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Note 12 - Acquisition of Sims Transport Services, LLC

9 Months Ended

Sep. 30, 2024

Sims Transport Services, LLC [Member]

Notes to Financial Statements

Business Combination Disclosure [Text Block]

Note 12.

Acquisition of Sims Transport Services, LLC

On August 18, 2023, we acquired 100% of the equity interests of Sims, a specialized brokerage company, headquartered in Maysville, GA. The acquisition date fair value of the consideration transferred was $9.8 million. The Stock Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions. The Stock Purchase Agreement includes an earnout component of up to an aggregate of $12.0 million based on Sims' adjusted earnings before interest, taxes, depreciation, and amortization reported for the first through fourth calendar years following closing. The total purchase price, including any earnout achieved, is expected to range from $9.8 million to $20.0 million depending on the results achieved by Sims.

Sims' results have been included in the consolidated financial statements since the date of acquisition and are reported within our Managed Freight reportable segment.

The acquisition date fair value of the consideration transferred consisted of the following:

		August 18, 2023
(in thousands)
Cash paid pursuant to Stock Purchase Agreement		$	8,573
Cash acquired included in historical book value of Sims' assets and liabilities			(526	)
Contingent consideration			1,786
Net purchase price		$	9,833

The contingent consideration arrangement requires us to pay up to $12.0 million of additional consideration to Sim's former equity-holders based on Sims' results during the first four calendar years following closing. We estimated the fair value of the contingent consideration using a probability-weighted model. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. Refer to Note 3, "Fair Value of Financial Instruments" for information regarding changes in the contingent consideration arrangement.

All goodwill related to the acquisition is deductible for tax purposes and there are no deferred income taxes arising from the acquisition.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date.

		August 18, 2023
Accounts receivable		$	735
Other intangibles, net			6,090
Total identifiable assets acquired			6,825

Accounts payable			(457	)
Accrued expenses			(4	)
Total liabilities assumed			(461	)
Net identifiable assets acquired			6,364
Goodwill			3,469
Net assets acquired		$	9,833

During the nine months ended September 30, 2024 we recognized measurement period adjustments of $1.6 million, primarily related to the deductibility of goodwill and other intangibles, which decreased goodwill from $5.1 million as of December 31, 2023 to $3.5 million as of September 30, 2024. The goodwill recognized is attributable primarily to expected cost synergies as a result of overhead support. Refer to Note 14, "Goodwill and Other Assets" for a summary of changes to goodwill during the period as well as information related to the identifiable intangible asset acquired.

The amounts of revenue and earnings of Sims included in the Company’s consolidated results of operations from the acquisition date of August 18, 2023, to the periods ended September 30, 2024 and 2023 are as follows:

(in thousands)		Three months ended								Nine months ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Total revenue		$	2,694			$	1,026			$	7,421			$	1,026
Net income		$	361			$	219			$	982			$	219