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Acquisitions | 3 Months Ended
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Mar. 31, 2023
Business Combinations [Abstract] |
Acquisitions | NOTE 4. ACQUISITIONS On February 1, 2023, the Company completed the acquisition of Vesta Housing Solutions Holdings, Inc. (“Vesta Modular”), a portfolio company of Kinderhook Industries, for $437.2 million cash consideration on the closing date, which included certain adjustments, including net working capital and certain qualified capital expenditures. In connection with the acquisition, the Company purchased a representation and warranty insurance policy to provide certain recourse in the event of breaches of representations and warranties of Vesta Modular and the seller of Vesta Modular under the stock purchase agreement. Vesta Modular is a leading provider of temporary and permanent modular space solutions serving customers between its modular leasing and modular construction divisions. The acquisition was accounted for as a purchase of a “business” in accordance with criteria in ASC 805, Business Combinations, using the purchase method of accounting. Under the purchase method of accounting, the total purchase price is assigned to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values on the closing date. The excess of the purchase price over those fair values is recorded as goodwill. The financial results of Vesta Modular were a part of the Mobile Modular segment since February 1, 2023, including $9.5 million of transaction costs. On March 1, 2023, the Company completed the purchase of assets of Jerald R. Brekke, Inc., DBA Brekke Storage ("Brekke Storage"), for a total purchase price of $16.4 million. Brekke Storage is a regional provider of portable storage solutions in the Colorado market. The acquisition expanded the Mobile Modular Portable Storage fleet by approximately 2,700 units and provided a new regional operation to serve the Colorado market. The acquisition was accounted for as a purchase of a “business” in accordance with criteria in ASC 805 using the purchase method of accounting. The financial results of Brekke Storage were a part of the Mobile Modular segment since March 1, 2023, including $0.2 million of transaction costs. The following tables summarize the preliminary purchase price allocations reflecting estimated fair values of assets acquired and liabilities assumed in the Vesta Modular and Brekke Storage acquisitions, with excess amounts allocated to goodwill. The estimated fair values of the assets acquired and liabilities assumed at the acquisition date are determined based on preliminary valuations and analyses. Accordingly, the Company has made provisional estimates for the assets acquired and liabilities assumed. The valuation of intangible assets acquired is based on certain valuation assumptions including cash flow projections, discount rates, contributory asset charges and other valuation model inputs. The valuation of tangible long-lived assets acquired is dependent upon various analyses including an analysis of the condition and estimated remaining economic lives of the assets acquired. Vesta Modular:
(dollar amounts in thousands) |  |  |
Rental equipment |  | $ | 226,753 |
Intangible assets: |  |  |
Goodwill |  |  | 213,313 |
Customer relationships |  |  | 26,000 |
Non-compete |  |  | 7,100 |
Trade name |  |  | 800 |
Cash |  |  | 11 |
Accounts receivable |  |  | 22,401 |
Property, plant and equipment |  |  | 1,437 |
Prepaid expenses and other assets |  |  | 3,550 |
Accounts payable and accrued liabilities |  |  | (27,558 | )
Deferred income |  |  | (14,273 | )
Deferred income taxes |  |  | (22,324 | )
Total purchase price |  | $ | 437,210 |
Brekke Storage:
(dollar amounts in thousands) |  |  |
Rental equipment |  | $ | 10,798 |
Intangible assets: |  |  |
Goodwill |  |  | 4,083 |
Customer relationships |  |  | 949 |
Non-compete |  |  | 59 |
Property, plant and equipment |  |  | 875 |
Deferred income |  |  | (382 | )
Total purchase price |  | $ | 16,382 |
The value assigned to identifiable intangible assets was determined based on discounted estimated future cash flows associated with such assets to their present value. The combined acquired goodwill of $217.4 million reflects the strategic fit of Vesta Modular and Brekke Storage with the Company’s modular and portable storage business operations. The Company amortizes the acquired customer relationships over their expected useful lives of 11 years for Vesta Modular and 8 years for Brekke Storage. The expected useful life for the non-compete agreements is 5 years. The trade name intangible acquired from the Vesta Modular acquisition will be amortized over it's useful life of nine months. Goodwill is expected to have an indefinite life and will be subject to future impairment testing. The goodwill is deductible for tax purposes over 15 years. The following unaudited pro forma financial information shows the combined results of continuing operations of the Company and Vesta Modular as if the acquisition occurred as of the beginning of the periods presented. The pro forma results include the effects of the amortization of the purchased intangible assets and depreciation expense of acquired rental equipment valuation step up, interest expense on the debt incurred to finance the acquisitions. A pro forma adjustment has been made to reflect the income taxes that would have been recorded at the combined federal and state statutory rate of 26.5% on the acquisitions’ combined net income. The pro forma results for the three months ended March 31, 2023 and 2022, have been adjusted to include transaction related costs. This pro forma data is presented for informational purposes only and does not purport to be indicative of the results of the future operations or the results that would have occurred had the acquisitions taken place in the periods noted below:
|  | (Unaudited) |
|  | Three months ended March 31, |
(dollar amounts in thousands, except for per share amounts) |  | 2023 |  |  | 2022 |
Pro-forma total revenues |  | $ | 171,361 |  |  | $ | 148,551 |
Pro-forma net income |  | $ | 11,222 |  |  | $ | 10,276 |
Pro-forma basic earnings per share |  | $ | 0.46 |  |  | $ | 0.42 |
Pro-forma diluted earnings per share |  | $ | 0.46 |  |  | $ | 0.42 |
Vesta Modular |  |  |  |  |  |
Actual total revenues |  | $ | 17,584 |  |  |  |
Actual net income |  | $ | 3,679 |  |  |  |
Actual basic earnings per share |  | $ | 0.15 |  |  |  |
Actual diluted earnings per share |  | $ | 0.15 |  |  |  |

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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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