XML 24 R10.htm IDEA: XBRL DOCUMENT
v3.20.4

Note 3 - Business Combinations | 12 Months Ended
--- | ---
Dec. 31, 2020
Notes to Financial Statements |
Business Combination Disclosure [Text Block] |
3. | BUSINESS COMBINATION S:
Geneva Pipe and Precast Company On January 31, 2020, the Company completed the acquisition of 100% of Geneva Pipe and Precast Company (“Geneva”) (fka Geneva Pipe Company, Inc.) for a purchase price of $49.4 million in cash. Geneva is a concrete pipe and precast concrete products manufacturer based in Utah. This acquisition expanded the Company’s water infrastructure product capabilities by adding additional reinforced concrete pipe capacity and a full line of precast concrete products including storm drains and manholes, catch basins, vaults, and curb inlets as well as innovative lined products that extend the life of concrete pipe and manholes for sewer applications. Operations have continued with Geneva's previous management and workforce at the three Utah manufacturing facilities located in Salt Lake City, Orem, and St. George. Consistent with prior periods and considering the chief operating decision maker's evaluation of post-acquisition performance is based on total Company results, the Company continues to report as one segment. The following table summarizes the purchase consideration and fair value of the assets acquired and liabilities assumed as of January 31, 2020 (in thousands):
Assets |  |  |  |
Cash and cash equivalents |  | $ | 691 |
Trade and other receivables |  |  | 7,089 |
Inventories |  |  | 5,673 |
Prepaid expenses and other |  |  | 356 |
Property and equipment |  |  | 9,096 |
Operating lease right-of-use assets |  |  | 21,684 |
Intangible assets |  |  | 11,165 |
Total assets acquired |  |  | 55,754 |
Liabilities |  |  |  |
Accounts payable |  |  | 1,395 |
Accrued liabilities |  |  | 1,189 |
Operating lease liabilities |  |  | 20,454 |
Deferred income taxes |  |  | 5,343 |
Other long-term liabilities |  |  | 939 |
Total liabilities assumed |  |  | 29,320 |
Goodwill |  |  | 22,985 |
Total purchase consideration |  | $ | 49,419 |
The purchase consideration for this business combination was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated purchase consideration recorded as goodwill. As a result of additional information obtained during the measurement period about facts and circumstances that existed as of the acquisition date, the Company recorded measurement period adjustments during the three months ended June 30, 2020 which resulted in a $0.1 million balance sheet reclassification between trade and other receivables and inventories. The following table summarizes the components of the intangible assets acquired and their estimated useful lives:
|  | Estimated Useful Life |  |  | Fair Value |
|  | (In years) |  |  | (In thousands) |
Customer relationships |  |  | 11.0 |  |  | $ | 8,031 |
Trade names |  |  | 10.0 |  |  |  | 2,093 |
Backlog |  |  | 0.9 |  |  |  | 1,041 |
Total intangible assets |  |  | 9.9 |  |  | $ | 11,165 |
Goodwill arose from the acquisition of an assembled workforce, expansion of product offerings, and management’s industry know-how. The Company does not expect the goodwill to be deductible for tax purposes. The Company incurred transaction costs associated with this acquisition of $2.6 million and $0.6 million during the years ended December 31, 2020 and 2019, respectively. These transaction costs are included in Selling, general, and administrative expense in the Consolidated Statements of Operations. Geneva operations contributed net sales of $44.2 million to the Company’s continuing operations for the period from January 31, 2020 to December 31, 2020. It is impracticable to determine the effect on net income as a substantial portion of Geneva has been integrated into the Company’s ongoing operations. The following unaudited pro forma summary presents the consolidated results of the Company as if the acquisition of Geneva had occurred on January 1 of the year prior to the acquisitions (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
Net sales |  | $ | 289,496 |  |  | $ | 323,741 |
Net income |  |  | 22,025 |  |  |  | 27,163 |
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 of Geneva had occurred on January 1 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 Geneva. The pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Geneva 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 1 of the year prior to the acquisition. Adjustments also include an increase of interest expense as if the Company’s debt obtained in connection with the acquisition of Geneva had been outstanding since January 1 of the year prior to the acquisition. The unaudited pro forma financial information includes non-recurring adjustments to remove transaction costs directly attributable to the acquisition. The provision for income taxes has also been adjusted for all periods, based upon the foregoing adjustments to historical results. Ameron Water Transmission Group, LLC On 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. 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. In December 2019, the Company closed its leased facility 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 |
As a result of additional information obtained during the measurement period about facts and circumstances that existed as of the acquisition date, the Company recorded measurement period adjustments during the three months ended December 31, 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 Company recorded no measurement period adjustments during the year ended December 31, 2019. The purchase consideration for this business combination was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with 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 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 transaction costs associated with this acquisition of $2.6 million during the year ended December 31, 2018. These costs are included in Selling, general, and administrative expense in the 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 1 of the year prior to the acquisition (in thousands):
|  | Year Ended December 31, 2018 |
Net sales |  | $ | 200,513 |
Net loss |  |  | (15,102 | )
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 of Ameron had occurred on January 1 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 1 of the year prior to the acquisition. The unaudited pro forma financial information includes non-recurring adjustments to remove transaction costs directly attributable to the acquisition and remove the bargain purchase gain. The provision for income taxes has also been adjusted for all periods, based upon the foregoing adjustments to historical results.

X
- 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
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration