XML 34 R19.htm IDEA: XBRL DOCUMENT

BUSINESS COMBINATIONS

12 Months Ended

Dec. 27, 2024

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

13. BUSINESS COMBINATIONS

Acquisition of Enica Engineering, PLLC.

On October 23, 2024, (the “Enica Closing Date”), the Company, through its wholly owned subsidiary, WES, acquired substantially all of the assets of Enica Engineering, PLLC. (“Enica”), pursuant to the terms of the Asset Purchase Agreement, dated as of October 23, 2024 (the “Enica Agreement”), by and among the Company, WES, Genesys, Enica, and Reed Berinato (“Berinato”) and Mark Prewett (“Prewett” and, together with Berinato, the “Enica Members”). Enica is an energy efficiency company that provides an array of services around energy projects, metering, and consulting services to help its customers drive energy efficiency, decarbonization, and energy reduction. Enica’s financial information is included within the Company’s Energy segment beginning in the fourth quarter of fiscal year 2024. The Company expects to finalize the purchase price allocation related to this transaction by the end of the second quarter of fiscal year 2025.

The Company agreed to pay (i) $12.0 million in cash on the Enica Closing Date (subject to holdbacks and adjustments) and (ii) up to $6.0 million in cash if Enica exceeds certain financial targets during the two years after the Enica Closing Date, as further described below (such potential payments of up to $6.0 million, being referred to as “Enica Earnout Payments” and $6.0 million in respect thereof, being referred to as the “Enica Maximum Earnout”); for a potential maximum purchase price of $18.0 million.

The amount of the Enica Earnout Payments to be paid will be determined based on Enica’s earnings before interest, taxes, depreciation and amortization (“Enica’s EBITDA”). The Enica Members will receive Enica Earnout Payments in each of the two years after the Enica Closing Date (the “Earnout Period”) based on the amount by which Enica’s EBITDA exceeds certain targets. The amounts due to the Enica Members as Enica Earnout Payments will in no event, individually or in the aggregate, exceed the Enica Maximum Earnout. Enica Earnout Payments will be made in annual installments for each of the two years of the Enica Earnout Period. In addition, the Enica Earnout Payments will be subject to certain subordination provisions in favor of the lenders under the Company’s Credit Agreement.

The Enica Agreement contains customary representations and warranties regarding the Company, WES, Genesys, Enica, and the Enica Members, indemnification provisions and other provisions customary for transactions of this nature.

The Company used cash on hand to fund the initial purchase price on the Enica Closing Date.

The acquisition was accounted for as a business combination in accordance with ASC 805. Under ASC 805, the Company recorded the acquired assets and assumed liabilities at their estimated fair value with the excess allocated to goodwill. Goodwill represents the value the Company expects to achieve through the operational synergies, the expansion into new markets and the acquired company’s assembled work force. The Company estimates that the entire $9.8 million of goodwill resulting from the acquisition will be tax deductible.

Preliminary consideration for the acquisition includes the following:


		Enica
		(in thousands)
Cash consideration		$	7,364
Other working capital adjustments and holdbacks⁽¹⁾			4,847
Contingent consideration			4,060
Total consideration		$	16,271

(1)

Of which $3.5 million is included within accrued liabilities in the Company’s consolidated balance sheet and the remainder is included within accounts payable in the Company’s consolidated balance sheet.

The following table summarizes the amounts for the acquired assets recorded at their estimated fair value as of the acquisition date:


		Enica
		(in thousands)
Current assets		$	2,358
Non-current assets ⁽¹⁾			69
Right-of-use assets			652
Liabilities			(658)
Lease liability			(652)
Backlog			576
Customer relationships			3,892
Tradename			187
Goodwill			9,847
Net assets acquired		$	16,271

(1)

Excluded from non-current assets are right-of-use assets, backlog, customer relationships, tradename, and goodwill.

During the fiscal year 2024, the Company did not make any adjustments to the consideration paid for Enica, and as a result, there were no adjustments to the purchase price allocation for the fiscal year ended December 27, 2024.

Acquisition related costs associated with Enica are included in other general and administrative expenses in the consolidated statements of comprehensive income and were not material for the year ended December 27, 2024.

The following unaudited pro forma financial information for the fiscal years ended December 27, 2024 and December 29, 2023 assumes that the acquisitions of substantially all of the assets of Enica occurred on the first day of the year prior to the year of acquisition:


		Fiscal Year
		2024			2023
		(in thousands, except per share data)
		(Unaudited)
Pro forma revenue		$	573,835		$	518,521

Pro forma income (loss) from operations		$	33,633		$	24,079
Pro forma net income (loss)⁽¹⁾		$	24,499		$	12,427

Income (Loss) per share:
Basic		$	1.77		$	0.93
Diluted		$	1.72		$	0.91

Weighted average shares outstanding:
Basic			13,818			13,394
Diluted			14,245			13,606

(1)

Adjustments to pro forma net income include income from operations, amortization and interest expenses.

This pro forma supplemental information does not purport to be indicative of what the Company’s operating results would have been had the acquisitions of substantially all of the assets of Enica occurred on the first day of the year prior to the year of acquisition and may not be indicative of future operating results.

During fiscal year 2024, the acquisition of Enica contributed $1.8 million in revenue and $0.4 million of income from operations.