XML 22 R10.htm IDEA: XBRL DOCUMENT
v3.23.1

Acquisitions | 12 Months Ended
--- | ---
Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | Acquisitions Acquisition of DanChem Technologies, Inc. On October 22, 2021, the Company completed the acquisition of DanChem, a contract manufacturer of chemical products located in Danville, Virginia. The Company accounted for the transaction as a business combination using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805 - "Business Combinations". The preliminary purchase price was $34.1 million including $1.5 million in cash obtained through the acquisition. The purchase price was paid in cash and funded through a drawdown of $34.5 million on the Company’s existing revolving credit facility. Amounts outstanding under the revolving line of credit portion of the facility currently bear interest, at the Company's option, at (a) the Base Rate (as defined in the Credit Agreement) plus 0.50%, or (b) LIBOR plus 1.50%. See Note 6 for more information on the Company's long-term debt. During the third quarter of 2022, subsequent to the preliminary estimates of fair value of intangible assets acquired and liabilities assumed, management revised the initial estimate of the fair value of property, plant and equipment resulting in an increase of $1.6 million. As a result of this revision within the measurement period, goodwill was decreased by $1.2 million and the Company's deferred tax balances were increased $0.4 million. In addition, the change to the provisional amount resulted in an increase in depreciation expense and accumulated depreciation of $0.2 million of which $0.1 million relates to a previous reporting period. During the fourth quarter of 2022, subsequent to the preliminary estimates of fair value of intangible assets acquired and liabilities assumed, management finalized the values of deferred tax balances upon completion of the DanChem pre-acquisition tax returns. As a result, within the measurement period, the Company's deferred tax balances were decreased by $40,475 and goodwill was decreased by $40,475. The table below summarizes the fair value of identifiable assets acquired and liabilities assumed in the Acquisition and the revisions made in 2022:
(in thousands) | October 22, 2021 | Revisions | December 31, 2022
Cash and cash equivalents | $ | 1,533 |  |  | $ | 1,533 |
Accounts receivable, net of allowance for credit losses of $118 | 5,358 |  |  | 5,358 |
Inventories, net | 1,561 |  |  | 1,561 |
Prepaid expenses and other current assets | 454 |  |  | 454 |
Property, plant and equipment, net | 15,697 |  | $ | 1,594 |  | 17,291 |
Right of use asset, operating leases, net | 208 |  |  | 208 |
Intangible assets, net | 5,750 |  |  | 5,750 |
Total identifiable assets acquired | 30,561 |  | 1,594 |  | 32,155 |
Accounts payable | 1,751 |  |  | 1,751 |
Accrued expenses and other current liabilities | 1,622 |  |  | 1,622 |
Current portion of operating lease liabilities | 51 |  |  | 51 |
Current portion of finance lease liabilities | 215 |  |  | 215 |
Deferred income taxes | 2,542 |  | 346 |  | 2,888 |
Long-term portion of operating lease liabilities | 157 |  |  | 157 |
Long-term portion of finance lease liabilities | 1,408 |  |  | 1,408 |
Total identifiable liabilities assumed | 7,746 |  | 346 |  | 8,092 |
Net identifiable assets acquired | 22,815 |  | 1,248 |  | 24,063 |
Transaction price | 34,097 |  |  | 34,097 |
Goodwill | $ | 11,282 |  | $ | (1,248) |  | $ | 10,034 |
Goodwill is calculated as the excess of the purchase price over the fair value of t he net assets acquired. The recognized goodwill is attributable to operational synergies, assembled workforce and growth opportunities and was allocated to the Company's Specialty Chemicals segment. Substantially all of the goodwill resulting from this acquisition is not expected to be deductible for tax purposes. Approximately $0.5 million and $1.0 million of one-time, acquisition-related costs, is recognized in acquisition costs and other expenses in the consolidated statements of income as of December 31, 2022 and 2021, respectively. The Company identified DanChem’s customer relationships, product development know-how, and tradename as finite-lived assets with estimated fair values as of the acquisition date of $5.1 million, $0.5 million, and $0.2 million, respectively. The finite-lived assets are subject to amortization using either an accelerated or straight-line method over 15 years. Total net sales and operating income for DanChem for the period from October 22, 2021 through December 31, 2022 were as follows:
(in thousands) | 2022 |  | Period from 10/22/2021 - 12/31/2021
Net sales | $ | 32,297 |  |  | $ | 5,692 |
Operating income | $ | 115 |  |  | $ | 621 |
Pro Forma Financial Information The following unaudited consolidated pro forma summary has been prepared by adjusting the Company's historical data to give effect to the acquisition of DanChem as if it had occurred on January 1, 2021:
(unaudited) | Year Ended December 31, 2021 |  |
(in thousands, except per share data) |  |
Net sales | $ | 358,735 |  |  |
Net income | 21,681 |  |  |
Basic net income per common share | 2.32 |  |  |
Diluted net income per common share | $ | 2.29 |  |  |
These unaudited pro forma results include adjustments, such as property, plant and equipment step-up, amortization of acquired intangible assets and interest expense on debt financing in connection with the acquisition. The unaudited consolidated pro forma financial information was prepared in accordance with GAAP and is not necessarily indicative of the results of operations that would have occurred if the acquisition had been completed on the date indicated, nor is it indicative of the future operating results of the Company. The unaudited pro forma results do not reflect events that either have occurred or may occur after the acquisition date, including, but not limited to, the anticipated realization of operating synergies in subsequent periods. These results do not give effect to certain charges that the Company expects to incur in connection with the acquisition, including, but not limited to, additional professional fees and employee integration.

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

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 https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration