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ACQUISITIONS

12 Months Ended

Dec. 31, 2023

ACQUISITION

3.ACQUISITIONS

Trojan Leisure Products, LLC d/b/a Radiant Pools

On November 24, 2021, Latham Pool Products acquired Trojan Leisure Products, LLC d/b/a Radiant Pools (“Radiant”) for a total purchase price of $90.7 million (the “Radiant Acquisition”). The results of Radiant’s operations have been included in the consolidated financial statements since that date. Radiant specializes in manufacturing proprietary vinyl liner aluminum swimming pools that can be built completely in-ground, semi-in-ground, or above ground. As a result, this acquisition expanded the Company’s product offerings. In connection with the Radiant Acquisition, consideration paid was $90.7 million in cash, or $90.5 million net of cash acquired of $0.2 million. The cash consideration was funded, in part, through long-term debt proceeds of $50.0 million. The Company incurred $2.9 million in transaction costs.

Subsequent to the acquisition date, there was an additional amount due to the seller of $0.4 million related to the finalization of the net working capital adjustment, which was accounted for as a measurement period adjustment. The measurement period adjustment resulted in an increase in the total consideration transferred of $0.4 million and an increase to goodwill of $0.4 million. The net working capital adjustment was paid during the quarter ended July 2, 2022.

The Company accounted for the Radiant Acquisition using the acquisition method of accounting in accordance with ASC 805. This requires that the assets acquired and liabilities assumed be measured at fair value. The Company estimated, using Level 3 inputs, the fair value of certain fixed assets using a combination of the cost approach and the market approach. Inventories were valued using the comparative sales method, less the cost of disposal. Specific to intangible assets, customer relationships and order backlog were valued using the multi-period excess earnings method, whereas trade names, technology, and pool designs were valued using the relief from royalty method. The Company recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date.

The following summarizes the purchase price allocation for the Company’s acquisition of Radiant:


(in thousands)		November 24, 2021
Total consideration		$	91,109
Allocation of purchase price:
Cash			217
Trade receivables			2,805
Inventories			5,528
Prepaid expenses and other current assets			396
Property and equipment			1,263
Intangible assets			72,500
Total assets acquired			82,709
Accounts payable			1,744
Accrued expenses and other current liabilities			1,038
Deferred income tax liabilities			2,920
Total liabilities assumed			5,702
Total fair value of net assets acquired, excluding goodwill			77,007
Goodwill		$	14,102

The excess of the purchase price over the fair value of the identifiable assets acquired and the liabilities assumed in the acquisition was allocated to goodwill in the amount of $14.1 million. Goodwill resulting from the Radiant Acquisition was attributable to the expanded market share and product offerings. Goodwill resulting from the Radiant Acquisition is deductible for tax purposes.

The Company allocated a portion of the purchase price to specific intangible asset categories as follows:


		Fair Value			Amortization
Definite-lived intangible assets:		(in thousands)			Period
Dealer relationships		$	37,000		13 years
Trade names			13,000		25 years
Technology			13,000		15 years
Pool designs			7,900		15 years
Order backlog			1,600		10 months
		$	72,500

The following are the net sales and net income from Radiant included in the Company’s results from the Radiant Acquisition Date through December 31, 2021:


		Year Ended
(in thousands)		December 31, 2021
Net sales		$	2,211
Net income		$	3

Other Business Combinations

During the quarter ended December 31, 2022, the Company completed the acquisition of certain fiberglass pool manufacturing assets in Seminole, Oklahoma that qualified as a business combination. This transaction resulted in an increase to goodwill, but was not material to our consolidated financial statements, and as a result, additional business combination disclosures for this acquisition have been omitted.

Pro Forma Financial Information (Unaudited)

The following pro forma financial information presents the statements of operations of the Company with Radiant as if the acquisition occurred on January 1, 2021. The pro forma results do not include any anticipated synergies, cost savings, or other expected benefits of an acquisition. The pro forma financial information is not necessarily indicative of what the financial results would have been had the acquisition been completed on January 1, 2021, and is not necessarily indicative of the Company’s future financial results.




(in thousands)		2021
Net sales		$	662,282
Net loss		$	(50,382)

The pro forma financial information presented above reflects the effects as a result of the acquisition, including the amortization expense from acquired intangible assets, the depreciation and amortization expense from acquired property and equipment, the additional cost of sales from acquired inventory, interest expense from debt financing, and any related tax effects. Transaction costs for Radiant are reflected within pro forma net loss for the year ended December 31, 2021.