Acquisitions

3 Months Ended

Apr. 02, 2022

Business Combination and Asset Acquisition [Abstract]

On October 14, 2021, the Corporation acquired Trinity Hearth & Home ("Trinity"), an installing fireplace distributor in the Dallas/Fort Worth area, for approximately $31 million. This transaction, which aligns with the Corporation's vertical integration strategy in the residential building products market and provides a hub to better serve customers in the rapidly growing Southwest region, was structured as an asset acquisition and was consummated entirely in cash.

On December 17, 2021, the Corporation acquired The Outdoor GreatRoom Company ("OGC"), a leading manufacturer and supplier of premium outdoor fire tables and fire pits, for approximately $15 million. This transaction, which positions the Corporation to grow and develop a leading position in the fast-growing outdoor living market, was structured as a stock acquisition and was consummated entirely in cash.

The preliminary assets and liabilities of Trinity and OGC are included in the Corporation's residential building products segment, and goodwill, which is expected to be tax deductible, is assigned to the residential building products reporting unit.

The provisional purchase price allocation for Trinity and OGC, and estimated amortization periods of identified intangible assets as of the date of acquisition is as follows (dollars in thousands):


	Trinity			OGC
	Fair Value		Amortization Period	Fair Value		Amortization Period
Cash	$	—		$	331
Inventories	1,901			4,460
Receivables	4,604			1,783
Prepaid expenses and other current assets	—			1,247
Property, plant, and equipment	281			520
Accounts payable and accrued expenses	(1,726)			(2,844)
Goodwill	14,228			2,366
Customer lists	12,000		13 Years	4,900		10 Years
Trade names	—			2,500		10 Years
Total Net Assets	$	31,288		$	15,263

At this time, the provisional purchase price accounting of both acquisitions remains open, and intangible assets and goodwill are recorded based on preliminary assumptions. As a result of further review and refinement, measurement period adjustments were recorded in the first quarter of 2022 which decreased Trinity's inventory acquired by $0.2 million and increased goodwill related to both acquisitions by $0.9 million in the aggregate. Additionally, the aggregate purchase price of the deals increased by $0.8 million as a result of post-closing working capital settlements. The portions of the allocation that are provisional may be adjusted to reflect the finally determined amounts, and those adjustments may be material. The Corporation expects to finalize the purchase price allocation of both of these acquisitions later in 2022.

Both acquisitions were accounted for using the acquisition method pursuant to ASC 805, with goodwill being recorded as a result of the purchase price exceeding the fair value of identifiable tangible and intangible assets and liabilities.