XML 52 R25.htm IDEA: XBRL DOCUMENT
v3.23.2

Acquisitions | 12 Months Ended
--- | ---
May 31, 2023
Business Combinations [Abstract] |
Acquisitions | Note Q – Acquisitions Level 5 Tools, LLC (fiscal 2023) On June 2, 2022, we acquired Level5, a leading provider of drywall tools and related accessories. The total purchase price was $59,321, including $2,000 attributed to an earnout agreement with the selling shareholders, that provides for up to an additional $25,000 of cash consideration should certain earnings targets be met annually through calendar year 2024. The earnout agreement also requires continued employment of a selling shareholder during the duration of the earnout period. Accordingly, payments to this key employee, to the extent earned, will be accounted for as post-combination compensation expense. As of May 31, 2023, there was no accrual recorded for anticipated payments under the second earnout period ending December 31, 2023. Level5 is being operated as part of the Consumer Products operating segment and its results have been included in our consolidated statements of earnings since the date of acquisition. Proforma results, including the acquired business since the beginning of fiscal 2022, would not be materially different from the reported results. The information included herein has been based on the preliminary allocation of the purchase price using estimates of the fair value and useful lives of the assets acquired. The purchase price allocation is subject to further adjustment until all pertinent information regarding the assets acquired is fully evaluated by us, including but not limited to, the fair value accounting. The assets acquired and liabilities assumed were recognized at their estimated acquisition-date fair values, with goodwill representing the excess of the purchase price over the fair value of the net identifiable assets acquired. In connection with the acquisition of Level5, we identified and valued the following intangible assets:
Category |  | Amount |  |  | Useful Life (Years)
Trade name |  | $ | 13,500 |  |  | Indefinite
Customer relationships |  |  | 13,300 |  |  | 10
Technological know-how |  |  | 6,500 |  |  | 20
Non-compete agreement |  |  | 280 |  |  | 3
Total acquired identifiable intangible assets |  | $ | 33,580 |  |  |
The purchase price includes the fair values of other assets that were not identifiable, not separately recognizable under applicable accounting rules (e.g., assembled workforce) or of immaterial value. The purchase price also includes strategic and synergistic benefits (investment value) specific to us, which resulted in a purchase price in excess of the fair value of the identifiable net assets. This additional investment value resulted in goodwill which will be deductible by us for income tax purposes. The following table summarizes the consideration transferred and the estimated fair value assigned to the assets acquired and liabilities assumed at the acquisition date. These amounts reflect various preliminary fair value estimates and assumptions, including preliminary work performed by a third-party valuation specialist, and are subject to change within the measurement period as the valuation is finalized. The primary areas of preliminary purchase price allocation subject to change relate to the valuation of acquired tangible assets and liabilities, identification and valuation of residual goodwill and tax effects of acquired assets and assumed liabilities.
|  |  |  |  | Measurement |  |  |  |
|  | Preliminary |  |  | Period |  |  | Final |
(In thousands) |  | Valuation |  |  | Adjustments |  |  | Valuation |
Cash and cash equivalents |  | $ | 1,515 |  |  | $ | - |  |  | $ | 1,515 |
Accounts receivable |  |  | 2,860 |  |  |  | - |  |  |  | 2,860 |
Inventories |  |  | 9,161 |  |  |  | - |  |  |  | 9,161 |
Prepaid expenses |  |  | 64 |  |  |  | - |  |  |  | 64 |
Property, plant and equipment |  |  | 273 |  |  |  | - |  |  |  | 273 |
Intangible assets |  |  | 33,580 |  |  |  | - |  |  |  | 33,580 |
Operating lease assets |  |  | 377 |  |  |  | - |  |  |  | 377 |
Total identifiable assets |  |  | 47,830 |  |  |  | - |  |  |  | 47,830 |
Accounts payable |  |  | (3,175 | ) |  |  | - |  |  |  | (3,175 | )
Accrued expenses |  |  | (904 | ) |  |  | 151 |  |  |  | (753 | )
Current operating lease liabilities |  |  | (111 | ) |  |  | - |  |  |  | (111 | )
Noncurrent operating lease liabilities |  |  | (266 | ) |  |  | - |  |  |  | (266 | )
Net identifiable assets |  |  | 43,374 |  |  |  | 151 |  |  |  | 43,525 |
Goodwill |  |  | 15,947 |  |  |  | - |  |  |  | 15,947 |
Total purchase price |  |  | 59,321 |  |  |  | 151 |  |  |  | 59,472 |
Less: Fair value of earnout |  |  | (2,000 | ) |  |  | - |  |  |  | (2,000 | )
Plus: Net working capital deficit |  |  | 282 |  |  |  | (151 | ) |  |  | 131 |
Cash purchase price |  | $ | 57,603 |  |  | $ | - |  |  | $ | 57,603 |
Shiloh Industries’ U.S. BlankLight® (fiscal 2022) On June 8, 2021, our Steel Processing operating segment, along with our 55% consolidated joint venture TWB, acquired certain assets of Shiloh’s U.S. BlankLight® business. The purchase price for the acquisition was cash consideration of approximately $104,506, after closing adjustments. The Shiloh business is being primarily operated by TWB and is part of the Steel Processing segment and the operating results of the Shiloh business have been included in our consolidated statements of earnings since the date of acquisition. Proforma results of the Shiloh business, including the acquired business since the beginning of fiscal 2021, would not be materially different than the reported results. Net sales and net earnings since the beginning of fiscal 2021, would not be materially different than the reported results. The acquisition consisted of three laser welding facilities that are being operated as part of our TWB joint venture and one blanking facility that is being operated as part of our core Steel Processing operations. Approximately $19,500 of the total goodwill relates to TWB, which will be treated as a separate reporting unit for purposes of goodwill impairment testing. The assets acquired and liabilities assumed were recognized at their estimated acquisition-date fair values, with goodwill representing the excess of the purchase price over the fair value of the net identifiable assets acquired. In connection with the acquisition of Shiloh, we identified and valued the following intangible assets:
(In thousands) |  |  |  |  |
Category |  | Amount |  |  | Useful Life (Years)
Customer relationships |  | $ | 34,500 |  |  | 15-20
Non-compete agreement |  |  | 290 |  |  | 3
In-process research & development |  |  | 1,300 |  |  | Indefinite
Total acquired identifiable intangible assets |  | $ | 36,090 |  |  |
The purchase price includes the fair values of other assets that were not identifiable, not separately recognizable under accounting rules (e.g., assembled workforce) or of immaterial value. The purchase price also includes strategic and synergistic benefits (investment value) specific to us, which resulted in a purchase price in excess of the fair value of the identifiable net assets. This additional investment value resulted in goodwill which will be deductible for income tax purposes. The following table summarizes the consideration paid and the final fair value assigned to the assets and liabilities assumed at the acquisition date.
|  |  |  |  | Measurement |  |  |  |
|  | Preliminary |  |  | Period |  |  | Final |
(In thousands) |  | Valuation |  |  | Adjustments |  |  | Valuation |
Accounts receivable |  | $ | 44,191 |  |  | $ | (496 | ) |  | $ | 43,695 |
Inventories |  |  | 13,971 |  |  |  | 1,999 |  |  |  | 15,970 |
Property, plant, and equipment |  |  | 30,461 |  |  |  | (1,104 | ) |  |  | 29,357 |
Intangible assets |  |  | 34,280 |  |  |  | 1,810 |  |  |  | 36,090 |
Operating lease assets |  |  | 59,905 |  |  |  | - |  |  |  | 59,905 |
Total identifiable assets |  |  | 182,808 |  |  |  | 2,209 |  |  |  | 185,017 |
Accounts payable |  |  | (44,822 | ) |  |  | (72 | ) |  |  | (44,894 | )
Current operating lease liabilities |  |  | (1,555 | ) |  |  | - |  |  |  | (1,555 | )
Noncurrent operating lease liabilities |  |  | (58,350 | ) |  |  | - |  |  |  | (58,350 | )
Net identifiable assets |  |  | 78,081 |  |  |  | 2,137 |  |  |  | 80,218 |
Goodwill |  |  | 26,669 |  |  |  | (2,381 | ) |  |  | 24,288 |
Purchase price |  | $ | 104,750 |  |  | $ | (244 | ) |  | $ | 104,506 |
Tempel Steel Company (fiscal 2022) On December 1, 2021, our Steel Processing operating segment completed its acquisition of Tempel, a leading global manufacturer of precision motor and transformer laminations for the electrical steel market that includes transformers, machine motors and electric vehicle (EV) motors for cash consideration of $272,208 net of cash acquired, plus the assumption of certain long-term liabilities. The acquisition was funded primarily with cash on hand and some borrowing under our Credit Facility. Total acquisition-related expenses of $1,924 were incurred in fiscal 2022. The assets acquired and liabilities assumed were recognized at their estimated acquisition-date fair values, with goodwill representing the excess of the purchase price over the fair value of the net identifiable assets acquired. In connection with the acquisition of Tempel, we identified and valued the following intangible assets:
(In thousands) |  |  |  |  |
Category |  | Amount |  |  | Useful Life (Years)
Customer relationships |  | $ | 30,000 |  |  | 17
Technological know how |  |  | 11,000 |  |  | 6-8
Total acquired identifiable intangible assets |  | $ | 41,000 |  |  |
The purchase price includes the fair values of other assets that were not identifiable, not separately recognizable under accounting rules (e.g., assembled workforce) or of immaterial value. The purchase price also includes strategic and synergistic benefits (investment value) specific to us, which resulted in a purchase price in excess of the fair value of the identifiable net assets. This additional investment value resulted in goodwill which is not expected to be deductible for income tax purposes. The following table summarizes the consideration paid and the final fair value assigned to the assets and liabilities assumed at the acquisition date.
|  |  |  |  | Measurement |  |  |  |
|  | Preliminary |  |  | Period |  |  | Final |
(In thousands) |  | Valuation |  |  | Adjustments |  |  | Valuation |
Cash |  | $ | 17,098 |  |  | $ | - |  |  | $ | 17,098 |
Accounts receivable |  |  | 88,672 |  |  |  | 801 |  |  |  | 89,473 |
Inventories |  |  | 59,927 |  |  |  | - |  |  |  | 59,927 |
Other current assets |  |  | 10,666 |  |  |  | (18 | ) |  |  | 10,648 |
Property, plant and equipment |  |  | 147,441 |  |  |  | - |  |  |  | 147,441 |
Intangible assets |  |  | 41,000 |  |  |  | - |  |  |  | 41,000 |
Operating lease assets |  |  | 4,098 |  |  |  | - |  |  |  | 4,098 |
Total identifiable assets |  |  | 368,902 |  |  |  | 783 |  |  |  | 369,685 |
Accounts payable |  |  | (49,777 | ) |  |  | - |  |  |  | (49,777 | )
Notes payable |  |  | (6,270 | ) |  |  | - |  |  |  | (6,270 | )
Accrued liabilities |  |  | (17,501 | ) |  |  | 64 |  |  |  | (17,437 | )
Current operating lease liabilities |  |  | (1,614 | ) |  |  | - |  |  |  | (1,614 | )
Noncurrent operating lease liabilities |  |  | (2,484 | ) |  |  | - |  |  |  | (2,484 | )
Other non-current liabilities (1) |  |  | (40,110 | ) |  |  | 2,287 |  |  |  | (37,823 | )
Net identifiable assets |  |  | 251,146 |  |  |  | 3,134 |  |  |  | 254,280 |
Goodwill |  |  | 38,462 |  |  |  | (3,436 | ) |  |  | 35,026 |
Purchase price |  | $ | 289,608 |  |  | $ | (302 | ) |  | $ | 289,306 |
(1) Includes $40,160 of net pension and other postretirement benefit obligations assumed as part of the Tempel acquisition. The excess of projected benefit obligations over the fair value of the plans’ assets was recognized as a liability in accordance with ASC 715 using key inputs including, but not limited to, discount rates and expected rates of return on the plans’ assets. See “Note M - Employee Pension Plans” for additional information. Operating results of Tempel have been included in our consolidated statements of earnings since December 1, 2021, the date of acquisition. During the fiscal 2022, Tempel contributed net sales of $278,182 and operating income of $8,609, which included acquisition-related costs of approximately $1,924 and incremental cost of goods sold of $3,820 due to the write-up of inventory to its estimated acquisition-date fair value. The following unaudited pro forma information for the past two fiscal years presents consolidated financial information as if Tempel had been acquired at the beginning of fiscal 2021. Depreciation and amortization expense included in the pro forma results reflect the acquisition-date fair values assigned to the definite-lived intangible assets and fixed assets of Tempel assuming a June 1, 2020 acquisition date. Adjustments have been made to remove acquisition-related costs and the acquisition date fair value adjustment to acquired inventories. The pro forma adjustments noted above have been adjusted for the applicable income tax impact. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on June 1, 2020.
|  | 2022 |  |  | 2021 |
Net sales |  | $ | 5,841,097 |  |  | $ | 3,490,167 |
Net earnings attributable to controlling interest |  | $ | 398,361 |  |  | $ | 724,631 |
Diluted earnings per common share attributable to controlling interest |  | $ | 7.81 |  |  | $ | 13.44 |
PTEC Pressure Technology GmbH (“PTEC”) (fiscal 2021) On January 4, 2021, we acquired PTEC, a leading independent designer and manufacturer of valves and components for high pressure hydrogen and compressed natural gas storage, transport and onboard fueling systems. The PTEC business is being operated as part of the industrial products business within our Sustainable Energy Solutions operating segment. The total purchase price was $10,784. In connection with this acquisition, we recognized total intangible assets of $9,247, including goodwill of $3,785. The remaining purchase price was primarily allocated to personal property and working capital. General Tools & Instruments Company LLC (“GTI”) (fiscal 2021) On January 29, 2021, we acquired GTI, a provider of feature-rich, specialized tools in various categories including environmental health & safety, precision measurement & layout, home repair & remodel, lawn & garden and specific purpose tools, in a stock deal for cash consideration of $120,388, after adjustment for final working capital. The GTI business is being operated as part of the Consumer Products operating segment and GTI’s operating results have been included in our consolidated statements of earnings since the date of acquisition. We incurred total acquisition-related costs of $660 in fiscal 2021 related to the transaction. The assets acquired and liabilities assumed were recognized at their estimated acquisition-date fair values, with goodwill representing the excess of the purchase price over the fair value of the net identifiable assets acquired. In connection with the acquisition of GTI, we identified and valued the following identifiable intangible assets:
(In thousands) |  |  |  |  |
Category |  | Amount |  |  | Useful Life (Years)
Customer relationships |  | $ | 40,600 |  |  | 15
Trade names - indefinite lived |  |  | 27,400 |  |  | Indefinite
Trade names - finite lived |  |  | 400 |  |  | 9
Total acquired identifiable intangible assets |  | $ | 68,400 |  |  |
The purchase price included the fair values of other assets that were not identifiable, not separately recognizable under accounting rules (e.g., assembled workforce) or of immaterial value. The purchase price also included strategic and synergistic benefits (investment value) specific to us, which resulted in a purchase price in excess of the fair value of the identifiable net assets. This additional investment value resulted in goodwill. GTI had a goodwill tax basis of $11,052 resulting from its previous acquisitions that will be deductible by us for income tax purposes. The following table summarizes the consideration transferred and the fair value assigned to the assets acquired and liabilities assumed at the acquisition date.
|  |  |  |  | Measurement |  |  |  |
|  | Preliminary |  |  | Period |  |  | Final |
(In thousands) |  | Valuation |  |  | Adjustments |  |  | Valuation |
Cash |  | $ | 1,633 |  |  | $ | - |  |  | $ | 1,633 |
Accounts receivable |  |  | 16,440 |  |  |  | (998 | ) |  |  | 15,442 |
Inventories |  |  | 19,795 |  |  |  | (16 | ) |  |  | 19,779 |
Prepaid expenses |  |  | 924 |  |  |  | (173 | ) |  |  | 751 |
Other current assets |  |  | 97 |  |  |  | (97 | ) |  |  | - |
Intangible assets |  |  | 68,400 |  |  |  | - |  |  |  | 68,400 |
Property, plant, and equipment |  |  | 956 |  |  |  | - |  |  |  | 956 |
Operating lease assets |  |  | 5,502 |  |  |  | - |  |  |  | 5,502 |
Other assets |  |  | 30 |  |  |  | - |  |  |  | 30 |
Total identifiable assets |  |  | 113,777 |  |  |  | (1,284 | ) |  |  | 112,493 |
Accounts payable |  |  | (2,594 | ) |  |  | 40 |  |  |  | (2,554 | )
Accrued liabilities |  |  | (6,006 | ) |  |  | 133 |  |  |  | (5,873 | )
Current operating lease liabilities |  |  | (657 | ) |  |  | - |  |  |  | (657 | )
Other current liabilities |  |  | (923 | ) |  |  | 758 |  |  |  | (165 | )
Noncurrent operating lease liabilities |  |  | (4,845 | ) |  |  | - |  |  |  | (4,845 | )
Deferred tax liabilities |  |  | (11,635 | ) |  |  | (147 | ) |  |  | (11,782 | )
Other long-term liabilities |  |  | (239 | ) |  |  | 9 |  |  |  | (230 | )
Net identifiable assets |  |  | 86,878 |  |  |  | (491 | ) |  |  | 86,387 |
Goodwill |  |  | 33,714 |  |  |  | 287 |  |  |  | 34,001 |
Purchase price |  | $ | 120,592 |  |  | $ | (204 | ) |  | $ | 120,388 |
Proforma results, including the acquired business since the beginning of fiscal 2019, would not be materially different than the reported results. Net sales and net earnings since the completion of the acquisition were immaterial.

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 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
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types: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