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Business Combinations and Discontinued Operations | 12 Months Ended
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Dec. 31, 2021
Business Combinations [Abstract] |
Business Combinations And Discontinued Operations | Note D: Business Combinations and Discontinued Operations Lehigh Hanson West Region. On October 1, 2021, the Company completed the acquisition of Lehigh Hanson, Inc.’s West Region business (Lehigh West Region) for $2.28 billion in cash. The acquisition was primarily financed using proceeds from the issuance of publicly traded debt. Lehigh West Region has a portfolio of 17 active aggregates quarries, two cement plants with related distribution terminals, and targeted downstream operations in four states. These operations provide a new upstream, materials-led growth platform across several of the nation’s largest and fastest growing megaregions in California and Arizona, solidifying the Company’s position as a leading coast-to-coast aggregates producer. The acquisition is reported in the Company’s West Group. The acquisition represents a stock transaction where the Company acquired 100% of the voting interest of the legal entities that comprise the Lehigh West Region. However, for tax purposes, the acquisition is being treated as an asset transaction. The Company determined the acquisition-date fair values of assets acquired and liabilities assumed. Although initial accounting for the business combination has been recorded, the fair values of these amounts are subject to change during the measurement period, which extends no longer than one year from consummation date depending on additional reviews, such as asset verification. Specific amounts subject to ongoing purchase accounting adjustments include, but are not limited to, inventories; property, plant and equipment; lease assets and liabilities; goodwill; intangible assets; asset retirement obligations; and other liabilities. Therefore, the measurement period remains open as of December 31, 2021. The following is a summary of the estimated fair values of the assets acquired and the liabilities assumed as of October 1, 2021:
(in millions) |  |  |  |
Assets: |  |  |  |
Inventories |  | $ | 95.5 |
Property, plant and equipment1 |  |  | 859.5 |
Intangible assets, other than goodwill |  |  | 551.0 |
Goodwill |  |  | 989.2 |
Other assets |  |  | 54.6 |
Total Assets |  |  | 2,549.8 |
Liabilities: |  |  |  |
Asset retirement obligations |  |  | 168.9 |
Operating and finance lease liabilities |  |  | 57.5 |
Other liabilities |  |  | 39.9 |
Total Liabilities |  |  | 266.3 |
Total Consideration |  | $ | 2,283.5 |
1 | Includes mineral reserves of $332.0 million.
The acquired intangible assets consist of the following:
(in millions, except year data) |  | Amount |  |  | Weighted-average amortization period
Subject to amortization: |  |  |  |  |  |
Customer relationships |  | $ | 112.6 |  |  | 27 years
Operating permits |  |  | 173.5 |  |  | 40 years
Total subject to amortization |  |  | 286.1 |  |  | 35 years
Classified as held for sale and not subject to amortization: |  |  |  |  |  |
Customer relationships |  |  | 27.9 |  |  |
Operating permits |  |  | 237.0 |  |  |
Total classified as held for sale |  |  | 264.9 |  |  |
Total |  | $ | 551.0 |  |  |
Goodwill represents the excess purchase price over the fair values of assets acquired and liabilities assumed and reflects projected operating synergies from the transaction, including expected overhead savings. The goodwill generated by the transaction is deductible for income tax purposes. The Company did not acquire any of Lehigh West Region’s cash, cash equivalents or accounts receivable nor did it assume any accounts payable, outstanding debt, or pension obligation. The unaudited pro forma financial information summarizes the combined results of operations for the Company and Lehigh West Region as though the companies were combined as of January 1, 2020. Financial information for periods prior to the October 1, 2021 acquisition date included in the pro forma earnings does not reflect any cost savings or associated costs to achieve such savings from operating efficiencies or synergies that result from the combination. Consistent with the assumed acquisition date of January 1, 2020, the pro forma financial results for the year ended December 31, 2020 include acquisition-related expenses of $46.8 million. The unaudited pro forma financial information does not purport to project the future financial position or operating results of the combined company. The following pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2020:
years ended December 31 |  |  |  |  |  |  |  |  |
(in millions, except for per share data) |  | 2021 |  |  | 2020 |  |
Total revenues |  | $ | 5,755.1 |  |  | $ | 5,184.9 |  |
Net earnings from continuing operations attributable to Martin Marietta |  | $ | 737.3 |  |  | $ | 642.4 |  |
Diluted net earnings from continuing operations per share |  | $ | 11.78 |  |  | $ | 10.30 |  |
The pro forma financial information excludes the cement and California ready mix businesses, which are classified as discontinued operations. Southern Crushed Concrete. On July 30, 2021, the Company acquired assets of Southern Crushed Concrete (SCC). SCC is a leading producer of recycled concrete in the Houston area. Recycled concrete is principally used as a base aggregates product in infrastructure, commercial and residential construction applications. The Company acquired inventories; property, plant and equipment; intangible assets (including goodwill); and lease ROU assets. The Company assumed asset retirement obligations; lease obligations; and other liabilities. The goodwill generated by the transaction is deductible for income tax purposes. Although initial accounting for the business combination has been recorded, the fair values of these amounts are subject to change during the measurement period, which remains open as of December 31, 2021. The acquisition is reported in the Company’s West Group, but is immaterial for pro-forma financial statement disclosures. Tiller Corporation. On April 30, 2021, the Company completed the acquisition of Tiller Corporation (Tiller), a leading aggregates and hot mix asphalt supplier in the Minneapolis/St. Paul region, one of the largest and fastest growing midwestern metropolitan areas. The Tiller acquisition complements the Company’s existing product offerings in the surrounding areas. Additionally, Tiller sells asphalt solely as a materials provider, and does not offer paving or other associated services. The Company financed the acquisition using available cash and borrowings under its credit facilities. The Company has recorded preliminary fair values of the assets acquired and liabilities assumed; however, these amounts are subject to change during the measurement period, which remains open as of December 31, 2021. The goodwill generated by the transaction is deductible for income tax purposes. The acquisition is reported in the Company’s East Group, but is immaterial for pro-forma financial statement disclosures. Total revenues and earnings from operations attributable to all continuing operations acquired in 2021 which are included in the consolidated statement of earnings for the year ended December 31, 2021 were $338.6 million and $12.1 million, respectively. Total acquisition-related expenses, primarily related to the Lehigh West Region transaction, were $57.9 million for the year ended December 31, 2021. Discontinued Operations. The Company’s discontinued operations are comprised of the cement and California ready mix businesses acquired as part of the Lehigh West Region transaction. The Company did not record any amortization or depreciation expense related to these businesses from the date of acquisition, October 1, 2021, through December 31, 2021, as these are classified as assets held for sale. Discontinued operations for the year ended December 31, 2021 include the following:
(in millions) |  |  |  |
Total revenues |  | $ | 79.2 |
Earnings from operations |  | $ | 6.6 |
Loss on sale |  |  | (6.0 | )
Pretax earnings |  |  | 0.6 |
Income tax expense |  |  | 0.1 |
Net earnings |  | $ | 0.5 |
Total cash used for operating and investing activities for the discontinued operations was $11.9 million for the year ended December 31, 2021. For the year ended December 31, 2021, non-cash operating and investing activities related to the discontinued operations were $14.8 million and $19.7 million of right-of-use assets obtained in exchange for new finance and operating lease liabilities, respectively. Capital expenditures for the discontinued operations for the period of the Company’s ownership are immaterial. Assets Held for Sale. Assets and liabilities held for sale as of December 31 were as follows:
(in millions) |  | 2021 |  |  | 2020 |
Inventories, net |  | $ | 53.1 |  |  | $ | 2.3 |
Property, plant and equipment |  |  | — |  |  |  | 4.8 |
Intangible assets, excluding goodwill |  |  | — |  |  |  | 0.2 |
Goodwill |  |  | — |  |  |  | 0.5 |
Other assets |  |  | 49.1 |  |  |  | 2.0 |
Total current assets held for sale |  | $ | 102.2 |  |  | $ | 9.8 |
Property, plant and equipment |  | $ | 226.0 |  |  | $ | — |
Intangible assets, excluding goodwill |  |  | 264.9 |  |  |  | — |
Operating lease right-of-use assets |  |  | 18.1 |  |  |  | — |
Goodwill |  |  | 109.3 |  |  |  | — |
Other assets |  |  | 4.6 |  |  |  | — |
Valuation allowance for loss on sale |  |  | (6.0 | ) |  |  | — |
Total noncurrent assets held for sale |  | $ | 616.9 |  |  | $ | — |
Asset retirement obligations |  | $ | — |  |  | $ | (0.3 | )
Lease obligations |  |  | (7.5 | ) |  |  | — |
Total current liabilities held for sale |  | $ | (7.5 | ) |  | $ | (0.3 | )
Asset retirement obligations |  | $ | (31.5 | ) |  | $ | — |
Lease obligations |  |  | (22.0 | ) |  |  | — |
Total noncurrent liabilities held for sale |  | $ | (53.5 | ) |  | $ | — |

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