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Acquisitions | 12 Months Ended
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Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisitions |
3. | ACQUISITIONS
Petillo Acquisition On December 30, 2021 (the “Closing Date”), Sterling completed the acquisition (the “Petillo Acquisition”) of Petillo Incorporated and its related entities (collectively, “Petillo”). Petillo is a leading specialty site development contractor based in Flanders, New Jersey, and serves the Northeastern and Mid-Atlantic States, providing large-scale site infrastructure improvement service, including full-service excavation, underground utility construction, environmental remediation, drainage systems for commercial construction and water management and distribution systems. The Petillo Acquisition is accounted for using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The results of Petillo are included within our E-Infrastructure Solutions segment. Purchase Consideration—Sterling completed the Petillo Acquisition for a purchase price of $196,763, net of cash acquired, detailed as follows:
Cash consideration transferred, net of cash acquired | $ | 175,000 |
Equity consideration transferred (759 shares at $26.87 per share(1)) | 20,406
Target working capital adjustment | 1,357
Total consideration | $ | 196,763 |
(1) Sterling’s closing stock price on December 29, 2021. Purchase Price Allocation—The aggregate purchase price noted above was allocated to the assets and liabilities acquired based upon their estimated fair values at the acquisition closing date, which were based, in part, upon an external appraisal and valuation of certain assets, including specifically identified intangible assets. The excess of the purchase price over the estimated fair value of the net tangible and identifiable intangible assets acquired totaling $60,873 was recorded as goodwill. This goodwill represents the value of expected future earnings and cash flows, as well as the synergies created by the integration of the new business within our organization, including cross-selling opportunities to help strengthen our existing service offerings and expand our market position. Goodwill and intangibles of approximately $132,000 related to the Petillo Acquisition, are deductible and amortizable for tax purposes over the next 15 years. The following table summarizes our purchase price allocation at the acquisition closing date, net of cash acquired:
Net tangible assets: |
Accounts receivable | $ | 45,016 |
Contract assets | 5,953 |
Other current assets | 193 |
Property and equipment, net | 47,141 |
Other non-current assets, net | 5,498 |
Accounts payable | (21,810) |
Contract liabilities | (8,585) |
Other current liabilities | (8,216) |
Total net tangible assets | 65,190 |
Identifiable intangible assets | 70,700 |
Goodwill | 60,873 |
Total consideration transferred | $ | 196,763 |
During 2022, the total consideration and purchase price allocation (goodwill) changed by $7,800, primarily due to the finalization of the tax basis step-up payment. Identifiable Intangible Assets—Intangible assets identified as part of the Petillo Acquisition are reflected in the table below and are recorded at their estimated fair value, as determined by the Company’s management, based on available information which includes a valuation from external experts. The estimated useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows.
| Weighted Average Life (Years) |  | December 30, 2021 Fair Value
Customer relationships | 25 |  | $ | 43,200 |
Trade names | 25 |  | 27,500 |
Total |  |  | $ | 70,700 |
Acquired Remaining Performance Obligations (“RPOs”)—Petillo’s RPOs totaled $210,600 at the acquisition closing date. Impact of the Acquisition on the Consolidated Statement of Operations—Due to the acquisition’s proximity to year end, Petillo’s operating results had no impact on the Company’s Consolidated Statement of Operations for the year ended December 31, 2021. Supplemental Pro Forma Information (Unaudited)—The following unaudited pro forma combined financial information (“the pro forma financial information”) gives effect to the Petillo Acquisition, accounted for as a business combination using the purchase method of accounting. The pro forma financial information reflects the Petillo Acquisition and related events as if they occurred at the beginning of the period and includes adjustments to (1) include compensation expense associated with the employment agreement the Company entered into with Mr. Petillo, (2) include additional intangible asset amortization associated with the Petillo Acquisition, (3) include additional interest expense associated with the Petillo Acquisition and (4) include the pro forma results of Petillo for the years ended December 31, 2020 and 2021. This pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the pro forma events taken place on the dates indicated. Further, the pro forma financial information does not purport to project the future operating results of the combined company following the Petillo Acquisition.
| Years Ended December 31,
| 2021 |  | 2020
Pro forma revenue | $ | 1,617,742 |  |  | $ | 1,449,422 |
Pro forma net income attributable to Sterling | $ | 74,426 |  |  | $ | 58,507 |
Other Acquisitions CCS Acquisition—On December 20, 2022, we completed the acquisition of Concrete Construction Services of Arizona LLC and its affiliated company’s business (collectively “CCS”) for a purchase price of approximately $21,000. The business of CCS provides residential single-family home concrete foundations, including the preparation, pouring and finishing of post-tension concrete foundations in new housing subdivisions in the Greater Phoenix area. The transaction includes working capital, intangible assets and goodwill. The results of CCS are included within Tealstone which is included within our Building Solutions segment. Kimes Acquisition—On December 28, 2021, Sterling completed the acquisition of Kimes & Stone (“Kimes”) for an all-cash purchase price of approximately $7,600. Kimes provides a diversified services offering of soil stabilization for site development on e-commerce projects such as large fulfillment and distribution centers and data centers, as well as soil stabilization for roadways and manufacturing plant construction. The transaction includes a fleet of soil stabilization equipment and working capital. The results of Kimes’ are included within Plateau which is included within our E-Infrastructure Solutions segment.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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