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Note 2 - Acquisitions | 9 Months Ended
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Sep. 30, 2021
Notes to Financial Statements |
Business Combination Disclosure [Text Block] |
2. | ACQUISITIONS
rms Connectors On January 8, 2021, the Company acquired rms Connectors, Inc. (“rms Connectors” or "rms"), from rms Company Inc., a division of Cretex Companies, Inc., for $9.0 million in cash, including a working capital adjustment. rms Connectors is a highly regarded connector manufacturer with over 30 years of experience producing harsh environment circular connectors used in a variety of military and aerospace applications. This acquisition complements Bel's existing military and aerospace product portfolio and we anticipate will allow us to expand key customer relationships within these end markets and leverage the combined manufacturing resources to improve our operational efficiency. Originally based in Coon Rapids, Minnesota, the rms Connectors business was relocated into Bel's existing facilities during the second quarter of 2021, and is a component of Bel's Connectivity Solutions group. The transaction was funded with cash on hand. EOS Power On March 31, 2021, the Company completed the acquisition of EOS Power ("EOS") through a stock purchase agreement for $7.8 million, net of cash acquired, including a working capital adjustment. EOS, located in Mumbai, India, had sales of $12.0 million for the year ended December 31, 2020. EOS is expected to play a key role in Bel’s penetration of certain industrial and medical markets currently being served by EOS, with a strong line of high-power density and low-profile products with high convection ratings. In addition to new products and customers acquired, this acquisition has diversified Bel's manufacturing footprint in Asia. The EOS business is a component of Bel’s Power Solutions and Protection group. The transaction was funded with cash on hand. The acquisitions of rms Connectors and EOS may hereafter be referred to collectively as either the "2021 Acquisitions" or the "2021 Acquired Companies". As of the respective acquisition dates, all of the assets acquired and liabilities assumed were recorded at their preliminary fair values and the Company's condensed consolidated results of operations for the nine months ended September 30, 2021 include the operating results of the 2021 Acquired Companies from their respective acquisition dates through September 30, 2021. During the nine months ended September 30, 2021, the Company incurred $0.5 million of acquisition-related costs related to the 2021 Acquisitions. No acquisition-related costs were incurred during the third quarter of 2021. These costs are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. While the final accounting related to the 2021 Acquisitions is not complete as of the filing date of this Quarterly Report on Form 10-Q, the following table depicts the Company's preliminary acquisition date fair values of the consideration transferred and identifiable net assets acquired in these transactions:
|  | Acquisition Date Fair Values |
|  | rms |  |  | EOS |  |  | Total |
Cash and cash equivalents |  | $ | - |  |  | $ | 3,903 |  |  | $ | 3,903 |
Accounts receivable |  |  | 1,283 |  |  |  | 1,805 |  |  |  | 3,088 |
Inventories |  |  | 3,946 |  |  |  | 1,878 |  |  |  | 5,824 |
Other current assets |  |  | 9 |  |  |  | 1,340 |  |  |  | 1,349 |
Property, plant and equipment |  |  | 4,035 |  |  |  | 721 |  |  |  | 4,756 |
Intangible assets |  |  | - |  |  |  | 2,000 |  |  |  | 2,000 |
Other assets |  |  | - |  |  |  | 60 |  |  |  | 60 |
Total identifiable assets |  |  | 9,273 |  |  |  | 11,707 |  |  |  | 20,980 |
Accounts payable |  |  | (62 | ) |  |  | (2,148 | ) |  |  | (2,210 | )
Accrued expenses |  |  | (209 | ) |  |  | (506 | ) |  |  | (715 | )
Total liabilities assumed |  |  | (271 | ) |  |  | (2,654 | ) |  |  | (2,925 | )
Net identifiable assets acquired |  |  | 9,002 |  |  |  | 9,053 |  |  |  | 18,055 |
Goodwill |  |  | - |  |  |  | 2,659 |  |  |  | 2,659 |
Net assets acquired |  | $ | 9,002 |  |  | $ | 11,712 |  |  | $ | 20,714 |
Cash paid |  | $ | 9,002 |  |  | $ | 11,712 |  |  | $ | 20,714 |
Fair value of consideration transferred |  | $ | 9,002 |  |  | $ | 11,712 |  |  | $ | 20,714 |
Measurement period adjustments recorded during the second quarter of 2021 on the EOS acquisition related to finalization of EOS' pre-acquisition balance sheet. During the third quarter of 2021, the Company completed its preliminary valuation of EOS whereby $2.0 million of intangible assets were identified and recorded on the condensed consolidated balance sheet as of the acquisition date. These intangible assets are comprised of customer relationships valued at $1.8 million (to be amortized over an estimated life of 16 years) and the tradename, valued at $0.2 million (to be amortized over an estimated life of 2 years). The preliminary valuations of the 2021 Acquisitions are still under review and subject to change. The Company expects to finalize these valuations and complete the purchase price allocations as soon as practicable but no later than one year from the respective acquisition dates. Based upon the preliminary purchase price allocation above, there is currently no goodwill associated with the rms acquisition. Any goodwill recognized in connection with the EOS acquisition would be allocated to the Company's Power Solutions and Protection segment and would not be deductible for tax purposes. The results of operations of the 2021 Acquired Companies have been included in the Company’s condensed consolidated financial statements for the periods subsequent to their respective acquisition dates. During the three and nine months ended September 30, 2021, the 2021 Acquired Companies contributed revenues of $4.3 million and $12.4 million, respectively, and estimated net earnings of $0.2 million and $1.6 million, respectively, to the Company since their respective acquisition dates. As EOS was acquired on March 31, 2021, this acquisition did not have any contribution to revenue or net earnings during the first quarter of 2021. The unaudited pro forma information below presents the combined operating results of the Company and the 2021 Acquired Companies assuming that the acquisition of the 2021 Acquired Companies had occurred as of January 1, 2020. The unaudited pro forma results are presented for illustrative purposes only. They do not reflect the realization of any potential cost savings, or any related integration costs. This unaudited pro forma information does not purport to be indicative of the results that would have actually been obtained if the 2021 Acquisitions had occurred as of January 1, 2020, nor is the pro forma data intended to be a projection of results that may be achieved in the future. The following unaudited pro forma consolidated results of operations assume that the acquisition of the 2021 Acquired Companies was completed as of January 1, 2020:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Revenue, net |  | $ | 146,966 |  |  | $ | 129,782 |  |  | $ | 399,372 |  |  | $ | 362,918 |
Net earnings |  |  | 5,734 |  |  |  | 7,814 |  |  |  | 17,043 |  |  |  | 9,538 |
Earnings per Class A common share - basic and diluted |  |  | 0.44 |  |  |  | 0.60 |  |  |  | 1.31 |  |  |  | 0.72 |
Earnings per Class B common share - basic and diluted |  |  | 0.47 |  |  |  | 0.64 |  |  |  | 1.39 |  |  |  | 0.78 |

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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 http://asc.fasb.org/topic&trid=2303972 + Details
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