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Acquisitions | 3 Months Ended
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Dec. 31, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Acquisitions | Acquisitions Acquisition of Midwest Grinding On June 10, 2024, pursuant to an asset purchase agreement, Kinetic acquired certain assets and assumed certain liabilities of Midwest Grinding Corp., a Milwaukee grinding house dedicated to precision Blanchard and specialty surface grinding of small to extra-large capacity. Total consideration for the acquisition was $0.6 million. In connection with the acquisition, Kinetic also acquired the building being used in the business for $0.4 million. Total consideration for both the business and building acquisition was $1.0 million, paid in cash at close. The fair value of the assets acquired and liabilities assumed are based on their estimates of fair value available as of June 10, 2024, as calculated by management. The table below outlines the purchase price allocation of the purchase for Midwest Grinding to the acquired identifiable assets and liabilities assumed as of December 31, 2024 (in $000’s):
Total purchase price |  |  | $ | 1,000 |
Accounts payable |  |  | 1 |
Total consideration |  |  | 1,001 |
Accounts receivable |  |  | 152 |
Other current assets |  |  | 71 |
Property and equipment |  |  | 738 |
Intangible Assets |  |  |
Customer relationships |  | $ | 16 |  |
Trade names |  | 15 |  |
Non-compete agreement |  | 9 |  |
Intangible assets |  |  | 40 |
Total assets acquired |  |  | 1,001 |
Total goodwill |  |  | $ | — |
Acquisition of Central Steel On May 15, 2024, Precision Marshall acquired Central Steel. Total consideration for the acquisition was approximately $13.9 million, comprised of $10.7 million paid at closing, a seller note of $1.1 million, a holdback, in the amount of $0.3 million, and contingent consideration of $2.0 million paid in the form of a five-year earn-out. The consideration paid at close was funded in part by borrowings under Precision Marshall's credit facility of approximately $3.3 million, and proceeds from a sale and leaseback transaction, discussed below. The acquisition involved no issuance of stock of the Company. Simultaneous to the acquisition, the Company entered into a sale and leaseback transaction with Legacy West Partners, LLC, an unrelated party, for one of Central Steel's properties located in Broadview, Illinois. The sales price for the real property subject to the sale and leaseback transaction was approximately $8.3 million, with total proceeds received by the Company of approximately $7.9 million, net of approximately $0.4 million in seller's fees. The lease agreement includes a 20-year lease term with two five-year renewal options. The base rent under the lease agreement is $58,795 per month for the first year of the term and a 2.0% per annum escalator thereafter. The lease agreement is a “net lease,” such that Central Steel is also obligated to pay all taxes, insurance, assessments, and other costs, expenses, and obligations of ownership of the real property incurred by Central Steel. Due to the highly specialized nature of the leased property, the Company currently believes it is more likely than not that each of the two five-year options will be exercised. Consequently, because the aggregate term of the lease at its conclusion will represent approximately 75% of the economic life of the building, the Company concluded that the lease is a financing transaction and a failed sale and leaseback transaction, as defined under ASC 842. The proceeds, net of closing fees, from the failed sale and leaseback transaction were used to assist in funding the acquisition of Central Steel. No gain was recognized as a result of the sale. The fair value of the purchase price components was approximately $13.9 million, as detailed below (in $000's):
Purchase price |  | $ | 11,758 |
Fair value of contingent consideration |  | 2,000 |
Holdback |  | 122 |
Net purchase price |  | $ | 13,880 |
Under the preliminary purchase price allocation, the Company recognized goodwill of approximately $2.9 million, which is calculated as the excess of both the consideration exchanged and liabilities assumed over the fair value of the identifiable assets acquired. The Company anticipates all of the goodwill arising from the acquisition to be fully deductible for tax purposes. The table below outlines the purchase price allocation for the purchase of Central Steel to the acquired identifiable assets, liabilities assumed, and goodwill as of December 31, 2024 (in $000’s):
Total purchase price |  |  | $ | 13,880 |
Accounts payable |  |  | 464 |
Accrued liabilities |  |  | 969 |
Total liabilities assumed |  |  | 1,433 |
Total purchase price plus liabilities assumed |  |  | 15,313 |
Cash |  |  | 184 |
Accounts receivable |  |  | 2,418 |
Inventory |  |  | 2,171 |
Property and equipment |  |  | 5,034 |
Intangible assets |  |  |
Trade names |  | 400 |  |
Customer relationships |  | 900 |  |
Non-compete |  | 825 |  |
Subtotal intangible assets |  |  | 2,125 |
Other assets |  |  | 475 |
Total assets acquired |  |  | 12,407 |
Total goodwill |  |  | $ | 2,906 |
Acquisition of Johnson On November 30, 2023, CRO Affiliated, LLC ("CRO Affiliated"), a subsidiary of Live Ventures, acquired certain assets and assumed certain liabilities of Johnson Floor & Home (“Johnson”), a floor covering retailer and installer serving residential and commercial customers through four locations in the Tulsa, Oklahoma area, and one in Joplin, Missouri. Total consideration for the acquisition was $2.0 million, comprised of cash at close of $0.5 million, deferred consideration in the form of a seller note of $1.2 million, with additional consideration paid in the form of an earnout valued at approximately $0.3 million. The deferred consideration is payable in three $0.4 million installments due annually on the first three anniversary dates following the closing date. Each installment will accrue interest at 6.0% per annum until paid. The fair value of the purchase price components outlined above was approximately $2.0 million, as detailed below (in $000's):
Cash |  | $ | 500 |
Deferred consideration |  | 1,200 |
Earnout |  | 301 |
Purchase price |  | $ | 2,001 |
The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of November 30, 2023, as calculated by management. The table below outlines the purchase price allocation of the purchase for Johnson to the acquired identifiable assets and liabilities assumed as of December 31, 2024:
Total purchase price |  |  | $ | 2,001 |
Accounts payable |  |  | 1,017 |
Accrued liabilities |  |  | 1,141 |
Total liabilities assumed |  |  | 2,158 |
Total consideration |  |  | 4,159 |
Accounts receivable |  |  | 1,252 |
Inventory |  |  | 1,127 |
Property, plant and equipment |  |  | 157 |
Intangible assets |  |  |
Customer relationships |  | $ | 1,301 |  |
Non-compete agreement |  | 306 |  |
Subtotal intangible assets |  |  | 1,607 |
Other assets |  |  | 16 |
Total assets acquired |  |  | 4,159 |
Total goodwill |  |  | $ | — |
On May 24, 2024, CRO Affiliated entered into an asset purchase agreement with the original seller of Johnson under which the original seller agreed to purchase certain assets and assume certain obligations acquired by CRO Affiliated under the original asset purchase agreement. Consequently, CRO Affiliated recorded a loss on disposition of Johnson’s assets and liabilities of approximately $0.3 million, as detailed in the table below (in $000's):
Accounts payable and accrued liabilities |  |  | $ | 475 |
Earnout |  |  | 307 |
Seller note |  |  | 1,230 |
Lease liabilities |  |  | 2,703 |
Total deconsolidation of liabilities |  |  | 4,715 |
Inventory |  |  | 613 |
Property and equipment |  |  | 206 |
ROU assets |  |  | 2,692 |
Intangible assets |  |  |
Customer relationships |  | 1,224 |  |
Non-compete agreement |  | 281 |  |
Subtotal intangible assets |  |  | 1,505 |
Total deconsolidation of assets |  |  | 5,016 |
Total loss on disposition |  |  | $ | (301) |
Acquisition of CRO On October 13, 2023, CRO Affiliated acquired certain assets and assumed certain liabilities of Carpet Remnant Outlet, Inc. (“CRO”), a floor covering retailer and installer serving residential and commercial customers throughout Northwest Arkansas. Total consideration for the acquisition was approximately $1.4 million and was comprised of cash at close of approximately $1.0 million, an indemnification holdback amount of $0.3 million, and additional consideration valued at $89,000. The fair value of the purchase price components was $1.4 million, as detailed below (in $000's):
Cash |  | $ | 1,034 |
Additional consideration |  | 89 |
Holdback |  | 300 |
Purchase price |  | $ | 1,423 |
Under the preliminary purchase price allocation, the Company recognized goodwill of $89,000, which is calculated as the excess of both the consideration exchanged and liabilities assumed as compared to the fair value of the identifiable assets acquired. The values assigned to the assets acquired and liabilities assumed are based on their estimates of fair value available as of October 13, 2023, as calculated by an independent third-party firm. The value of the additional consideration was calculated by management. The Company anticipates the $89,000 of goodwill arising from the acquisition to be fully deductible for tax purposes. The table below outlines the purchase price allocation of the purchase for CRO to the acquired identifiable assets, liabilities assumed and goodwill (in $000’s):
Total purchase price |  |  | $ | 1,423 |
Accounts payable |  |  | 770 |
Accrued liabilities |  |  | 1,298 |
Total liabilities assumed |  |  | 2,068 |
Total consideration |  |  | 3,491 |
Accounts receivable |  |  | 259 |
Inventory |  |  | 1,406 |
Property and equipment |  |  | 261 |
Intangible assets |  |  |
Non-compete agreement |  | 1,190 |  |
Subtotal intangible assets |  |  | 1,190 |
Other assets |  |  | 286 |
Total assets acquired |  |  | 3,402 |
Total goodwill |  |  | $ | 89 |

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- 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/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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