2.	Business Combination

July

27,

2018,

the Company completed the acquisition of

100%

of Ameron Water Transmission Group, LLC for a purchase price of

$38.1

million in cash. The results of Ameron’s operations have been included in the consolidated financial statements since that date. Ameron was a major supplier of engineered welded steel pressure pipe and reinforced concrete pipe. In addition to strengthening the Company's position in the water infrastructure market, this acquisition expanded the Company’s bar-wrapped concrete cylinder pipe capabilities and added reinforced concrete pipe and T-Lock

—a proprietary polyvinyl chloride (PVC) lining for concrete pipe sewer applications—to the Company’s product portfolio. In connection with the acquisition, the Company acquired pipe facilities in Tracy, California and San Luis Río Colorado, Mexico, as well as protective lining equipment in Brea, California.

The following table summarizes the purchase consideration and 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		8,887
Contract assets		12,018
Inventories		7,937
Prepaid expenses and other		3,777
Property and equipment		34,827
Other assets		320
Total assets acquired		68,678

Liabilities
Accounts payable		5,520
Accrued liabilities		1,599
Contract liabilities		123
Deferred income taxes		3,221
Total liabilities assumed		10,463

Bargain purchase gain		(20,080	)

Total purchase consideration	$	38,135

The Company recorded

measurement period adjustments during the

three

and

nine

months ended

September

30,

2019.

As a result of additional information obtained about facts and circumstances that existed as of the acquisition date, the Company recorded measurement period adjustments during the

fourth

quarter of

2018,

which resulted in a net decrease of the bargain purchase gain of

$1.8

million. The adjustments primarily included reclassifications between balance sheet categories and a

$2.0

million reduction in inventories.

The excess of the aggregate net fair value of assets acquired and liabilities assumed over the fair value of consideration transferred as the purchase price has been recorded as a bargain purchase gain. 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 costs associated with this acquisition of

$1.9

million and

$2.0

million during the

three

and

nine

months ended

September

30,

2018.

These costs are included in Selling, general, and administrative expense in the Condensed Consolidated Statements of Operations.

The following unaudited pro forma summary presents the consolidated results of the Company as if the acquisition of Ameron had occurred on

January

of the year prior to the acquisition (in thousands):

	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018

Net sales	$	57,250	$	142,969
Net income (loss)		6,822		(18,059	)

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

of the year prior to the acquisition. Moreover, this information is

not

indicative of what the Company’s future operating results will be. The information 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 and equipment and intangible assets had been applied on

January

of the year prior to the acquisition, and the consequential tax effects. Aside from revising the

2018

net income for the effect of the bargain purchase gain, there were

material, non-recurring adjustments to this unaudited pro forma information.