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Business Combinations | 12 Months Ended
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Dec. 31, 2022
Business Combinations [Abstract] |
Business Combinations | BUSINESS COMBINATIONSAs 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 eight, eleven and nine business combinations during the years ended December 31, 2022, 2021 and 2020, respectively. Acquisition-related costs amounted to $3.0 million, $3.8 million and $3.0 million for the years ended December 31, 2022, 2021 and 2020, respectively, and are included in Administrative expenses on the Consolidated Statements of Operations and Comprehensive Income. In addition, we recognized gains on acquisition earnouts on the Consolidated Statements of Operations and Comprehensive Income of $16.1 million, $1.0 million and $0.2 million for the years ended December 31, 2022, 2021 and 2020, respectively, due to probability assessments and to the cancellations of acquisition-related earnouts. The gain recorded during the year ended December 31, 2022, is primarily comprised of a $15.1 million gain for the Central Aluminum acquisition (as defined below) recorded as a result of revised earnout target expectations. 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 $41.3 million of goodwill for tax purposes as a result of 2022 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 2022 acquisitions were Central Aluminum Supply Corporation and Central Aluminum Supply of North Jersey, LLC (collectively "CAS") in April 2022 and ABS Insulating Company, Inc., ABS Sprayfoam Insulation, Inc. and ABS Coastal Insulating Company, LLC (collectively "ABS") in December 2022. 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. Prior period amounts have been recast to conform with the current year presentation. For the year ended December 31, 2022 (in thousands):
2022 Acquisitions |  | Date |  | Acquisition Type |  | Cash Paid |  | Seller Obligations |  | Total Purchase Price |  | Revenue |  | Net Income (Loss)
CAS |  | 4/11/2022 |  | Share |  | $ | 55,150 |  |  | $ | 22,927 |  |  | $ | 78,077 |  |  | $ | 37,822 |  |  | $ | (1,001) |
ABS |  | 12/19/2022 |  | Share |  | 23,150 |  |  | 412 |  |  | 23,562 |  |  | 658 |  |  | (97) |
Other |  | Various |  | Asset/Share |  | 35,759 |  |  | 3,639 |  |  | 39,398 |  |  | 22,576 |  |  | 787 |
Total |  |  |  |  |  | $ | 114,059 |  |  | $ | 26,978 |  |  | $ | 141,037 |  |  | $ | 61,056 |  |  | $ | (311) |
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 |
Five Star |  | 9/13/2021 |  | Share |  | 26,308 |  |  | 5,466 |  |  | 31,774 |  |  | 6,861 |  |  | (119) |
AMD |  | 12/13/2021 |  | Asset |  | 119,490 |  |  | 6,631 |  |  | 126,121 |  |  | 3,707 |  |  | (225) |
Other |  | Various |  | Asset/Share |  | 55,119 |  |  | 9,835 |  |  | 64,954 |  |  | 35,604 |  |  | (390) |
Total |  |  |  |  |  | $ | 243,015 |  |  | $ | 27,891 |  |  | $ | 270,906 |  |  | $ | 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)
ICON |  | 10/13/2020 |  | Asset |  | $ | 16,900 |  |  | $ | 3,598 |  |  | $ | 20,498 |  |  | $ | 4,798 |  |  | $ | 449 |
Other |  | Various |  | Asset |  | 59,546 |  |  | 10,488 |  |  | 70,034 |  |  | 35,696 |  |  | 1,443 |
Total |  |  |  |  |  | $ | 76,446 |  |  | $ | 14,086 |  |  | $ | 90,532 |  |  | $ | 40,494 |  |  | $ | 1,892 |
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):
| 2022 |
| CAS |  | ABS |  | Other |  | Total |
Estimated fair values: |  |  |  |  |  |  |  |
Cash | $ | 243 |  |  | $ | 193 |  |  | $ | 87 |  |  | $ | 523 |  |
Accounts receivable | 3,502 |  |  | 2,777 |  |  | 5,800 |  |  | 12,079 |  |
Inventories | 13,784 |  |  | 853 |  |  | 2,456 |  |  | 17,093 |  |
Other current assets | 576 |  |  | 485 |  |  | 71 |  |  | 1,132 |  |
Property and equipment | 2,590 |  |  | 1,269 |  |  | 4,498 |  |  | 8,357 |  |
Operating lease right-of-use asset | 844 |  |  | — |  |  | 66 |  |  | 910 |  |
Intangibles | 34,900 |  |  | 12,800 |  |  | 17,365 |  |  | 65,065 |  |
Goodwill | 27,594 |  |  | 10,546 |  |  | 11,154 |  |  | 49,294 |  |
Other non-current assets | — |  |  | — |  |  | 56 |  |  | 56 |  |
Accounts payable and other current liabilities | (5,387) |  |  | (2,677) |  |  | (2,133) |  |  | (10,197) |  |
Deferred income tax liabilities | — |  |  | (2,455) |  |  | — |  |  | (2,455) |  |
Income tax payable | — |  |  | (229) |  |  | — |  |  | (229) |  |
Other long-term liabilities | (569) |  |  | — |  |  | (22) |  |  | (591) |  |
Fair value of assets acquired and purchase price | 78,077 |  |  | 23,562 |  |  | 39,398 |  |  | 141,037 |  |
Less seller obligations | 22,927 |  |  | 412 |  |  | 3,639 |  |  | 26,978 |  |
Cash paid | $ | 55,150 |  |  | $ | 23,150 |  |  | $ | 35,759 |  |  | $ | 114,059 |  |
| 2021
| IWI |  | Five Star |  | AMD |  | Other |  | Total
Estimated fair values: |  |  |  |  |  |  |  |  |
Cash | $ | 168 |  |  | $ | 1,472 |  |  | $ | — |  |  | $ | 67 |  |  | $ | 1,707 |
Accounts receivable | 5,122 |  |  | 4,583 |  |  | 8,393 |  |  | 13,584 |  |  | 31,682 |
Inventories | 1,157 |  |  | 1,399 |  |  | 7,540 |  |  | 1,786 |  |  | 11,882 |
Other current assets | 3,014 |  |  | 330 |  |  | — |  |  | 1,975 |  |  | 5,319 |
Property and equipment | 796 |  |  | 1,161 |  |  | 1,133 |  |  | 4,124 |  |  | 7,214 |
Operating lease right of-use-asset | — |  |  | — |  |  | 199 |  |  | — |  |  | 199 |
Intangibles | 25,200 |  |  | 17,400 |  |  | 52,800 |  |  | 31,554 |  |  | 126,954 |
Goodwill | 23,282 |  |  | 6,626 |  |  | 56,327 |  |  | 21,122 |  |  | 107,357 |
Other non-current assets | 264 |  |  | — |  |  | — |  |  | 417 |  |  | 681 |
Accounts payable and other current liabilities | (8,416) |  |  | (1,170) |  |  | (184) |  |  | (6,809) |  |  | (16,579) |
Deferred income tax liabilities | — |  |  | — |  |  | — |  |  | (2,089) |  |  | (2,089) |
Other long-term liabilities | (2,530) |  |  | (27) |  |  | (87) |  |  | (777) |  |  | (3,421) |
Fair value of assets acquired and purchase price | 48,057 |  |  | 31,774 |  |  | 126,121 |  |  | 64,954 |  |  | 270,906 |
Less seller obligations | 5,959 |  |  | 5,466 |  |  | 6,631 |  |  | 9,835 |  |  | 27,891 |
Cash paid | $ | 42,098 |  |  | $ | 26,308 |  |  | $ | 119,490 |  |  | $ | 55,119 |  |  | $ | 243,015 |
| 2020
| ICON |  | Other |  | Total
Estimated fair values: |  |  |  |  |
Accounts receivable | $ | 4,828 |  |  | $ | 12,777 |  |  | $ | 17,605 |
Inventories | 243 |  |  | 2,518 |  |  | 2,761 |
Other current assets | 675 |  |  | 779 |  |  | 1,454 |
Property and equipment | 380 |  |  | 5,482 |  |  | 5,862 |
Intangibles | 11,830 |  |  | 34,393 |  |  | 46,223 |
Goodwill | 2,870 |  |  | 18,435 |  |  | 21,305 |
Other non-current assets | 145 |  |  | 96 |  |  | 241 |
Accounts payable and other current liabilities | (445) |  |  | (4,196) |  |  | (4,641) |
Other long-term liabilities | (28) |  |  | (250) |  |  | (278) |
Fair value of assets acquired and purchase price | 20,498 |  |  | 70,034 |  |  | 90,532 |
Less seller obligations | 3,598 |  |  | 10,488 |  |  | 14,086 |
Cash paid | $ | 16,900 |  |  | $ | 59,546 |  |  | $ | 76,446 |
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. The provisional amounts for one of our 2021 acquisitions originally reported in our Consolidated Balance Sheets included in our Annual Report on Form 10-K for the period ended December 31, 2021 were adjusted due to adjustments to pre-acquisition financial information and ongoing analysis of the fair value measurements. As a result of an independent appraisal, we increased goodwill by approximately $1.6 million and decreased intangibles by $(3.0) million. These adjustments were within applicable measurement period guidelines and did not effect earnings. 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, 2022, 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 (dollars in thousands):
| 2022 |  | 2021 |  | 2020
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 | $ | 45,236 |  |  | 12 |  | $ | 95,173 |  |  | 12 |  | $ | 28,307 |  |  | 8
Trademarks and trade names | 16,794 |  |  | 15 |  | 23,149 |  |  | 15 |  | 9,834 |  |  | 15
Non-competition agreements | 2,645 |  |  | 5 |  | 7,054 |  |  | 5 |  | 3,315 |  |  | 5
Backlog | 390 |  |  | 1 |  | 1,578 |  |  | 1.5 |  | 4,767 |  |  | 1.5
Pro Forma Information (unaudited) The unaudited pro forma information has been prepared as if the 2022 acquisitions had taken place on January 1, 2021, 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, 2021, 2020 and 2019 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,
| 2022 |  | 2021 |  | 2020
Net revenue | $ | 2,732,084 |  |  | $ | 2,217,592 |  |  | $ | 1,922,327 |
Net income | 227,108 |  |  | 135,850 |  |  | 107,791 |
Basic net income per share | 7.91 |  |  | 4.63 |  |  | 3.65 |
Diluted net income per share | 7.87 |  |  | 4.59 |  |  | 3.63 |
Unaudited pro forma net income reflects additional intangible asset amortization expense of $2.5 million, $13.1 million and $18.2 million for the years ended December 31, 2022, 2021 and 2020, respectively, additional interest expense of $4.3 million for each of the years ended December 31, 2021 and 2020, respectively, as well as additional income tax expense of $1.2 million, $5.7 million and $3.7 million for the years ended December 31, 2022, 2021 and 2020, 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 https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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