Acquisitions Of Businesses

3 Months Ended

Mar. 31, 2025

Acquisitions of Businesses

Acquisitions are accounted for utilizing the acquisition method of accounting and the prices paid for them are allocated to their respective assets and liabilities based upon the estimated fair value of such assets and liabilities at the dates of their respective acquisition by us.

On February 3, 2025, we completed the acquisition of Miller Electric Company (“Miller Electric”), a leading electrical contractor that operates predominantly across the Southeastern United States. Under the terms of the transaction, we acquired 100% of Miller Electric's capital stock for total cash consideration of approximately $868.6 million. This acquisition is expected to complement our existing electrical construction capabilities in high-growth end markets while expanding our geographic presence. The results of operations of Miller Electric have been included within our United States electrical construction and facilities services segment. For the period from February 3, 2025 to March 31, 2025, such acquisition contributed revenues of $183.1 million and operating income of $12.7 million, net of amortization expense attributable to identifiable intangible assets of $7.4 million. During the three months ended March 31, 2025, we incurred $9.4 million of transaction related costs in connection with this acquisition. These expenses were included in "Selling, general and administrative expenses" in the accompanying Consolidated Statement of Operations.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date (in thousands):


Assets:
Cash and cash equivalents	$	18,394
Accounts receivable (1)	222,355
Contract assets	23,120
Inventories	329
Prepaid expenses and other	7,284
Property, plant, and equipment	10,462
Operating lease right-of-use assets	30,345
Goodwill	317,354
Identifiable intangible assets	475,000
Other assets	302
Total assets acquired	$	1,104,945

NOTE 4 - Acquisitions of Businesses (Continued)


Liabilities:
Accounts payable	$	68,147
Contract liabilities	104,595
Accrued payroll and benefits	9,838
Other accrued expenses and liabilities	21,524
Operating lease liabilities, current	2,573
Operating lease liabilities, long-term	27,771
Other long-term obligations	991
Total liabilities assumed	235,439
Noncontrolling interests	934
Net assets acquired	$	868,572

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(1)The fair value of accounts receivable acquired was $222.4 million, with the gross contractual amount being $224.4 million. We expect $2.0 million to be uncollectible.

Goodwill is calculated as the excess of the consideration transferred over the fair value of the net assets acquired and represents the future economic benefits expected from this strategic acquisition. We are evaluating the tax deductibility of the goodwill and identifiable intangible assets acquired; however, we currently expect that all such amounts will be deductible. The purchase price allocation is preliminary and subject to change during its measurement period as we finalize asset valuations and certain tax matters, among other items. The finalization of these items may result in changes in the valuation of assets acquired or liabilities assumed.

The following table summarizes the preliminary fair values of identifiable intangible assets (in thousands) and their estimated useful lives (in years). Refer to Note 8 - Fair Value Measurements of the notes to consolidated financial statements for additional information on the valuation methodologies utilized to determine fair value.


Miller Electric	Preliminary Fair Value		Estimated Useful Life
Customer relationships	$	280,000	16.0
Contract backlog	40,000		1.5
Total intangible assets subject to amortization	320,000		14.2
Trade name	155,000		Indefinite
Total identifiable intangible assets	$	475,000

In addition to Miller Electric, during the first quarter of 2025, we acquired a company for an immaterial amount. This company provides building automation controls and solutions to commercial, institutional, and industrial customers. Its results of operations have been included within our United States mechanical construction and facilities services segment.

During calendar year 2024, we acquired seven companies for upfront consideration of $231.1 million, inclusive of customary working capital adjustments. These acquisitions are comprised of: (a) an electrical contractor in the Southeast region of the United States, that has been included in our United States electrical construction and facilities services segment, (b) two companies that have been included within our United States mechanical construction and facilities services segment, including: (i) a leading plumbing services provider in the Southeast region of the United States and (ii) a full service provider of mechanical construction and maintenance services in Central Texas, (c) three companies that have been included in our United States building services segment, including: (i) a provider of building automation and controls solutions in the Northeast region of the United States, (ii) a mechanical services company in the Western region of the United States, and (iii) a mechanical services company in the Eastern region of the United States, and (d) an instrumentation and electrical contractor, that has been included in our United States industrial services segment, which provides electrical, automation, digital integration, and fabrication services to various energy sector and process equipment customers. In connection with these acquisitions, we acquired working capital of $29.0 million and other net assets of $1.1 million, and have preliminarily ascribed $61.9 million to goodwill and $139.1 million to identifiable intangible assets.

NOTE 4 - Acquisitions of Businesses (Continued)

We expect that all of the goodwill and identifiable intangible assets acquired in connection with these 2024 acquisitions will be deductible for tax purposes. The purchase price allocations for one of the businesses acquired in 2024 is preliminary and subject to change during its measurement period. Although not expected to be significant, as we finalize such purchase price allocation, adjustments may result in changes to the valuation of assets and liabilities acquired. The purchase price allocations for the other businesses acquired in 2024 have been finalized during their respective measurement periods with an insignificant impact.