Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Skratch Enterprises Ltd.

On June 21, 2022, the Company acquired the stock of Skratch for $7,402, which is inclusive of deferred payments withheld by the Company of $1,228, to be paid over the next five years or utilized to satisfy post-closing working capital adjustments or indemnity claims under the purchase agreement. Located in Telford, United Kingdom, Skratch offers a single-point supply solution model for clients, and enables large scale deployments of its intelligent digital signage solutions. Skratch’s service offerings include design, prototyping and proof of concept, hardware and software, logistics and warehousing, installation, maintenance, content management, and managed monitoring. Skratch has been included in the Company’s Technology Services and Solutions business unit within the Rail, Technologies, and Services segment.

VanHooseCo Precast LLC

On August 12, 2022, the Company acquired the operating assets of VanHooseCo, a privately-held business headquartered in Loudon, Tennessee specializing in precast concrete walls, water management products, and traditional precast products for the industrial, commercial, and residential infrastructure markets. The Company acquired VanHooseCo for $52,146, net of cash acquired at closing, subject to the finalization of net working capital adjustments. An amount equal to $2,500 of the purchase price was deposited in an escrow account in order to cover breaches of representations and warranties. The acquisition agreement includes two employment agreements whereby principals have the ability to earn up to an additional $1,000 dependent upon the successful completion of the principals’ employment agreements. VanHooseCo has been included in the Company’s Precast Concrete Products segment.

Acquisition Summary

Each transaction was accounted for under the acquisition method of accounting under U.S. GAAP which requires an acquiring entity to recognize, with limited exceptions, all of the assets acquired and liabilities assumed in a transaction at fair value as of the

acquisition date. Goodwill primarily represents the value paid for each acquisition’s enhancement to the Company’s product and service offerings and capabilities, as well as a premium payment related to the ability to control the acquired assets, as well as the assembled workforce provided. Acquisition costs for the year ended December 31, 2022 were $2,043 and were recognized as part of the Company’s selling and administrative expenses.

VanHooseCo contributed net sales of $17,788 and operating profit of $1,555 to the Company’s consolidated results for the period from August 12, 2022 through December 31, 2022.

The table below summarizes the Company’s results as though the VanHooseCo acquisition had been completed on January 1, 2022. Certain of VanHooseCo’s historical amounts were reclassified to conform to the Company’s financial presentation of operations, which included recording inventory and property, plant, and equipment at fair market value, to establish intangible assets, to remove deferred compensation expense, and to include interest expense for the additional borrowings. The following unaudited pro forma information is provided for informational purposes only and does not represent what consolidated results of operations would have been had the VanHooseCo acquisition occurred on January 1, 2021 nor are they necessarily indicative of future consolidated results of operations.


	Year Ended December 31,
		2022		2021

		Unaudited
Net sales		$	522,997	$	540,359
Net (loss) income attributable to L.B. Foster Company		(44,564)		2,223
Diluted (loss) earnings per share
As reported		$	(4.25)	$	0.33
Pro forma		$	(4.16)	$	0.21

The following table summarizes estimated fair values of the assets acquired and liabilities assumed at the date of the VanHooseCo and Skratch acquisitions:


Allocation of purchase price	VanHooseCo		Skratch
Current assets, net of cash acquired on the acquisition date	$	11,138	$	1,129
Property, plant, and equipment	30,410		174
Goodwill	8,221		5,549
Other intangibles	5,442		1,750
Liabilities assumed	(3,065)		(1,200)
Total	$	52,146	$	7,402

The following table summarizes estimates of the fair values of the VanHooseCo and Skratch identifiable intangible assets acquired:


	VanHooseCo			Skratch
Identifiable intangible assets	Weighted Average Amortization Period In Years	Net Carrying Amount		Weighted Average Amortization Period In Years	Net Carrying Amount
Non-compete agreements	0	$	—	1	$	27
Customer relationships	5	3,578		3	1,349
Trademarks and trade names	10	1,537		10	374
Favorable lease	6	327		0	—
Total		$	5,442		$	1,750

The Company made an allocation of the purchase price for the VanHooseCo and Skratch acquisitions as of the acquisition date based on its understanding of the fair value of the acquired assets and assumed liabilities. These fair value measurements are classified as Level 3 in the fair value hierarchy. See Note 16 for a description of the fair value hierarchy.

Due to the timing of the acquisitions, values shown in the table above are preliminary. If new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement recognized for assets or liabilities assumed, the Company will retrospectively adjust the amounts recognized as of the acquisition date.

Divestiture Summary

On August 1, 2022, the Company divested its Track Components business located in St-Jean-sur-Richelieu, Quebec, Canada. Cash proceeds from the transaction were $7,795, subject to indemnification obligations and working capital adjustments, resulting in a pre-tax loss of $467. The Track Components business was reported in the Rail Products business unit within the Rail, Technologies, and Services segment.

On September 24, 2021, the Company executed the sale of its Piling Products division for $23,902 in total proceeds resulting in a pre-tax gain of $3,230. The Piling Products division was included in the Fabricated Steel Products business unit within the Steel Products and Measurement segment.