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Note 2 - Business Combinations | 6 Months Ended
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Sep. 30, 2025
Notes to Financial Statements |
Business Combination [Text Block] | NOTE 2 — BUSINESS COMBINATIONS On August 29, 2025, (the “Acquisition Date”), the Company acquired certain assets and liabilities of Century Metals & Supplies Inc. (“Century”) based in Miami, Florida. The Company acquired the working capital, buildings, processing and other equipment, and the related real estate of Century (the “Transaction”). In addition to the owned facilities in Miami, the Transaction also includes leased distribution and warehouse facilities in Orlando, Florida and Tampa, Florida. The operations will continue as Century Metals and Supplies LLC, a wholly owned subsidiary of the Company. Century is a metals processing company with cut-to-length and coil slitting capabilities which will operate as part of the Company's flat-roll business segment. As a result of the Transaction, the Company expanded its presence in the southeastern U.S. and Latin American markets and broadened the Company's product offerings to include cold-rolled, coated, and stainless steels, as well as non-ferrous materials such as aluminum, copper, and brass. The Transaction resulted in the Company acquiring all the ownership interests in the assets noted above, for a total consideration of approximately $52.7 million, subject to final net working capital adjustments. The total consideration consists of (i) approximately $45.6 million of cash at close, (ii) a five-year seller's note with a fair value of approximately $3.5 million and (iii) contingent consideration possible through earn-out provisions with a fair value of approximately $3.6 million. The contingent consideration allows for up to $10 million in additional consideration over a four-year period based on certain performance metrics and is not contingent on the sellers employment with Century at the time of the payout and, as such, the fair value of such contingent consideration was recognized as consideration transferred. The seller’s note was fair valued using a discounted cash flow analysis of the expected future payments, for which the significant inputs included the rate of return based on a reference rate plus a spread and the expected cash flows associated with the seller’s note over the remaining time to maturity. The contingent consideration was fair valued using a Monte Carlo simulation of the potential cash payments to the sellers utilizing an estimate of the average future EBITDA, which was discounted to present value. The significant inputs to the Monte Carlo simulation included projected future EBITDA, a discount rate, EBITDA targets, maximum payout and EBITDA volatility. Such contingent consideration is required to be measured at fair value at inception and at each reporting period, however management determined that there was no change in the fair value of the contingent consideration as of September 30, 2025. As of September 30, 2025, the value of the contingent consideration was $3.5 million and is included within contingent consideration liability on the consolidated balance sheet. The Transaction was accounted for using the acquisition method of accounting, in accordance with Topic 805, Business Combinations, whereby the consideration transferred and the acquired identifiable assets and liabilities assumed are recorded at their respective fair values. The excess of the consideration transferred over the fair values of these identifiable net assets is recorded as goodwill. The Transaction resulted in no residual goodwill. The estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the Acquisition Date to estimate the fair value of assets acquired and liabilities assumed. Therefore, the provisional measurements of fair value reflected are subject to change and such changes could be significant. The Company expects to finalize its fair value estimates as soon as practicable but no later than one year from the Acquisition Date.
Fair value of assets acquired and liabilities assumed (in thousands) |  |  |  |
Accounts receivable |  | $ | 12,672 |
Inventory |  |  | 34,623 |
Property, plant and equipment |  |  | 14,428 |
Operating lease right-of-use asset |  |  | 2,422 |
Other assets |  |  | 26 |
Accounts payable |  |  | (9,083 | )
Operating lease liability |  |  | (2,422 | )
Total |  | $ | 52,666 |
The following unaudited pro forma consolidated operating results give effect to the Transaction as if it had been completed as of July 1, 2025 (in thousands). These pro forma amounts are not necessarily indicative of the operating results that would have occurred if the Transaction had occurred on such date. The pro forma adjustments are based on certain assumptions that we believe are reasonable.
|  | Three Months Ended September 30, |  |  | Six Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Net sales |  | $ | 173,477 |  |  | $ | 130,910 |  |  | $ | 333,247 |  |  |  | 270,783 |
Earnings from operations |  | $ | 3,847 |  |  | $ | 900 |  |  | $ | 11,834 |  |  |  | 807 |
The Company recorded acquisition specific costs of approximately $0.9 million and $1.1 million in the three and six month periods ended September 30, 2025 as a component of "Selling, general and administrative" expenses on the Condensed Consolidated Statement of Operation.

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