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Acquisitions, Goodwill And Other Intangible Assets | 12 Months Ended
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Dec. 31, 2022
Acquisitions, Goodwill And Other Intangible Assets [Abstract] |
Acquisitions, Goodwill and Other Intangible Assets | ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS Acquisitions in 2022 Way In November 2022, the Company acquired substantially all of the business assets of Way Interglobal Network LLC ("Way"), a distributor of innovative appliances and electronics to OEMs in the RV industry. The purchase price was $54.8 million, which includes a holdback payment of 2.0 million due on the first anniversary of the acquisition in November 2023. The holdback payment is recorded in the Consolidated Balance Sheet in accrued expenses and other current liabilities at December 31, 2022. The results of the acquired business have been included in the Consolidated Statements of Income since the acquisition date, primarily in the Company's OEM Segment. As the operations of this acquisition are not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. The Company is in the process of determining the fair value of the assets acquired and liabilities assumed for the opening balance sheet, including net working capital, deferred taxes, and the fair value of intangible assets. The current estimates for intangible assets are based on a preliminary valuation and these estimates are subject to change when the valuation is finalized within the measurement period (not to exceed 12 months from the acquisition date). The acquisition of this business was preliminarily recorded as of the acquisition date as follows (in thousands):
Cash consideration | $ | 52,761 |
Fixed deferred consideration | 2,000 |
Total fair value of consideration given | $ | 54,761 |
Identifiable intangible assets | $ | 13,000 |
Other assets acquired and liabilities assumed, net | 36,783 |
Total fair value of net assets acquired | $ | 49,783 |
Goodwill (tax deductible) | $ | 4,978 |
The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill. Girard In March 2022, the Company acquired substantially all of the business assets of Girard Systems and Girard Products LLC (collectively "Girard"), a manufacturer and distributor of proprietary awnings and tankless water heaters for OEMs and aftermarket customers in the RV, specialty vehicle, and related industries. The total fair value of consideration was approximately $70.7 million. The Company paid $50.0 million in cash consideration at closing, with fixed deferred consideration of $20.0 million paid in July 2022 and $0.7 million paid to true up net working capital in September 2022. The results of the acquired business have been included in the Consolidated Statements of Income since the acquisition date, in both the Company's OEM and Aftermarket Segments. As the operations of this acquisition are not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. The acquisition of this business was recorded as of the acquisition date as follows (in thousands):
Cash consideration | $ | 50,664 |
Fixed deferred consideration | 20,000 |
Total fair value of consideration given | $ | 70,664 |
Customer relationships | $ | 35,700 |
Identifiable intangible assets | 7,820 |
Other assets acquired and liabilities assumed, net | 14,442 |
Total fair value of net assets acquired | $ | 57,962 |
Goodwill (tax deductible) | $ | 12,702 |
The customer relationships intangible asset is being amortized over its estimated useful life of 20 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill. Other Acquisitions in 2022 During the twelve months ended December 31, 2022, the Company completed two other acquisitions for $5.0 million of cash purchase consideration. The preliminary purchase price allocations resulted in $0.8 million of goodwill (tax deductible). As these acquisitions are not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. Acquisitions in 2021 Exertis In October 2021, the Company acquired certain business assets of Stampede Presentation Products, Inc. d/b/a Exertis ("Exertis"), a global distribution company, in exchange for $39.7 million. The acquisition qualifies as a business combination for accounting purposes and supports the acquisition of Furrion Holdings Limited ("Furrion") by allowing the Company to provide logistics and warehousing to serve Furrion's North American customer base. The results of the acquired business have been included in the Consolidated Statements of Income since the acquisition date, primarily in the Company's OEM Segment. As the operations of this acquisition are not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. The Company had a pre-existing relationship with Exertis where Exertis had a prepaid asset and the Company had an equal and offsetting deferred revenue liability of $24.8 million, which was effectively settled immediately prior to the business combination. No gain or loss was recognized in the effective settlement of the deferred revenue liability. During the year ended December 31, 2022, the Company adjusted the preliminary purchase price allocation reported at December 31, 2021 to account for updates to net working capital balances. These measurement period adjustments would not have resulted in a material impact on the prior period results if the adjustments had been recognized as of the acquisition date. Furrion In September 2021, the Company acquired 100 percent of the share capital of Furrion, a leading distributor of a large range of appliances and other products to OEMs and aftermarket customers in the RV, specialty vehicle, utility trailer, horse trailer, marine, transit bus, and school bus industries. The total fair value of consideration, net of cash acquired, was approximately $146.7 million. The Company paid $50.5 million in cash consideration at closing, net of cash acquired, with fixed payments of $31.3 million due on each of the first and second anniversaries of the acquisition in September 2022 and September 2023. The Company paid the first anniversary payment in September 2022, and the remaining deferred acquisition fixed payment is recorded at its discounted present value in the Consolidated Balance Sheet in accrued expenses and other current liabilities at December 31, 2022. In 2019, the Company and Furrion agreed to terminate an exclusive distribution and supply agreement and transition all sale and distribution of Furrion products then handled by the Company to Furrion. Effective January 1, 2020, Furrion took responsibility for distributing its products directly to the customer and assumed all responsibilities previously carried out by the Company relating to Furrion products. Upon termination of the agreement, Furrion purchased from the Company all non-obsolete stock and certain obsolete and slow-moving stock of Furrion products at the cost paid by the Company. At the date of the Furrion acquisition in September 2021, the Company had a receivable balance of $35.0 million (the "Receivable from Furrion") and Furrion had a corresponding payable balance. In direct connection with the acquisition negotiations, the receivable and payable balances were effectively settled in the acquisition and the receivable balance is included within the approximate $146.7 million of consideration transferred. No gain or loss was recognized in the effective settlement of the Receivable from Furrion. The results of the acquired business have been included in the Consolidated Statements of Income since the acquisition date, in both the Company's OEM and Aftermarket Segments. As this acquisition is not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. During the year ended December 31, 2022, the Company adjusted and finalized the preliminary purchase price allocation reported at December 31, 2021 to account for updates to net working capital, intangible assets, fixed asset balances, and deferred tax balances. These measurement period adjustments would not have resulted in a material impact on the prior period results if the adjustments had been recognized as of the acquisition date. The acquisition of this business was preliminarily recorded as of the acquisition date, and subsequently adjusted and finalized, as follows (in thousands):
| Preliminary at December 31, 2021 |  | Measurement Period Adjustments |  | As Adjusted at December 31, 2022
Cash consideration, net of cash acquired | $ | 50,534 |  |  | $ | — |  |  | $ | 50,534 |
Effective settlement of Receivable from Furrion | 34,956 |  |  | — |  |  | 34,956 |
Discounted value of fixed deferred consideration | 61,191 |  |  | — |  |  | 61,191 |
Total fair value of consideration given | $ | 146,681 |  |  | $ | — |  |  | $ | 146,681 |
Customer relationships | $ | 66,300 |  |  | $ | (10,600) |  |  | $ | 55,700 |
Other identifiable intangible assets | 43,900 |  |  | (1,200) |  |  | 42,700 |
Other assets acquired and liabilities assumed, net | (9,518) |  |  | (1,483) |  |  | (11,001) |
Total fair value of net assets acquired | $ | 100,682 |  |  | $ | (13,283) |  |  | $ | 87,399 |
Goodwill (tax deductible) | $ | 45,999 |  |  | $ | 13,283 |  |  | $ | 59,282 |
The Company incurred costs during the year ended December 31, 2021 related specifically to this acquisition of $2.3 million, which are included in selling, general and administrative expenses in the Consolidated Statements of Income. Schaudt In April 2021, the Company acquired 100 percent of the equity interests of Schaudt GmbH Elektrotechnik & Apparatebau ("Schaudt"), a leading supplier of electronic controls and energy management systems for the European caravan industry located in Markdorf, Germany. The purchase price was approximately $29.4 million. The results of the acquired business have been included in the Consolidated Statements of Income since the acquisition date, primarily in the Company's OEM Segment. As the operations of this acquisition are not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. During the year ended December 31, 2022, the Company adjusted and finalized the preliminary purchase price allocation reported at December 31, 2021 to account for updates to net working capital and fixed asset balances. These measurement period adjustments would not have resulted in a material impact on the prior period results if the adjustments had been recognized as of the acquisition date. Ranch Hand In April 2021, the Company acquired 100 percent of the equity interests of Kaspar Ranch Hand Equipment, LLC ("Ranch Hand"), a manufacturer of custom bumpers, grill guards, and steps for the automotive aftermarket headquartered in Shiner, Texas. The purchase price was approximately $56.9 million, plus contingent consideration up to $3.0 million. The results of the acquired business have been included in the Consolidated Statements of Income since the acquisition date, primarily in the Company's Aftermarket Segment. Other Acquisitions in 2021 During the year ended December 31, 2021, the Company completed two other acquisitions totaling $17.8 million of cash purchase consideration, plus holdback payments of $2.1 million to be paid over the two years following the closings of the respective acquisitions and contingent consideration of up to $2.0 million. Holdback payments of $1.0 million and $0.6 million were paid during the years ended December 31, 2022 and 2021, respectively, related to these acquisitions. The purchase price allocations resulted in $8.6 million of goodwill (tax deductible) and $7.8 million of acquired identifiable intangible assets. Acquisitions in 2020 Veada In December 2020, the Company acquired 100 percent of the outstanding capital stock of Veada Industries, Inc. ("Veada"), a manufacturer and distributor of boat seating and marine accessories based in New Paris, Indiana. The purchase price was $69.0 million, net of cash acquired, which included initial holdback payments of $12.2 million to be paid over the two years following the closing of the acquisition. During the years ended December 31, 2022 and 2021, holdback payments of $1.8 million and $9.9 million, respectively, were paid and during the year ended December 31, 2021, holdback payment requirements were reduced by $0.5 million related to net working capital true-ups. The results of the acquired business have been included in the Consolidated Statements of Income since the acquisition date, primarily in the Company's OEM Segment. Challenger In November 2020, the Company acquired substantially all of the business assets of Challenger Door, LLC ("Challenger"), a leading manufacturer and distributor of branded doors for the RV industry and products for specialty and cargo trailers, based in Nappanee, Indiana. The purchase price was $35.0 million, which included holdback payments of up to $4.5 million to be paid over the two years following the closing of the acquisition. These holdback payment requirements were reduced by $4.3 million during the year ended December 31, 2021, due to net working capital true-ups and other indemnification claims. During the year ended December 31, 2022, the holdback payment requirement was increased by $0.9 million due to negotiations related to indemnification claims, and the final holdback payment of $1.1 million was paid. The results of the acquired business have been included in the Consolidated Statements of Income since the acquisition date, primarily in the Company's OEM Segment. Polyplastic In January 2020, the Company acquired 100 percent of the equity interests of Polyplastic Group B.V. (with its subsidiaries "Polyplastic"), a premier window supplier to the caravanning industry, headquartered in Rotterdam, Netherlands. The purchase price was $95.8 million, net of cash acquired, plus contingent consideration up to $7.7 million, based on future sales by this operation. The results of the acquired business have been included in the Consolidated Statements of Income since the acquisition date, primarily in the Company's OEM Segment. Goodwill Changes in the carrying amount of goodwill by reportable segment were as follows:
(In thousands) | OEM Segment |  | Aftermarket Segment |  | Total
Net balance – December 31, 2020 | $ | 305,953 |  |  | $ | 148,775 |  |  | $ | 454,728 |
Acquisitions – 2021 | 70,836 |  |  | 14,938 |  |  | 85,774 |
Measurement period adjustments | 9,519 |  |  | (23) |  |  | 9,496 |
Foreign currency translation | (6,845) |  |  | 27 |  |  | (6,818) |
Net balance – December 31, 2021 | 379,463 |  |  | 163,717 |  |  | 543,180 |
Acquisitions – 2022 | 16,302 |  |  | 2,202 |  |  | 18,504 |
Measurement period adjustments | 10,917 |  |  | 2,370 |  |  | 13,287 |
Foreign currency translation | (6,946) |  |  | (962) |  |  | (7,908) |
Net balance – December 31, 2022 | $ | 399,736 |  |  | $ | 167,327 |  |  | $ | 567,063 |
The Company performed its annual goodwill impairment procedures for all of its reporting units as of November 30, 2022, 2021, and 2020, and concluded no goodwill impairment existed at any of those times. The Company plans to update its assessment as of November 30, 2023, or sooner if events occur or circumstances change that could more likely than not reduce the fair value of a reporting unit below its carrying value. The goodwill balance as of each of December 31, 2022, 2021, and 2020 included $50.5 million of accumulated impairment, which occurred prior to December 31, 2020. Other Intangible Assets Other intangible assets, by segment, at December 31 were as follows:
(In thousands) | 2022 |  | 2021 |  |
OEM Segment | $ | 314,828 |  |  | $ | 330,930 |  |  |
Aftermarket Segment | 188,492 |  |  | 189,027 |  |  |
Other intangible assets | $ | 503,320 |  |  | $ | 519,957 |  |  |
Other intangible assets consisted of the following at December 31, 2022:
(In thousands) | Gross Cost |  | Accumulated Amortization |  | Net Balance |  | Estimated Useful Life in Years
Customer relationships | $ | 520,273 |  |  | $ | 163,562 |  |  | $ | 356,711 |  |  | 6 | to | 20
Patents | 121,167 |  |  | 62,841 |  |  | 58,326 |  |  | 3 | to | 20
Trade names (finite life) | 97,810 |  |  | 21,380 |  |  | 76,430 |  |  | 3 | to | 20
Trade names (indefinite life) | 7,600 |  |  | — |  |  | 7,600 |  |  | Indefinite
Non-compete agreements | 11,584 |  |  | 7,698 |  |  | 3,886 |  |  | 3 | to | 6
Other | 609 |  |  | 242 |  |  | 367 |  |  | 2 | to | 12
Other intangible assets | $ | 759,043 |  |  | $ | 255,723 |  |  | $ | 503,320 |  |  |  |  |
The Company performed its annual impairment test for indefinite lived intangible assets as of November 30, 2022, 2021, and 2020, and concluded no impairment existed at any of those times. Other intangible assets consisted of the following at December 31, 2021:
(In thousands) | Gross Cost |  | Accumulated Amortization |  | Net Balance |  | Estimated Useful Life in Years
Customer relationships | $ | 487,853 |  |  | $ | 127,048 |  |  | $ | 360,805 |  |  | 6 | to | 17
Patents | 116,725 |  |  | 53,479 |  |  | 63,246 |  |  | 3 | to | 20
Trade names (finite life) | 93,994 |  |  | 16,497 |  |  | 77,497 |  |  | 3 | to | 20
Trade names (indefinite life) | 7,600 |  |  | — |  |  | 7,600 |  |  | Indefinite
Non-compete agreements | 11,464 |  |  | 5,439 |  |  | 6,025 |  |  | 3 | to | 6
Other | 309 |  |  | 212 |  |  | 97 |  |  | 2 | to | 12
Purchased research and development | 4,687 |  |  | — |  |  | 4,687 |  |  | Indefinite
Other intangible assets | $ | 722,632 |  |  | $ | 202,675 |  |  | $ | 519,957 |  |  |  |  |
Amortization expense related to other intangible assets was as follows for the years ended December 31:
(In thousands) | 2022 |  | 2021 |  | 2020
Cost of sales | $ | 10,155 |  |  | $ | 5,783 |  |  | $ | 5,101 |
Selling, general and administrative expense | 46,218 |  |  | 41,782 |  |  | 32,772 |
Amortization expense | $ | 56,373 |  |  | $ | 47,565 |  |  | $ | 37,873 |
Estimated amortization expense for other intangible assets for the next five years is as follows:
(In thousands) | 2023 |  | 2024 |  | 2025 |  | 2026 |  | 2027
Cost of sales | $ | 9,834 |  |  | $ | 9,486 |  |  | $ | 8,507 |  |  | $ | 7,280 |  |  | $ | 6,137 |
Selling, general and administrative expense | 46,383 |  |  | 44,867 |  |  | 41,536 |  |  | 39,682 |  |  | 38,726 |
Amortization expense | $ | 56,217 |  |  | $ | 54,353 |  |  | $ | 50,043 |  |  | $ | 46,962 |  |  | $ | 44,863 |

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