Thermon Group Holdings, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

Acquisitions

3 Months Ended

Jun. 30, 2018

THS acquisition

On October 30, 2017, we, through a wholly-owned subsidiary, acquired 100% of the equity interests of CCI Thermal Technologies Inc. and certain related real estate assets for $262,415 CAD (approximately $204,596 USD at the exchange rate as of October 30, 2017) in cash (such purchase price inclusive of final working capital adjustments). Such subsidiary and CCI Thermal Technologies Inc. amalgamated immediately after the closing of the acquisition to form Thermon Heating Systems, Inc. ("THS"), an indirect, wholly-owned subsidiary of the Company. THS is engaged in industrial process heating, focused on the development and production of advanced heating and filtration solutions for industrial and hazardous area applications and is headquartered in Edmonton, Alberta, Canada. THS markets its products through several diverse brands known for high quality, safety and reliability, and serves clients in the energy, petrochemical, electrical distribution, power, transit and industrial end markets globally. We believe we will be able to leverage our existing global sales force to further expand the reach of THS's product offerings. We recognized $85,637 of goodwill in connection with the THS acquisition.

The following table details the purchase price of the THS acquisition:



Consideration to or on behalf of sellers	$	204,596
Fair value of total consideration transferred	204,596

The Company is in the process of obtaining all necessary information required to complete the THS acquisition accounting. Pending matters principally include receipt of final valuation estimates on acquired intangible and tangible assets, and final review of tax related matters. The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed:



Assets acquired:
Cash	$	1,534
Accounts receivable	14,351
Inventories	20,085
Other current assets	1,181
Property, plant and equipment	29,464
Identifiable intangible assets	79,002
Goodwill	85,637
Total assets	231,254
Liabilities assumed:
Current liabilities	6,832
Other non-current liabilities	500
Non-current deferred tax liability	19,326
Total liabilities	26,658
Total consideration	$	204,596

In total, $4,093 of transaction costs were incurred related to the THS acquisition, all of which were incurred prior to the three months ended June 30, 2018. During the three months ended June 30, 2018, we finalized the working capital adjustment related to the THS acquisition, and accordingly, recorded an adjustment to goodwill in the amount of $481 and recorded other minor adjustments to current liabilities.

Our provisional estimate of identifiable intangible assets at June 30, 2018 that were related to the THS acquisition, inclusive of currency translation adjustments for the period, consisted of the following:



	Amortization period	Gross Carrying Amount at June 30, 2018		Accumulated Amortization		Net Carrying Amount at June 30, 2018		Gross Carrying Amount at March 31, 2018		Accumulated Amortization		Net Carrying Amount at March 31, 2018

Products	10 Years	$	63,266	$	4,218	$	59,048	$	64,611	$	2,692	$	61,919
Customer relationships	17 Years	10,923		428		10,495		11,155		273		10,882
Backlog	1 Year	3,163		2,109		1,054		3,230		1,346		1,884
Total		$	77,352	$	6,755	$	70,597	$	78,996	$	4,311	$	74,685

The weighted average useful life of acquired finite lived intangible assets related to THS acquisition is 10.6 years.