v3.26.1
Acquisition
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisition Acquisition
On August 14, 2025 (the “Closing Date”), the Company, through its indirect wholly owned subsidiary STINorland USA, Inc., a California corporation (“APA Buyer”), completed the APA Acquisition, pursuant to the terms of the equity purchase agreement, dated as of June 17, 2025, by and among the Company, APA Buyer, APA, SunHoldings, LLC, an Ohio limited liability company (“APA Seller”) and the guarantors party thereto (as
amended, the “APA Purchase Agreement”). The cash consideration paid was approximately $166.1 million. The APA Purchase Agreement also includes an earnout provision estimated to have a fair value of approximately $19.3 million as of the Closing Date (the “Earnout Consideration”), under which APA Seller may receive shares of Company common stock, or equivalent cash value at the Company’s discretion, based upon APA’s achievement of certain financial performance targets during the three-year period ending on September 30, 2028. As a result, the purchase consideration approximates $185.4 million. Subject to the terms and conditions set forth in the APA Purchase Agreement, the Company has also agreed to pay aggregate deferred purchase price consideration of approximately $40.0 million payable in three installments over a two-year period based on service within five business days after the first and second anniversaries from the Closing Date and as set forth below (the “Deferred Consideration”). Each of the Earnout Consideration and Deferred Consideration are described in more detail below. The Company is currently finalizing the valuation of the acquired assets and liabilities and assessing the related accounting impacts.

The purchase consideration to acquire APA consisted of the following:
Cash consideration paid
$166,135 
Earn-out
19,256 
Purchase consideration
$185,391 

Earnout Consideration
The APA Purchase Agreement includes an earnout provision pursuant to which APA Seller may be granted shares of the Company’s common stock, or equivalent cash value at the Company’s discretion, based upon APA’s achievement of certain financial performance targets during the three-year period ending September 30, 2028. The maximum number of shares payable as Earnout Consideration is 4,686,530 shares of common stock, which was determined by dividing $40 million by the volume weighted average price of the Company’s common stock for the 10 trading days immediately following the Closing Date. The number of shares payable will be subject to reduction if the cumulative value of the Earnout Consideration earned (measured on each date such shares are issued) exceeds $90 million. The APA Purchase Agreement provides that, to the extent the issuance of any Earnout Consideration or Deferred Consideration Shares (as defined below) would require stockholder approval under Nasdaq Listing Rule 5635(a), the Company will pay cash in lieu of issuing such shares, unless such stockholder approval has been obtained. The principal APA Seller continues to assume the managerial responsibilities of APA.

The Earnout Consideration is accounted for as contingent consideration, and the fair value is estimated each reporting period. As of the Closing Date, the Earnout Consideration was estimated to have a fair value of approximately $19.3 million using a Monte-Carlo simulation method. Changes in fair value of the contingent liability are recognized in Change in fair value of contingent consideration on the condensed consolidated statements of operations. Refer to Note 12 - Commitments and Contingencies for additional details. Estimating the amount of payments that may be made under the Earnout Consideration is by nature imprecise. The significant fair value inputs used to estimate the future expected Earnout Consideration payments to APA Seller include a discount rate, earnings forecasts, and actual and estimated future volatility in the Company’s stock price.

Deferred Consideration Installments
The Deferred Consideration which will be payable to APA Seller in three installments (each, a “Deferred Consideration Installment”): (i) within five business days after the first anniversary of the Closing Date, an
amount equal to 50% of the Deferred Consideration; (ii) on December 31, 2026, an amount equal to (A) 50% of the Deferred Consideration multiplied by (B) the proportion of the two-year period from the Closing Date to the second anniversary of the Closing Date that has elapsed as of December 31, 2026; and (iii) within five business days after the second anniversary of the Closing Date, an amount equal to the remaining balance of the Deferred Consideration. As more fully described in the APA Purchase Agreement, the Deferred Consideration Installments are subject to reduction if certain equity holders of APA Seller cease to be employees of the Company under certain circumstances. Each Deferred Consideration Installment will, at the Company’s election, be paid (x) in cash; (y) through the issuance of shares of Company common stock, par value $0.001 per share (the “Common Stock”), valued at the closing price on the trading day immediately preceding the applicable Deferred Consideration anniversary (if any such shares are issued, the “Deferred Consideration Shares”); or (z) by any combination of the foregoing. As the Deferred Consideration Installments are tied to future service to the Company, they are considered compensatory and not included in purchase consideration.

Purchase Price Allocation
The APA Acquisition was accounted for as a business combination applying ASC 805. The allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed was based on their estimated fair values as of the date of acquisition. Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The factors contributing to the recognition of goodwill were the expected synergies of the combined entities that are expected to be realized from the APA Acquisition. The goodwill is deductible for tax purposes.
The following table summarizes the fair values of the assets acquired and liabilities assumed, including measurement period adjustments as of June 30, 2026 (in thousands). No measurement period adjustments have been recognized since December 31, 2025.
Fair Value of Net Assets Acquired and Liabilities Assumed:
Acquisition Date Including Remeasurements
Cash and cash equivalents$1,219 
Accounts receivable
29,124 
Inventories25,136 
Prepaid expenses and other466 
Property, plant and equipment14,256 
Other intangible assets88,000 
Other assets27,244 
Total assets acquired$185,445 
Accounts payable12,540 
Deferred revenue22,329 
Other liabilities4,138 
Other long-term liabilities26,493 
Total liabilities assumed$65,500 
Fair value of net assets acquired
119,945 
Allocation to goodwill
65,446 
Purchase consideration$185,391 

The amounts recorded as of June 30, 2026 are preliminary, as the Company is finalizing working capital, post closing, and other customary adjustments. These preliminary estimates are subject to change within the measurement period (defined as the twelve months following the Closing Date) and related accounting adjustments may be materially different, as the Company obtains additional information on these matters and as additional information is made known during the post-acquisition measurement period. As a result of further refining its estimates and assumptions since the date of the acquisition, the Company has recorded measurement period adjustments to the initial opening balance sheet. There were no measurement period adjustments materially impacting earnings that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date.
The purchase price allocation includes $88.0 million of acquired identifiable intangible assets as follows:
Estimated Fair Value
(in USD)		Estimated Weighted Average Useful Life in Years
(in thousands, except useful lives)
Developed technology$22,000 5
Computer software and other
13,000 5
Customer relationships39,500 
5-9
Backlog3,500 1
Trade name10,000 10
Total$88,000 

The fair value of the identifiable intangible assets has been estimated using the Multi-Period Excess Earnings Method (Customer relationships and Backlog), Relief from Royalty Method (Trade name), and Replacement Cost Method (Developed technology and Computer software and other). The intangible assets are being amortized over their estimated useful lives on a straight-line basis that reflects the economic benefit of the asset. The determination of the useful lives is based upon various industry studies, historical acquisition experience, economic factors, and future forecasted cash flows of the Company following the APA Acquisition.

Pro Forma Financial Information (Unaudited)
The following unaudited pro forma financial information presents the combined results of operations of the Company and APA as if the acquisition had occurred on January 1, 2024, after giving effect to certain unaudited pro forma adjustments. The unaudited pro forma adjustments reflected herein include only those adjustments that are directly attributable to the APA Acquisition and factually supportable. The unaudited pro forma financial information does not reflect any adjustments for anticipated expense savings resulting from the APA Acquisition and is not necessarily indicative of the operating results that would have actually occurred had the APA Acquisition been consummated on January 1, 2024. These results are prepared in accordance with U.S. GAAP (in thousands).
Three Months Ended June 30, 2025Six Months Ended June 30, 2025
Revenue
$397,021 $725,261 
Net income
44,992 57,962 
Pro forma adjustments (1)
$(6,789)$(13,577)
(1) Pro forma adjustments represent re-casting of incremental expenses, net of estimated taxes, resulting from the APA Acquisition, including Deferred Consideration expense, intangible asset amortization, and the impacts of lease re-measurements and increases to the fair value of inventories and property, plant and equipment.