Acquisitions

9 Months Ended

Nov. 30, 2019

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Acquisitions

In April 2019, the Company completed the acquisition of all the outstanding shares of K2 Partners, Inc. (“K2”) and Tennessee Galvanizing, Inc. ("Tennessee Galvanizing"), two privately held companies. K2 provides powder coating and electroplating solutions to customers in the Midwest and Southeast from locations in Texas and Florida. Tennessee Galvanizing provides galvanizing solutions to customers throughout the United States. These acquisitions expand the Company's geographical reach in metal coating solutions and broaden its offerings in strategic markets. The goodwill arising from these acquisitions was allocated to the Metal Coatings segment and is not deductible for income tax purposes.

In August 2019, the Company completed the acquisition of the assets of NuZinc, LLC, a privately held plating company in the Dallas-Fort Worth area. The acquisition will increase the Company's footprint in electroplating solutions within its Metal Coatings segment. The goodwill arising from this acquisition was allocated to the Metal Coatings segment and is deductible for income tax purposes.

In September 2019, the Company completed the acquisition of all the assets of Preferred Industries, Ltd. ("Preferred"), a privately held company based in the Dallas-Fort Worth area. Preferred provides powder and e-coating solutions to the automotive, HVAC, marine, transportation, medical, industrial, and plastics industries. The acquisition broadens the Company's offerings and expand its network of surface technology plants. This acquisition will be included in the Metal Coatings segment.

The fair values of the net assets acquired, including property, plant and equipment, intangibles and goodwill may be subject to change as additional information is received and finalized. Accordingly, the provisional measurements of fair value for these items are subject to change. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition dates.

The Company paid approximately $60.6 million for these acquisitions, net of cash acquired, and expensed $0.4 million of acquisition related costs. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed, in aggregate, related to these acquisitions as of the date of each respective acquisition (in thousands):

Assets
Accounts receivable	$	4,737
Inventories	1,728
Prepaid expenses and other	22
Property, plant and equipment	3,599
Intangibles	19,325
Goodwill	36,443
Liabilities
Accounts payable and other accrued liabilities	(1,574		)
Contingent consideration	(1,791		)
Deferred income taxes	(1,861		)
Total purchase price	$	60,628

The goodwill resulting from these acquisitions consists largely of the Company’s expected future product sales and synergies from combining the products and technology with the Company’s existing metal coatings portfolio. In addition to the initial cash payment upon closing for the K2 acquisition, contingent consideration of up to $2.0 million is payable based on the achievement of specified operating results over the three year period following completion of the acquisition.