The Company’s acquisitions are accounted for in accordance with ASC 805, Business Combinations. In accordance with this guidance, the fair value of consideration transferred is allocated to assets acquired and liabilities assumed based on their estimated fair values as of the completion of the acquisition, with the remaining amount recognized as goodwill. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The Company’s judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations.

Under ASC 805-10, acquisition-related costs (e.g., advisory, legal, valuation and other professional fees) are not included as a component of consideration transferred, but are accounted for as expenses in the periods in which the costs are incurred. Acquisition-related costs are included as a component of Acquisition and integration-related expenses on the Consolidated Statements of Operations.

On June 12, 2020, the Company acquired certain assets and operations of Public Works Equipment and Supply, Inc. (“PWE”), a distributor of maintenance and infrastructure equipment covering North Carolina, South Carolina and parts of Tennessee. The acquisition included cash consideration of $6.2 million, which included a payment to acquire certain inventory and fixed assets at closing. As the acquisition closed on June 12, 2020, the assets and liabilities of PWE have been consolidated into the Company’s Consolidated Balance Sheet as of December 31, 2020, and the post-acquisition results of operations have been included in the Consolidated Statements of Operations, within the Environmental Solutions Group.

The assets acquired and liabilities assumed in the PWE acquisition have been measured at their fair values at the acquisition date, resulting in $2.5 million of goodwill, which is deductible for tax purposes. As of December 31, 2020, the Company’s purchase price allocation is considered to be final.

The acquisition was not, and would not have been, material to the Company’s net sales, results of operations or total assets during any period presented. Accordingly, the Company’s consolidated results from operations do not differ materially from historical performance as a result of the acquisition, and therefore, pro-forma results are not presented.

On July 1, 2019, the Company completed the acquisition of substantially all of the assets and operations of Mark Rite Lines Equipment Company, Inc. (“MRL”), a U.S. manufacturer of truck-mounted and ride-on road-marking and line-removal equipment, including its wholly-owned subsidiary HighMark Traffic Services, Inc. The Company expects that MRL will provide an efficient entry into a new line of product offerings and access to new markets. As the acquisition closed on July 1, 2019, the assets and liabilities of MRL have been consolidated into the Consolidated Balance Sheet as of December 31, 2020, while the post-acquisition results of operations have been included in the Consolidated Statements of Operations, within the Environmental Solutions Group.

The initial cash consideration paid by the Company to acquire MRL was $49.8 million, inclusive of a preliminary adjustment for working capital and other post-closing items. The purchase price was subsequently reduced by a final adjustment for working capital and other post-closing items in the amount of $0.8 million, which the Company received in the first quarter of 2020. In addition, there is a contingent earn-out payment of up to $15.5 million, which is contingent upon the achievement of certain financial targets and objectives. The contingent earn-out payment, if earned, would be due to be paid following the third anniversary of the closing.

The Company’s purchase price allocation was finalized during the year ended December 31, 2019. The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date:


(in millions)
Purchase price, inclusive of adjustment for working capital and other post-closing items (a)	$	49.0
Estimated fair value of additional consideration (b)	4.1
Total consideration	53.1

Cash	0.2
Accounts receivable	3.8
Inventories	13.8
Prepaid expenses and other current assets	0.3
Properties and equipment	6.4
Operating lease right-of-use assets	4.6
Other long-term assets	0.1
Customer relationships (c)	17.7
Trade names (d)	9.0
Other intangible assets	1.4
Operating lease liabilities	(4.6)
Accounts payable	(3.7)
Accrued liabilities	(1.9)
Customer deposits	(6.5)
Deferred tax liabilities	(1.4)
Net assets acquired	39.2

Goodwill (e)	$	13.9

(a) The purchase price was funded with borrowings under the Company’s revolving credit facility. The purchase price includes adjustments for working capital and other post-closing items, which were finalized in the fourth quarter of 2019, with the Company receiving $0.8 million in the first quarter of 2020.

(b) Represents the estimated fair value of the contingent earn-out payment as of the acquisition date, which is included as a component of Other long-term liabilities on the Consolidated Balance Sheets. See Note 18 – Fair Value Measurements for discussion of the methodology used to determine the fair value of the contingent earn-out payment.

(c) Represents the fair value assigned to customer relationships, which are considered to be definite-lived intangible assets, with an estimated useful life of approximately 12 years.

(e) Goodwill, the majority of which is tax-deductible, has been allocated to the Environmental Solutions Group on the basis that the synergies identified will primarily benefit this segment.

The following table presents the unaudited pro forma combined net sales of the Company and MRL for the years ended December 31, 2019 and 2018, assuming this transaction occurred on January 1, 2018. Pro forma combined income from continuing operations and pro forma diluted earnings per share are not presented as they would not be materially different from the results reported for the years ended December 31, 2019 and 2018.

The unaudited pro forma financial information is presented for informational purposes only and is not intended to represent or be indicative of the consolidated results of operations of the Company that would have been reported had the acquisition been completed as of the beginning of the periods presented, and should not be taken as being representative of the future consolidated results of operations of the Company.