net assets acquired are based upon preliminary calculations and valuations as of April 1, 2022. Due to the timing and significance of the Acquisition, the estimates and assumptions regarding certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, income taxes, contingent liabilities, goodwill and useful lives of intangible assets are subject to change as the Company obtains additional information during the measurement period of up to 12 months from the acquisition date. The preliminary allocation of the $ 824.4 million purchase price to the estimated fair values of the tangible and intangible assets acquired and liabilities assumed is as follows: (in thousands) Amount Cash and cash equivalents $ 19,010 Trade accounts receivable, net 63,607 Inventory 105,641 Other current assets 4,491 Property and equipment, net 89,143 Operating lease right-of-use assets 4,920 Goodwill 368,672 Intangible assets, net 357,327 Other noncurrent assets 1,428 Total assets 1,014,239 Trade accounts payable 46,457 Accrued liabilities and other current liabilities 22,079 Operating lease liabilities 5,176 Deferred income tax and other long-term liabilities 116,122 Total purchase price $ 824,405 Trade accounts receivable, net The gross amount of trade receivables acquired was approximately $ 67.4 million, of which $ 63.6 million is estimated to be recoverable based on ETANCO's historical trend for collections. Inventory Acquired inventory primarily consists of raw materials and finished goods consisting of building and construction materials products. The Company adjusted acquired finished goods higher by $ 12.8 million to estimated fair value based on expected selling prices less a reasonable amount for selling efforts. The fair value adjustment is recognized as a component of cost of sales over the inventory’s expected turnover period and was $ 3.6 million and $ 12.8 million during the three and nine months ended September 30, 2022, respectively. 13 Property and equipment, net Acquired property and equipment includes land of $ 15.9 million, buildings and site improvements of $ 32.1 million, and machinery, equipment, and software of $ 41.1 million. The estimated fair value of property and equipment was determined primarily using market and/or or cost approach methodologies. The acquired fair value for buildings and site improvements will depreciate on a straight-line basis over the estimated useful lives of the assets for a period of up to sixteen years , machinery, equipment and software will depreciate on an accelerated basis over an estimated useful life of three to ten years . Depreciation expense associated with the acquired property and equipment amounted to $ 2.2 million and $ 3.6 million for the three and nine months ended September 30, 2022, respectively. Goodwill The excess of purchase price over the net assets acquired is recognized as goodwill and relates to the value that is expected from the acquired assembled workforce as well as the increased scale and synergies resulting from the integration of both businesses. The goodwill recognized from the Acquisition is not deductible for local income tax purposes. Goodwill will be allocated to reporting units within the European reporting segment when the purchase price allocation is finalized during the measurement period. Intangible assets, net The estimated fair value of intangible assets acquired was determined primarily using income approach methodologies. The preliminary values allocated to intangible assets and the useful lives are as follows: (in thousands except useful lives) Weighted-average useful life (in years) Amount Customer relationships 15 $ 248,398 Trade names Indefinite 93,811 Developed technology 10 11,256 Patents 8 3,862 $ 357,327 The acquired definite-lived intangible assets will be amortized on a straight-line basis over estimated useful lives, which approximates the pattern in which these assets are utilized. The Company recognized $ 4.4 million and $ 8.6 million of amortization expense on these assets during the three and nine ended September 30, 2022, respectively. Deferred taxes As a result of the increase in fair value of inventory, property and equipment, and intangible assets, deferred tax liabilities of $ 105.4 million were recognized, primarily due to intangible assets. Acquisition and integration related costs During the three months and nine ended September 30, 2022 and the year ended December 31, 2021, the Company incurred acquisition and integration related expenses of $ 1.9 million, $ 14.7 million and $ 2.3 million, respectively. The fiscal 2022 amounts have been included in acquisition and integration related costs in the Company’s income from operations, while the 2021 amounts were included in interest expense, net and other. These acquisition and integration related costs consisted of investment banking, legal, accounting, advisory, and consulting fees. Unaudited pro forma results The following unaudited pro forma combined financial information presents estimated results as if the Company acquired ETANCO on January 1, 2021. The unaudited pro forma financial information as presented below is for informational purposes only and does not purport to actually represent what the Company’s combined results of operations would have been had the Acquisition occurred on January 1, 2021, or what those results will be for any future periods. 14 The following unaudited pro forma consolidated financial information has been prepared using the acquisition method of accounting in accordance with U.S. GAAP: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Net sales $ 553,662 $ 472,172 $ 1,719,648 $ 1,395,751 Net income $ 92,327 $ 70,456 $ 302,579 $ 181,118 Pro forma earnings per common share: Basic $ 2.16 $ 1.63 $ 7.03 $ 4.18 Diluted $ 2.15 $ 1.62 $ 7.01 $ 4.16 Weighted average shares outstanding: Basic 42,813 43,276 43,044 43,287 Diluted 42,916 43,485 43,173 43,500 The unaudited pro forma results above includes the following non-recurring charges to net income: 1) Acquisition and integration related costs of $ 1.9 million, $ 14.7 million, and $ 2.3 million, which were incurred during the three months ended September 30, 2022, nine months ended September 30, 2022, and three months ended December 31, 2021, respectively, were adjusted as if such costs were incurred during the three months ended March 31, 2021. 2) The $ 3.6 million and $ 12.8 million of amortization related to the fair value adjustment for inventory and recognized during the three and nine months ended September 30, 2022, respectively, were adjusted as if incurred during the nine months ended September 30, 2021. 3) Net income for ETANCO includes adjustments of $ 0.6 million and $ 2.7 million to conform ETANCO’s historical financial results prepared under French GAAP to U.S. GAAP for the three and nine months ended September 30, 2021, respectively. In addition, $ 0.4 million in French to U.S. GAAP adjustments were made for the nine months ended September 30, 2022. The U.S. GAAP adjustments are primarily related to share-based payments expense on awards that were settled prior to the Acquisition, and costs incurred and capitalized by ETANCO on its historical acquisitions. 15 4. Net Income Per Share The following shows a reconciliation of basic net earnings per share ("EPS") to diluted EPS: Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share amounts) 2022 2021 2022 2021 Net income available to common stockholders $ 88,243 $ 73,778 $ 276,389 $ 196,650 Basic weighted-average shares outstanding 42,813 43,276 43,044 43,287 Dilutive effect of potential common stock equivalents — restricted stock units 103 209 129 213 Diluted weighted-average shares outstanding 42,916 43,485 43,173 43,500 Net income per common share: Basic $ 2.06 $ 1.70 $ 6.42 $ 4.54 Diluted $ 2.06 $ 1.70 $ 6.40 $ 4.52 5. Stockholders' Equity Treasury Shares As of September 30, 2022, the Company held 763,530 shares of its common stock as treasury shares, which were repurchased during the nine months ended September 30, 2022, in the open market at an average price of $ 97.65 per share, for a total of $ 74.6 million. As of September 30, 2022, approximately $ 25.4 million remains available for repurchase of shares of the Company's common stock under the previously announced $ 100.0 million share repurchase authorization (which expires at the end of 2022). 6. Stock-Based Compensation The Company allocates stock-based compensation expense amongst cost of sales, research and development and other engineering expense, selling expense, or general and administrative expense based on the job functions performed by the employees to whom the stock-based compensation is awarded. Stock-based compensation capitalized in inventory was immaterial for all periods presented. The Company recognized stock-based compensation expense related to its equity plans for employees of $ 3.5 million and $ 2.6 million for the three months ended September 30, 2022 and 2021, respectively, and $ 13.0 million and $ 12.4 million for the nine months ended September 30, 2022 and 2021, respectively. During the nine months ended September 30, 2022, the Company granted 119,169 RSUs and PSUs to the Company's employees, including officers at an estimated weighted average fair value of $ 119.60 per share based on the closing price (adjusted for the present value of dividends) of the Company's common stock on the grant date. The RSUs and PSUs granted to the Company's employees may be time-based, performance-based or time- and performance-based. Certain of the PSUs are granted to officers and key employees, where the number of performance-based awards to be issued is based on the achievement of certain Company performance criteria established in the award agreement over a cumulative three year period. These awards cliff vest after three years . In addition, these same officers and key employees also receive time-based RSUs, which vest pursuant to a three-year graded vesting schedule. Time-based RSUs that are granted to the Company's employees excluding officers and certain key employees, vest ratably over the four year vesting-term of the award. The Company’s seven non-employee directors are entitled to receive approximately $ 704 thousand in equity compensation annually. The number of shares ultimately granted are based on the average closing share price for the Company over the 60 day period prior to approval of the award in the second quarter of each year. In May 2022, the Company granted 6,206 shares of the Company's common stock to the non-employee directors, based on the average closing price of $ 105.50 per share and recognized $ 655 thousand of expense. 16 As of September 30, 2022, the Company's aggregate unamortized stock compensation expense was approximately $ 24.2 million which is expected to be recognized in expense over a weighted-average period of 2.2 years. 7. Trade Accounts Receivable, net Trade accounts receivable consisted of the following: At September 30, At December 31, (in thousands) 2022 2021 2021 Trade accounts receivable $ 341,293 $ 241,955 $ 237,312 Allowance for doubtful accounts ( 2,864 ) ( 1,670 ) ( 1,932 ) Allowance for sales discounts and returns ( 3,980 ) ( 3,750 ) ( 4,359 ) $ 334,449 $ 236,535 $ 231,021 8. Inventories The components of inventories are as follows: At September 30, At December 31, (in thousands) 2022 2021 2021 Raw materials $ 189,715 $ 149,488 $ 191,174 In-process products 48,627 28,399 30,309 Finished products 301,678 207,625 222,273 $ 540,020 $ 385,512 $ 443,756 9. Derivative Instruments The Company enters into derivative instrument agreements, including forward foreign currency exchange contracts, interest rate swaps, and cross currency swaps to manage risk in connection with changes in foreign currency and interest rates. The Company hedges committed exposures and does not engage in speculative transactions. The Company only enters into derivative instrument agreements with counterparties who have highly rated credit. Beginning in March 2022, the Company entered into a forward foreign currency contract expiring in March 2029 to hedge its exposure to adverse foreign currency exchange rate movements for its operations in Europe and elected the spot method for designating this contract as a net investment hedge with the excluded forward point amortized to interest expense. During May 2022, the Company settled the March 2022 forward foreign currency contract for $ 3.9 million in cash, which included $ 0.4 million in recognized forward points, terminated the hedge accounting treatment and simultaneously entered into a new forward foreign currency contract expiring in March 2029 with the same notional amount at a new forward rate. The Company also elected the spot method for designating the May 2022 contract as a net investment hedge. The $ 3.5 million gain recognized on the March 2022 contract excluding recognized forward points is deferred in OCI and will remain in OCI until either the sale or substantially complete liquidation of the hedged subsidiaries. Beginning in March 2022, the Company also converted a Euro-denominated ("EUR"), fixed rate obligation into a U.S. Dollar fixed rate obligation using a receive fixed, pay fixed cross currency swap, which was designated as a cash flow hedge. During May 2022, the Company settled the March 2022 cross currency swap for $ 22.4 million in cash, which was comprised of $ 21.3 million gain on the swap excluding accrued interest and $ 1.1 million of net interest income accrued according to the terms of the swap. The Company terminated the hedge accounting treatment and simultaneously entered into a new cross currency swap expiring in March 2029 with a lower notional amount for the US dollar denominated leg at a new US dollar interest rate. An amount of $ 28.3 million was reclassified out of OCI into earnings to offset the currency loss on the underlying security being hedged resulting in a net $ 7.0 million hedge accounting reserve balance within OCI, which is being amortized to interest expense in the Condensed Consolidated Statement of Earnings and Comprehensive Income through the termination of the underlying hedged intercompany debt in March 2029. In addition, the Company has converted its domestic U.S. variable rate debt to fixed rate debt using a receive variable, pay fixed interest rate swap expiring March 2027. The interest rate swap contract is also designated as a cash flow hedge. 17 As of September 30, 2022, the aggregate notional amount of the Company's outstanding interest rate contracts, cross currency swap contracts and forward contract were $ 688.8 million, $ 460.0 million and $ 321.7 million, respectively. As of September 30, 2021, the aggregate notional amount of the Company's outstanding forward contracts used to hedge variability in cash flows on its Chinese Yuan denominated purchases were $ 2.0 million, all of which expired by December 31, 2021. As of September 30, 2022 there were no outstanding forward contracts on its Chinese Yuan denominated purchases. Changes in fair value of any forward contracts that are determined to be ineffective are immediately reclassified from OCI into earnings. There were no amounts recognized due to ineffectiveness during the nine-months ended September 30, 2022. T he effects of fair value and cash flow hedge accounting on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the periods ended September 30, were as follows: 2022 2021 (in thousands) Cost of sales Interest expense, net Other & foreign exchange loss, net Cost of sales Total amounts of income and expense line items presented in the Condensed Consolidated Statement of Earnings in which the effects of fair value or cash flow hedges are recorded $ 899,828 $ ( 2,983 ) $ ( 3,814 ) $ 597,901 The effects of fair value and cash flow hedging Gain or (loss) on cash flow hedging relationships Interest contracts: Amount of gain or (loss) reclassified from OCI to earnings ( 3,315 ) Cross currency swap contract Amount of gain or (loss) reclassified from OCI to earnings ( 4,020 ) 57,560 Forward contract Amount of gain or (loss) reclassified from OCI to earnings 163 207 The effects of derivative instruments on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the three months ended September 30, 2022 and 2021 were as follows: Cash Flow Hedging Relationships Gain (Loss) Recognized in OCI Location of Gain (Loss) Reclassified from OCI into Earnings Gain (Loss) Reclassified from OCI into Earnings (in thousands) 2022 2021 2022 2021 Interest rate contracts $ 18,696 $ — Interest expense $ ( 337 ) $ — Cross currency contracts 23,977 — Interest expense ( 5,979 ) — FX gain (loss) 28,437 — Forward contracts $ — $ 207 Cost of goods sold — 228 Total $ 42,673 $ 207 $ 22,121 $ 228 18 The effects of derivative instruments on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the nine months ended September 30, 2022 and 2021were as follows: Cash Flow Hedging Relationships Gain (Loss) Recognized in OCI Location of Gain (Loss) Reclassified from OCI into Earnings Gain (Loss) Reclassified from OCI into Earnings 2022 2021 2022 2021 Interest rate contracts $ 25,571 $ — Interest expense $ ( 3,315 ) $ — Cross currency contracts 46,692 — Interest expense ( 4,020 ) — FX gain (loss) 57,560 — Forward contracts — 207 Cost of goods sold 163 428 Total $ 72,263 $ 207 $ 50,388 $ 428 For the three and nine months ending September 30, 2022, gains on the net investment hedge of $ 16.9 million and $ 28.2 million were included in OCI, respectively. For the three and nine months ending September 30, 2022, excluded gains of $ 1.3 million and $ 2.4 million, respectively, were reclassified from OCI to interest expense. As of September 30, 2022, the aggregate fair values of the Company’s derivative instruments were comprised of an asset of $ 82.1 million, of which $ 19.9 million is included in other current assets on the condensed consolidated balance sheet, and the balance, or $ 62.2 million as an Other non-current assets on the condensed consolidated balance sheet. 10. Property, Plant and Equipment, net Property, plant and equipment consisted of the following: At September 30, At December 31, (in thousands) 2022 2021 2021 Land $ 48,027 $ 28,232 $ 28,175 Buildings and site improvements 220,684 201,730 202,393 Leasehold improvements 5,698 5,956 5,995 Machinery, equipment, and software 449,121 396,201 399,079 723,530 632,119 635,642 Less accumulated depreciation and amortization ( 419,108 ) ( 400,981 ) ( 402,246 ) 304,422 231,138 233,396 Capital projects in progress 36,811 24,409 26,473 Total $ 341,233 $ 255,547 $ 259,869 11. Goodwill and Intangible Assets, net Goodwill consisted of the following: At September 30, At December 31, (in thousands) 2022 2021 2021 North America $ 96,087 $ 96,306 $ 96,307 Europe 370,669 35,816 36,331 Asia/Pacific 1,234 1,373 1,384 Total $ 467,990 $ 133,495 $ 134,022 19 Goodwill totaled $ 468.0 million as of September 30, 2022, including $ 337.3 million attributable to the ETANCO acquisition. Amortizable i ntangible assets, net, consisted of the following: At September 30, 2022 Gross Net Carrying Accumulated Carrying (in thousands) Amount Amortization Amount North America $ 46,717 $ ( 28,922 ) $ 17,795 Europe 342,407 ( 29,669 ) 312,738 Total $ 389,124 $ ( 58,591 ) $ 330,533 At September 30, 2021 Gross Net (in thousands) Carrying Amount Accumulated Amortization Carrying Amount North America $ 41,003 $ ( 25,563 ) $ 15,440 Europe 26,361 ( 19,724 ) 6,637 Total $ 67,364 $ ( 45,287 ) $ 22,077 At December 31, 2021 Gross Net (in thousands) Carrying Amount Accumulated Amortization Carrying Amount North America $ 46,643 $ ( 26,346 ) $ 20,297 Europe 26,371 ( 20,399 ) 5,972 Total $ 73,014 $ ( 46,745 ) $ 26,269 Intangible assets consist of definite-lived and indefinite-lived assets. Definite-lived intangible assets include customer relationships, patents, unpatented technology, and non-compete agreements. Amortization expense of definite-lived intangible assets was $ 5.4 million and $ 1.5 million for the three months ended September 30, 2022 and 2021, respectively and was $ 11.8 million and $ 5.0 million for the nine months ended September 30, 2022 and 2021, respectively. The weighted-average amortization period for all amortizable intangibles on a combined basis is 9.3 years. Indefinite-lived intangible assets totaled $ 83.4 million as of September 30, 2022, including $ 82.8 million attributable to trade names acquired in the ETANCO acquisition. At September 30, 2022, the estimated future amortization of definite-lived intangible assets was as follows: (in thousands) Remaining three months of 2022 $ 5,272 2023 20,275 2024 19,334 2025 19,085 2026 18,422 2027 18,275 Thereafter 146,392 $ 247,055 20 The changes in the carrying amount of goodwill and intangible assets for the nine months ended September 30, 2022, were as follows: Intangible (in thousands) Goodwill Assets Balance at December 31, 2021 $ 134,022 $ 26,269 Acquisition of ETANCO 368,673 357,402 Reclassifications — ( 95 ) Amortization — ( 11,846 ) Foreign exchange ( 34,705 ) ( 41,197 ) Balance at September 30, 2022 $ 467,990 $ 330,533 21 12. Leases The Company has operating leases for certain facilities, equipment and automobiles. The existing operating leases expire at various dates through 2026, some of which include options to extend the leases for up to 5 years. The Company measured the lease liability at the present value of the lease payments to be made over the lease term. The lease payments are discounted using the Company's incremental borrowing rate. The Company measured the ROU assets at the amount at which the lease liability is recognized plus initial direct costs incurred or prepayment amounts. The ROU assets are amortized on a straight-line basis over the lease term. The following table provides a summary of leases included on the condensed consolidated balance sheets as of September 30, 2022 and 2021 and December 31, 2021, condensed consolidated statements of earnings and comprehensive income, and condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021, respectively: Condensed Consolidated Balance Sheets Line Item September 30, December 31, (in thousands) 2022 2021 2021 Operating leases Assets Operating leases Operating lease right-of-use assets $ 48,196 $ 41,513 $ 45,438 Liabilities Operating - current Accrued expenses and other current liabilities $ 10,163 $ 8,849 $ 8,769 Operating - noncurrent Operating lease liabilities 38,650 33,063 37,091 Total operating lease liabilities $ 48,813 $ 41,912 $ 45,860 Finance leases Assets Property and equipment, gross Property, plant and equipment, net $ 3,569 $ 3,569 $ 3,569 Accumulated amortization Property, plant and equipment, net ( 3,569 ) ( 3,340 ) ( 3,416 ) Property and equipment, net Property, plant and equipment, net $ — $ 229 $ 153 The components of lease expense were as follows: Condensed Consolidated Statements of Earnings and Comprehensive Income Line Item Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Operating lease cost General administrative expenses and cost of sales $ 3,436 $ 2,958 $ 9,851 $ 8,570 Finance lease cost: Amortization of right-of-use assets General administrative expenses $ — $ 2 $ — $ 215 Interest on lease liabilities Interest expense, net — — — 2 Total finance lease $ — $ 2 $ — $ 217 22 Other Information Supplemental cash flow information related to leases is as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 3,435 $ 2,919 $ 9,662 $ 8,417 Finance cash flows for finance leases — 2 — 291 Operating right-of-use assets obtained in exchange for lease obligations during the current period 3,159 926 8,728 5,624 The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2022: (in thousands) Operating Leases Remaining three months of 2022 $ 3,391 2023 12,218 2024 10,161 2025 8,287 2026 6,405 Thereafter 18,070 Total lease payments 58,532 Less: Present value discount ( 9,719 ) Total lease liabilities $ 48,813 The following table summarizes the Company's lease terms and discount rates as of September 30, 2022 and 2021: Weighted-average remaining lease terms (in years): 2022 2021 Operating leases 6.12 6.77 Weighted-average discount rate: Operating leases 4.79 % 5.26 % 13. Debt On March 30, 2022, the Company entered into the Amended and Restated Credit Facility, which amends and restates the Company's previous Credit Agreement, dated as of July 27, 2012. The Amended and Restated Credit Facility provides for a 5-year revolving credit facility of $ 450.0 million revolving line of credit, which includes a letter of credit-sub-facility up to $ 50.0 million, and a 5-year term loan facility of $ 450.0 million. The Company borrowed $ 250.0 million, under the revolving credit facility and $ 450.0 million under the term loan facility to finance a portion of the purchase price of the Acquisition. In addition, the Company incurred $ 6.8 million of debt issuance costs, which are classified in long-term debt on the condensed consolidating balance sheet, that have been deferred and will amortize over the 5-year terms of the Amended and Restated Credit Facility. The Company is required to pay an annual revolving credit facility fee of 0.10 % to 0.25 % per annum on the available commitments under the terms of the Amended and Restated Revolving Credit Facility, regardless of usage, with the applicable 23 fee determined on a quarterly basis based on the Company’s net leverage ratio. The fee is included within Interest expense, net and other in the Company's Condensed Consolidated Statements of Earnings and Comprehensive Income. Amounts borrowed under the Amended and Restated Credit Facility will bear interest from time to time at either the Base Rate, Spread Adjusted Daily Simple SOFR, Spread Adjusted Term SOFR, Adjusted Eurocurrency Rate or Daily Simple RFR, in each case, as calculated under and as in effect from time to time under the Amended and Restated Credit Facility, plus the Applicable Margin, as defined in the Amended and Restated Credit Facility. The Applicable Margin is determined based on the Company’s net leverage ratio, and ranges (i) from 0.00 % to 0.75 % per annum for amounts borrowed under the term loan facility that bear interest at Base Rate, (ii) from 0.75 % to 1.75 % per annum for amounts borrowed under the term loan facility that bear interest at Adjusted Eurocurrency Rate, Spread Adjusted Daily Simple SOFR or Spread Adjusted Term SOFR, (iii) from 0.00 % to 0.50 % per annum for amounts borrowed under the revolving credit facility that bear interest at Base Rate, (iv) from 0.68 % to 1.53 % per annum for amounts borrowed under the revolving credit facility that bear interest at Daily Simple RFR (solely to the extent denominated in pound sterling) and (v) from 0.65 % to 1.50 % per annum for amounts borrowed under the revolving credit facility that bear interest at Daily Simple RFR (other than loans denominated in pound sterling) or Adjusted Eurocurrency Rate. Loans outstanding under the Amended and Restated Credit Facility may be prepaid at any time without penalty except for customary breakage costs and expenses. Based on current principal payment expectations, the annual interest rate on the outstanding debt will be approximately 2.00 % over the life of the debt including the effects of the interest rate swap and other derivatives noted above. As of September 30, 2022, in addition to the Amended and Restated Credit Facility, certain of the Company’s domestic subsidiaries are guarantors for a credit agreement between certain of its foreign subsidiaries and institutional lenders. Together, all of its credit facilities provide the Company with a total of $ 205.1 million in available revolving credit lines and an irrevocable standby letter of credit in support of various insurance deductibles. The Company has $ 688.8 million, excluding deferred financing costs, outstanding under the Amended and Restated Credit Facility, which is the estimated the fair value as of September 30, 2022. There were no outstanding balances under the Amended and Restated Credit Facility as of September 30, 2021, and December 31, 2021. The following is a schedule, by years, of maturities for the remaining term loan facility as of September 30, 2022: (in thousands) 5-Year Term Loan Remaining three months of 2022 $ 5,625 2023 22,500 2024 22,500 2025 22,500 2026 22,500 2027 343,125 Total loan outstanding $ 438,750 The $ 250.0 million borrowed under the revolving credit facility is due on March 31, 2027. The Company was in compliance with its financial covenants under the Amended and Restated Credit Facility as of September 30, 2022. 14. Commitments and Contingencies Environmental The Company’s policy with regard to environmental liabilities is to accrue for future environmental assessments and remediation costs when information becomes available that indicates that it is probable that the Company is liable for any related claims and assessments and the amount of the liability is reasonably estimable. The Company does not believe that any such matters will have a material adverse effect on the Company’s financial condition, cash flows or results of operations. Litigation and Potential Claims 24 From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. Corrosion, hydrogen embrittlement, cracking, material hardness, wood pressure-treating chemicals, misinstallations, misuse, design and assembly flaws, manufacturing defects, labeling defects, product formula defects, inaccurate chemical mixes, adulteration, environmental conditions, or other factors can contribute to failure of fasteners, connectors, anchors, adhesives, specialty chemicals, such as fiber reinforced polymers, and tool products. In addition, inaccuracies may occur in product information, descriptions and instructions found in catalogs, packaging, data sheets, and the Company’s website. The resolution of any claim or litigation is subject to inherent uncertainty and could have a material adverse effect on the Company’s financial condition, cash flows or results of operations. 15. Segment Information The Company is organized into three reporting segments defined by the regions where the Company’s products are manufactured, marketed and distributed to the Company’s customers. The three reporting segments are the North America segment (comprised primarily of the Company’s operations in the U.S. and Canada), the Europe segment, which includes ETANCO, and the Asia/Pacific segment (comprised of the Company’s operations in Asia, the South Pacific, and the Middle East). These segments are similar in several ways, including the types of materials used, the production processes, the distribution channels and the product applications. The Administrative & All Other column primarily includes expenses such as self-insured workers compensation claims for employees, stock-based compensation for certain members of management, interest expense, foreign exchange gains or losses and income tax expense, as well as revenues and expenses related to real estate activities. The following tables illustrate certain measurements used by management to assess the performance of its reportable segments as of or the following periods: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Net Sales North America $ 437,770 $ 338,591 $ 1,332,911 $ 989,711 Europe 111,903 54,832 296,592 155,567 Asia/Pacific 3,989 3,315 10,961 9,383 Total $ 553,662 $ 396,738 $ 1,640,464 $ 1,154,661 Sales to Other Segments* North America $ 1,071 $ 815 $ 3,646 $ 1,732 Europe 1,045 1,226 4,000 4,386 Asia/Pacific 8,736 5,856 25,242 19,849 Total $ 10,852 $ 7,897 $ 32,888 $ 25,967 Income (Loss) from Operations ** North America $ 127,318 $ 100,229 $ 400,336 $ 274,444 Europe 6,149 7,517 10,339 15,681 Asia/Pacific 234 313 898 941 Administrative and all other ( 10,886 ) ( 7,440 ) ( 31,243 ) ( 20,335 ) Total $ 122,815 $ 100,619 $ 380,330 $ 270,731 * Sales to other segments are eliminated in consolidation. ** Beginning in 2022, the Company changed its presentation of its North America and Administrative and all other segment's statement of operations to display allocated expenses and management fees as a separate item below income from operations. During 2021, allocated expenses and management fees between the two segments were previously included in gross profit, operating expenses and in income from operations and been adjusted herein to conform to 2022 presentation. Consolidated income of operations, income before tax and net income for all periods presented below are not affected by the change of operations. 25 At At September 30, December 31, (in thousands) 2022 2021 2021 Total Assets North America $ 1,311,102 $ 1,274,937 $ 1,352,988 Europe 641,988 207,744 202,631 Asia/Pacific 34,333 32,748 31,832 Administrative and all other 516,835 ( 93,360 ) ( 103,326 ) Total $ 2,504,258 $ 1,422,069 $ 1,484,125 Cash collected by the Company’s U.S. subsidiaries is routinely transferred into the Company’s cash management accounts and, therefore is in the total assets of “Administrative and all other.” Cash and cash equivalent balances in the “Administrative and all other” segment were $ 236.3 million, $ 219.7 million, and $ 223.5 million, as of September 30, 2022 and 2021, and December 31, 2021, respectively. Also included in the total assets of "Administrative and all other" are intercompany borrowings due from the Europe segment, which were used by the Europe segment in the acquisition of ETANCO. Included in the total assets of each segment are net intercompany borrowings due to and from the other segments. The Company’s wood construction products include connectors, truss plates, fastening systems, fasteners and pre-fabricated shearwalls and are used for connecting and strengthening wood-based construction primarily in residential and commercial construction. Its concrete construction products include adhesives, specialty chemicals, mechanical anchors, carbide drill bits, powder actuated tools and reinforcing fiber materials and are used for restoration, protection or strengthening concrete, masonry and steel construction in residential, industrial, commercial and infrastructure construction. The table below illustrates the distribution of the Company’s sales by product group as additional information for the following periods: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Wood construction products $ 478,554 $ 338,896 $ 1,428,745 $ 996,261 Concrete construction products 74,933 57,589 211,119 157,417 Other 175 253 600 983 Total $ 553,662 $ 396,738 $ 1,640,464 $ 1,154,661 16. Subsequent Events Dividend Declared On October 21, 2022, the Company’s Board of Directors (the "Board") declared a quarterly cash dividend of $ 0.26 per share, estimated to be $ 11.1 million in total. The dividend will be payable on January 26, 2023, to the Company's stockholders of record on January 5, 2023. 26