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Note 2 - Business Combination

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Business Combination Disclosure [Text Block]

2.	Business Combination

On October 5, 2021, the Company completed the acquisition of 100% of Park Environmental Equipment, LLC for a purchase price of approximately $88.4 million in cash, subject to a post-closing adjustment based on changes in net working capital, and is included in the Precast segment for all periods following the acquisition date. ParkUSA is a precast concrete and steel fabrication-based company that develops and manufactures water, wastewater, and environmental solutions. Operations continue with ParkUSA’s previous management and workforce at its three Texas manufacturing facilities located in Houston, Dallas, and San Antonio.

The following table summarizes the purchase consideration and fair value of the assets acquired and liabilities assumed as of October 5, 2021 (in thousands):

Assets
Cash and cash equivalents		$	278
Trade and other receivables			11,034
Inventories			12,773
Prepaid expenses and other			293
Property and equipment			8,076
Operating lease right-of-use assets			58,301
Intangible assets			31,000
Deferred income taxes			347
Total assets acquired			122,102

Liabilities
Accounts payable			2,029
Accrued liabilities			4,067
Operating lease liabilities			58,301
Total liabilities assumed			64,397

Goodwill			30,699

Total purchase consideration		$	88,404

The tangible and intangible assets acquired and liabilities assumed were recognized based on their estimated fair values on the acquisition date, with the excess purchase consideration recorded as goodwill. The asset and liability fair value measurements primarily related to inventories, identifiable intangible assets, deferred income taxes, accrued liabilities, and goodwill, are preliminary and subject to change as additional information is obtained. The acquisition accounting will be finalized as soon as practicable within the measurement period, but not later than one year following the acquisition date.

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			10.0			$	19,800
Trade names and trademarks			10.0				9,600
Patents			21.0				1,300
Backlog			0.6				300
Total intangible assets			10.2			$	31,000

Goodwill arose from the acquisition of an assembled workforce, expansion of product offerings, and management’s industry know-how, and is expected to be deductible for tax purposes.

The Company incurred transaction costs associated with this acquisition of approximately $0 and $0.1 million during the three months ended March 31, 2022 and 2021, respectively. These transaction costs are included in Selling, general, and administrative expense in the Condensed Consolidated Statements of Operations.

Unaudited Pro Forma Disclosures

The following unaudited pro forma summary presents the consolidated results of the Company as if the acquisition of ParkUSA had occurred on January 1 of the year prior to the acquisition (in thousands):

		Three Months Ended March 31, 2021

Net sales		$	85,530
Net income			3,972

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 ParkUSA 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 ParkUSA. The pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results of ParkUSA 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 ParkUSA had been outstanding since January 1 of the year prior to the acquisition. The provision for income taxes has also been adjusted for all periods, based upon the foregoing adjustments to historical results.