Note 2. Acquisitions and Discontinued Operations

12 Months Ended

Dec. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Acquisition of RSI Logistics

On March 8, 2023, we acquired RSI Logistics ("RSI"), a data-centric provider of proprietary software and logistics and terminal management solutions to the North American rail industry, for an aggregate purchase price of $72.1 million. This transaction was recorded as a business combination within the Leasing Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs.

Based on our preliminary purchase price allocation recorded during the first quarter of 2023, we recorded identifiable intangible assets of $37.4 million, goodwill of $26.3 million, and certain other assets, net of liabilities, totaling $8.4 million. The identifiable intangible assets, with the exception of the trade name, which is considered an indefinite-lived intangible asset, are being amortized over their estimated useful lives, ranging from 5 years to 15 years. During 2023, we made immaterial purchase price allocation adjustments to certain assets, which included a final working capital adjustment. Additionally, during the fourth quarter of 2023, we completed the sale of an intermodal transportation services business, which was a wholly-owned subsidiary of RSI, for a sales price of approximately $4.4 million. The disposal group included identifiable intangible assets of $1.6 million, goodwill of $1.2 million, and certain other assets, net of liabilities, totaling $1.6 million, resulting in final goodwill attributable to the RSI acquisition of $25.6 million as of December 31, 2023.

Acquisition of Holden America

On December 30, 2022, we acquired Holden America, a manufacturer of market-leading multi-level vehicle securement and protection systems, gravity-outlet gates, and gate accessories for freight rail in North America. The aggregate purchase price, when combined with the potential additional future consideration described below, resulted in total consideration of $87.1 million. This transaction was recorded as a business combination within the Rail Products Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs. Based on our preliminary purchase price allocation recorded during the year ended December 31, 2022, we recorded identifiable intangible assets of $45.9 million, goodwill of $36.4 million, and certain other immaterial assets and liabilities. The identifiable intangible assets, with the exception of the trade name, which is considered an indefinite-lived intangible asset, are being amortized over their estimated useful lives, ranging from 1 year to 15 years. During 2023, we made immaterial adjustments to certain assets and liabilities to finalize our purchase price allocation.

The purchase agreement included minimum additional consideration of $10.0 million, which is payable in installments of $5.0 million per year for the next two years. The purchase agreement also contained a provision whereby additional consideration could become payable based on the achievement of certain revenue targets, up to a maximum payout of $10.0 million. The total additional consideration, which is included in other liabilities in our Consolidated Balance Sheets, had an initial estimated fair value of $15.7 million as of December 31, 2022 and is remeasured at each reporting period using Level 3 inputs. As of December 31, 2023, the estimated fair value of the additional consideration was $20.0 million. The change in fair value is included in selling, engineering, and administrative expenses in our Consolidated Statements of Operations for the year ended December 31, 2023.

Other Acquisitions

In June 2022, the Leasing Group acquired a portfolio of railcars for $132.1 million in cash. This transaction was recorded as an asset acquisition within the Leasing Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs. As a result of the purchase transaction, the Leasing Group acquired approximately 3,800 railcars, substantially all of which are currently under lease to third parties. We recorded acquired railcars of $125.0 million, lease-related intangible assets of $7.8 million, and certain other immaterial assets and liabilities in our Consolidated Balance Sheets as of the purchase date.

In May 2022, we completed the acquisition of a company that owns and operates an end-to-end rail logistics software platform providing a real-time data universe to freight rail shippers and operators. This transaction was recorded as a business combination within the Leasing Group, based on valuations of the acquired assets and liabilities at their acquisition date fair value using Level 3 inputs. The acquisition did not have a significant impact on our Consolidated Financial Statements. Based on our purchase price allocation, we recorded intellectual property of $5.2 million, which will be amortized over five years, goodwill of $5.3 million, and certain other immaterial assets and liabilities.

See Note 8 for further information regarding goodwill and intangible assets recorded as a result of these acquisitions.

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Discontinued Operations

Sale of Highway Products Business

In the fourth quarter of 2021, we completed the sale of our highway products business, THP. The sale closed on December 31, 2021, and we received net proceeds of approximately $364.7 million, after certain adjustments and closing costs. We concluded that the sale of THP represented a strategic shift that will have a major effect on the Company’s operations and financial results. Accordingly, we have presented the operating results and cash flows of THP as discontinued operations for all periods in this 2023 Annual Report on Form 10-K.

In connection with the sale, the Company agreed to indemnify Rush Hour for certain liabilities related to the highway products business, including certain liabilities resulting from or arising out of the ET-Plus® System, a highway guardrail end-terminal system (the “ET Plus”). Consequently, results from discontinued operations below include certain legal expenses that were directly attributable to the highway products business. Expenses related to these retained obligations incurred during the years ended December 31, 2023 and 2022 were, and similar expenses that may be incurred in the future will likewise be, reported in discontinued operations. See Note 15 for further information regarding obligations retained in connection with the THP sale.

The following is a summary of operating results related to the THP business included in income (loss) from discontinued operations for the years ended December 31, 2023, 2022, and 2021:


	Year Ended December 31,
	2023		2022		2021
	(in millions)
Revenues	$	—	$	—	$	296.5
Cost of revenues	—		—		216.6
Selling, engineering, and administrative expenses	17.0		21.4		65.3


Income (loss) from discontinued operations before income taxes	(17.0)		(21.4)		14.6
Provision (benefit) for income taxes	(3.6)		(1.1)		2.7
Income (loss) from discontinued operations, net of income taxes	$	(13.4)	$	(20.3)	$	11.9

Additionally, during the year ended December 31, 2022, we recorded a loss on sale of discontinued operations of $5.8 million ($4.4 million, net of income taxes), which included a $2.7 million payment to Rush Hour representing a final working capital adjustment, as well as additional transaction costs incurred during the period. During the year ended December 31, 2021, we recorded a gain on sale of discontinued operations of $183.3 million ($131.4 million, net of income taxes).

Other discontinued operations

In addition to the THP activities disclosed above, results include certain amounts related to businesses previously disposed, including $1.3 million of loss on sale of discontinued operations, net of income taxes for the year ended December 31, 2022, and a loss of $0.8 million included in income (loss) from discontinued operations, net of income taxes for the year ended December 31, 2021.