XML 21 R9.htm IDEA: XBRL DOCUMENT v3.25.2
Note 2 - Acquisition
 3 Months Ended
Jun. 30, 2025
Notes to Financial Statements  
Business Combination [Text Block]

2. Acquisition

 

Acquisition of NWL 

 

On August 1, 2024 (the "Acquisition Date"), the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding shares of capital stock of Megatran Industries, Inc. ("Megatran") (the "NWL Acquisition"). Megatran's wholly-owned subsidiary, NWL, Inc. (together with Megatran, "NWL"), is a U.S.-based global provider of engineered power conversion solutions for demanding industrial and military applications.

 

The NWL Acquisition has been accounted for under the purchase method of accounting in accordance with ASC 805, Business Combinations. The Company allocated the purchase price to the assets acquired and liabilities assumed at their estimated fair values as of the Acquisition Date. The excess of the purchase price paid by the Company over the estimated fair value of net assets acquired has been recorded as goodwill.

 

The total purchase price of approximately $61.4 million includes the fair value of shares of the Company’s common stock issued at closing, and cash paid, as follows (in millions):

 

Cash payments$30.0
Issuance of 1,297,600 shares of Company’s common stock$31.4

 

At the Acquisition Date, in addition to the $30.0 million cash, the Company valued the Company’s common stock, using $24.16 per share, which was the closing price on the day prior to the day that the Company completed the NWL Acquisition. Acquisition costs of $1.1 million were included in selling, general and administrative ("SG&A") for the fiscal year ended  March 31, 2025.

 

The following table summarizes the allocation of the purchase price based on the estimated fair values of the assets acquired and liabilities assumed and related deferred income taxes in connection with the NWL Acquisition as of the Acquisition Date and reflective of measurement period adjustments (in millions):

 

Cash and cash equivalents

 $0.4 

Equity-method investments

  1.2 

Prepaid expenses and other current assets

  1.7 

Accounts receivable

  16.1 

Inventory

  23.1 

Property, plant, and equipment

  28.4 

Accounts payable and accrued expenses

  (5.6)

Deferred revenue

  (5.0)

Deferred tax liability

  (5.6)

Net tangible assets/(liabilities)

  54.7 
     

Backlog

  0.7 

Customer relationships

  1.3 

Net identifiable intangible assets

  2.0 
     

Goodwill

  4.7 
     

Total purchase consideration

 $61.4 

 

The fair value of the financial assets acquired includes receivables with a fair value of $16.1 million. The gross amount due is $16.9 million, of which $0.8 million is expected to be uncollectible.

 

Inventory includes a $0.7 million adjustment to step up the inventory balance to fair value consistent with the purchase price allocation. The fair value was determined based on the estimated selling price of the inventory, less the remaining manufacturing and selling cost and a normal profit margin on those manufacturing and selling efforts. The inventory step up adjustment increased cost of revenue $0.7 million for the fiscal year ended  March 31, 2025 as the inventory was sold.

 

Backlog of $0.7 million was evaluated using the multi period excess earnings method under the income approach. The contracts with customers do not provide for any guarantees to source all future requirements from the Company. The amortization method being utilized is economic consumption estimated over an eight-month period with the expense being allocated to cost of revenues.

 

Customer relationships of $1.3 million relates to customers currently under contract and was determined based on a multi period excess earnings method under the income approach. The method of amortization being utilized is straight line over 10 years, as the results were not materially different from the economic consumption method, with the expense being allocated to SG&A.

 

Goodwill represents the value associated with the acquired workforce and expected synergies related to the business combination of the two companies. Goodwill resulting from the NWL Acquisition was assigned to the Company’s Grid business segment. Goodwill recognized in the NWL Acquisition is not deductible for tax purposes. This purchase price allocation is preliminary and has not been finalized as the analysis on the assets and liabilities acquired, primarily the tax related liability  may require further adjustments to our purchase accounting that could result in a measurement period adjustment that would impact the Company's reported net assets and goodwill as of August 1, 2024. Material changes, if any, to the preliminary allocation summarized above will be reported once the related uncertainties are resolved, but no later than August 1, 2025.

 

Unaudited Pro Forma Operating Results

 

The unaudited pro forma condensed consolidated statement of operations for the three months ended June 30, 2025, and 2024 presented as if the NWL Acquisition had occurred on April 1, 2024, is as follows:

 

  

Three Months Ended June 30, 2024

 

Net Revenue

 $59,310 

Operating income (loss)

  (3,342)

Net income

 $1,791 
     

Net income per common share

    

Basic

 $0.05 

Diluted

 $0.05 

Shares - basic

  36,972 

Shares - diluted

  37,994 

 

The pro forma amounts include the historical operating results of the Company and NWL with appropriate adjustments that give effect to acquisition related costs, income taxes, intangible amortization resulting from the NWL Acquisition and certain conforming accounting policies of the Company. The pro forma amounts are not necessarily indicative of the operating results that would have occurred if the NWL Acquisition and related transactions had been completed at the beginning of the applicable periods presented. In addition, the pro forma amounts are not necessarily indicative of operating results in future periods.

 

NWL contributed $17.8 million of revenue and $2.5 million in net income for the Company for the three months ended June 30, 2025. Amortization expense of less than $0.1 million is included in the three months ended June 30, 2025, as a result of the acquired intangible assets from the NWL Acquisition.