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Note 2 - Business Combination | 9 Months Ended
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Sep. 30, 2018
Notes to Financial Statements |
Business Combination Disclosure [Text Block] |
2. | Business Combination
On July 27, 2018, the Company completed the acquisition of 100% of Ameron Water Transmission Group, LLC (“Ameron”) for a purchase price of approximately $38.1 million in cash, subject to a post-closing adjustment based on changes in net working capital. The results of Ameron’s operations have been included in the consolidated financial statements since that date. Ameron is a major supplier of engineered welded steel pressure pipe as well as reinforced concrete pipe. Headquartered in Rancho Cucamonga, California, Ameron has pipe operations in Tracy, California and San Luis Río Colorado, Mexico, as well as a protective lining facility in Brea, California. This acquisition expands the Company's footprint in a key water transmission pipe market and adds bar-wrapped concrete cylinder pipe, reinforced concrete pipe and T-Lock, a proprietary polyvinyl chloride (PVC) lining for concrete pipe sewer applications, to the Company’s product portfolio. The following table summarizes the preliminary purchase consideration and preliminary fair value of the assets acquired and liabilities assumed as of July 27, 2018 (in thousands):
Assets |  |  |  |
Cash and cash equivalents |  | $ | 912 |
Trade and other receivables |  |  | 12,806 |
Contract assets |  |  | 11,858 |
Inventories |  |  | 9,895 |
Prepaid expenses and other |  |  | 452 |
Property and equipment |  |  | 34,709 |
Other assets |  |  | 218 |
Total assets acquired |  |  | 70,850 |
Liabilities |  |  |  |
Accounts payable |  |  | 5,520 |
Accrued liabilities |  |  | 1,894 |
Contract liabilities |  |  | 123 |
Deferred income taxes |  |  | 3,298 |
Total liabilities assumed |  |  | 10,835 |
Bargain purchase gain |  |  | (21,880 | )
Total purchase consideration |  | $ | 38,135 |
The asset and liability fair value measurements are preliminary and subject to change. The adjustments arising from the completion of the detailed valuations and necessary calculations may materially affect the preliminary allocation of the purchase price. The purchase price allocation will be finalized as soon as practicable within the measurement period, but not later than one year following the acquisition date. The excess of the aggregate fair value of the net assets acquired over the consideration paid has been treated as a gain on bargain purchase. When it became apparent there was a potential for a bargain purchase gain, management reviewed the Ameron assets acquired and liabilities assumed as well as the assumptions utilized in estimating their fair values. Upon completion of this reassessment, the Company concluded that recording a bargain purchase gain with respect to Ameron was appropriate and required under U.S. GAAP. The Company believes the seller was motivated to complete the transaction as part of an overall repositioning of its business. The Company incurred acquisition-related costs during the three and nine months ended September 30, 2018 of $1.9 million and $2.0 million, respectively. These costs are included in Selling, general and administrative expense in the Condensed Consolidated Statements Operations. Ameron operations contributed net sales of $11.1 million and operating loss of $0.7 million, including acquisition-related costs of $1.9 million, to the Company for the period from July 27, 2018 to September 30, 2018. The following unaudited pro forma summary presents the consolidated results of the Company as if the acquisition of Ameron had occurred on January 1, 2017 (in thousands, except per share amounts):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Net sales |  | $ | 57,250 |  |  | $ | 53,071 |  |  | $ | 142,969 |  |  | $ | 142,836 |
Net income (loss) from continuing operations |  |  | 6,822 |  |  |  | 1,229 |  |  |  | (18,059 | ) |  |  | (5,050 | )
Net income (loss) from continuing operations per basic share |  |  | 0.70 |  |  |  | 0.13 |  |  |  | (1.86 | ) |  |  | (0.53 | )
Net income (loss) from continuing operations per diluted share |  |  | 0.70 |  |  |  | 0.13 |  |  |  | (1.86 | ) |  |  | (0.53 | )
This unaudited pro forma consolidated financial data is included only for the purpose of illustration and does not necessarily indicate what the operating results would have been if the acquisition had occurred on January 1, 2017. Moreover, this information is not indicative of what the Company’s future operating results will be. The information for 2017 and 2018 prior to the acquisition is included based on prior accounting records maintained by Ameron. The pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Ameron to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied on January 1, 2017, and the consequential tax effects. Aside from revising the 2018 net income (loss) for the effect of the bargain purchase gain, there were no material, non-recurring adjustments to this unaudited pro forma information.

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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 http://asc.fasb.org/topic&trid=2303972 + Details
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