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Acquisitions | 3 Months Ended
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Mar. 31, 2024
Business Combinations [Abstract] |
Acquisitions | Acquisitions On April 24, 2023, we acquired Coast Mountain Resources (2020) Ltd. (“CMR”). CMR is a construction aggregate producer based in British Columbia, Canada operating on Malahat First Nation land. CMR results are reported in the Materials segment. This acquisition did not have a material impact on our financial statements. On November 30, 2023 (“acquisition date”), we completed the acquisition of LRC/MSG for $278.0 million, subject to customary closing adjustments, plus an estimated amount related to tax make-whole agreements with the seller. We purchased all of the outstanding equity interests in LRC/MSG and the purchase price was funded by a $150.0 million senior secured term loan, as described further in Note 14, a draw of $100 million under our existing revolver, which was fully repaid during the three months ended March 31, 2024, and the remainder from cash on hand. The acquired businesses are longstanding asphalt paving and asphalt and aggregates producers and suppliers. LRC/MSG operates strategically located asphalt plants and sand and gravel mines serving the greater Memphis area and northern Mississippi. The buyer of LRC/MSG, Granite Southeast, is a wholly-owned subsidiary of Granite Construction Incorporated, and its results have been included in the Construction and Materials segments since the acquisition date. LRC/MSG’s customers are in both the public and private sectors. We have accounted for this transaction in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations (“ASC 805”). Revenue and gross loss attributable to LRC/MSG for the three months ended March 31, 2024 was $14.0 million and $8.5 million, respectively. During the three months ended March 31, 2024, we incurred an immaterial amount of pre-tax integration expenses associated with the LRC/MSG acquisition which were primarily related to professional services. Preliminary Purchase Price Allocation In accordance with ASC 805, the total purchase price and assumed liabilities were allocated to the net tangible and identifiable intangible assets based on their estimated fair values as of the acquisition date, as presented in the table below. These estimates are subject to revision, which may result in adjustments to the values presented below. There are certain provisional estimates that are subject to finalization, one of which is related to tax make-whole agreements with the seller of approximately $24.0 million, which will be finalized upon the former owners of LRC/MSG paying their personal tax burden related to the sale of the businesses. During the three months ended March 31, 2024, we made measurement period adjustments to reflect facts and circumstances in existence as of the acquisition date. These adjustments included a $4.6 million net increase from net working capital adjustments and a $2.0 million increase in the estimated obligation associated with the tax make-whole agreements noted above, offset by a $0.6 million net increase in the value of the net tangible and identifiable intangible assets acquired. The impact of these adjustments was an increase in goodwill of $6.0 million. We paid $6.1 million during the three months ended March 31, 2024 for net working capital adjustments associated with the acquisition of LRC/MSG. As we continue to integrate the acquired business, we may obtain additional information on the acquired identifiable intangible assets which, if significant, may require revisions to preliminary valuation assumptions, estimates and resulting fair values. We expect to finalize these amounts within 12 months from the acquisition date. The following table presents the preliminary purchase price allocation:
(in thousands) |
Assets |
Cash and cash equivalents | $ | 12,798 |
Receivables | 18,373 |
Contract assets | 3,388 |
Inventories | 13,738 |
Other current assets | 1,032 |
Property and equipment | 86,329 |
Right of use assets | 15,539 |
Other noncurrent assets | 3,718 |
Total tangible assets | 154,915 |
Identifiable intangible assets | 110,360 |
Liabilities |
Accounts payable | 6,806 |
Contract liabilities | 3,213 |
Accrued expenses and other current liabilities | 10,166 |
Long-term lease liabilities | 15,558 |
Other long-term liabilities | 5,960 |
Total liabilities assumed | 41,703 |
Total tangible and identifiable intangible net assets acquired | 223,572 |
Goodwill | 86,780 |
Estimated purchase price | $ | 310,352 |

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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://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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