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Acquisitions and Divestitures | 9 Months Ended
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Sep. 30, 2023
Business Combinations [Abstract] |
Acquisitions and Divestitures | 2. Acquisitions and Divestitures Acquisition of AeroTech On August 1, 2023, the Company acquired 100% of JBT AeroTech (AeroTech) from JBT Corporation for $803.3 million, net of cash acquired. AeroTech, a leading provider of aviation ground support products, gate equipment and airport services provided to commercial airlines, airports, air-freight carriers, ground handling customers and the military, is part of the Vocational segment. The purchase price included $808.0 million in cash, a receivable of $10.0 million for certain post-closing information technology integration costs, a payable of $1.5 million for required equity replacement awards and a payable of $3.8 million for certain post-closing working capital adjustments. The acquisition was funded with cash on hand and approximately $575 million of borrowings under the Company’s existing revolving credit facility. See Note 12 to Condensed Consolidated Financial Statements for additional information regarding the Company’s debt. The results of AeroTech have been included in the Company’s Condensed Consolidated Statements of Income from the date of acquisition. AeroTech had sales of $115.8 million from the acquisition date to September 30, 2023. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the date of acquisition (in millions):
Assets Acquired: |  |  |
Cash and cash equivalents |  | $ | 9.3 |
Accounts receivable |  |  | 79.1 |
Unbilled receivables |  |  | 57.8 |
Inventory |  |  | 150.1 |
Other current assets |  |  | 4.4 |
Property, plant and equipment |  |  | 30.6 |
Goodwill |  |  | 363.4 |
Purchased intangible assets |  |  | 241.4 |
Other long-term assets |  |  | 10.5 |
Total assets, excluding cash and cash equivalents |  | $ | 937.3 |
Liabilities Assumed: |  |  |
Accounts payable |  | $ | 66.2 |
Customer advances |  |  | 24.8 |
Payroll-related obligations |  |  | 13.5 |
Other current liabilities |  |  | 22.6 |
Deferred income taxes |  |  | 2.6 |
Long-term liabilities |  |  | 4.3 |
Total liabilities |  | $ | 134.0 |
Net assets acquired |  | $ | 803.3 |
The preliminary valuation of intangible assets consists of $241.4 million of assets subject to amortization with an estimated average life of approximately seven years. The purchase price, net of cash acquired, was allocated based on the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition with the excess purchase price of $363.4 million recorded as goodwill, all of which was allocated to the Vocational segment. The goodwill is primarily the result of expected synergies, including combining the highly engineered products of AeroTech with the Company's portfolio and technology ecosystem, new product innovations and operational synergies. The Company estimates that the majority of the goodwill is deductible for income tax purposes. Due to the timing of the acquisition and the nature of the net assets acquired, the purchase price allocations are preliminary at September 30, 2023 and may be subsequently adjusted to reflect the finalization of appraisals and other valuation studies. The Company recorded $11.6 million and $12.9 million of transaction costs related to the acquisition during the three and nine months ended September 30, 2023, respectively, which are included in selling, general and administrative expense in the Company’s Condensed Consolidated Statements of Income. Unaudited pro forma financial information The following table presents the supplemental consolidated results of the Company for the three and nine months ended September 30, 2023 and 2022, on an unaudited pro-forma basis as if the acquisition of AeroTech had been completed on January 1, 2022 (in millions). The primary adjustments reflected in the unaudited pro-forma information related to (1) increase in interest expense for debt used to fund the acquisition and lower interest income due to less cash on hand available to be invested, (2) changes related to purchase accounting primarily related to amortization of purchased intangible assets recorded in conjunction with the acquisition and amortization of the inventory fair value step-up recorded as of the acquisition date, and (3) removal of transaction costs related to the acquisition from 2023 (and included in 2022). Adjustments to net income have been reflected net of income tax effects. The unaudited pro forma information does not include any anticipated cost savings or other effects of future integration efforts and does not purport to be indicative of results that actually would have been achieved if the operations were combined during the periods presented and is not intended to be a projection. The unaudited pro forma financial information does not reflect any potential cost savings, operating efficiencies, debt pay down, financial synergies or other strategic benefits as a result of the acquisition or any restructuring costs to achieve those benefits.
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Net sales |  | $ | 2,548.8 |  |  | $ | 2,223.3 |  |  | $ | 7,535.6 |  |  | $ | 6,496.5 |
Net income |  | $ | 186.3 |  |  | $ | 63.7 |  |  | $ | 436.8 |  |  | $ | 75.6 |
Acquisition of Hinowa On January 31, 2023, the Company acquired Hinowa S.p.A. (Hinowa), an Italian manufacturer of compact crawler booms and tracked equipment, for €171.8 million ($186.8 million), net of cash acquired. Hinowa is part of the Access segment. The results of Hinowa have been included in the Company’s Condensed Consolidated Statements of Income from the date of acquisition. Hinowa had sales of $19.0 million for the three months ended September 30, 2023 and $56.8 million from the acquisition date to September 30, 2023. Pro-forma resu lts of operations have not been presented as the effect of the acquisition is not material to any periods presented. The following table summarizes the fair values of the assets acquired and liabilities assumed as of the date of acquisition (in millions):
Assets Acquired: |  |  |
Cash and cash equivalents |  | $ | 13.7 |
Current assets, excluding cash and cash equivalents |  |  | 54.7 |
Property, plant and equipment |  |  | 15.5 |
Goodwill |  |  | 106.4 |
Purchased intangible assets |  |  | 84.7 |
Other long-term assets |  |  | 4.8 |
Total assets, excluding cash and cash equivalents |  |  | 266.1 |
Liabilities Assumed: |  |  |
Current liabilities |  |  | 48.3 |
Deferred income taxes |  |  | 25.8 |
Long-term liabilities |  |  | 5.2 |
Total liabilities |  |  | 79.3 |
Net assets acquired |  | $ | 186.8 |
Purchased intangible assets consist of $58.3 million of assets subject to amortization with a weighted average useful life of eight years and $26.4 million of assets with an indefinite life. The purchase price, net of cash acquired, was allocated based on the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition with the excess purchase price of $106.4 million recorded as goodwill, representing expected synergies, all of which was allocated to the Access segment. None of the goodwill is deductible for income tax purpo ses. The Company recorded $0.6 million of transaction costs related to the acquisition during the nine months ended September 30, 2023, which are included in selling, general and administrative expense in the Company’s Condensed Consolidated Statements of Income. Divestitures On March 1, 2023, the Company completed the sale of its rear discharge concrete mixer business for $32.9 million. As the sale price was below the carrying value of the business, a pre-tax loss of $13.3 million was recognized during the first quarter of fiscal 2023, which is included in selling, general and administrative expense in the Company’s Condensed Consolidated Statements of Income. The rear discharge concrete mixer business, which was included in the Vocational segment, had sales of $40.6 million and $128.3 million for the three and nine months ended September 30, 2022, respectively. On July 24, 2023, the Company completed the sale of its 49% interest in the Mezcladoras Trailers de Mexico, S.A. de C.V. (Mezcladoras) joint venture for $2.9 million. A loss of $1.9 million on the sale was recognized during the third quarter of fiscal 2023, primarily to eliminate the cumulative translation adjustments related to Mezcladoras upon liquidation of the investment. On July 24, 2023, the Company completed the sale of its snow removal apparatus business for $17.1 million. As the sale price was greater than the carrying value of the business, a pre-tax gain of $8.0 million was recognized during the third quarter of fiscal 2023, which is included in selling, general and administrative expense in the Company’s Condensed Consolidated Statements of Income. The snow removal apparatus business, which was included in the Defense segment, had sales of $4.5 million and $11.1 million for the three and nine months ended September 30, 2022, respectively.

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