Business Combinations

9 Months Ended

Jan. 31, 2023

Business Combination and Asset Acquisition [Abstract]

The Company accounts for business combinations by recognizing the assets acquired and liabilities assumed at the acquisition date fair value. In valuing certain acquired assets and liabilities, fair value estimates use Level 3 inputs, including future expected cash flows and discount rates. Goodwill is measured as the excess of consideration transferred over the fair values of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions to value assets acquired and liabilities assumed at the acquisition date, the Company’s estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments arising from new facts and circumstances are recorded to the Consolidated Statements of Operations and Comprehensive Income. The results of operations of acquisitions are reflected in the Company’s Consolidated Financial Statements from the date of acquisition.

Westside Acquisition

During the nine months ended January 31, 2023, the Company settled its $13.5 million holdback liability related to the acquisition of Westside Building Material (“Westside”) in accordance with the terms of the purchase agreement. The holdback liability was for general representations and warranties of the sellers and was settled 15 months after the acquisition date.

Fiscal 2023 Acquisitions

On June 1, 2022, the Company acquired certain assets of Construction Supply of Southwest Florida, Inc. (“CSSWF”). CSSWF is a distributor of various stucco, building and waterproofing supplies serving markets in the southwest Florida area. The impact of this acquisition is not material to the Company’s Consolidated Financial Statements.

On December 30, 2022, the Company acquired certain assets of Tanner Bolt and Nut, Inc. ("Tanner"). Tanner is a distributor of various tools, fasteners, sealants and related construction products to the broader New York City market through its four distribution facilities. The impact of this acquisition is not material to the Company’s Consolidated Financial Statements.

The assets acquired and liabilities assumed were recognized at their acquisition date fair values. The acquisition accounting is subject to change as the Company obtains additional information during the measurement period about the facts and circumstances that existed as of the acquisition dates. The primary areas of the preliminary acquisition accounting that are not yet finalized relate to preliminary fair value estimates, working capital adjustments and residual goodwill.

The following table summarizes the preliminary acquisition accounting for the Company's fiscal 2023 acquisitions based on currently available information:


	Preliminary Acquisition Accounting
	(in thousands)
Trade accounts and notes receivable	$	5,487
Inventories	7,824
Prepaid and other current assets	1,607
Property and equipment	1,336
Customer relationships	4,800
Tradenames	1,400
Goodwill	2,094
Accounts payable and other liabilities	(4,249)
Fair value of consideration transferred	$	20,299

Goodwill recognized is attributable to expected synergies, increased market presence and the expected value to expand and enhance the Company's complementary product offerings. Goodwill is expected to be deductible for U.S. federal income tax purposes. The estimated useful life for the customer relationships is ten years and the estimated useful life for the tradenames is 15 years.

Pro Forma Financial Information

The following table presents the unaudited pro forma consolidated net sales and net income for the Company for the period indicated:


	Three Months		Nine Months
	Ended		Ended
	January 31, 2022		January 31, 2022

	(in thousands)
Net sales	$	1,160,211	$	3,429,878
Net income	62,625		205,050

On July 1, 2021, the Company acquired substantially all the assets of Westside. On December 1, 2021, the Company acquired Ames Taping Tools Holding LLC (“Ames”). The above pro forma results have been calculated by combining the historical results of the Company, Westside and Ames as if the acquisitions of Westside and Ames had occurred on May 1, 2021, the first day of the comparable prior reporting period presented. The pro forma results include estimates for intangible asset amortization, depreciation, interest expense and income taxes. The pro forma information is not necessarily indicative of the results that would have been achieved had the transactions occurred on the first day of each of the periods presented or that may be achieved in the future. See Note 2, "Business Combinations," in the Company's Annual Report on Form 10-K for the year ended April 30, 2022 for more information regarding these acquisitions.