Business Combinations

3 Months Ended

Mar. 31, 2025

Note 3 – Business Combinations

2024 Business Combination

On June 20, 2024, the 2024 Business Combination was completed and accounted for using the acquisition method of accounting under ASC 805. The results of operations are included in the accompanying consolidated statements of operations from the date of the acquisition. Under the acquisition method of accounting, the assets and liabilities have been recorded at their respective estimated fair values as of the date of closing and reported into the accompanying consolidated balance sheets.

Preliminary fair value measurements were made for acquired assets and liabilities, and adjustments to those measurements may be made in subsequent periods (up to one year from the acquisition date) as information necessary to complete the fair value analysis is obtained. The measurements associated with working capital, property, plant and equipment, and the allocation of certain intangible assets are preliminary as of the date these financial statements are available to be issued. The carrying amounts of cash and cash equivalents, and other net working capital accounts approximate their fair values due to their nature or the short-term maturity of instruments. The acquired debt was determined to approximate fair value as the terms were commensurate with current market terms. The acquired leases were accounted for in accordance with ASC 842. The fair value of the intangible assets acquired was determined using variations of the income approach that utilizes unobservable inputs classified as Level 3 measurements.

The following table presents the consideration transferred and preliminary fair value of Flogistix assets acquired and liabilities assumed in accordance with ASC 805 (in thousands):


Cash and cash equivalents	$	193
Accounts receivable - trade, net		18,104
Inventory		82,378
Prepaid expenses and other current assets		2,551
Property, plant and equipment		357,443
Intangible assets		110,290
Finance lease right-of-use assets		8,629
Operating lease right-of-use assets		9,763
Other assets		358
Accounts payable - Trade		(18,143	)
Accrued expenses		(9,495	)
Current portion of finance lease obligations		(2,356	)
Current portion of operating lease obligations		(3,579	)
Deferred revenue		(4,085	)
Operating lease obligations, net of current portion		(6,172	)
Finance lease obligations, net of current portion		(6,506	)
Long-term debt		(205,933	)
Identifiable net assets acquired		333,440
Goodwill		66,325
Total consideration transferred	$	399,765

The following table presents the consideration transferred and preliminary fair value of FPS assets acquired and liabilities assumed in accordance with ASC 805 (in thousands):


Cash and cash equivalents	$	2,895
Accounts receivable - trade, net		42,999
Inventory		61,194
Prepaid expenses and other current assets		1,565
Property, plant and equipment		28,608
Intangible assets		194,000
Finance lease right-of-use assets		6,102
Operating lease right-of-use assets		5,151
Other assets		300
Accounts payable - Trade		(11,119	)
Accrued expenses		(15,534	)
Current portion of finance lease obligations		(3,225	)
Current portion of operating lease obligations		(2,179	)
Operating lease obligations, net of current portion		(2,972	)
Finance lease obligations, net of current portion		(2,877	)
Long-term debt		(29,930	)
Identifiable net assets acquired		274,978
Goodwill		179,885
Total consideration transferred	$	454,863

Identifiable intangible assets and their amortization periods are estimated as follows (in thousands):


	Cost Basis		Useful Life (years)
Flogistix
Trade name	$	16,650	10
Developed Technology		47,450	20
Customer relationships		46,190	14
	$	110,290
FPS
Trade name	$	39,000	10
Developed Technology		39,000	10
Customer relationships		116,000	9
	$	194,000

The following table presents certain unaudited pro forma financial information for the three months ended March 31, 2024, as if the 2024 Business Combination had been completed on January 1, 2024 (in thousands):


	Three Months Ended March 31,
		2024
Pro forma net sales		$	171,966
Pro forma net income		$	31,941

Other Business Combination

On October 25, 2024, the Company completed the acquisition of 100% of the equity interests in an oilfield services company located in Midland, Texas, for a total purchase price of $7.0 million. This acquisition consists primarily of machinery and equipment and certain intangible assets related to customer relationships contract and intellectual property. This acquisition is complementary to the Company's existing oilfield service presence already in the area and provides additional service capacity in a region where producers are actively drilling for crude oil and natural gas.

This acquisition was accounted for as a business combination which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. The agreement also contained a contingent liability in the form of an earnout arrangement whereby the Company is contractually obligated to pay the seller if certain operating conditions are met. This contingent liability has been included as part of the consideration given up at the closing of this acquisition. The excess of consideration given up over the net fair values was recorded to goodwill.

During the three months ended March 31, 2025, there have been no material changes to the preliminary purchase price allocation disclosed in our Annual Report regarding this business combination.