Acquisitions |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisitions | 2. Acquisitions Harper Engineering Company On January 21, 2026, the Company acquired Harper Engineering Company (Harper Engineering) for $249.8 million in cash. The Company recorded an additional $15.3 million in purchase consideration that may be paid to the sellers if Harper Engineering achieves certain financial targets for the years 2026 to 2031. The maximum payout to the seller related to achieving these financial targets is $55.0 million. During the three months ended June 30, 2026, based on management's revaluation of the estimated contingent consideration liability the Company recorded an increase in contingent consideration totaling $1.3 million. This amount was recorded as other expense on the condensed consolidated statements of income. The additional purchase consideration totaling $16.6 million is recorded in other long-term liabilities on the accompanying condensed consolidated balance sheets. Founded in 1968, Harper Engineering is a leading manufacturer of mechanically engineered devices for aircraft interiors and holds a proprietary portfolio of latching and securing mechanisms used across multiple leading commercial aerospace platforms. The total purchase price was allocated to the underlying assets acquired and liabilities assumed based upon the estimated fair values at the date of acquisition in accordance with Accounting Standards Codification (ASC) 805, Business Combinations. The following table summarizes the preliminary purchase price allocation of the estimated fair values of the assets acquired and the liabilities assumed at the transaction date (in thousands):
Inventory, which is included in current assets in the table above, was recorded at its estimated fair value, which represented an amount equivalent to estimated selling price less fulfillment costs and a normative selling profit. The increase in fair value of inventory from the acquisition was approximately $0.4 million, which was recognized in cost of goods sold during the six months ended June 30, 2026. Goodwill is primarily attributable to the assembled workforce and expected synergies with other existing companies, combined with the industry operating expertise of management. These are among the factors that contributed to a purchase price that resulted in the recognition of goodwill. Goodwill is deductible for tax purposes. LMB Fans & Motors On December 23, 2025, the Company acquired 100% of the issued and outstanding equity interests and paid the outstanding debt of LMB Fans & Motors (LMB) for $474.8 million in cash and $0.9 million of deferred purchase obligation. Founded over 60 years ago, LMB is a global specialty player in the design and production of tailor-made high-performance fans and motors. Leveraging its many decades of expertise and proprietary designs, LMB provides the market with 2,000+ unique fans, blowers, motors and specialized rotating machines. The total purchase price was allocated to the underlying assets acquired and liabilities assumed based upon the estimated fair values at the date of acquisition in accordance with Accounting Standards Codification (ASC) 805, Business Combinations. The following table summarizes the preliminary purchase price allocation of the estimated fair values of the assets acquired and the liabilities assumed at the transaction date (in thousands):
The initial accounting has been adjusted, including the measurement of the acquired tangible and intangible assets and liabilities, as well as the associated income tax considerations. The adjustments include a decrease to goodwill of $19.7 million, an increase to intangible assets of $18.7 million, an increase to deferred income taxes of $6.7 million, an increase to property, plant and equipment of $3.3 million, a decrease of $3.3 million in current liabilities, and an increase of $1.2 million in current assets. Any further adjustments during the one-year measurement period from the acquisition date are not expected to be material to the consolidated financial statements.
Inventory, which is included in current assets in the table above, was recorded at its estimated fair value, which represented an amount equivalent to estimated selling price less fulfillment costs and a normative selling profit. The increase in fair value of inventory from the acquisition was approximately $4.5 million, which was recognized in cost of goods sold during the six months ended June 30, 2026. Goodwill is primarily attributable to the assembled workforce and expected synergies with other existing companies, combined with the industry operating expertise of management. These are among the factors that contributed to a purchase price that resulted in the recognition of goodwill. Goodwill is not deductible for tax purposes. The results of operations of LMB are included in the Company’s consolidated financial statements for the period subsequent to the Pro forma financial information (Unaudited) The pro forma information below gives effect to the LMB acquisition as if it had been completed on January 1, 2024, and the Harper Engineering acquisition as if it had been completed on January 1, 2025. Had the acquisitions of LMB and Harper Engineering occurred on those dates, net sales on a pro forma basis for the three and six months ended June 30, 2025 would have been $145.3 million and $286.2 million, respectively. Additionally, income before income taxes on a pro forma basis would have been $8.6 million and $18.4 million, for the three and six months ended June 30, 2025, respectively. Pro forma net sales and pretax income for the six months ended June 30, 2026 are not materially different from actual results and accordingly, have not been provided. The underlying pro forma information for the three and six months ended June 30, 2025 includes $6.7 million and $13.4 million, respectively, of amortization of acquired intangible assets resulting from the preliminary purchase price allocation. Interest expense has been adjusted as though the debt incurred to finance the LMB acquisition had been outstanding at January 1, 2024 and the debt incurred to finance the Harper Engineering acquisition had been outstanding at January 1, 2025. The pro forma interest expense adjustments for the three and six months ended June 30, 2025 are $14.2 million, and $28.4 million, respectively. The pro forma information does not include the effects of any synergies, cost reduction initiatives or anticipated integration costs related to the acquisitions. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||