XML 21 R10.htm IDEA: XBRL DOCUMENT v3.22.1

Note 3 - Business Combinations and Dispositions

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

3. Business combinations and dispositions

Frank’s International N.V.

As discussed in Note 1 “Business description”, the Merger of Frank’s with Legacy Expro pursuant to the Merger Agreement was completed on October 1, 2021. U.S. GAAP requires the determination of the accounting acquirer, the acquisition date, the fair value of assets and liabilities of the acquired business and the resulting measurement of goodwill. The Merger is accounted for as a reverse merger and Legacy Expro has been identified as the acquirer for accounting purposes. As a result, the Company has in accordance with ASC 805, Business Combinations, applied the acquisition method of accounting to account for Frank’s assets acquired and liabilities assumed. Applying the acquisition method of accounting includes recording the identifiable assets acquired and liabilities assumed at their fair values and recording goodwill for the excess of the consideration transferred over the net aggregate fair value of the identifiable assets acquired and liabilities assumed.

The Merger consideration was based on Frank’s closing share price on the Closing Date. In a reverse merger involving only the exchange of equity, the fair value of the equity of the accounting acquiree may be used to measure consideration transferred if the value of the accounting acquiree’s equity interests are more reliably measurable than the value of the accounting acquirer’s equity interest. As Legacy Expro was a private company and Frank’s was a public company with a quoted and reliable market price, the fair value of Frank’s equity interests was deemed to be more reliable. Under the acquisition method of accounting, total consideration exchanged was as follows:

						Per share				Amount
		Shares issued				price				(in thousands)
Issuance of common stock attributable to Frank’s stockholders			38,066,216			$	18.90			$	719,452
Replacement of Frank’s equity awards											7,830
Cash payment to Mosing Holdings LLC pursuant to the amended and restated tax receivable agreement											15,000
Total Merger Consideration Exchanged										$	742,282

The following table sets forth the preliminary allocation of the merger consideration exchanged to the fair value of identifiable tangible and intangible assets acquired and liabilities assumed as of the Closing Date, with the recording of goodwill for the excess of the consideration transferred over the net aggregate fair value of the identifiable assets acquired and liabilities assumed (in thousands):

		Amount
Cash and cash equivalents		$	187,178
Restricted cash			2,561
Accounts receivables, net			112,234
Inventories			69,567
Assets held for sale			10,061
Income tax receivables			2,030
Other current assets			23,908
Property, plant and equipment			212,639
Goodwill			154,399
Intangible assets			104,791
Operating lease right-of-use assets			27,406
Other assets			20,494
Total assets			927,268
Accounts payable and accrued liabilities			81,959
Operating lease liabilities			8,344
Current income tax liabilities			8,932
Other current liabilities			19,918
Deferred tax liabilities			5,673
Non-current operating lease liabilities			19,607
Other non-current liabilities			40,553
Total Liabilities			184,986
Total Merger Consideration Exchanged		$	742,282

Due to the recency and complexity of the Merger, these amounts are preliminary and subject to change as our fair value assessments are finalized. The final fair value determination could result in material adjustments to the values presented in the preliminary purchase price allocation table above. The fair values of identifiable intangible assets were prepared using an income valuation approach, which requires a forecast of expected future cash flows either through the use of the relief-from-royalty method or the multi-period excess earnings method, which are discounted to approximate their current value. The estimated useful lives are based on management’s historical experience and expectations as to the duration of time that benefits from these assets are expected to be realized.

The intangible assets will be amortized on a straight-line basis over an estimated 10 to 15 year life. We expect annual amortization to be approximately $7.7 million associated with these intangible assets.

Goodwill will not be amortized but rather subject to an annual impairment test, absent any indicators of impairment. Goodwill is attributable to planned synergies expected to be achieved from the combined operations of Legacy Expro and Frank’s. Goodwill recorded in the Merger is not expected to be deductible for tax purposes.

Unaudited Pro Forma Financial Information

The following unaudited pro forma consolidated results of operations for the three months ended March 31, 2021 assume the Merger was completed as of January 1, 2020 (in thousands):

		Three Months Ended March 31,
		2021
Unaudited pro forma revenues		$	251,106
Unaudited pro forma net loss		$	41,589

Estimated unaudited pro forma information is not necessarily indicative of the results that actually would have occurred had the Merger been completed on the date indicated or of future operating results.

Merger and integration expense

During the three months ended March 31, 2022 and 2021, the Company incurred $4.7 million and $4.8 million, respectively, of merger and integration expense which consist primarily of legal fees, professional fees, integration, severance and other costs directly attributable to the Merger.

Below is a reconciliation of our liability balance associated with our severance plan initiated during 2021 related to the integration in connection with the Merger, which is included in “Other current liabilities” on the condensed consolidated balance sheets (in thousands):

		NLA				ESSA				MENA				APAC				Central				Total
Balance as of December 31, 2021		$	2,057			$	2,502			$	424			$	617			$	6,615			$	12,215
Costs expensed during the period			114				-				91				213				-				418
Payments made during the period			(286	)			(1,054	)			(153	)			(307	)			(3,033	)			(4,833	)
Balance as of March 31, 2022		$	1,885			$	1,448			$	362			$	523			$	3,582			$	7,800

X

- References

No definition available.

+ Details

Name:	us-gaap_DisclosureTextBlockAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- Definition

The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-URI https://asc.fasb.org/subtopic&trid=2122178

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-URI https://asc.fasb.org/topic&trid=2303972

+ Details

Name:	us-gaap_MergersAcquisitionsAndDispositionsDisclosuresTextBlock
Namespace Prefix:	us-gaap_
Data Type:	dtr-types:textBlockItemType
Balance Type:	na
Period Type:	duration