Business Combinations (Tables)
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9 Months Ended |
Sep. 30, 2017 |
Business Combinations [Abstract] |
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Schedule of Business Combinations |
As part of our ongoing strategy to increase market share in certain
markets, we completed seven business combinations during the nine
months ended September 30, 2017 and six business combinations
during the nine months ended September 30, 2016 in which we
acquired 100% of the voting equity interests in each. The largest
of these acquisitions were Alpha, Columbia Shelving & Mirror
Inc. and Charleston Shelving & Mirror, Inc. (collectively,
“Columbia”) and All In Insulation, LLC d/b/a Astro
Insulation (collectively, “Astro”). The remaining
acquisitions were individually insignificant but material in the
aggregate, as follows (in thousands):
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Fair Value |
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Total |
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Three months ended
September 30, 2017 |
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Nine months ended
September 30, 2017 |
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2017 Acquisitions
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Date |
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Acquisition
Type |
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Cash Paid |
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Seller
Obligations |
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of Common
Stock Issued |
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Purchase
Price |
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Revenue |
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Net (Loss)
Income |
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Revenue |
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Net Income
(Loss) |
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Alpha(1)
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1/5/2017 |
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Share |
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$ |
103,810 |
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$ |
2,002 |
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$ |
10,859 |
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$ |
116,671 |
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$ |
29,334 |
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$ |
(271 |
) |
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$ |
87,830 |
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$ |
190 |
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Columbia
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6/26/2017 |
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Asset |
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8,768 |
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225 |
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— |
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8,993 |
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3,026 |
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73 |
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3,241 |
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80 |
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Astro
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9/18/2017 |
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Asset |
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8,851 |
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490 |
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— |
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9,341 |
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264 |
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46 |
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264 |
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46 |
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Other
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Various |
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Asset |
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9,812 |
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1,042 |
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— |
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10,854 |
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6,499 |
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84 |
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11,671 |
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366 |
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Total
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$ |
131,241 |
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$ |
3,759 |
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$ |
10,859 |
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$ |
145,859 |
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$ |
39,123 |
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$ |
(68 |
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$ |
103,006 |
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$ |
682 |
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(1) |
The cash paid included
$21.7 million in contingent consideration to satisfy purchase
price adjustments related to cash and net working capital
requirements, earnout consideration based on Alpha’s change
in EBITDA from 2015 and a customary holdback. We issued 282,577
shares of our common stock with a fair value of
$10.9 million. |
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Three months ended
September 30, 2016 |
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Nine months ended
September 30, 2016 |
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2016 Acquisitions
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Date |
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Acquisition
Type |
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Cash Paid |
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Seller
Obligations |
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Total
Purchase
Price |
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Revenue |
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Net Income
(Loss) |
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Revenue |
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Net Income
(Loss) |
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Alpine Insulation Co., Inc.
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4/12/2016 |
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Asset |
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$ |
21,151 |
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$ |
1,560 |
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$ |
22,711 |
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$ |
7,957 |
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$ |
806 |
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$ |
14,734 |
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$ |
1,238 |
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Other
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Various |
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Asset |
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15,276 |
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1,289 |
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16,565 |
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5,519 |
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(200 |
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12,283 |
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(664 |
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Total
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$ |
36,427 |
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$ |
2,849 |
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$ |
39,276 |
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$ |
13,476 |
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$ |
606 |
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$ |
27,017 |
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$ |
574 |
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Summary of Estimated Fair Value of Assets Acquired and Liabilities Assumed |
The estimated fair values of the assets acquired and liabilities
assumed for the acquisitions, as well as total purchase prices and
cash paid, approximated the following as of September 30, 2017
and 2016 and may be adjusted during the valuation period since
acquisition (in thousands):
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2017 |
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2016 |
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Alpha |
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Columbia |
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Astro |
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Other |
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Total |
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Alpine |
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Other |
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Total |
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Estimated fair values:
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Cash
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$ |
247 |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
247 |
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$ |
— |
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$ |
— |
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$ |
— |
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Accounts receivable
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30,361 |
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990 |
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924 |
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2,137 |
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34,412 |
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3,959 |
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2,080 |
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6,039 |
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Inventories
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1,851 |
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704 |
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296 |
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1,014 |
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3,865 |
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700 |
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888 |
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1,588 |
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Other current assets
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4,827 |
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8 |
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36 |
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8 |
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4,879 |
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— |
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12 |
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12 |
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Property and equipment
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1,528 |
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659 |
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640 |
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1,144 |
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3,971 |
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656 |
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1,188 |
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1,844 |
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Intangibles
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57,100 |
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4,760 |
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4,966 |
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5,939 |
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72,765 |
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12,800 |
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8,492 |
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21,292 |
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Goodwill
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38,679 |
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2,211 |
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2,808 |
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2,361 |
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46,059 |
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6,642 |
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5,270 |
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11,912 |
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Other non-current
assets
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150 |
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31 |
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— |
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191 |
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372 |
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— |
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94 |
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94 |
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Accounts payable and other current liabilities
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(18,072 |
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(370 |
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(329 |
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(1,940 |
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(20,711 |
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(2,046 |
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(1,459 |
) |
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(3,505 |
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Fair value of assets acquired and purchase price
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116,671 |
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8,993 |
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9,341 |
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10,854 |
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145,859 |
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22,711 |
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16,565 |
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39,276 |
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Less fair value of common stock issued
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10,859 |
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— |
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— |
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— |
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10,859 |
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— |
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— |
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— |
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Less seller obligations
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2,002 |
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225 |
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490 |
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1,042 |
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3,759 |
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1,560 |
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1,289 |
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2,849 |
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Cash paid
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$ |
103,810 |
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$ |
8,768 |
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$ |
8,851 |
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$ |
9,812 |
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$ |
131,241 |
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$ |
21,151 |
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$ |
15,276 |
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$ |
36,427 |
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Estimates of Acquired Intangible Assets |
Estimates of acquired intangible assets related to the acquisitions
are as follows for the nine months ended September 30 (dollars
in thousands):
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2017 |
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2016 |
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Acquired intangibles assets
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Estimated
Fair Value |
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Weighted
Average
Estimated
Useful
Life (yrs.) |
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Estimated
Fair Value |
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Weighted
Average
Estimated
Useful
Life (yrs.) |
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Customer relationships
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$ |
37,533 |
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8 |
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$ |
12,862 |
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9 |
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Trademarks and trade names
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19,403 |
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15 |
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6,116 |
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15 |
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Non-competition
agreements
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2,429 |
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5 |
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2,315 |
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5 |
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Backlog
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13,400 |
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1.5 |
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— |
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— |
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Pro Forma Results of Operations |
The unaudited pro forma information for the combined results of the
Company has been prepared as if the 2017 acquisitions had taken
place on January 1, 2016 and the 2016 acquisitions had taken
place on January 1, 2015. The unaudited pro forma information
is not necessarily indicative of the results that we would have
achieved had the transactions actually taken place on
January 1, 2016 and 2015, respectively, and the unaudited pro
forma information does not purport to be indicative of future
financial operating results. See Note 12, Business Combinations, to
our audited financial statements in Item 8 of Part II of our 2016
Form 10-K for additional
information on 2016 acquisitions included in the table below (in
thousands, except per share data):
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Pro forma for the three months
ended September 30, |
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Pro forma for the nine months
ended September 30, |
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2017 |
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2016 |
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2017 |
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2016 |
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Net revenue
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$ |
297,820 |
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$ |
272,010 |
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$ |
853,897 |
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$ |
771,313 |
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Net income
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11,836 |
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12,328 |
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31,544 |
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32,117 |
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Basic net income per share
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0.37 |
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0.39 |
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1.00 |
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1.02 |
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Diluted net income per share
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0.37 |
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0.39 |
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0.99 |
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1.02 |
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