Foundation Building Materials: Legislation to reduce liability under TRA
Foundation Building Materials is providing preliminary estimates regarding its Tax Receivable Agreement with its controlling shareholder due to the passage of recent tax legislation. On December 22, 2017, President Trump signed the Tax Cut and Jobs Act of 2017. The Act reduced the maximum federal corporate income tax rate from 35% to 21%, effective January 1, 2018. The passage of this legislation is expected to significantly reduce the company's liability under the TRA. In the company's most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission, the company disclosed that its undiscounted liability as of September 30, 2017 under the TRA was $203.8M. Due to the decrease in the federal corporate income tax rate, the company now expects that as of December 31, 2017, the undiscounted liability of the TRA will be between $130M-$145M, and the discounted present value of the TRA will be between $85M-$100M. The decrease in the undiscounted value of the TRA will be recorded in the consolidated statement of operations for the year ended December 31, 2017, and the company estimates earnings per share for the fourth quarter to be positively impacted by a range of $1.37 to $1.72 due to this adjustment.