XML 27 R12.htm IDEA: XBRL DOCUMENT
v3.25.3

Discontinued Operations | 12 Months Ended
--- | ---
Dec. 31, 2024
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Dispositions Sale of Ergo On December 27, 2024, the LLC, solely in its capacity as the representative of the holders of stock and options of EBP Lifestyle Brands Holdings, Inc. (“Ergobaby”), a majority owned subsidiary of the Company, entered into a definitive Agreement and Plan of Merger (the “Ergobaby Merger Agreement”) with ERGO Acquisition LLC (“Ergo Acquiror”), Aloha Merger Sub LLC ( “Aloha Merger Sub”) and Ergobaby, to sell to Ergo Acquiror all of the issued and outstanding securities of Ergobaby, the parent company of the operating entity, The ERGO Baby Carrier, Inc., through a merger of Aloha Merger Sub with and into Ergobaby, with Ergobaby surviving the merger and becoming a wholly owned subsidiary of Acquiror (the “Ergobaby Merger”). On the same day, December 27, 2024, the parties completed the Ergobaby Merger pursuant to the Ergobaby Merger Agreement. The sale price of Ergobaby was based on an enterprise value of $104 million and will be subject to certain adjustments based on matters such as transaction expenses of Ergobaby, the net working capital and cash and debt balances of Ergobaby at the time of the closing. The LLC owned approximately 82% of the outstanding stock of Ergobaby on a fully diluted basis prior to the Merger. After the allocation of the sales price to Ergobaby non-controlling equityholders and the payment of transaction expenses, the Company received approximately $99.1 million of total proceeds at closing. This amount was in respect of its debt and equity interests in Ergobaby (which was acquired by the Company on September 16, 2010) and the payment of accrued interest. The Company recorded a pre-tax gain on the sale of Ergobaby of $6.1 million. The proceeds from the Ergo sale were used to pay down outstanding debt under the Company’s Revolving Credit facility. Summarized results of operations of Ergo for the previous years through the date of disposition are as follows (in thousands):
| For the period January 1, 2024 through disposition |  | Year ended December 31, 2023 |  | Year ended December 31, 2022
Net sales | $ | 93,213 |  |  | $ | 93,859 |  |  | $ | 88,435 |
Gross profit | 60,091 |  |  | 60,320 |  |  | 54,430 |
Operating income (loss) | (5,461) |  |  | 4,820 |  |  | (16,814) |
Income (loss) from operations before income taxes (1) | (5,526) |  |  | 4,784 |  |  | (16,830) |
Provision (benefit) for income taxes | 1,379 |  |  | (1,308) |  |  | (4,274) |
Income (loss) from discontinued operations (1) | $ | (6,905) |  |  | $ | 6,092 |  |  | $ | (12,556) |
(1) The results of operations for the periods from January 1, 2024 through disposition and the years ended December 31, 2023 and 2022, each exclude $8.8 million, $8.7 million and $6.1 million, respectively, of intercompany interest expense. The following table presents summary balance sheet information of Ergo that is presented as discontinued operations as of December 31, 2023 (in thousands):
|  | December 31, 2023
Assets |  |
Cash and cash equivalents |  | $ | 3,793 |
Accounts receivable, net |  | 10,058 |
Inventories, net |  | 17,193 |
Prepaid expenses and other current assets |  | 5,871 |
Current assets of discontinued operations |  | $ | 36,915 |
Property, plant and equipment, net |  | 1,279 |
Goodwill |  | 41,521 |
Intangible assets, net |  | 44,827 |
Other non-current assets |  | 256 |
Non-current assets of discontinued operations |  | $ | 87,883 |
Liabilities |  |
Accounts payable |  | $ | 2,323 |
Accrued expenses |  | 6,013 |
Other current liabilities |  | 650 |
Current liabilities of discontinued operations |  | $ | 8,986 |
Deferred income taxes |  | 1,249 |
Other non-current liabilities |  | 28 |
Non-current liabilities of discontinued operations |  | $ | 1,277 |
Noncontrolling interest of discontinued operations |  | $ | 16,756 |
Sale of Marucci On November 1, 2023, the LLC, solely in its capacity as the representative of the holders of stock and options of Marucci, a majority owned subsidiary of the LLC, entered into a definitive Agreement and Plan of Merger with Fox Factory, Inc. (“Marucci Purchaser”), Marucci Merger Sub, Inc. (“Marucci Merger Sub”) and Wheelhouse, pursuant to which Marucci Purchaser agreed to acquire all of the issued and outstanding securities of Wheelhouse, the parent company of the operating entity, Marucci Sports, LLC, through a merger of Marucci Merger Sub with and into Wheelhouse, with Wheelhouse surviving the merger and becoming a wholly owned subsidiary of Marucci Purchaser. On November 14, 2023, the parties completed the Merger pursuant to the Agreement. The sale price of Wheelhouse was based on an enterprise value of $572 million, subject to certain adjustments based on matters such as transaction tax benefits, transaction expenses of Wheelhouse, the net working capital and cash and debt balances of Wheelhouse at the time of the closing. After the allocation of the sales price to Wheelhouse non-controlling equityholders and the payment of transaction expenses, we received approximately $484.0 million o f total proceeds at closing of which $87.3 million related to the repayment of intercompany loans with the Compa ny. We recorded a pre-tax gain on sale of Marucci of $241.4 million in the year ended December 31, 2023. In the first quarter of 2024, the LLC received a net working capital settlement of approximately $3.3 million related to Marucci, which was recognized as an additional gain on sale of discontinued operations, net of taxes, in the accompanying consolidated statement of operations. The proceeds from the Marucci sale were used to pay down outstanding debt under the Company’s 2022 Credit Facility and to fund an acquisition by Company. Summarized results of operations of Marucci for the previous years through the date of disposition are as follows (in thousands):
| For the period January 1, 2023 through disposition |  | Year ended December 31, 2022
Net sales | $ | 167,898 |  |  | $ | 165,411 |
Gross profit | 94,891 |  |  | 83,628 |
Operating income | 17,073 |  |  | 21,113 |
Income from operations before income taxes (1) | 17,040 |  |  | 22,974 |
Provision (benefit) for income taxes | (2,467) |  |  | 4,320 |
Income from discontinued operations (1) | $ | 19,507 |  |  | $ | 18,654 |
(1) The results of operations for the periods from January 1, 2023 through disposition and the year ended December 31, 2022, each exclude $8.9 million and $7.0 million, respectively, of intercompany interest expense. Sale of Advanced Circuits On January 10, 2023, the LLC, solely in its capacity as the representative of the holders of stock and options of Compass AC Holdings, Inc., a majority owned subsidiary of the LLC, entered into a definitive Agreement and Plan of Merger with APCT Inc. (“ACI Purchaser”), Circuit Merger Sub, Inc. (“ACI Merger Sub”) and Advanced Circuits, pursuant to which ACI Purchaser agreed to acquire all of the issued and outstanding securities of Advanced Circuits, the parent company of the operating entity, Advanced Circuits, Inc., through a merger of ACI Merger Sub with and into Advanced Circuits, with Advanced Circuits surviving the merger and becoming a wholly owned subsidiary of ACI Purchaser (the “ACI Merger”). The ACI Merger was completed on February 14, 2023. The sale price of Advanced Circuits was based on an enterprise value of $220 million, subject to certain adjustments based on matters such as the working capital and cash and debt balances of Advanced Circuits at the time of the closing. After the allocation of the sales price to Advanced Circuits non-controlling equity holders and the payment of transaction expenses, the Company received approximately $170.9 million of total proceeds at closing, of which $66.9 million related to the repayment of intercompany loans with the Company. We recorded a pre-tax gain on sale of $106.9 million on the sale of Advanced Circuits in the year ended December 31, 2023. Summarized results of operations of ACI for the previous years through the date of disposition are as follows (in thousands):
| For the period January 1, 2023 through disposition |  | Year ended December 31, 2022
Net sales | $ | 8,829 |  |  | $ | 89,503 |
Gross profit | 3,663 |  |  | 41,064 |
Operating income | 1,058 |  |  | 23,617 |
Income (loss) from operations before income taxes (1) | (2,464) |  |  | 23,349 |
Provision (benefit) for income taxes | (1,073) |  |  | 3,616 |
Income (loss) from discontinued operations (1) | $ | (1,391) |  |  | $ | 19,733 |
(1) The results of operations for the periods from January 1, 2023 through disposition and the year ended December 31, 2022, each exclude $1.4 million and $6.7 million, respectively, of intercompany interest expense. Gain on sale of discontinued operations - income tax Effective September 1, 2021, the Trust elected to be treated as a corporation for U.S. federal income tax purposes. Prior to the Effective Date, the Trust was treated as a partnership for U.S. federal income tax purposes and the Trust’s items of income, gain, loss and deduction flowed through from the Trust to the shareholders, and the Trust shareholders were subject to income taxes on their allocable share of the Trust’s income and gains. After the Effective Date, the Trust is taxed as a corporation and is subject to U.S. federal corporate income tax at the Trust level. The election to be treated as a corporation for U.S federal income tax purposes, resulted in an approximate $328 million gain to the Trust for U.S. federal income tax purposes. This taxable capital gain should result in a basis step-up for the Trust after the Election. This basis step-up should provide a tax benefit to the Trust, as it should increase the Trust’s basis in its subsidiaries as of September 1, 2021, which in turn should reduce future gains, if and when the Trust divests such subsidiar ies. The Trust filed for a Private Letter Ruling ("PLR"), with the Internal Revenue Service ("IRS") regarding the basis step-up. While the IRS declined to rule on the private letter request, they did not indicate that the Company's proposed treatment was unreasonable and the Company intends to reflect the basis step up on future tax returns. However, since the IRS declined to rule on the private letter request, the Company has concluded that a full reserve should be recorded for the stepped-up basis b enefit in accordance with ASC 740 and has recorded an unrecognized tax benefit of $7.4 million that reduced the gain on Ergobaby in 2024, and $27.9 million that reduced the gain on sale of Advanced Circuits and Marucci in 2023. The sale of Ergobaby in the year ending December 31, 2024 resulted in a tax benefit of $9.9 million that increased the gain on the sale of Ergobaby. The Advanced Circuits and Marucci in the year ending December 31, 2023 was subject to income tax expense. Prior to the sale of Marucci in the fourth quarter of 2023, the Trust had sufficient net operating losses to offset the gain on sale of Advanced Circuits and did not record income tax expense. The sale of Marucci and the resulting gain that was recorded, combined with the gain on Advanced Circuits, utilized all of the Trust's net operating losses and resulted in taxable income in the fourth quarter of 2023. The Trust recorded income tax expense of $37.4 million that reduced the gain on sale of discontinued operations. The pre-tax gain on sale of Advanced Circuits and Marucci totaled $348.4 million, and was reduced by the $37.4 million in income tax expense and the $27.9 million in unrecognized tax benefits, resulting in the $283.0 million recorded as gain on sale of discontinued operations in the statement of operations in the year ending December 31, 2023. Disposition of Crosman On April 30, 2024, Velocity Outdoor entered into a stock purchase agreement to sell Crosman Corporation ("Crosman"), its airgun product division, to Daisy Manufacturing Company, for an enterprise value of approximately $63 million. The sale was completed on the same day. The Company recorded a loss of $24.6 million on the sale of Crosman in the quarter ended June 30, 2024, and a gain of $0.4 million in the third quarter of 2024 related to the working capital settlement. Vel ocity received net proceeds of approximately $61.9 million related to the sale of Crosman, which was used to repay amounts outstanding under its intercompany credit agreement. The results of operation of Crosman are included in the accompanying consolidated financial statements through the date of sale.

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

X
- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
Name: | us-gaap_DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration