Business Combinations

6 Months Ended

Oct. 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.

On May 1, 2023, the Company acquired Jawl Lumber Corporation ("Jawl"), which provides service to the Vancouver Island market in Canada under the Home Lumber and Building Supplies ("Home Lumber") brand name. Home Lumber is a leading supplier of lumber, engineered wood, doors, framing packages and siding as well as other key complementary building materials. Home Lumber operates from a single location in Victoria, Canada. The primary purpose of the transaction was to expand the geographical coverage of the Company and grow the business. The impact of this acquisition is not material to the Company’s Consolidated Financial Statements.

On October 1, 2023, the Company acquired AMW Construction Supply, LLC ("AMW"), a tools and fasteners and other complementary products distributor servicing the Phoenix, Arizona metro area. AMW operates from a single location in Phoenix, Arizona. The primary purpose of the transaction was to expand the Company's complementary product offerings and grow the business. 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 date. 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 2024 acquisitions based on currently available information:


	Preliminary Acquisition Accounting		Adjustments		Preliminary Acquisition Accounting
	(in thousands)
Cash	$	3,027	$	—	$	3,027
Trade accounts and notes receivable	4,602		(42)		4,560
Inventories	8,181		—		8,181
Other assets	2,945		—		2,945
Customer relationships	27,554		(4,353)		23,201
Tradenames	6,064		(664)		5,400
Goodwill	17,443		3,353		20,796
Accounts payable and other liabilities	(3,622)		24		(3,598)
Deferred income taxes	(6,586)		1,181		(5,405)
Fair value of consideration transferred	$	59,608	$	(501)	$	59,107

Goodwill recognized is attributable to synergies achieved through the streamlining of operations combined with improved margins attainable through increased market presence and is attributable to the Company's geographic divisions reportable segment. Goodwill of $17.0 million is not expected to be deductible for U.S. federal income tax purposes and goodwill of $3.8 million is expected to be deductible for U.S. federal income tax purposes. The estimated useful life for the customer relationships is 10 years and the estimated useful life for the tradenames is 15 years.