Note 6 - Acquisition of Sims Transport Services, LLC

12 Months Ended

Dec. 31, 2023

Sims Transport Services, LLC [Member]

Notes to Financial Statements

Business Combination Disclosure [Text Block]

6. ACQUISITION OF SIMS TRANSPORT SERVICES LLC

On August 18, 2023, we acquired 100% of the equity interests of Sims, a specialized brokerage company, headquartered in Maysville, GA. The acquisition date fair value of the consideration transferred was $9.8 million. 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 $12.0 million based on Sims' adjusted earnings before interest, taxes, depreciation, and amortization reported for the first through fourth calendar years following closing. The total purchase price, including any earnout achieved, is expected to range from $9.8 million to $20.0 million depending on the results achieved by Sims.

Sims' results have been included in the consolidated financial statements since the date of acquisition and are reported within our Managed Freight reportable segment.

The preliminary acquisition date fair value of the consideration transferred consisted of the following:

	August 18, 2023
(in thousands)
Cash paid pursuant to Stock Purchase Agreement	$	8,573
Cash acquired included in historical book value of Sims' assets and liabilities		(526	)
Contingent consideration		1,786
Net purchase price	$	9,833

The contingent consideration arrangement requires us to pay a total of up to $12.0 million of additional consideration to Sim's former equity-holders based on Sim's results during the first four calendar years following closing. We estimated the fair value of the contingent consideration using a probability-weighted model. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. Refer to Note 3, "Fair Value of Financial Instruments" for information regarding changes in the contingent consideration arrangement.

Goodwill related to the acquisition is not tax deductible. A deferred tax liability of $1.6 million was recorded arising from the intangible assets related to the acquisition.

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

(in thousands)	August 18, 2023
Accounts receivable	$	735
Other intangibles, net		6,090
Total identifiable assets acquired		6,825
Accounts payable		(457	)
Accrued expenses		(4	)
Deferred tax liability		(1,614	)
Total liabilities assumed		(2,075	)
Net identifiable assets acquired		4,750
Goodwill		5,083
Net assets acquired	$	9,833

The goodwill recognized is attributable primarily to expected cost synergies as a result of overhead support. Refer to Note 9, "Goodwill and Other Assets" for a summary of changes to goodwill during the period as well as information related to the identifiable intangible asset acquired.  

The amounts of revenue and earnings of Sims included in the Company’s consolidated results of operations from the acquisition date to the period ended December 31, 2023 are as follows:

(in thousands)	Year Ended
	December 31, 2023
Total revenue	$	2,924
Net income	$	555