Mergers and Acquisitions

6 Months Ended

Jun. 30, 2025

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

Mergers and Acquisitions

Mergers and Acquisitions

Alliance Drilling Tools

On March 3, 2025 (the “Closing Date”), we entered into a Merger Agreement through which we acquired ADT.

ADT operates a drilling equipment supply and repair business serving the oil and gas, geothermal, mining and water-well industries, with operations primarily in Texas and Wyoming. ADT is principally engaged in the business of renting equipment. ADT also sells used rental equipment, new equipment, parts and supplies, and offers repair services to support its customers.

In connection with the closing of the transaction, we paid the sellers total consideration which includes the following (in thousands):

Cash payments	$	4,185
Preferred shares at fair value	7,045
Indemnity liability to sellers	1,000
Working capital liability to sellers	250
Estimated amount due to seller	89
	$	12,568

At the closing $1.25 million of cash consideration and 100,000 of the preferred shares were held back from the sellers, subject to indemnification and working capital provisions. The liability related to working capital is expected to be settled within 30 days after 120 days of the Closing Date and is recorded as a current liability on our condensed consolidated balance sheet. The liability related to working capital was settled in the third quarter of 2025. The indemnity liability is expected to be settled within the earlier of 15 days of ADT’s 2025 audited financials, which is expected to be within the earlier of 12 months of March 31, 2025, or 18 months of the Closing Date. We have recorded this as a current liability on our condensed consolidated balance sheet. The preferred shares held back are considered to be issued and outstanding at June 30, 2025 and are expected to be settled within 12 months of the Closing Date.

In accordance with ASC 805, Business Combinations, we accounted for this transaction as a business combination and recorded the acquired assets of ADT at their estimated fair value. The valuation of assets acquired and liabilities assumed has not yet been finalized as of June 30, 2025. The purchase price allocation is preliminary and subject to change, including the valuation of property and equipment, intangible assets, inventory, income taxes, and goodwill, among other items. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for the acquisition date fair value. This business is reported as part of our Energy Services segment.

The following table sets forth the purchase price allocation of ADT to the estimated fair value of assets acquired as of the acquisition date (in thousands):

At March 3, 2025
Cash and cash equivalents	$	545
Accounts receivable	2,468
Inventory	1,702
Other current assets	40
Land and Buildings	3,255
Equipment	3,426
Intangibles	3,100
Accounts payable	(547)
Other accrued liabilities	(177)
Deferred income taxes	(2,712)
Net assets acquired (liabilities assumed)	$	11,100
Goodwill	1,468
Estimated purchase price	$	12,568

The $3.1 million of identified intangible assets was allocated as follows (in thousands):

	Fair Value		Useful Life (years)
Trade Names	$	500	15
Customer Relationships	2,600		10
Fair value of identified intangible assets	$	3,100

Goodwill and intangibles of $1.5 million and $3.1 million, respectively, were assigned to the Energy Services segment. The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of ADT.

The Company recognized $0.5 million of acquisition related costs including legal and accounting that were expensed in 2024 and 2025.

The following represents certain information from the unaudited pro forma condensed Consolidated Statement of Operations as if ADT had been included in the consolidated results of the Company for the three and six months ending June 30, 2025 and 2024 (in thousands), as applicable:

	Three Months Ended June 30,
Pro-forma	2024
Revenue	$	16,027
Gross Profit	$	3,837
Net loss	$	(3,083)

	Six Months Ended June 30,
Pro-forma	2025		2024
Revenue	$	37,896	$	27,394
Gross Profit	$	11,231	$	6,680
Net loss	$	3,418	$	(4,924)

Timber Technologies Solutions

On May 17, 2024, we acquired, through certain wholly owned subsidiaries, substantially all of the assets of Timber Technologies Inc. and, on June 28, 2024, the real assets of Timber Properties, LLC (collectively, “TT”) for total consideration of $23.7 million consisting of cash of $19.7 million, $1.0 million of escrow funds included in accrued liabilities, and a Term Loan Secured by a Mortgage of $3.0 million. We are also subject to payments due to the sellers contingent upon the achievement of certain EBITDA metrics over a 2-year period which may result in total payments not to exceed $4.1 million, 50% of which is payable in cash and 50% of which is payable in Series A Preferred Stock. These payments are also contingent upon the continued employment of the individual sellers. We have concluded that these payments are akin to compensation and will be recorded if and as such compensation is earned. For the three months ended June 30, 2025, we have accrued no amounts related to these payments as such achievement is deemed to have not been met. We have restricted $1.0 million of cash associated with the escrow funds payable to the sellers within 12 months after the acquisition as defined in the escrow agreement. Such amount was paid in July 2025.

In accordance with ASC 805, Business Combinations, we accounted for this transaction as a business combination and recorded the acquired assets of TT at fair value. This business is reported as part of our Building Solutions segment.

The following table sets forth the purchase price allocation of TT to the estimated fair value of assets acquired as of the acquisition date (in thousands):

	As of Acquisition Date
Accounts receivable, net	$	766
Inventory, net	2,836
Other current assets	2
Property and equipment, net	7,156
Intangibles	8,900
Net assets acquired	$	19,660
Goodwill	4,014
Purchase price	$	23,674

The $8.9 million of identified intangible assets was allocated as follows (in thousands):

	Fair Value		Useful Life (years)
Trade Names	$	1,970	15
Customer Relationships	6,640		10
Backlog	290		1
Fair value of identified intangible assets	$	8,900

Goodwill and intangibles of $4.0 million and $8.9 million, respectively, were assigned to the Building Solutions segment. The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of TT.

The Company recognized $0.2 million of acquisition related costs including legal and accounting that were expensed in 2024.

The following represents certain information from the unaudited pro forma condensed Consolidated Statement of Operations as if TT had been included in the consolidated results of the Company for the three and six months ending June 30, 2024 (in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2024		2024
Revenue	$	18,145	$	31,296
Gross profit	5,491		8,987
Net income (loss), net of tax	$	(2,065)	$	(2,943)

These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of TT to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant, and equipment and intangible assets had been applied on January 1, 2024, together with the consequential tax effects.