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Business Combination | 12 Months Ended
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Dec. 31, 2022
Business Combinations [Abstract] |
Business Combination | Business Combination On November 18, 2021, the Company entered into a membership interest purchase agreement (the “MIPA Agreement”) to acquire of all of the issued and outstanding equity ownership of BasX, LLC, an Oregon limited liability company, doing business as BASX Solutions. We closed this transaction on December 10, 2021 for a purchase price of (i) $100.0 million payable in cash (not including working capital adjustments), and (ii) up to $80.0 million in the aggregate of contingent consideration payable in shares of the Company's stock, par value $0.004 per share (the "Shares"). The $80.0 million of contingent consideration payable consists of $78.0 million payable to the former owners of BasX, LLC and $2.0 million payable to key employees of BasX, LLC whom are now employed by the Company. The potential future issuance of the Shares is contingent upon BASX meeting certain post-closing earn-out milestones during each of 2021, 2022, and 2023 under the terms of the MIPA Agreement (Note 16). The Company funded the acquisition cash portion of the purchase price and related transaction costs with cash on hand. Additionally, as a condition to closing, the Company entered into a real estate purchase agreement with BasX Properties, LLC, an affiliate of BasX, LLC, to acquire the principal real property and improvements utilized by BASX for an additional $22.0 million, subject to customary closing conditions and adjustments. The Company closed this real estate transaction on May 31, 2022, which terminated the related lease (Note 5). We incurred $4.4 million in transaction fees related to the acquisition which are included in selling, general, and administrative expenses on our consolidated statement of income for the year ended December 31, 2021. We have included the results of BASX’s operations in our consolidated financial statements beginning December 11, 2021. We applied pushdown accounting, allowable under ASC 805 "Business Combinations," to "pushdown" our stepped-up basis in the assets acquired and liabilities assumed to BASX's subsidiary financial statements. The decision to apply pushdown accounting is irrevocable. Goodwill was calculated and recognized consistent with acquisition accounting, resulting in the pushdown of $78.7 million in goodwill as of December 31, 2022. The following table presents the allocation of the consideration paid to the assets acquired and liabilities assumed in the acquisition described above, which was still preliminary at December 31, 2021. The revisions indicated below were recorded during the first quarter of 2022. The revisions were the result of updates to our preliminary estimates and third party valuation models. The impact of such revisions on consolidated net income were not significant.
| Final Allocation |  | Estimated Allocation as of December 31, 2021 |  | Revisions
|  |  | (in thousands) |  |
Accounts receivable | 13,699 |  |  | $ | 13,699 |  |  | $ | — |
Inventories | 2,725 |  |  | 2,725 |  |  | — |
Contract assets | 7,635 |  |  | 7,635 |  |  | — |
Prepaid expenses and other | 341 |  |  | 341 |  |  | — |
Property, plant and equipment | 15,611 |  |  | 15,611 |  |  | — |
Right of use assets | 13,169 |  |  | 13,169 |  |  | — |
Intangible assets | 68,413 |  |  | 70,329 |  |  | (1,916) |
Goodwill | 78,663 |  |  | 82,498 |  |  | (3,835) |
Accounts payable | (9,388) |  |  | (9,388) |  |  | — |
Accrued liabilities | (3,807) |  |  | (3,807) |  |  | — |
Contract liabilities | (7,771) |  |  | (7,771) |  |  | — |
Lease liabilities | (15,611) |  |  | (15,611) |  |  | — |
Contingent Consideration - shares of AAON | (60,000) |  |  | (66,000) |  |  | 6,000 |
Consideration paid | $ | 103,679 |  |  | $ | 103,430 |  |  | $ | 249 |
The Company recognized the following definite and indefinite-lived intangible assets as part of the acquisition:
| Final Allocation |  | Estimated Allocation as of December 31, 2021 |  | Revisions
| (in thousands)
Definite-lived intangible assets |  |  |  |  |
Intellectual property | $ | 6,295 |  |  | $ | 6,479 |  |  | $ | (184) |
Customer relationships | 47,547 |  |  | 48,684 |  |  | (1,137) |
| 53,842 |  |  | 55,163 |  |  | (1,321) |
Indefinite-lived intangible assets |  |  |  |  |
Trademarks | 14,571 |  |  | 15,166 |  |  | (595) |
Total intangible assets acquired | $ | 68,413 |  |  | $ | 70,329 |  |  | $ | (1,916) |
Goodwill is the excess of the consideration paid for the acquired businesses over the fair value of the individual assets acquired, net of liabilities assumed. Goodwill represents a premium paid to acquire the skilled workforce and expanded market opportunities. Goodwill of $47.1 million was tax deductible upon completion of the final allocation of consideration paid to the assets acquired and liabilities acquired. Future additional amounts of goodwill related to the contingent consideration may become tax deductible in the future if the earn out provisions of the MIPA are achieved. Pro Forma Results of Operations (unaudited) The operations of BASX have been included in our consolidated statements of income since the closing date on December 10, 2021. The following unaudited pro forma consolidated results of operations for the years ended December 31, 2021 and 2020 are presented as if the combination had been made on January 1, 2020.
| (unaudited)
| Years ended December 31,
| 2021 |  | 2020
| (in thousands, except per share data)
Revenues | $ | 611,158 |  |  | $ | 562,563 |
Net income | 63,491 |  |  | 80,507 |
Earnings per share: |  |  |
Basic | $ | 1.21 |  |  | $ | 1.54 |
Dilutive | $ | 1.18 |  |  | $ | 1.52 |
These unaudited pro forma results include adjustments necessary in connection with the acquisition. The unaudited consolidated pro forma financial information was prepared in accordance with GAAP and is not necessarily indicative of the results of operations that would have occurred if the acquisition had been completed on the date indicated, nor is it indicative of the future operating results of the Company. The unaudited pro forma results do not reflect events that either have occurred or may occur after the acquisition date, including, but not limited to, the anticipated realization of operating synergies in subsequent periods. These results also do not give effect to certain charges that the Company expects to incur in connection with the acquisition, including, but not limited to, additional professional fees and employee integration.

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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 http://asc.fasb.org/topic&trid=2303972 + Details
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