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Acquisition of STI | 12 Months Ended
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Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisition of STI | Acquisition of STI On January 11, 2022, the Company completed the STI Acquisition pursuant to the purchase agreement, dated November 10, 2021, by and among Amixa Capital, S.L. and Aurica Trackers, S.L., each a company duly organized under the laws of the Kingdom of Spain (together, the “Sellers”) and Mr. Javier Reclusa Etayo (the “STI Purchase Agreement”). The STI Acquisition was funded primarily with borrowings from the Convertible Notes (as defined below) and the issuance of the Series A Shares. The STI Acquisition provided the Company with an immediate presence in Spain, Western Europe, Brazil and South Africa. Transaction expenses incurred in connection with the acquisition are $5.6 million recorded in the general and administrative line item on the consolidated statement of operations for the year ended December 31, 2022. In accordance with the Purchase Agreement, the Company paid closing consideration to the Sellers consisting of $410.5 million in cash and (13,894,800 shares) of the Company’s common stock with an estimated fair value of $200.2 million based on the closing share price on the date of acquisition. The fair value of the purchase consideration was $610.8 million and resulted in the Company owning 100% of the interests in STI. The Company has performed a valuation of the acquisition assets and liabilities and determined the related accounting impact. The information presented below has been adjusted to give effect to the restatement discussed in Note 21. The consideration paid to acquire STI consisted of the following (in thousands):
Cash consideration for STI |  | $ | 409,647 |
Cash consideration for transaction expenses of STI |  | 896 |
Total cash consideration |  | 410,543 |
Non-cash equity consideration |  | 200,224 |
Total consideration transferred |  | 610,767 |
Total purchase price consideration |  | $ | 610,767 |
The STI Acquisition was accounted for as a business combination in accordance with ASC 805 Business Combinations. The equity consideration transferred consisted of the Company’s common stock and was measured at fair value based on the closing stock price on the Acquisition Date. The purchase price was allocated to the assets acquired and liabilities assumed based on management’s estimate of the respective fair values at the Acquisition Date. Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The factors contributing to the recognition of goodwill were the expected synergies of the combined entities that are expected to be realized from the STI Acquisition. None of the goodwill is expected to be deductible for income tax purposes. The following table summarizes the fair values of the assets acquired and liabilities assumed as of the Acquisition Date (in thousands):
Fair Value of Net Assets Acquired and Liabilities Assumed: | Acquisition Date |  | Measurement Adjustment |  | Remeasured Acquisition Date
Cash and cash equivalents | $ | 36,725 |  |  | $ | — |  |  | $ | 36,725 |
Accounts receivable | 110,789 |  |  | — |  |  | 110,789 |
Inventories | 47,517 |  |  | — |  |  | 47,517 |
Prepaid expenses and other | 23,399 |  |  | — |  |  | 23,399 |
Property, plant and equipment | 4,434 |  |  | — |  |  | 4,434 |
Other intangible assets | 304,431 |  |  | — |  |  | 304,431 |
Other assets | 325 |  |  | 2,655 |  |  | 2,980 |
Total assets acquired | $ | 527,620 |  |  | $ | 2,655 |  |  | $ | 530,275 |
Accounts payable | 65,761 |  |  | — |  |  | 65,761 |
Deferred revenue | 20,345 |  |  | — |  |  | 20,345 |
Short-term debt | 44,338 |  |  | — |  |  | 44,338 |
Other liabilities | 10,115 |  |  | 2,655 |  |  | 12,770 |
Income tax payable | 7,576 |  |  | — |  |  | 7,576 |
Deferred tax liability | 95,510 |  |  | — |  |  | 95,510 |
Other long-term liabilities | 4,524 |  |  | — |  |  | 4,524 |
Long-term debt | 12,053 |  |  | — |  |  | 12,053 |
Total liabilities assumed | $ | 260,222 |  |  | $ | 2,655 |  |  | $ | 262,877 |
Fair value of net assets acquired | 267,398 |  |  |  |  | 267,398 |
Allocation to goodwill | $ | 343,369 |  |  |  |  | $ | 343,369 |
The purchase price allocation was based upon Management’s estimates with the assistance of a third party valuation. The estimates of the fair values of the assets acquired and liabilities assumed were estimated to approximate carrying values since they are short term in nature, and they are receivable or payable on demand. These assets and liabilities were cash and cash equivalents, accounts receivable, inventories, prepaid expenses and other, accounts payable, other liabilities, and deferred revenue. The deferred tax liability was determined utilizing statutory rates in effect at the time of the acquisition, as applied to the respective intangible assets by jurisdiction. For assets and liabilities excluded from the scope of the intangible assets and property, plant and equipment valuation, the Company considered net book value to be a reasonable proxy as of the Acquisition Date. The purchase price allocation includes $304.4 million of acquired identifiable intangible assets.
(in thousands, except useful lives) |  | Estimated Fair Value |  | Estimated Weighted Average Useful Life in Years
Backlog |  | $ | 50,000 |  |  | 1
Customer relationships |  | 228,408 |  |  | 10
Trade name |  | 26,023 |  |  | 20
Total |  | $ | 304,431 |  |  |
The fair value of the identifiable intangible assets has been estimated using the Excess Earnings Method (customer relationships and backlog) and Relief from Royalty Method (trade name). Significant inputs using the Excess Earnings Method and Level 3 inputs in the fair value hierarchy include economic life, estimated revenue, expenses based on historical results and forecasts, and a discount rate based on a weighted average cost of capital for customer relationships of 15% for Spain, 16.5% for Brazil and 14.0% for Spain foreign sourced projects and for order backlog of 8.5% for Spain, 9.5% for Brazil and 7.5% for Spain foreign sourced projects. Significant inputs to the Relief from Royalty method model include estimates of future revenue, economic life, estimated royalty rate of 1.25%, and a discount rate based on a weighted average cost of capital 15.2%. The weighted average cost of capital was determined based on the Company’s capital structure, cost of capital, inherent business risk profile and long-term growth expectations. The intangible assets are being amortized over their estimated useful lives on a straight-line basis that reflects the economic benefit of the asset. The determination of the useful lives is based upon various industry studies, historical acquisition experience, economic factors, and future forecasted cash flows of the Company following the STI Acquisition. The amounts of revenue and net loss of STI included in the Company’s consolidated statement of operations from the Acquisition Date through December 31, 2022 are $369.7 million and $(21.5) million, respectively. Pro Forma Financial Information (Unaudited) The following unaudited pro forma financial information presents the combined results of operations of the Company and STI as if the acquisition had occurred on January 1, 2021, after giving effect to certain unaudited pro forma adjustments. The unaudited pro forma adjustments reflected herein include only those adjustments that are directly attributable to the STI Acquisition including amortization of intangibles, debt financing expenses and tax benefits. The unaudited pro forma financial information does not reflect any adjustments for anticipated expense savings resulting from the STI Acquisition and is not necessarily indicative of the operating results that would have actually occurred had the STI Acquisition been consummated on January 1, 2021, (in thousands):
| Year Ended December 31,
| 2022 |  | 2021
Revenue | $ | 1,645,962 |  |  | $ | 1,118,903 |
Net income (loss) | $ | 36,285 |  |  | $ | (74,215) |

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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 https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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