Business Acquisition

12 Months Ended

Dec. 31, 2017

Business Combinations [Abstract]

Business Acquisition

Business Acquisitions

TBC Acquisition

On April 9, 2017, T.A.S. Commercial Concrete Construction, LLC, a wholly owned subsidiary of Orion Group Holdings, Inc. ("the Company") entered into a Stock Purchase Agreement ("the Agreement") for the purchase of all the issued and outstanding shares (the "shares") of Tony Bagliore Concrete, Inc. ("TBC"), a Texas corporation. The Company and the two sole shareholders of TBC closed the purchase transactions on April 10, 2017 (the "Closing Date"). Upon the terms of and subject to the conditions set forth in the Agreement, the total aggregate consideration paid on the Closing Date by the Company to the Sellers for the shares was $6.0 million in cash. In addition however, if certain target considerations are met in future periods, an additional cash payment of up to $2.0 million will become payable to the Seller.

The purpose of the acquisition was primarily to achieve growth by expanding the Company's current service offerings in addition to expansion into new markets. The tangible assets acquired include accounts receivable, retainage 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 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 and are subject to change and may result in an increase or decrease in goodwill, particularly with any other working capital adjustments during the measurement period. This measurement period may extend up to one year from the acquisition date.

Under the acquisition method of accounting, the total acquisition consideration is allocated to the acquired tangible and intangible assets and assumed liabilities of TBC based on their estimated fair values as of the closing of the acquisition. The table below outlines the total actual acquisition consideration allocated based on the preliminary fair values of TBC’s tangible and intangible assets and liabilities as of April 9, 2017:

Accounts receivable	$	3,239
Retainage	1,860
Fixed assets, net	2,098
Other	9
Goodwill	2,562
Other intangible assets	878
Accounts payable	(2,017		)
Accrued expenses and other current liabilities	(1,080		)
Contingent consideration	(456		)
Deferred tax liability	(1,093		)
Total Acquisition Consideration at April 9, 2017	$	6,000
Working capital adjustment (all attributable to Goodwill)	557
Total Acquisition Consideration	$	6,557

The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed was allocated to goodwill. The goodwill of $3.1 million arising from the acquisition consists primarily of synergies and business opportunities expected to be realized from the purchase of TBC. The goodwill is not deductible for income tax purposes.

Finite-lived intangible assets acquired include customer relationships and contractual backlog. (See Note 9).

The fixed assets acquired include construction equipment as well as automobiles and trucks and will be depreciated in accordance with Company policy, generally three to 15 years.

As stated in the Agreement, the Company has agreed to pay the sellers up to $2.0 million in cash, if earned, as additional purchase consideration. The seller's right to receive the contingent consideration, if any, shall be based on the Company's achievement of certain future financial targets. The Company measured the fair value of the contingent consideration at the Acquisition Date, and determined that fair value to be approximately $0.5 million, as shown in the table above. This amount of contingent liability is classified on the Consolidated Balance Sheets as other long-term liabilities.

Pro Forma Results (unaudited)

The results and operations of TBC have been included in the Consolidated Statements of Operations since the acquisition date of April 9, 2017. The Company has calculated the pro forma impact of the acquisition of TBC in our operating results for the twelve months ended December 31, 2016.

	Pro Forma Results
	For the Year Ended
	December 31, 2016
Contract revenues	$	610,695
Operating income from continuing operations	$	5,593
Net loss	$	(2,677	)
Basic loss per share	$	(0.10	)
Diluted loss per share	$	(0.10	)

The Company derived the pro forma results of the acquisition based upon historical financial information obtained from the seller and certain management assumptions. The pro forma adjustments related to incremental amortization expense associated with the acquired finite-lived intangible assets and interest expense associated with borrowings to effect the transaction, assuming a January 1, 2016 effective transaction date. In addition, the tax impact of these adjustments was calculated at a 35% statutory rate.

These pro forma results are not indicative of the results that would have been obtained had the acquisition of TBC been completed on January 1 of the respective period, or that may be obtained in the future.

TAS Acquisition

On August 5, 2015, the Company completed its acquisition of all the issued and outstanding membership interests 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 the Company's 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 excess acquisition consideration over the fair value of assets acquired and liabilities assumed was allocated to goodwill. The goodwill of $32.6 million, which included $0.4 million recorded in June 2016 for certain adjustments to post-closing items, arising from the acquisition consists primarily of synergies and business opportunities expected to be realized from the purchase of TAS. Goodwill for tax purposes is $32.6 million, which is amortizable over a 15-year period.

Pro Forma Results (unaudited)

The Company has calculated the pro forma impact of the acquisition of TAS in our operating results for the twelve months ended December 31, 2015. The following pro forma results give effect to this acquisition, assuming the transaction occurred on January 1 of the respective period.

	Pro Forma Results
	For the Year Ended
	December 31, 2015
Contract Revenues	$	602,537
Operating income from continuing operations	$	1,541
Net Income	$	1,311
Basic earnings per share	$	0.05
Diluted earnings per share	$	0.05

The Company derived the pro forma results of the acquisition based upon historical financial information obtained from the sellers and certain management assumptions. The pro forma adjustments related to incremental amortization expense associated with the acquired finite-lived intangible assets and interest expense associated with borrowings to effect the transaction, assuming a January 1, 2015 effective transaction date. In addition, the tax impact of these adjustments was calculated at a 35% statutory rate.

These pro forma results are not indicative of the results that would have been obtained had the acquisition of TAS been completed on January 1 of the respective period, or that may be obtained in the future.