Business Acquisitions |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Acquisitions | Business Acquisitions and Disposition Tennessee Acquisition - Provisional
On November 18, 2022, the Company acquired three HMA manufacturing plants and certain related assets located in the Nashville, Tennessee metro area for $8.4 million. In connection with this transaction, the Company disposed of a quarry located near Goldston, North Carolina, resulting in total cash proceeds of $36.4 million and a gain on the facility exchange of $5.4 million.
North Carolina Acquisition - Provisional
On December 1, 2022, the Company acquired all of the capital stock of Ferebee Corporation, an HMA manufacturing and paving company headquartered in Charlotte, North Carolina for $68.8 million. The transaction established the Company’s second platform company in North Carolina and added three HMA plants in the greater Charlotte/Rock Hill metro area.
Combined Acquisitions During the Three Months Ended December 31, 2022
The foregoing acquisitions were accounted for as business combinations in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“Topic 805”). As of December 31, 2022, the purchase price allocation has not yet been finalized due to the recent timing of these acquisitions, as certain information was pending on such date to finalize estimates of fair value of certain assets acquired and liabilities assumed. The Company consulted with independent third parties to assist in the valuation process. The Company expects to finalize these values as soon as practicable and no later than one year from their respective acquisition dates.
Identifiable assets acquired and liabilities assumed were recorded at their estimated fair values based on the methodology described
under Fair Value Measurements in Note 2 - Significant Accounting Policies. The amount of the purchase price exceeding the net fair
value of identifiable assets acquired and liabilities assumed was recorded as provisional goodwill in the amount of approximately
$32.3 million, which is deductible for income tax purposes. Goodwill primarily represents the assembled work force and
synergies expected to result from the acquisitions. Upon finalizing the accounting for these transactions, management
expects to ascribe value to other identifiable intangible assets, including customer relationships and customer backlog, which will
reduce the provisional amount allocated to goodwill.
Total consideration transferred for these acquisitions was $77.2 million, which was paid from available cash, proceeds from the exchange of the North Carolina facility and a draw from the Revolving Credit Facility (as defined in Note 8). The total consideration has been provisionally allocated as follows: $9.0 million of net working capital, $35.9 million of property, plant and equipment and $32.3 million of goodwill.
The Consolidated Statements of Comprehensive Income include $4.2 million of revenue and $0.2 million of net loss attributable to the operations of these acquisitions for the three months ended December 31, 2022 from their respective acquisition dates. The Company recorded certain costs to effect the acquisitions as they were incurred, which are reflected in general and administrative expenses on the Company’s Consolidated Statements of Comprehensive Income in the amount of $0.2 million for the three months ended December 31, 2022.
The following table presents pro forma revenues and net income as though the acquisitions had occurred on October 1, 2021 (unaudited, in thousands):
Pro forma financial information is presented as if the operations of the acquisitions had been included in the consolidated results of the Company since October 1, 2021, and gives effect to transactions that are directly attributable to the acquisitions, including adjustments to:
(a)include the pro forma results of operations of the acquisitions for the three months ended December 31, 2022 and 2021;
(b)include additional depreciation and depletion expense related to the fair value of acquired property, plant and equipment and reserves at aggregates facilities, as applicable, as if such assets were acquired on October 1, 2021 and consistently applied to the Company’s depreciation and depletion methodologies;
(c)include interest expense under the Term Loan as if the funds borrowed to finance the purchase prices were borrowed on October 1, 2021 (interest expense calculations further assume that no principal payments were made during the period from October 1, 2021 through December 31, 2022, and that the interest rate in effect on the date the Company made the acquisitions was in effect for the period from October 1, 2021 through December 31, 2022); and
(d)exclude $0.2 million of acquisition-related expenses from the three months ended December 31, 2022, as though such expenses were incurred prior to the pro forma acquisition date of October 1, 2021.
Pro forma information is presented for informational purposes and may not be indicative of revenue or net income that would have been achieved if these acquisitions had occurred on October 1, 2022.
Provisional Accounting
In March 2022, the Company acquired an HMA paving company headquartered in Burgaw, North Carolina. In August 2022, the Company acquired an HMA paving, grading and sitework company headquartered in Conway, South Carolina. As of December 31, 2022, there had been no material adjustments to the September 30, 2022 provisional accounting for either acquisition as reported in the 2022 Form 10-K.
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