Note 12 - Acquisition of AAT Carriers, Inc.

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Business Combination Disclosure [Text Block]

Note 12. Acquisition of AAT Carriers, Inc.

On February 9, 2022, we acquired 100% of the outstanding stock of AAT Carriers, Inc. ("AAT") headquartered in Chattanooga, TN. AAT specializes in highly regulated, time-sensitive loads for the U.S. government. The total cash consideration at closing was $38.8 million, not considering approximately $1.8 million of cash balances acquired. The Stock Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions. The Stock Purchase Agreement includes an earnout component of up to an aggregate of $20.0 million based on AAT's adjusted earnings before interest, taxes, depreciation, and amortization reported for the first and second years following closing. The total purchase price, including any earnout achieved, is expected to range from $35.0 million to $57.0 million depending on the results achieved by AAT.

AAT’s results have been included in the condensed consolidated financial statements since the date of acquisition and are reported within our Expedited reportable operating segment.

The allocation of the preliminary purchase price detailed below is subject to change based on finalization of the valuation of long-lived and intangible assets, as well as our ongoing evaluation of AAT’s accounting principles for consistency with ours.

	February 9, 2022
(in thousands)
Cash paid pursuant to Stock Purchase Agreement	$	38,796
Cash acquired included in historical book value of AAT's assets and liabilities		(1,796	)
Net cash paid	$	37,000

There are no deferred income taxes arising from the acquisition because of our 338(h)(10) election.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date.

	February 9, 2022
Cash and cash equivalents	$	1,796
Accounts receivable		842
Prepaid expenses		33
Other short-term assets		69
Net property and equipment		7,994
Total identifiable assets acquired		10,734
Accounts payable		(19	)
Accrued expenses		(946	)
Finance lease obligations		(458	)
Other long-term liabilities		(3	)
Total liabilities assumed		(1,426	)
Net identifiable assets acquired		9,308
Goodwill		29,488
Net assets acquired	$	38,796

Goodwill and other intangible assets will change upon the completion of the valuation of the contingent consideration liability and intangible asset as part of the purchase accounting for the AAT acquisition. The goodwill recognized is attributable primarily to expected cost synergies in the areas of fuel, purchases of revenue equipment, and recruiting.

The amounts of revenue and earnings of AAT included in the Company’s consolidated results of operations from the acquisition date to the period ended March 31, 2022 are as follows:

(in thousands)	Three months ended
	March 31, 2022
Total revenue	$	4,166
Net income	$	1,987