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Business Combinations | 12 Months Ended
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Dec. 31, 2020
Business Combinations [Abstract] |
Business Combinations | Business Combinations Sustainable Energy Solutions, Inc. Acquisition On December 23, 2020, we completed the acquisition of Sustainable Energy Solutions, Inc. (“SES”). SES’s Cryogenic Carbon Capture™ (CCC) technology eliminates most emissions from fossil fuels while enabling better use of intermittent renewables through grid-scale energy storage. The stock purchase was completed for a closing purchase price of $20.0 in cash at closing, subject to a post closing working capital adjustment, plus a potential earn-out not to exceed $25.0. The preliminary estimated fair value of the net assets acquired and goodwill at the date of acquisition was $13.4 and $24.0, respectively. Net assets includes $17.3 in intangible assets, which consists of unpatented technology, trade names and non-compete contracts. BlueInGreen, LLC Acquisition On November 3, 2020, we completed the acquisition of BlueInGreen, LLC (“BIG”), a leading dissolved-gas expert providing custom-engineered solutions for water treatment and industrial process applications that delivers tangible economic, social and environmental value. The stock purchase was completed for a purchase price of $20.0 in cash at closing (subject to customary adjustments), plus a potential earn-out not to exceed $6.0. The preliminary estimated fair value of the net assets acquired and goodwill at the date of acquisition was $8.8 and $14.8, respectively. Net assets includes $6.8 in intangible assets, which consists of non-compete contracts, unpatented technology, trademarks and trade names, certifications and licenses and customer relationships. Alabama Trailers Acquisition On October 13, 2020, we completed the acquisition of the Theodore, Alabama cryogenic trailer and hydrogen trailer (transport) assets of Worthington Industries, Inc. (NYSE: WOR) for $10.0 in cash (“Alabama Trailers”). Worthington Industries, Inc. made the decision to exit the hydrogen trailer business. With few buyers of this specialized business, Worthington Industries, Inc. sold the trailer business to us at a discount. As a result of the acquisition, we recorded a bargain purchase gain of $5.0. Alabama Trailers designs, manufactures and sells cryogenic trailers and hydrogen trailers used in industrial gas and energy applications. The purchase price allocations of SES, BIG and Alabama Trailers are preliminary and are based on provisional fair values and subject to revision as we finalize third-party valuations and other analyses. Final determination of the fair values may result in further adjustments to the value of net assets acquired. Air-X-Changers Acquisition On July 1, 2019, we completed the acquisition of AXC pursuant to the previously disclosed Asset Purchase Agreement dated as of May 8, 2019 (the “AXC acquisition”). The purchase price for AXC was $599.7, including post-closing purchase price adjustments with respect to working capital. We paid $592.0 of the purchase price at closing and the final working capital adjustment of $7.7 was paid during the third quarter of 2019. We financed the purchase price for the AXC acquisition with proceeds from borrowings under the 2024 Credit Facilities and a public offering of Chart’s common stock in 2019. See Note 10, “Debt and Credit Arrangements” and Note 14, “Accumulated Other Comprehensive Income (Loss) and Equity” for further information. AXC is a leading supplier of custom engineered and manufactured air cooled heat exchangers for the natural gas compression and processing industry and refining and petrochemical industry in the United States. The air cooled heat exchangers offered by AXC are used in conditioning natural gas during recovery, compression and transportation from underground reserves through major pipeline distribution channels. In addition to natural gas compression and processing, AXC’s products are also used in the turbine lube oil cooling, landfill gas compression and liquids cooling industries. AXC’s end markets include process industries, power generation and refineries. AXC was combined with Chart’s Hudson Products and Chart Cooler Service businesses and its results are included in our Heat Transfer Systems segment from the date of acquisition. As defined in our significant policies for fair value measurements in Note 2, “Significant Accounting Policies” we allocated the acquisition consideration to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The fair value of the acquired tangible and identifiable intangible assets were determined based on inputs that are unobservable and significant to the overall fair value measurement. It is also based on estimates and assumptions made by management at the time of the acquisition. As such, this was classified as Level 3 fair value hierarchy measurements and disclosures. We estimated the fair value of acquired unpatented technology and trademarks and trade names using the relief from royalty method. The fair values of acquired customer backlog and customer relationships were estimated using the multi-period excess earnings method. Under both the relief from royalty and multi-period excess earnings methods, the fair value models incorporated estimates of future cash flows, estimates of allocations of certain assets and cash flows, estimates of future growth rates, and management’s judgment regarding the applicable discount rates to use to discount such estimates of cash flows. The estimated useful lives of identifiable finite-lived intangible assets range from one to 14 years. The excess of the purchase price over the estimated fair values was assigned to goodwill. The estimated goodwill was established due to benefits including the combination of strong engineering and manufacturing cultures which will continue to further develop full service solutions for our worldwide customer base, as well as the benefits derived from the anticipated synergies of AXC integrating with our Heat Transfer Systems segment. Goodwill recorded for the AXC acquisition is deductible for tax purposes. The purchase price allocation reported at December 31, 2019 was preliminary and was based on provisional fair values. During the first six months of 2020 and prior to July 1, 2020, we received and analyzed new information about certain property, plant and equipment and subsequently increased associated deferred tax liabilities by $0.4. The following table summarizes the fair values of the assets acquired and liabilities assumed in the AXC acquisition as of the acquisition date:
| As Reported December 31, 2019 |  | Adjustments |  | Fair Value
Net assets acquired: |  |  |  |  |
Identifiable intangible assets | $ | 256.4 |  |  | $ | — |  |  | $ | 256.4 |
Goodwill | 287.5 |  |  | 0.4 |  |  | 287.9 |
Property, plant and equipment | 34.2 |  |  | — |  |  | 34.2 |
Other assets | 53.1 |  |  | — |  |  | 53.1 |
Liabilities | (31.5) |  |  | (0.4) |  |  | (31.9) |
Net assets acquired | $ | 599.7 |  |  | $ | — |  |  | $ | 599.7 |
Information regarding identifiable intangible assets acquired in the AXC acquisition is presented below:
| Weighted-average Estimated Useful Life |  | Estimated Asset Fair Value
Finite-lived intangible assets: |  |  |
Customer relationships | 14.0 years |  | $ | 139.1 |
Unpatented technology | 10.0 years |  | 42.1 |
Backlog (1) | 1.0 year |  | 19.2 |
Other identifiable intangible assets (1) | 4.0 years |  | 1.0 |
Total finite-lived intangible assets acquired | 11.0 years |  | 201.4 |
Indefinite-lived intangible assets: |  |  |
Trademarks and trade names |  |  | 55.0 |
Total identifiable intangible assets acquired |  |  | $ | 256.4 |
_______________ (1)Backlog and other identifiable intangible assets is included in “Patents and other” in Note 9, “Goodwill and Intangible Assets.” For the year ended December 31, 2019, net sales, operating income and intangible assets amortization expense attributed to the acquired AXC operations was $103.1, $4.6 and $16.8, respectively. During the year ended December 31, 2019, we incurred $5.4 in transaction related costs related to the AXC acquisition which were recorded in selling, general and administrative expenses in Corporate in the consolidated statements of income. Unaudited Supplemental Pro Forma Information The following unaudited supplemental pro forma financial information is based on our historical consolidated financial statements and AXC’s historical consolidated financial statements as adjusted to give effect to the July 1, 2019 AXC acquisition. The unaudited supplemental pro forma financial information for the periods presented gives effect to the acquisition as if it had occurred on January 1, 2018. The following adjustments are reflected in the pro forma financial table below: •Adjustment for depreciation related to the step-up in basis of the acquired property, plant and equipment and change in estimated useful lives. •Adjustment for amortization of acquired intangible assets. •Adjustment for the change from last in, first out (LIFO) to weighted-average cost for the acquired inventory and the associated reduction of cost of sales. •Adjustment to reflect an increase in interest expense resulting from interest on the term loan under the 2024 Credit Facilities to finance the AXC acquisition and amortization of related debt issuance costs. •Adjustment to reflect the change in the estimated income tax rate for federal and state purposes. •Adjustment to reflect the increase in weighted-average shares in connection with the equity issuance. This unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have resulted had the acquisition been in effect at the beginning of the periods presented. In addition, the unaudited pro forma results are not intended to be a projection of future results and do not reflect any operating efficiencies or cost savings that might be achievable. The following table presents pro forma sales, net income attributable to Chart Industries, Inc., and net income attributable to Chart Industries, Inc. per common share data assuming AXC was acquired at the beginning of the 2018 fiscal year:
|  |  | Year Ended December 31,
|  |  | 2019 |  | 2018
Pro forma sales |  |  | $ | 1,364.3 |  |  | $ | 1,211.1 |
Pro forma net income attributable to Chart Industries, Inc. |  |  | 56.3 |  |  | 72.0 |
Pro forma net income attributable to Chart Industries, Inc. per common share, basic |  |  | $ | 1.66 |  |  | $ | 2.05 |
Pro forma net income attributable to Chart Industries, Inc. per common share, diluted |  |  | 1.60 |  |  | 1.99 |
Contingent Consideration The preliminary estimated fair value of contingent consideration was $16.9 for SES and $3.2 for BIG at the date of acquisitions and was valued according to a discounted cash flow approach, which included assumptions regarding the probability of achieving certain targets and a discount rate applied to the potential payments. Potential payments are measured between the period commencing January 1, 2021 and ending on December 31, 2028 based on the attainment of certain earnings targets. The potential payments related to both SES and BIG contingent consideration on a combined basis is between $0.0 and $31.0. Valuations are performed using Level 3 inputs as defined in Note 2, “Significant Accounting Policies” and are evaluated on a quarterly basis based on forecasted sales and earnings targets. Contingent consideration liabilities are classified as other current liabilities and other long-term liabilities in the consolidated balance sheets. The contingent consideration valuations were provisional and are subject to revision as we finalize third-party valuations and other analyses, and as such, any adjustment would impact the purchase price allocation. Otherwise, changes in fair value of contingent consideration, including accretion, are recorded as selling, general and administrative expenses in the consolidated statements of income and comprehensive income. No cash consideration was transferred for contingent consideration as of the acquisition dates and as such, the arrangements represent a noncash investing activity in the statement of cash flows for the year ended December 31, 2020. For the year ended December 31, 2020, the fair value of contingent consideration was unchanged.

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