Business Combinations

6 Months Ended

Mar. 31, 2023

3. BUSINESS COMBINATIONS

On August 1, 2022, the Company acquired INTEX Millwork Solutions, LLC, a New Jersey LLC, or INTEX, for a total purchase price of approximately $25.9 million, which consisted of $20.1 million in cash and $5.8 million in contingent consideration,

subject to customary post-closing working capital adjustments. INTEX is located in Mays Landing, New Jersey and manufactures high-quality railing solutions, column wraps and pergolas. We financed the acquisition with cash on hand.

The acquisition was accounted for as a business combination under Accounting Standards Codification (“ASC”) 805 Business Combinations. Tangible and identifiable intangible assets acquired and liabilities assumed were recorded at their respective fair values. The excess of the consideration transferred over the fair value of the net assets received has been recorded as goodwill in the Residential segment. The factors that contributed to the recognition of goodwill primarily relate to future economic benefits arising from expected sales.

The following table represents the preliminary allocation of assets acquired and liabilities assumed on the acquisition date as of March 31, 2023 (in thousands):


(US dollars in thousands)	Total
Cash and cash equivalents	$	4,279
Trade receivables		790
Inventories		1,902
Other current assets		52
Property and equipment		3,612
Intangible assets		9,300
ROU assets		580
Accounts payable		(250	)
Accrued expenses		(510	)
Current lease liabilities		(114	)
Noncurrent lease liabilities		(466	)
Total identifiable assets		19,175
Goodwill		6,717
Net assets acquired/total consideration		25,892
Less: cash acquired		(4,279	)
Total consideration net of cash acquired	$	21,613

As of the acquisition date, total intangible assets and goodwill amounted to $16.0 million, comprised of $7.3 million related to customer relationships, $1.1 million related to proprietary knowledge and $0.9 million related to trademarks, as well as $6.7 million in goodwill. It is expected that $6.7 million of the goodwill is deductible for tax purposes. The estimated useful life for customer relationships is 12 years, and proprietary knowledge and trademarks is 10 years. The intangible assets weighted average useful life at the date of acquisition was 11.6 years.