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Acquisition of Business | 6 Months Ended
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Jun. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Schedule of Business Acquisitions, by Acquisition | Acquisition of Business On January 16, 2024, we completed the acquisition of all issued and outstanding ownership units of AMPAC Intermediate Holdings, LLC, the ultimate parent company of American Pacific Corporation (AMPAC), for approximately $697 million. Based in Cedar City, Utah, AMPAC has one operating facility from which it manufactures and sells critical specialty materials primarily used in solid rocket motors for space launch and military defense applications. AMPAC is qualified on many NASA and Department of Defense programs and has been serving space launch and national defense programs for more than 60 years. The acquisition of AMPAC expands our presence in mission-critical, resilient sectors. It was funded by cash on hand and borrowings under our then existing revolving credit facility. The purchase consideration was subject to a customary post-closing adjustment for working capital, which was finalized during the second quarter of 2024. The preliminary fair values of the assets acquired and the liabilities assumed in the AMPAC acquisition are as follows (in millions):
Cash and cash equivalents |  | $ | 16 |
Trade and other accounts receivable, net |  | 6 |
Inventories |  | 25 |
Prepaid expenses and other current assets |  | 3 |
Property, plant, and equipment, net |  | 111 |
Intangibles and goodwill |  | 650 |
Deferred charges and other assets |  | 5 |
Accounts payable |  | (3) |
Accrued expenses |  | (5) |
Other noncurrent liabilities |  | (111) |
Fair value of net assets acquired |  | $ | 697 |
Identified intangible assets acquired consisted of the following (in millions):
|  | Fair Value |  | Estimated Useful Lives (in years)
Customer base |  | $ | 275 |  |  | 17.5
Formulas and technology |  | 60 |  |  | 8
Trademarks and trade names |  | 30 |  |  | 15
Water rights |  | 29 |  |  | indefinite
|  | $ | 394 |  |  |
As part of the acquisition, we recorded $256 million of goodwill. The goodwill recognized is attributable to increased access to mission-critical, resilient sectors with a role in global safety, security, and space exploration, as well as the value of the skilled assembled workforce of AMPAC. All of the goodwill recognized is part of the specialty materials segment, and none of the goodwill is deductible for income tax purposes. The allocation of the purchase price of AMPAC to the tangible and intangible assets acquired and liabilities assumed was developed using preliminary estimates of fair value and based on information currently available. We are continuing to finalize the valuation of certain assets and liabilities and expect to complete our valuations within one year of the date of acquisition. Acquisition-related charges of $1 million consisted primarily of legal and professional fees and are included in selling, general, and administrative expenses in our Consolidated Statements of Income. We are accounting for this acquisition using the acquisition method of accounting for business combinations under the provisions of Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) Topic 805, Business Combinations (ASC 805) and have included the results of operations of the acquired business in our Consolidated Statement of Income from the date of acquisition, as well as in the specialty materials segment in Note 4. These results include a charge related to the sale of finished goods inventory acquired, which was recorded at fair value on the acquisition date and sold to customers from the date of acquisition through June 30, 2024. The following table presents the financial results in thousands for AMPAC from the date of acquisition through June 30, 2024 and for the second quarter ended June 30, 2024.
AMPAC |  | Second Quarter Ended June 30, 2024 |  | January 16 to June 30, 2024
Net sales |  | $ | 38,010 |  |  | $ | 55,057 |
Income (loss) before income taxes |  | 4,923 |  |  | (78) |
The following table presents our estimated unaudited pro forma consolidated results for the second quarter and six months ended June 30, 2024 and June 30, 2023, assuming the acquisition of AMPAC had occurred on January 1, 2023. The unaudited pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been realized if the acquisition had been completed at the beginning of 2023, nor is it indicative of expected results for any future period. In addition, no effect is given to any future synergistic benefits that could result from the integration of AMPAC into NewMarket. Unaudited pro forma information for the second quarter and six months ended June 30, 2024 and June 30, 2023 includes adjustments to depreciation and amortization based upon the fair value allocation of the purchase price to AMPAC's tangible and intangible assets acquired and liabilities assumed as though the acquisition had occurred on January 1, 2023, as well as adjustments for debt-related costs and management fees. The acquisition-related costs and the charge related to the fair value adjustment to acquisition-date inventory were recognized in actual results during the second quarter and six months ended June 30, 2024, but for the presentation below, these costs are excluded from 2024 unaudited pro forma income before income taxes and are instead reflected in 2023 pro forma income before income taxes as though they were incurred during the second quarter and six months ended June 30, 2023.
Pro Forma Supplemental Information (unaudited) (in thousands) |  |  |
|  | Second Quarter Ended June 30, | Six Months Ended June 30,
Consolidated |  | 2024 |  | 2023 | 2024 |  | 2023
Net sales |  | $ | 710,228 |  |  | $ | 707,196 |  | $ | 1,412,064 |  |  | $ | 1,426,179 |
Income before income taxes |  | 144,971 |  |  | 113,162 |  | 284,975 |  |  | 219,146 |

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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://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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