XML 32 R18.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Acquisitions | 12 Months Ended
--- | ---
Dec. 31, 2017
Business Combinations [Abstract] |
Acquisitions | Note 12 - Acquisitions 2015 Acquisition On January 16, 2015, the Company acquired certain assets of a supplier of refrigerants and compressed gases, and also hired three employees associated with the business. The purchase price for this acquisition was $2.4 million cash paid at closing, the assumption of a liability of $20,000, and a maximum additional $3.0 million earn-out. The asset allocation was approximately $1.6 million of tangible assets, approximately $1.6 million of intangible assets, and approximately $2.3 million of goodwill. As of December 31, 2015, the valuation and allocation of the purchase price for this acquisition was finalized. As part of that process, it was determined that the deferred acquisition cost payable that had been previously recorded at the maximum earn out of $3.0 million per the purchase agreement was overstated by approximately $1.0 million. This adjustment to the deferred acquisition cost payable resulted in lowering the purchase price from approximately $5.4 million to approximately $4.4 million. The final valuation resulted in a reduction of goodwill by approximately $1.9 million, an increase in intangible assets of approximately $0.8 million, and an increase in current assets of approximately $0.1 million. This final valuation, as well as the respective changes in the amortization of intangibles, was reflected in the December 31, 2015 financial statements. Please see the table in Note 2 for a roll forward of the deferred acquisition cost. The final earnout payment was made during the first quarter of 2017. The intangible assets are being amortized over a period ranging from two to ten years. The goodwill recognized as part of the acquisition will be deductible for tax purposes. The transaction also provides for additional employee compensation for years 2017 through 2019, based on certain revenue performance. The total additional employee compensation, if any, cannot exceed $3,000,000. The results of the acquired business operations are included in the Company’s Consolidated Statements of Operations from the date of acquisition, and are not material to the Company’s financial position or results of operations. ARI Acquisition On October 10, 2017, the Company completed the Acquisition of ARI. At closing, the Company paid net cash consideration of approximately $209 million, which included preliminary post-closing adjustments relating to: (i) changes in the net working capital of ARI as of the closing relative to a net working capital target, (ii) the actual amount of specified types of R-22 refrigerant inventory on hand at closing relative to a target amount thereof, and (iii) other consideration pursuant to the Stock Purchase Agreement. Due to the timing of the ARI acquisition, which closed during the fourth quarter of 2017, our estimates of fair values of the assets that we acquired and the liabilities that we assumed are based on information that was available as of the acquisition date of ARI and are preliminary. We are continuing to evaluate the underlying inputs and assumptions used in our valuations, particularly with respect to certain aspects of the acquired inventory and property and equipment. In addition, in accordance with the stock purchase agreement the purchase price remains subject to further working capital adjustment. Accordingly, these preliminary estimates are subject to change during the measurement period, which is the period subsequent to the acquisition date during which the acquiror may adjust the provisional amounts recognized for a business combination, not to exceed one year form the acquisition date. The following table summarizes the fair values of the assets acquired and liabilities assumed from the ARI acquisition:
|  | Amortization life (in months) |  | Fair value (in thousands) |
Accounts receivable |  |  |  |  |  | $ | 14,668 |
Other assets |  |  |  |  |  |  | 734 |
Inventories |  |  |  |  |  |  | 103,876 |
Property and equipment |  |  |  |  |  |  | 24,179 |
Customer relationships |  |  |  | 144 |  |  | 29,660 |
Above-market leases |  |  |  | 153 |  |  | 567 |
Goodwill |  |  |  |  |  |  | 48,609 |
Total assets acquired |  |  |  |  |  | $ | 222,293 |
Accounts payable and accrued expenses |  |  |  |  |  | $ | 3,210 |
Other current liabilities |  |  |  |  |  |  | 10,114 |
Total liabilities assumed |  |  |  |  |  | $ | 13,324 |
Total purchase price |  |  |  |  |  | $ | 208,969 |
The fair values of the acquired intangibles were determined using discounted cash flow models using a discount factor based on an estimated risk-adjusted weighted average cost of capital. The customer relationships were valued using the multi-period excess-earnings method, a form of the income approach. The above-market leases were valued using the differential cash flow method of the income approach. The acquisition resulted in the recognition of $48.6 million of goodwill, which will be deductible for tax purposes. Goodwill largely consists of expected growth in revenue from new customer acquisitions over time. The cash consideration paid by the Company at closing was financed with available cash balances, plus $80 million of borrowings under the PNC Facility and a new term loan of $105 million from the Term Loan Facility. The following table provides unaudited pro forma total revenues and results of operations for the 12 months ended December 31, 2017 and 2016 as if ARI had been acquired on January 1, 2016. The unaudited pro forma results reflect certain adjustments related to the acquisitions, such as a step-up in basis in inventory, amortization expense on intangible assets arising from the acquisition, and interest on the acquisition financing. The pro forma results do not include any anticipated cost synergies or other effects of any planned integration. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisitions been completed at the beginning of 2016, nor are they indicative of the future operating results of the combined companies.
|  | 12 Months Ended December 31, |
(unaudited, in thousands, except per share amounts) |  | 2017 |  | 2016 |
Revenues |  | $ | 255,701 |  | $ | 239,626 |
Net income |  | $ | 23,405 |  | $ | 17,109 |
Net income per share: |  |  |  |  |  |  |
Basic |  | $ | 0.56 |  | $ | 0.50 |
Diluted |  | $ | 0.55 |  | $ | 0.48 |
The unaudited pro forma earnings for the 12 months ended December 31, 2017 were also adjusted to exclude $6.3 million of acquisition-related expenses incurred in 2017. Also included in the operating results for the year ended December 31, 2017 are $14.8 million of revenue from ARI and $1.5 million in pretax losses since the acquisition date, which includes the amortization of newly acquired intangible assets and amortization of step-up in the basis of inventories.

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://www.xbrl.org/2003/role/presentationRef -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_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration