Acquisitions

6 Months Ended

Jun. 30, 2024

NOTE 4. ACQUISITIONS

We account for acquisitions under the acquisition method and the results of operations of acquired operations are included in the Condensed Consolidated Financial Statements from the acquisition date. Acquisition related costs are expensed as incurred. We allocate total consideration to the assets acquired and liabilities assumed based on their estimated fair values, with the remaining unallocated amount recorded as goodwill. Definite-lived intangible assets are amortized over the estimated useful life on a straight-line basis and recorded as a component of operating income. The fair value of acquired intangible assets is estimated by applying discounted cash flow models based on significant level 3 inputs not observable in the market. Key assumptions are developed based on each acquirees’ historical experience, future projections and comparable market data including future cash flows, long-term growth rates, implied royalty rates, attrition rates and discount rates. Acquisition-related contingent consideration that is classified as a liability is measured at fair value as of the acquisition date. The fair value of contingent consideration is remeasured at each reporting period, and any future changes in the fair value of contingent consideration recorded in reporting periods after the acquisition date are recorded within loss related to change in fair value of contingent consideration on our Condensed Consolidated Statements of Earnings and Comprehensive Income.

3form

In April 2024, we acquired the issued and outstanding membership interests in 3form for a purchase price of $93.9 million, net of $0.5 million of cash acquired, subject to customary post-closing adjustments for working capital. The total fair value of tangible assets acquired, less liabilities assumed, was $36.3 million. The fair value of significant classes of assets acquired and liabilities assumed included accounts receivable of $6.9 million, inventory of $7.9 million, property, plant and equipment of $37.5 million, operating lease assets and liabilities of $10.0 million and accounts payable and accrued liabilities of $17.5 million. The total fair value of identifiable intangible assets acquired was $39.6 million, resulting in $18.5 million of goodwill. The following table summarizes the fair values of identifiable intangible assets acquired, and their estimated useful lives:


	Fair Value at Acquisition Date		Estimated Useful Life

Customer relationships	$	16.6	5 years
Trademarks and brand names		15.0	15 years
Non-compete agreements		3.8	5 years
Software		1.9	5 years
Backlog		1.2	1 year
Developed technology		1.1	16 years
Total identifiable intangible assets	$	39.6

Goodwill from the 3form acquisition relates to many factors, including the technical competencies and capabilities of the acquired workforce and our strategic intent to integrate and leverage those competencies and capabilities to advance and expand our portfolio of solutions and offerings. All of the acquired goodwill is deductible for tax purposes. Valuations for assets acquired and liabilities assumed are based on preliminary estimates that are subject to revisions and may result in adjustments to preliminary values as valuations are finalized.

The following table summarizes aggregate unaudited as reported and pro forma information assuming the acquisition of 3form had occurred on January 1, 2023. The unaudited pro forma results include the depreciation and amortization associated with the acquired assets. The unaudited pro forma results do not include any expected benefits from the 3form acquisition. Accordingly, the unaudited pro forma results are not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of January 1, 2023.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net sales, pro forma	$	388.3	$	348.0	$	737.7	$	683.9
Net sales, as reported		365.1		325.4		691.4		635.6
Earnings before income taxes, pro forma		89.8		79.4		170.2		143.4
Earnings before income taxes, as reported		87.1		80.0		167.3		143.9

For the three and six months ended June 30, 2024, net sales of $20.4 and $23.4, respectively, from BOK and 3form were included in our Condensed Consolidated Statements of Operations and Comprehensive Income since the acquisition dates.

Software-Related Intellectual Property

In May 2023, we acquired a co-ownership interest in certain software-related intellectual property for a total purchase price of $11.0 million, of which $10.0 million was paid in the second quarter of 2023 and an additional $1.0 million was paid in the fourth quarter of 2023. As a result of this transaction, the total fair value of identifiable intangible assets acquired was $6.5 million of software and $4.5 million of developed technology, which are being amortized over a weighted-average life of 5 and 17 years, respectively.