Business Acquisition

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Business Acquisition

Business Acquisition

On August 5, 2015, the Company completed its acquisition of all the issued and outstanding memberships interest of T.A.S. Commercial Concrete Construction, LLC, T.A.S. Commercial Concrete Solutions, LLC, directly and indirectly all of the issued and outstanding membership interests of T.A.S. Proco, LLC, and 49% of the issued and outstanding membership interests of GLM Concrete Solutions, LLC, collectively known as "TAS" hereafter, which is headquartered in Houston, Texas for approximately $112 million in cash. The purpose of the acquisition was primarily to achieve growth by expanding its current service offerings in addition to expansion into new markets. The tangible assets acquired include accounts receivable, prepaid assets, work in progress and fixed assets.

The allocation of the estimated acquisition consideration is preliminary because initial accounting for this business combination is incomplete. The preliminary allocation is based on estimates, assumptions, valuations, and other studies which have not progressed to a stage where there is sufficient information to make a definitive allocation. Accordingly, the acquisition consideration allocation unaudited purchase accounting adjustments will remain preliminary until the Company determines the final acquisition consideration allocation. The final amounts allocated to assets acquired and liabilities assumed could differ significantly from the amounts presented in the combined consolidated financial statements, specifically related to fixed assets.

Under the acquisition method of accounting, the total acquisition consideration is allocated to the acquired tangible and intangible assets and assumed liabilities of TAS based on their estimated fair values as of the closing of the acquisition. The table below outlines the total actual acquisition consideration allocated to the preliminary estimated fair values of TAS’s tangible and intangible assets and liabilities as of August 5, 2015:

Accounts receivable	$	54,344
Costs and estimated earnings in excess of billings on uncompleted contracts	4,372
Prepaid expenses and other current assets	828
Fixed assets, net	14,000
Investment in GLM Concrete Services, LLC	76
Goodwill	36,720
Other intangible assets	33,110
Accounts payable	(18,458		)
Accrued expenses and other current liabilities	(13,015		)
Total Acquisition Consideration	$	111,977

The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. The goodwill of $36.7 million arising from the acquisition consists primarily of synergies and business opportunities expected to be realized from the purchase of the Company. Goodwill for tax purposes is $36.7 million, which is amortizable over a 15 year period.

Finite-lived intangible assets include customer relationships and contractual backlog. Indefinite-lived intangible assets include the trade name. (See Note 9)

The fixed assets acquired include construction equipment, office equipment, building improvements, and automobiles and trucks and will be depreciated in accordance with Company policy, generally 3 to 15 years.

The external costs associated with the transaction were approximately $400,000 and were included in selling, general and administrative expenses.

The results and operations of TAS have been included in the Consolidated Statements of Operations since the acquisition date of August 5, 2015. Pro forma results are included below.

Unaudited Pro Forma Combined Condensed Consolidated Statements of Operations

For the Nine Month Period Ended September 30, 2015

(in thousands except per share information)

	Orion Marine						Combined			Pro Forma		Combined
	Group			TAS			Historical			Adjustments		Pro Forma
Contract revenues	$	257,614		$	183,032		$	440,646		$	—	$	440,646
Cost of contract revenues	241,653			152,867			394,520			—		394,520
Gross profit	15,961			30,165			46,126			—		46,126
Selling, general and administrative expenses	27,550			16,772			44,322			—		44,322
Operating (loss) income	(11,589		)	13,393			1,804			—		1,804
Other income/(expense)
(Loss) gain on sale of assets	(2,062		)	547			(1,515		)	—		(1,515		)
Other income	1,253			727			1,980			—		1,980
Interest expense	(1,433		)	(459		)	(1,892		)	—		(1,892		)
Interest income	30			—			30					30
Other (expense) income, net	(2,212		)	815			(1,397		)	—		(1,397		)
(Loss) income before income taxes	(13,801		)	14,208			407			—		407
Income tax benefit	(2,945		)	—			(2,945		)	—		(2,945		)
Net (loss) income attributable to common stockholders	$	(10,856	)	$	14,208		$	(2,538	)	$	—	$	(2,538	)
(Loss) earnings per common share:
Basic per share	$	(0.40	)	$	—		$	(0.09	)	$	—	$	(0.09	)
Diluted per share	$	(0.40	)	$	—		$	(0.09	)	$	—	$	(0.09	)
Shares used in the calculation of (loss) earnings per common share
Basic	27,397,342			—			27,397,342			—		27,397,342
Diluted	27,397,342			—			27,600,056			—		27,600,056

Unaudited Pro Forma Combined Condensed Consolidated Statements of Operations

For the Nine Month Period Ended September 30, 2014

(in thousands except per share information)

	Orion Marine						Combined			Pro Forma		Combined
	Group			TAS			Historical			Adjustments		Pro Forma
Contract revenues	$	278,485		$	170,542		$	449,027		$	—	$	449,027
Cost of contract revenues	252,060			144,249			396,309			—		396,309
Gross profit	26,425			26,293			52,718			—		52,718
Selling, general and administrative expenses	23,953			12,309			36,262			—		36,262
Operating income	2,472			13,984			16,456			—		16,456
Other income/(expense)
Gain on sale of assets	165			29			194			—		194
Other income	467			737			1,204			—		1,204
Interest expense	(523		)	(253		)	(776		)	—		(776		)
Interest income	12			276			288					288
Other income, net	121			789			910			—		910
Income before income taxes	2,593			14,773			17,366			—		17,366
Income tax expense	1,006			—			1,006			—		1,006
Net income attributable to common stockholders	$	1,587		$	14,773		$	16,360		$	—	$	16,360
Earnings per common share:
Basic per share	$	0.06		$	—		$	0.60		$	—	$	0.60
Diluted per share	$	0.06		$	—		$	0.59		$	—	$	0.59
Shares used in the calculation of earnings per common share
Basic	27,430,162			—			27,430,162			—		27,430,162
Diluted	27,809,208			—			27,809,208			—		27,809,208