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Business Combinations (Tables) | 12 Months Ended
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Dec. 31, 2017
Business Combinations [Abstract] |
Schedule of Business Combinations | As part of our ongoing strategy to expand geographically and increase market share in certain markets, we completed ten, nine and eight business combinations during the years ended December 31, 2017, 2016 and 2015, respectively, as well as insignificant tuck-in acquisitions merged into existing operations in 2017 and 2015, in which we acquired 100% of the voting equity interests in each acquired entity. Acquisition-related costs amounted to $3.9 million, $2.3 million and $1.1 million for the years ended December 31, 2017, 2016 and 2015, respectively, and are included in Administrative expenses on the Consolidated Statements of Operations and Comprehensive Income. The goodwill to be recognized in conjunction with these business combinations represents the excess cost of the acquired entity over the net amount assigned to assets acquired and liabilities assumed. We expect to deduct $47.6 million of goodwill for tax purposes as a result of 2017 acquisitions. The largest of our 2017 acquisitions were Alpha, Columbia Shelving & Mirror Inc. and Charleston Shelving & Mirror, Inc. (collectively, “Columbia”) and All In Insulation, LLC d/b/a Astro Insulation (collectively, “Astro”). The remaining acquisitions were individually insignificant but material in the aggregate, as follows. Net Income (Loss), as noted below, includes amortization, taxes and interest allocations. For the twelve months ended December 31, 2017 (in thousands):
Name |  | Date |  |  | Acquisition Type |  |  | Cash Paid |  |  | Seller Obligations |  |  | Fair Value of Common Stock Issued |  |  | Total Purchase Price |  |  | Revenue |  |  | Net Income (Loss) |
Alpha (1) |  |  | 1/5/2017 |  |  |  | Share |  |  | $ | 103,810 |  |  | $ | 2,002 |  |  | $ | 10,859 |  |  | $ | 116,671 |  |  | $ | 116,070 |  |  | $ | (1,148 | )
Columbia |  |  | 6/26/2017 |  |  |  | Asset |  |  |  | 8,768 |  |  |  | 225 |  |  |  | — |  |  |  | 8,993 |  |  |  | 6,046 |  |  |  | 86 |
Astro |  |  | 9/18/2017 |  |  |  | Asset |  |  |  | 9,144 |  |  |  | 482 |  |  |  | — |  |  |  | 9,626 |  |  |  | 1,829 |  |  |  | 11 |
Other |  |  | Various |  |  |  | Asset |  |  |  | 15,645 |  |  |  | 2,419 |  |  |  | — |  |  |  | 18,064 |  |  |  | 20,457 |  |  |  | 573 |
Total |  |  |  |  |  |  |  |  |  | $ | 137,367 |  |  | $ | 5,128 |  |  | $ | 10,859 |  |  | $ | 153,354 |  |  | $ | 144,402 |  |  | $ | (478 | )
(1) | The cash paid included $21.7 million in contingent consideration to satisfy purchase price adjustments related to cash and net working capital requirements, earnout consideration based on Alpha’s change in EBITDA from 2015 and a customary holdback. These payments were based on fair value of each contingent payment at the time of acquisition and subsequently adjusted during the measurement period. We issued 282,577 shares of our common stock with a fair value of $10.9 million.
For the twelve months ended December 31, 2016 (in thousands):
Name |  | Date |  |  | Acquisition Type |  |  | Cash Paid |  |  | Seller Obligations |  |  | Total Purchase Price |  |  | Revenue |  |  | Net Income (Loss) |
Alpine Insulation Co., Inc. |  |  | 4/12/2016 |  |  |  | Asset |  |  | $ | 21,151 |  |  | $ | 1,560 |  |  | $ | 22,711 |  |  | $ | 21,359 |  |  | $ | 1,370 |
East Coast |  |  | 10/17/2016 |  |  |  | Asset |  |  |  | 15,589 |  |  |  | 600 |  |  |  | 16,189 |  |  |  | 4,701 |  |  |  | 21 |
Other |  |  | Various |  |  |  | Asset |  |  |  | 18,753 |  |  |  | 2,299 |  |  |  | 21,052 |  |  |  | 19,974 |  |  |  | (592 | )
Total |  |  |  |  |  |  |  |  |  | $ | 55,493 |  |  | $ | 4,459 |  |  | $ | 59,952 |  |  | $ | 46,034 |  |  | $ | 799 |
For the twelve months ended December 31, 2015 (in thousands):
Name |  | Date |  |  | Acquisition Type |  |  | Cash Paid |  |  | Seller Obligations |  |  | Total Purchase Price |  |  | Revenue |  |  | Net Income (Loss) |
BDI |  |  | 3/12/2015 |  |  |  | Stock |  |  | $ | 30,680 |  |  | $ | 5,765 |  |  | $ | 36,445 |  |  | $ | 32,505 |  |  | $ | 2,023 |
CQ |  |  | 4/6/2015 |  |  |  | Stock |  |  |  | 5,193 |  |  |  | 2,319 |  |  |  | 7,512 |  |  |  | 7,839 |  |  |  | 556 |
Layman |  |  | 6/1/2015 |  |  |  | Asset |  |  |  | 9,088 |  |  |  | 600 |  |  |  | 9,688 |  |  |  | 8,211 |  |  |  | 516 |
Eastern |  |  | 8/10/2015 |  |  |  | Stock |  |  |  | 24,199 |  |  |  | 2,875 |  |  |  | 27,074 |  |  |  | 7,368 |  |  |  | 312 |
Other |  |  | Various |  |  |  | Asset |  |  |  | 16,040 |  |  |  | 1,621 |  |  |  | 17,661 |  |  |  | 6,349 |  |  |  | (97 | )
Total |  |  |  |  |  |  |  |  |  | $ | 85,200 |  |  | $ | 13,180 |  |  | $ | 98,380 |  |  | $ | 62,272 |  |  | $ | 3,310 |
Summary of Estimated Fair Value of Assets Acquired and Liabilities Assumed | The estimated fair values of the assets acquired and liabilities assumed for the acquisitions, as well as total purchase prices and cash paid, approximated the following (in thousands):
|  | 2017 |
|  | Alpha |  |  | Columbia |  |  | Astro |  |  | Other |  |  | Total |
Estimated fair values: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 247 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 247 |
Accounts receivable |  |  | 29,851 |  |  |  | 1,004 |  |  |  | 924 |  |  |  | 3,195 |  |  |  | 34,974 |
Inventories |  |  | 1,852 |  |  |  | 704 |  |  |  | 296 |  |  |  | 1,544 |  |  |  | 4,396 |
Other current assets |  |  | 4,500 |  |  |  | 8 |  |  |  | 36 |  |  |  | 96 |  |  |  | 4,640 |
Property and equipment |  |  | 1,528 |  |  |  | 659 |  |  |  | 640 |  |  |  | 1,820 |  |  |  | 4,647 |
Intangibles |  |  | 57,200 |  |  |  | 4,760 |  |  |  | 5,168 |  |  |  | 9,688 |  |  |  | 76,816 |
Goodwill |  |  | 38,511 |  |  |  | 2,184 |  |  |  | 2,926 |  |  |  | 4,106 |  |  |  | 47,727 |
Other non-current assets |  |  | 383 |  |  |  | 32 |  |  |  | — |  |  |  | 234 |  |  |  | 649 |
Accounts payable and other current liabilities |  |  | (17,401 | ) |  |  | (358 | ) |  |  | (364 | ) |  |  | (2,619 | ) |  |  | (20,742 | )
Fair value of assets acquired |  |  | 116,671 |  |  |  | 8,993 |  |  |  | 9,626 |  |  |  | 18,064 |  |  |  | 153,354 |
Less fair value of common stock issued |  |  | 10,859 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10,859 |
Less seller obligations |  |  | 2,002 |  |  |  | 225 |  |  |  | 482 |  |  |  | 2,419 |  |  |  | 5,128 |
Cash paid |  | $ | 103,810 |  |  | $ | 8,768 |  |  | $ | 9,144 |  |  | $ | 15,645 |  |  | $ | 137,367 |
|  | 2016 |
|  | Alpine |  |  | East Coast |  |  | Other |  |  | Total |
Estimated fair values: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | — |  |  | $ | 2,181 |  |  | $ | — |  |  | $ | 2,181 |
Accounts receivable |  |  | 3,959 |  |  |  | 3,093 |  |  |  | 2,502 |  |  |  | 9,554 |
Inventories |  |  | 700 |  |  |  | 332 |  |  |  | 1,183 |  |  |  | 2,215 |
Other current assets |  |  | — |  |  |  | 1 |  |  |  | 24 |  |  |  | 25 |
Property and equipment |  |  | 656 |  |  |  | 666 |  |  |  | 1,616 |  |  |  | 2,938 |
Intangibles |  |  | 12,800 |  |  |  | 6,400 |  |  |  | 11,067 |  |  |  | 30,267 |
Goodwill |  |  | 6,642 |  |  |  | 4,346 |  |  |  | 5,933 |  |  |  | 16,921 |
Other non-current assets |  |  | — |  |  |  | 116 |  |  |  | 345 |  |  |  | 461 |
Accounts payable and other current liabilities |  |  | (2,046 | ) |  |  | (946 | ) |  |  | (1,618 | ) |  |  | (4,610 | )
Fair value of assets acquired |  |  | 22,711 |  |  |  | 16,189 |  |  |  | 21,052 |  |  |  | 59,952 |
Less seller obligations |  |  | 1,560 |  |  |  | 600 |  |  |  | 2,299 |  |  |  | 4,459 |
Cash paid |  | $ | 21,151 |  |  | $ | 15,589 |  |  | $ | 18,753 |  |  | $ | 55,493 |
|  | 2015 |
|  | BDI |  |  | CQ |  |  | Layman |  |  | Eastern |  |  | Other |  |  | Total |
Estimated fair values: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 661 |  |  | $ | 100 |  |  | $ | — |  |  | $ | 165 |  |  | $ | — |  |  | $ | 926 |
Accounts receivable |  |  | 4,735 |  |  |  | 1,423 |  |  |  | 1,245 |  |  |  | 2,768 |  |  |  | 4,093 |  |  |  | 14,264 |
Inventories |  |  | 980 |  |  |  | 152 |  |  |  | 267 |  |  |  | 335 |  |  |  | 720 |  |  |  | 2,454 |
Other current assets |  |  | 368 |  |  |  | 39 |  |  |  | — |  |  |  | 109 |  |  |  | 32 |  |  |  | 548 |
Property and equipment |  |  | 1,006 |  |  |  | 190 |  |  |  | 733 |  |  |  | 1,364 |  |  |  | 1,574 |  |  |  | 4,867 |
Intangibles |  |  | 21,280 |  |  |  | 4,350 |  |  |  | 5,330 |  |  |  | 13,871 |  |  |  | 10,534 |  |  |  | 55,365 |
Goodwill |  |  | 16,213 |  |  |  | 3,035 |  |  |  | 3,143 |  |  |  | 9,904 |  |  |  | 4,809 |  |  |  | 37,104 |
Other non-current assets |  |  | 3,736 |  |  |  | — |  |  |  | — |  |  |  | 322 |  |  |  | 60 |  |  |  | 4,118 |
Accounts payable and other current liabilities |  |  | (3,303 | ) |  |  | (1,539 | ) |  |  | (1,030 | ) |  |  | (1,681 | ) |  |  | (2,220 | ) |  |  | (9,773 | )
Deferred income tax liabilities |  |  | (5,495 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (825 | ) |  |  | (6,320 | )
Long-term debt |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (82 | ) |  |  | — |  |  |  | (82 | )
Other long-term liabilities |  |  | (3,736 | ) |  |  | (238 | ) |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | (3,975 | )
Fair value of assets acquired |  |  | 36,445 |  |  |  | 7,512 |  |  |  | 9,688 |  |  |  | 27,074 |  |  |  | 18,777 |  |  |  | 99,496 |
Gain on bargain purchase |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,116 | ) |  |  | (1,116 | )
Total purchase price |  |  | 36,445 |  |  |  | 7,512 |  |  |  | 9,688 |  |  |  | 27,074 |  |  |  | 17,661 |  |  |  | 98,380 |
Less seller obligations |  |  | 5,765 |  |  |  | 2,319 |  |  |  | 600 |  |  |  | 2,875 |  |  |  | 1,621 |  |  |  | 13,180 |
Cash paid |  | $ | 30,680 |  |  | $ | 5,193 |  |  | $ | 9,088 |  |  | $ | 24,199 |  |  | $ | 16,040 |  |  | $ | 85,200 |
Estimates of Acquired Intangible Assets | Estimates of acquired intangible assets related to the acquisitions are as follows (dollars in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Acquired intangibles assets |  | Estimated Fair Value |  |  | Weighted Average Estimated Useful Life (yrs) |  |  | Estimated Fair Value |  |  | Weighted Average Estimated Useful Life (yrs) |  |  | Estimated Fair Value |  |  | Weighted Average Estimated Useful Life (yrs) |
Customer relationships |  | $ | 39,922 |  |  |  | 8 |  |  | $ | 18,511 |  |  |  | 9 |  |  | $ | 36,129 |  |  |  | 8 |
Trademarks and trade names |  |  | 20,667 |  |  |  | 15 |  |  |  | 8,983 |  |  |  | 15 |  |  |  | 14,567 |  |  |  | 15 |
Non-competition agreements |  |  | 2,628 |  |  |  | 5 |  |  |  | 2,773 |  |  |  | 5 |  |  |  | 4,668 |  |  |  | 5 |
Backlog |  |  | 13,600 |  |  |  | 1.5 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Pro Forma Results of Operations | The unaudited pro forma information has been prepared as if the 2017 acquisitions had taken place on January 1, 2016, the 2016 acquisitions had taken place on January 1, 2015 and the 2015 acquisitions had taken place on January 1, 2014. The unaudited pro forma information is not necessarily indicative of the results that we would have achieved had the transactions actually taken place on January 1, 2016, 2015 and 2014 and the unaudited pro forma information does not purport to be indicative of future financial operating results (in thousands, except for per share data).
|  | Unaudited Pro Forma for the years ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Net revenue |  | $ | 1,169,061 |  |  | $ | 1,058,707 |  |  | $ | 786,144 |
Net income |  |  | 43,179 |  |  |  | 43,891 |  |  |  | 29,463 |
Basic and diluted net income per share |  |  | 1.36 |  |  |  | 1.39 |  |  |  | 0.94 |

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