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Business Combinations | 12 Months Ended
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Dec. 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, as well as diversify our products and end markets, we completed eleven, nine and six business combinations during the years ended December 31, 2021, 2020 and 2019, respectively, as well as several insignificant tuck-in acquisitions merged into existing operations in 2019, in which we acquired 100% of the voting equity interests in each acquired entity. Acquisition-related costs amounted to $2.8 million, $2.8 million and $2.1 million for the years ended December 31, 2021, 2020 and 2019, respectively, and are included in Administrative expenses on the Consolidated Statements of Operations and Comprehensive Income. 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 expect to deduct $100.5 million of goodwill for tax purposes as a result of 2021 acquisitions. 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. The largest of our 2021 acquisitions were I.W. International Insulation, Inc., dba Intermountain West Insulation (“IWI”) in March 2021, Alert Insulation ("Alert") and Alpine Construction Services ("Alpine") in April 2021, General Ceiling & Partitions, Inc. ("GCP") in June 2021, Five Star Building Products, LLC and Five Star Building Products of Southern Utah, LLC (collectively "Five Star") in September 2021, Denison Glass and Mirror, Inc. ("DGM") and CFI Insulation ("CFI") in November 2021, and AMD Distribution ("AMD") in December 2021. In each table, “Other” represents acquisitions that were individually immaterial in that year. Net income (loss), as noted below, includes amortization, taxes and interest allocations when appropriate. For the year ended December 31, 2021 (in thousands):
2021 Acquisitions |  | Date |  | Acquisition Type |  | Cash Paid |  | Seller Obligations |  | Total Purchase Price |  | Revenue |  | Net Income (Loss)
IWI |  | 03/01/2021 |  | Share |  | $ | 42,098 |  |  | $ | 5,959 |  |  | $ | 48,057 |  |  | $ | 36,259 |  |  | $ | 3,373 |
Alert |  | 4/13/2021 |  | Asset |  | 5,850 |  |  | 2,980 |  |  | 8,830 |  |  | 13,494 |  |  | (151) |
Alpine |  | 4/19/2021 |  | Asset |  | 7,945 |  |  | 2,208 |  |  | 10,153 |  |  | 8,267 |  |  | 189 |
GCP |  | 6/7/2021 |  | Asset |  | 9,700 |  |  | 1,427 |  |  | 11,127 |  |  | 7,125 |  |  | 83 |
Five Star |  | 9/13/2021 |  | Share |  | 26,308 |  |  | 5,466 |  |  | 31,774 |  |  | 6,861 |  |  | (119) |
DGM |  | 11/1/2021 |  | Asset |  | 11,634 |  |  | 2,069 |  |  | 13,703 |  |  | 2,198 |  |  | (462) |
CFI |  | 11/22/2021 |  | Share |  | 13,450 |  |  | 1,145 |  |  | 14,595 |  |  | 1,289 |  |  | 53 |
AMD |  | 12/13/2021 |  | Asset |  | 119,490 |  |  | 6,631 |  |  | 126,121 |  |  | 3,707 |  |  | (225) |
Other |  | Various |  | Asset |  | 6,540 |  |  | 1,284 |  |  | 7,824 |  |  | 3,231 |  |  | (102) |
Total |  |  |  |  |  | $ | 243,015 |  |  | $ | 29,169 |  |  | $ | 272,184 |  |  | $ | 82,431 |  |  | $ | 2,639 |
For the year ended December 31, 2020 (in thousands):
2020 Acquisitions |  | Date |  | Acquisition Type |  | Cash Paid |  | Seller Obligations |  | Total Purchase Price |  | Revenue |  | Net Income (Loss)
Royals |  | 2/29/2020 |  | Asset |  | $ | 7,590 |  |  | $ | 2,500 |  |  | $ | 10,090 |  |  | $ | 11,095 |  |  | $ | 1,332 |
Energy One |  | 8/10/2020 |  | Asset |  | 13,200 |  |  | 1,591 |  |  | 14,791 |  |  | 7,454 |  |  | (558) |
Storm Master |  | 8/31/2020 |  | Asset |  | 13,000 |  |  | 1,336 |  |  | 14,336 |  |  | 8,131 |  |  | 619 |
ICON |  | 10/13/2020 |  | Asset |  | 16,900 |  |  | 3,598 |  |  | 20,498 |  |  | 4,798 |  |  | 449 |
Norkote |  | 10/26/2020 |  | Asset |  | 8,725 |  |  | 2,426 |  |  | 11,151 |  |  | 2,702 |  |  | 417 |
WeatherSeal |  | 11/16/2020 |  | Asset |  | 9,500 |  |  | 922 |  |  | 10,422 |  |  | 766 |  |  | (23) |
Other |  | Various |  | Asset |  | 7,531 |  |  | 1,713 |  |  | 9,244 |  |  | 5,548 |  |  | (344) |
Total |  |  |  |  |  | $ | 76,446 |  |  | $ | 14,086 |  |  | $ | 90,532 |  |  | $ | 40,494 |  |  | $ | 1,892 |
For the year ended December 31, 2019 (in thousands):
2019 Acquisitions |  | Date |  | Acquisition Type |  | Cash Paid |  | Seller Obligations |  | Total Purchase Price |  | Revenue |  | Net Income (Loss)
1st State Insulation |  | 3/18/2019 |  | Asset |  | $ | 5,125 |  |  | $ | 1,355 |  |  | $ | 6,480 |  |  | $ | 9,828 |  |  | $ | 476 |
Expert Insulation |  | 6/24/2019 |  | Asset |  | 16,165 |  |  | 1,993 |  |  | 18,158 |  |  | 6,484 |  |  | 155 |
Premier |  | 11/18/2019 |  | Share |  | 25,000 |  |  | 2,765 |  |  | 27,765 |  |  | 2,161 |  |  | (62) |
Other |  | Various |  | Asset |  | 5,750 |  |  | 1,430 |  |  | 7,180 |  |  | 3,339 |  |  | 23 |
Total |  |  |  |  |  | $ | 52,040 |  |  | $ | 7,543 |  |  | $ | 59,583 |  |  | $ | 21,812 |  |  | $ | 592 |
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):
| 2021
| IWI |  | Alert |  | Alpine |  | GCP |  | Five Star |  | DGM |  | CFI |  | AMD |  | Other |  | Total
Estimated fair values: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash | $ | 168 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,472 |  |  | $ | — |  |  | $ | 67 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,707 |
Accounts receivable | 5,122 |  |  | 4,710 |  |  | — |  |  | 3,067 |  |  | 4,597 |  |  | 4,007 |  |  | 1,318 |  |  | 8,393 |  |  | 446 |  |  | 31,660 |
Inventories | 1,157 |  |  | 765 |  |  | 359 |  |  | — |  |  | 1,399 |  |  | 6 |  |  | 311 |  |  | 7,540 |  |  | 345 |  |  | 11,882 |
Other current assets | 3,014 |  |  | 738 |  |  | — |  |  | — |  |  | 330 |  |  | 1,016 |  |  | 26 |  |  | — |  |  | 74 |  |  | 5,198 |
Property and equipment | 796 |  |  | 693 |  |  | 726 |  |  | 206 |  |  | 1,161 |  |  | 853 |  |  | 714 |  |  | 1,133 |  |  | 932 |  |  | 7,214 |
Intangibles | 25,200 |  |  | 2,770 |  |  | 5,543 |  |  | 5,670 |  |  | 17,400 |  |  | 8,800 |  |  | 7,699 |  |  | 52,800 |  |  | 4,072 |  |  | 129,954 |
Goodwill | 23,282 |  |  | 940 |  |  | 3,582 |  |  | 2,695 |  |  | 6,482 |  |  | 3,447 |  |  | 6,799 |  |  | 56,327 |  |  | 2,063 |  |  | 105,617 |
Other non-current assets | 264 |  |  | 132 |  |  | — |  |  | — |  |  | — |  |  | 213 |  |  | — |  |  | — |  |  | 18 |  |  | 627 |
Accounts payable and other current liabilities | (8,416) |  |  | (1,184) |  |  | (57) |  |  | (493) |  |  | (1,040) |  |  | (4,625) |  |  | (242) |  |  | (23) |  |  | (123) |  |  | (16,203) |
Deferred income tax liabilities | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,089) |  |  | — |  |  | — |  |  | (2,089) |
Other long-term liabilities | (2,530) |  |  | (734) |  |  | — |  |  | (18) |  |  | (27) |  |  | (14) |  |  | (8) |  |  | (49) |  |  | (3) |  |  | (3,383) |
Fair value of assets acquired and purchase price | 48,057 |  |  | 8,830 |  |  | 10,153 |  |  | 11,127 |  |  | 31,774 |  |  | 13,703 |  |  | 14,595 |  |  | 126,121 |  |  | 7,824 |  |  | 272,184 |
Less seller obligations | 5,959 |  |  | 2,980 |  |  | 2,208 |  |  | 1,427 |  |  | 5,466 |  |  | 2,069 |  |  | 1,145 |  |  | 6,631 |  |  | 1,284 |  |  | 29,169 |
Cash paid | $ | 42,098 |  |  | $ | 5,850 |  |  | $ | 7,945 |  |  | $ | 9,700 |  |  | $ | 26,308 |  |  | $ | 11,634 |  |  | $ | 13,450 |  |  | $ | 119,490 |  |  | $ | 6,540 |  |  | $ | 243,015 |
| 2020
| Royals |  | Energy One |  | Storm Master |  | ICON |  | Norkote |  | WeatherSeal |  | Other |  | Total
Estimated fair values: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable | $ | 2,848 |  |  | $ | 3,357 |  |  | $ | 2,362 |  |  | $ | 4,828 |  |  | $ | 1,926 |  |  | $ | 865 |  |  | $ | 1,419 |  |  | $ | 17,605 |
Inventories | 305 |  |  | 838 |  |  | 175 |  |  | 243 |  |  | 444 |  |  | 156 |  |  | 600 |  |  | 2,761 |
Other current assets | 430 |  |  | 12 |  |  | — |  |  | 675 |  |  | 178 |  |  | 14 |  |  | 145 |  |  | 1,454 |
Property and equipment | 598 |  |  | 2,319 |  |  | 798 |  |  | 380 |  |  | 584 |  |  | 520 |  |  | 663 |  |  | 5,862 |
Intangibles | 3,930 |  |  | 6,500 |  |  | 8,720 |  |  | 11,830 |  |  | 5,310 |  |  | 5,450 |  |  | 4,483 |  |  | 46,223 |
Goodwill | 3,015 |  |  | 3,253 |  |  | 3,631 |  |  | 2,870 |  |  | 2,841 |  |  | 3,472 |  |  | 2,223 |  |  | 21,305 |
Other non-current assets | 58 |  |  | — |  |  | — |  |  | 145 |  |  | — |  |  | — |  |  | 38 |  |  | 241 |
Accounts payable and other current liabilities | (1,059) |  |  | (1,469) |  |  | (1,336) |  |  | (445) |  |  | (86) |  |  | (50) |  |  | (196) |  |  | (4,641) |
Other long-term liabilities | (35) |  |  | (19) |  |  | (14) |  |  | (28) |  |  | (46) |  |  | (5) |  |  | (131) |  |  | (278) |
Fair value of assets acquired and purchase price | 10,090 |  |  | 14,791 |  |  | 14,336 |  |  | 20,498 |  |  | 11,151 |  |  | 10,422 |  |  | 9,244 |  |  | 90,532 |
Less seller obligations | 2,500 |  |  | 1,591 |  |  | 1,336 |  |  | 3,598 |  |  | 2,426 |  |  | 922 |  |  | 1,713 |  |  | 14,086 |
Cash paid | $ | 7,590 |  |  | $ | 13,200 |  |  | $ | 13,000 |  |  | $ | 16,900 |  |  | $ | 8,725 |  |  | $ | 9,500 |  |  | $ | 7,531 |  |  | $ | 76,446 |
| 2019
| 1st State |  | Expert |  | Premier |  | Other |  | Total
Estimated fair values: |  |  |  |  |  |  |  |  |
Cash | $ | — |  |  | $ | — |  |  | $ | 334 |  |  | $ | — |  |  | $ | 334 |
Accounts receivable | — |  |  | 1,796 |  |  | 2,929 |  |  | 479 |  |  | 5,204 |
Inventories | 291 |  |  | 723 |  |  | 1,242 |  |  | 410 |  |  | 2,666 |
Other current assets | — |  |  | — |  |  | — |  |  | 3 |  |  | 3 |
Property and equipment | 989 |  |  | 235 |  |  | 876 |  |  | 887 |  |  | 2,987 |
Intangibles | 3,382 |  |  | 6,740 |  |  | 14,300 |  |  | 3,619 |  |  | 28,041 |
Goodwill | 1,857 |  |  | 8,545 |  |  | 10,151 |  |  | 1,765 |  |  | 22,318 |
Other non-current assets | — |  |  | 161 |  |  | 329 |  |  | 41 |  |  | 531 |
Accounts payable and other current liabilities | (39) |  |  | (42) |  |  | (2,396) |  |  | (24) |  |  | (2,501) |
Fair value of assets acquired and purchase price | 6,480 |  |  | 18,158 |  |  | 27,765 |  |  | 7,180 |  |  | 59,583 |
Less seller obligations | 1,355 |  |  | 1,993 |  |  | 2,765 |  |  | 1,430 |  |  | 7,543 |
Cash paid | $ | 5,125 |  |  | $ | 16,165 |  |  | $ | 25,000 |  |  | $ | 5,750 |  |  | $ | 52,040 |
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 7, Goodwill and Intangibles, during the years ended December 31, 2021, 2020 and 2019 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. In addition, goodwill and intangibles increased during the year ended December 31, 2019 due to various small acquisitions merged into existing operations that do not appear in the above tables. Estimates of acquired intangible assets related to the acquisitions are as follows (dollars in thousands):
| 2021 |  | 2020 |  | 2019
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 | $ | 94,473 |  |  | 12 |  | $ | 28,307 |  |  | 8 |  | $ | 20,659 |  |  | 8
Trademarks and trade names | 23,349 |  |  | 15 |  | 9,834 |  |  | 15 |  | 5,286 |  |  | 15
Non-competition agreements | 7,254 |  |  | 5 |  | 3,315 |  |  | 5 |  | 2,096 |  |  | 5
Backlog | 4,878 |  |  | 2.5 |  | 4,767 |  |  | 1.5 |  | — |  |  | — |
Pro Forma Information (unaudited) The unaudited pro forma information has been prepared as if the 2021 acquisitions had taken place on January 1, 2020, the 2020 acquisitions had taken place on January 1, 2019 and the 2019 acquisitions had taken place on January 1, 2018. 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, 2019 and 2018 and the unaudited pro forma information does not purport to be indicative of future financial operating results (in thousands, except for per share data).
| December 31,
| 2021 |  | 2020 |  | 2019
Net revenue | $ | 2,105,295 |  |  | $ | 1,922,327 |  |  | $ | 1,660,326 |
Net income | 129,825 |  |  | 107,791 |  |  | 76,474 |
Basic net income per share | 4.42 |  |  | 3.65 |  |  | 2.57 |
Diluted net income per share | 4.38 |  |  | 3.63 |  |  | 2.56 |
Unaudited pro forma net income reflects additional intangible asset amortization expense of $8.2 million, $18.2 million and $10.2 million for the years ended December 31, 2021, 2020 and 2019, respectively, additional interest expense of $4.1 million and $4.3 million for the years ended December 31, 2021 and 2020, respectively, as well as additional income tax expense of $3.9 million, $3.7 million and $3.0 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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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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