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Acquisitions, Goodwill And Other Intangible Assets

6 Months Ended

Jun. 30, 2021

Acquisitions, Goodwill And Other Intangible Assets [Abstract]

Acquisitions, Goodwill And Other Intangible Assets

ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

Subsequent Event

Furrion

In August 2021, the Company entered into a definitive agreement to acquire Furrion Holdings Limited (“Furrion”), a leading distributor of a large range of appliances and other products to OEMs and aftermarket customers in the recreational vehicle, specialty vehicle, utility trailer, horse trailer, marine, transit bus, and school bus industries. The transaction is expected to close in the third quarter of 2021, subject to customary closing conditions, including regulatory approval.

Acquisitions Completed During the Six Months Ended June 30, 2021

Schaudt

In April 2021, the Company acquired 100 percent of the equity interests of Schaudt GmbH Elektrotechnik & Apparatebau ("Schaudt"), a leading supplier of electronic controls and energy management systems for the European caravan industry located in Markdorf, Germany. The purchase price was approximately $29.4 million. The purchase price is subject to customary adjustments for cash, working capital, and indebtedness. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company's OEM Segment. The Company is in the process of determining the fair value of the assets acquired and liabilities assumed for the opening balance sheet, including net working capital, fixed assets, and the fair value of intangible assets. As this acquisition is not considered to

have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. The acquisition of this business was preliminarily recorded as of the acquisition date as follows (in thousands):


Cash consideration, net of cash acquired	$	29,383

Customer relationships	$	10,000
Other identifiable intangible assets	2,500
Net tangible assets	564
Total fair value of net assets acquired	$	13,064

Goodwill (not tax deductible)	$	16,319

The customer relationships intangible asset is being amortized over its estimated useful life of 8 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products.

Ranch Hand

In April 2021, the Company acquired 100 percent of the equity interests of Kaspar Ranch Hand Equipment, LLC ("Ranch Hand"), a manufacturer of custom bumpers, grill guards, and steps for the automotive aftermarket headquartered in Shiner, Texas. The purchase price was approximately $56.7 million, plus contingent consideration up to $3.0 million. The purchase price is subject to customary adjustments for cash, working capital, and indebtedness. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company's Aftermarket Segment. The Company is in the process of determining the fair value of the assets acquired and liabilities assumed for the opening balance sheet, including net working capital, fixed assets, and the fair value of intangible assets. As this acquisition is not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. The acquisition of this business was preliminarily recorded on the acquisition date as follows (in thousands):


Cash consideration, net of cash acquired	$	56,709
Contingent consideration	3,000
Total fair value of consideration given	$	59,709

Customer relationships	$	24,200
Other identifiable intangible assets	9,100
Net tangible assets	16,872
Total fair value of net assets acquired	$	50,172

Goodwill (tax deductible)	$	9,537

The customer relationships intangible asset is being amortized over its estimated useful life of 13 years. The fair value of this asset was determined using a discounted cash flow model, which is a Level 3 input in the fair value hierarchy. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products.

Other Acquisitions in 2021

During the first six months of 2021, the Company completed two other acquisitions totaling $17.8 million of cash purchase consideration, plus holdback payments of $2.1 million to be paid over the next two years and contingent consideration of up to $2.0 million. The acquisitions are subject to potential post-closing adjustments related to net working capital. The

preliminary purchase price allocations resulted in $8.8 million of goodwill (tax deductible) and $7.5 million of acquired identifiable intangible assets.

The accounting for these acquisitions is incomplete at June 30, 2021. The estimated fair values of assets acquired and liabilities assumed are based on preliminary allocations and will be finalized during the respective measurement periods which will not exceed 12 months from the respective acquisition dates. As these acquisitions are not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented.

Acquisitions with Measurement Period Adjustments During the Six Months Ended June 30, 2021

Veada

In December 2020, the Company acquired 100 percent of the outstanding capital stock of Veada Industries, Inc. ("Veada"), a manufacturer and distributor of boat seating and marine accessories based in New Paris, Indiana. The purchase price was $69.0 million, net of cash acquired, which included initial holdback payments of $12.2 million to be paid over the next two years. Holdback payments of $3.9 million were paid; these holdback payment requirements were reduced by $0.5 million during the six months ended June 30, 2021 due to net working capital true-ups. The remaining holdback payments are recorded in the Condensed Consolidated Balance Sheet in accrued expenses and other current liabilities ($6.0 million) and other long-term liabilities ($1.8 million) at June 30, 2021. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company's OEM Segment.

During the six months ended June 30, 2021, the Company adjusted the preliminary purchase price allocation reported at December 31, 2020 to account for updates to net working capital balances and assumptions and estimates related to the fair value of fixed assets and intangible assets. These measurement period adjustments would not have resulted in a material impact on the prior period results if the adjustments had been recognized as of the acquisition date. The purchase price allocation is subject to adjustment for the fair value of intangible assets as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date).

Challenger

In November 2020, the Company acquired substantially all of the business assets of Challenger Door, LLC ("Challenger"), a leading manufacturer and distributor of branded doors for the RV industry and products for specialty and cargo trailers, based in Nappanee, Indiana. The purchase price was $35.0 million, which included holdback payments of up to $4.5 million to be paid over the next two years. These holdback payment requirements were reduced by $1.7 million during the six months ended June 30, 2021 due to net working capital true-ups. The remaining holdback payments are recorded in the Condensed Consolidated Balance Sheet in accrued expenses and other current liabilities ($1.8 million) and other long-term liabilities ($1.0 million) at June 30, 2021. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company’s OEM Segment.

Goodwill

Goodwill by reportable segment was as follows:


(In thousands)	OEM Segment		Aftermarket Segment		Total
Net balance – December 31, 2020	$	305,953	$	148,775	$	454,728
Acquisitions – 2021	24,448		10,190		34,638
Measurement period adjustments	9,456		(23)		9,433
Foreign currency translation	(2,528)		151		(2,377)
Net balance – June 30, 2021	$	337,329	$	159,093	$	496,422

Goodwill represents the excess of the total consideration given in an acquisition of a business over the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but instead is tested at the reporting unit level for impairment annually in November, or more frequently if certain circumstances indicate a possible impairment may exist.

Other Intangible Assets

Other intangible assets consisted of the following at June 30, 2021:


(In thousands)	Gross Cost		Accumulated Amortization		Net Balance		Estimated Useful Life in Years
Customer relationships	$	424,433	$	110,076	$	314,357	6	to	17
Patents	96,920		49,698		47,222		3	to	20
Trade names (finite life)	74,889		14,240		60,649		3	to	20
Trade names (indefinite life)	7,600		—		7,600		Indefinite
Non-compete agreements	7,479		4,702		2,777		3	to	6
Other	309		203		106		2	to	12
Purchased research and development	4,687		—		4,687		Indefinite
Other intangible assets	$	616,317	$	178,919	$	437,398

Other intangible assets consisted of the following at December 31, 2020:


(In thousands)	Gross Cost		Accumulated Amortization		Net Balance		Estimated Useful Life in Years
Customer relationships	$	398,613	$	95,443	$	303,170	6	to	17
Patents	92,128		47,090		45,038		3	to	20
Trade names (finite life)	69,686		11,272		58,414		3	to	20
Trade names (indefinite life)	7,600		—		7,600		Indefinite
Non-compete agreements	6,478		4,617		1,861		3	to	6
Other	309		194		115		2	to	12
Purchased research and development	4,687		—		4,687		Indefinite
Other intangible assets	$	579,501	$	158,616	$	420,885