XML 39 R25.htm IDEA: XBRL DOCUMENT
v3.21.1

Business Combinations | 3 Months Ended
--- | ---
Mar. 31, 2021
Business Combinations [Abstract] |
Business Combinations | BUSINESS COMBINATIONS As part of our ongoing strategy to expand geographically and increase market share in certain markets, we completed one business combination during the three months ended March 31, 2021 and two business combinations during the three months ended March 31, 2020. The largest of these acquisitions were I.W. International Insulation, Inc., dba Intermountain West Insulation (“Intermountain West”) in March 2021 and Royals Commercial Services, Inc. (“Royals”) in February 2020. Below is a summary of each significant acquisition by year, including revenue and net income (loss) since date of acquisition, shown for the year of acquisition. Where noted, “Other” represents acquisitions that were individually immaterial in that year. Net income (loss) includes amortization, taxes and interest allocations when appropriate. For the three months ended March 31, 2021 (in thousands):
|  |  |  |  |  |  |  |  |  |  |  | Three months ended March 31, 2021
2021 Acquisition |  | Date |  | Acquisition Type |  | Cash Paid |  | Seller Obligations |  | Total Purchase Price |  | Revenue |  | Net Income
Intermountain West |  | 3/1/2021 |  | Share |  | $ | 42,098 |  |  | $ | 5,959 |  |  | $ | 48,057 |  |  | $ | 3,608 |  |  | $ | 450 |
For the three months ended March 31, 2020 (in thousands):
|  |  |  |  |  |  |  |  |  |  |  | Three months ended March 31, 2020
2020 Acquisitions |  | Date |  | Acquisition Type |  | Cash Paid |  | Seller Obligations |  | Total Purchase Price |  | Revenue |  | Net Loss
Royals |  | 2/29/2020 |  | Asset |  | $ | 7,590 |  |  | $ | 2,500 |  |  | $ | 10,090 |  |  | $ | 784 |  |  | $ | (87) |
Other |  | 1/13/2020 |  | Asset |  | 911 |  |  | 70 |  |  | 981 |  |  | 226 |  |  | (21) |
|  |  |  |  |  | $ | 8,501 |  |  | $ | 2,570 |  |  | $ | 11,071 |  |  | $ | 1,010 |  |  | $ | (108) |
Acquisition-related costs recorded within administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income amounted to $1.2 million and $0.7 million for the three months ended March 31, 2021 and 2020, respectively. The goodwill 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 do not expect to take any tax deductions for the goodwill associated with the 2021 business combination unless we decide to make an asset election in the future which would make a portion of the goodwill deductible for tax purposes. Purchase Price Allocations 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):
| As of March 31, 2021 |  | As of March 31, 2020
| Intermountain West |  | Royals |  | Other |  | Total
Estimated fair values: |  |  |  |  |  |  |
Cash | $ | 168 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Accounts receivable | 5,122 |  |  | 2,848 |  |  | — |  |  | 2,848 |
Inventories | 1,157 |  |  | 305 |  |  | 70 |  |  | 375 |
Other current assets | 2,354 |  |  | 430 |  |  | 11 |  |  | 441 |
Property and equipment | 796 |  |  | 598 |  |  | 118 |  |  | 716 |
Intangibles | 25,200 |  |  | 3,930 |  |  | 582 |  |  | 4,512 |
Goodwill | 25,141 |  |  | 3,015 |  |  | 206 |  |  | 3,221 |
Other non-current assets | 264 |  |  | 58 |  |  | 8 |  |  | 66 |
Accounts payable and other current liabilities | (3,278) |  |  | (1,059) |  |  | (14) |  |  | (1,073) |
Deferred income tax liabilities | (6,537) |  |  | — |  |  | — |  |  | — |
Long-term debt | (2,036) |  |  | — |  |  | — |  |  | — |
Other long-term liabilities | (294) |  |  | (35) |  |  | — |  |  | (35) |
Fair value of assets acquired and purchase price | 48,057 |  |  | 10,090 |  |  | 981 |  |  | 11,071 |
Less seller obligations | 5,959 |  |  | 2,500 |  |  | 70 |  |  | 2,570 |
Cash paid | $ | 42,098 |  |  | $ | 7,590 |  |  | $ | 911 |  |  | $ | 8,501 |
Contingent consideration is included as “seller obligations” in the above table or within “fair value of assets acquired” if subsequently paid during the period presented. These contingent payments consist primarily of earnouts based on performance that are recorded at fair value at the time of acquisition, and/or non-compete agreements and amounts based on working capital calculations. When these payments are expected to be made over one year from the acquisition date, the contingent consideration is discounted to net present value of future payments based on a weighted average of various future forecast scenarios. Further adjustments to the allocation for each acquisition still under its measurement period are expected as third-party or internal valuations are finalized, certain tax aspects of the transaction are completed, contingent consideration is settled and customary post-closing reviews are concluded during the measurement period attributable to each individual business combination. As a result, insignificant adjustments to the fair value of assets acquired, and in some cases total purchase price, have been made to certain business combinations since the date of acquisition and future adjustments may be made through the end of each measurement period. Goodwill and intangibles per the above table may not agree to the total gross increases of these assets as shown in Note 6, Goodwill and Intangibles, during each of the three months ended March 31, 2021 and 2020 due to minor adjustments to goodwill for the allocation of certain acquisitions still under measurement as well as other immaterial intangible assets added during the ordinary course of business. Estimates of acquired intangible assets related to the acquisitions are as follows (in thousands):
| For the three months ended March 31,
| 2021 |  | 2020
Acquired intangibles assets | Estimated Fair Value |  | Weighted Average Estimated Useful Life (yrs.) |  | Estimated Fair Value |  | Weighted Average Estimated Useful Life (yrs.)
Customer relationships | $ | 18,200 |  |  | 12 |  | $ | 2,611 |  |  | 8
Trademarks and tradenames | 4,400 |  |  | 15 |  | 1,145 |  |  | 15
Non-competition agreements | 2,600 |  |  | 5 |  | 227 |  |  | 5
Backlog | — |  |  | 0 |  | 529 |  |  | 2
Pro Forma Information The unaudited pro forma information for the combined results of the Company has been prepared as if the 2021 acquisitions had taken place on January 1, 2020 and the 2020 acquisitions had taken place on January 1, 2019. 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, 2020 and 2019, respectively, and the unaudited pro forma information does not purport to be indicative of future financial operating results (in thousands, except per share data):
| Unaudited pro forma for the three months ended March 31, |  |
| 2021 |  | 2020 |  |  |  |
Net revenue | $ | 443,217 |  |  | $ | 431,379 |  |  |  |  |
Net income | 18,403 |  |  | 17,638 |  |  |  |  |
Basic net income per share | 0.63 |  |  | 0.59 |  |  |  |  |
Diluted net income per share | 0.62 |  |  | 0.59 |  |  |  |  |
Unaudited pro forma net income reflects additional intangible asset amortization expense of $0.4 million and $2.5 million for the three months ended March 31, 2021, and 2020, respectively, as well as additional income tax expense of $0.4 million and $0.6 million for the three months ended March 31, 2021 and 2020, respectively, that would have been recorded had the 2021 acquisitions taken place on January 1, 2020 and the 2020 acquisitions taken place on January 1, 2019.

X
- 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
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration