Acquisitions and Dispositions

12 Months Ended

Dec. 28, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Acquisitions and Dispositions

Acquisitions and Dispositions

2024 Acquisitions

Elkhart Products Corporation

On August 2, 2024, the Company entered into an equity purchase agreement to acquire all of the outstanding shares of Elkhart Products Corporation (Elkhart) for approximately $38.2 million in cash at closing, net of cash acquired and working capital adjustments. Elkhart is a U.S. manufacturer of copper solder fittings with two manufacturing locations in Elkhart, Indiana and Fayetteville, Arkansas. The business complements the Company’s existing business within the Piping Systems segment where the operating results are included in the Domestic Piping Systems Group.

The acquisition of Elkhart was not material to the Company's financial position or results of operations; therefore, pro forma operating results and other disclosures related to the acquisition are not presented as the results would not be significantly different than the reported results.

Nehring Electrical Works Company

On April 19, 2024, the Company entered into an equity purchase agreement to acquire Nehring Electrical Works Company and certain of its affiliated companies (collectively, “Nehring”). The transaction closed on May 28, 2024, whereby the Company purchased all of the outstanding equity of Nehring for approximately $569.2 million, net of working capital adjustments. The total purchase price consisted of $564.5 million in cash at closing and a contingent consideration arrangement which requires the Company to pay the sellers up to $19.0 million based on EBITDA growth of the acquired business. Nehring produces high-quality wire and cable solutions for the utility, telecommunication, electrical distribution, and OEM markets. Nehring provides the Company a substantial platform for expansion in the energy infrastructure space. The acquired business is reported in the Company’s Industrial Metals segment.

Since the acquisition date, Nehring has reported net sales of $220.7 million and operating income of $12.4 million. The Company incurred approximately $2.7 million of transaction-related expenses which are included in selling, general, and administrative expense in the Consolidated Statement of Income for the year ended December 28, 2024.

The following table presents pro forma consolidated results of operations as if the Nehring acquisition had occurred at the beginning of 2023. The pro forma information does not purport to be indicative of the results that would have been obtained if the operations had actually been combined during the periods presented, and is not necessarily indicative of operating results to be expected in future periods. The most significant pro forma adjustments to the historical results of operations relate to the application of purchase accounting and the amortization for intangible assets acquired, the financing structure, and estimated income taxes.

(In thousands, except per share data)	2024		2023
Net sales	$	3,903,228	$	3,811,909
Net income	608,961		624,683
Basic earnings per share	$	5.47	$	5.61
Diluted earnings per share	$	5.34	$	5.50

Purchase Price Allocations

These acquisitions were accounted for using the acquisition method of accounting whereby the total purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on respective fair values.

The following table summarizes the allocation of the purchase price to acquire these businesses, which were financed by available cash balances, as well as the assets acquired and liabilities assumed at the respective acquisition dates.  The purchase price allocations for both acquisitions are provisional as of December 28, 2024 and subject to change during the measurement periods.

(In thousands)	Elkhart		Nehring
Total consideration	$	38,158	$	569,171
Allocated to:
Accounts receivable	10,827		41,666
Inventories	18,720		38,803
Other current assets	356		960
Property, plant, and equipment	5,916		98,819
Tax-deductible goodwill	15,107		146,137
Intangible assets	—		271,700
Total assets acquired	50,926		598,085
Accounts payable	5,962		19,569
Other current liabilities	6,806		9,345
Total liabilities assumed	12,768		28,914
Net assets acquired	$	38,158	$	569,171

In determining the fair value of amounts above related to Nehring, the Company utilized various forms of the income, cost and market approaches depending on the asset or liability being valued. The estimation of fair value required judgment related to future net cash flows, discount rates, customer attrition rates, competitive trends, market comparisons and other factors. As a result, the Company utilized third-party valuation specialists to assist in determining the fair value of certain assets. Inputs were generally determined by taking into account independent appraisals and historical data, supplemented by current and anticipated market conditions.

The amounts in the table above represent the provisional purchase price allocation for the 2024 acquisitions. These purchase price allocations, including the residual amount allocated to goodwill, are based on preliminary information and are subject to change as additional information concerning final asset and liability valuations are obtained and management completes its reassessment of the measurement period procedures based on the results of the preliminary valuation. The purchase price allocation for Elkhart is provisional due to the proximity of the acquisition date to December 28, 2024, and as a result no elements of the purchase price allocation have been finalized. The purchase price allocation for Nehring is provisional with respect to final review of the valuation of the intangible assets, with the other areas of the allocation substantially complete. During the applicable measurement period, the Company will adjust assets and liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in revised estimated values of those assets or liabilities as of that date. The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments had been completed on the acquisition date.

The following details the total intangible assets identified in the allocation of the purchase price at the respective acquisition dates:

(In thousands)	Estimated Useful Life	Nehring
Intangible asset type:
Customer relationships	20 years	$	208,080
Non-compete agreements	5 years	700
Trade names	15 years	54,530
Certifications	5 years	8,390
Total intangible assets		$	271,700

2023 Disposition

Heatlink Group

Effective July 3, 2023, the Company transferred 100 percent of the outstanding shares of Heatlink Group, Inc. and Heatlink Group USA, LLC for an additional 11 percent equity interest in the limited liability company in the retail distribution business. This equity interest, combined with the 17 percent equity interest acquired with the contribution of Die-Mold in 2021, gave the Company a 28 percent equity interest in the limited liability company. Heatlink Group produces a complete line of products for PEX plumbing and radiant systems in Canada and sells these products in Canada and the U.S. and was included in the Piping Systems segment. Heatlink Group reported net sales of $15.6 million and operating income of $1.7 million for the year ended December 30, 2023 compared to net sales of $39.1 million and operating income of $7.2 million for the year ended December 31, 2022. As a result of the transaction, the Company recognized a gain of $4.1 million in 2023 based on the excess of the fair value of the consideration received (the 11 percent equity interest) over the carrying value of Heatlink Group. The Company equally weighted an income discounted cash flow approach and market comparable companies approach using an EBITDA multiple to determine the fair value of the consideration received of $26.0 million, which was recognized within the Investments in unconsolidated affiliates line of the Consolidated Balance Sheet as of December 30, 2023. The excess of the fair value of the deconsolidated subsidiary over its carrying value resulted in the gain.