Goodwill and Intangible assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible assets

Goodwill and Intangible Assets

NOTE 10—GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table shows the annual changes in the carrying amount of goodwill, by segment, from December 31, 2020 through December 31, 2022:

	Engineered		Latex		Base						Americas
	Materials		Binders		Plastics		Polystyrene		Feedstocks		Styrenics		Total
Balance at December 31, 2020	$	16.0	$	17.1	$	24.2	$	4.8	$	—	$	—	$	62.1
Acquisitions/Divestitures (Note 4)		668.0		—		—		—		—		—		668.0
Foreign currency impact		(16.7)		(1.2)		(1.8)		(0.3)		—		—		(20.0)
Balance at December 31, 2021	$	667.3	$	15.9	$	22.4	$	4.5	$	—	$	—	$	710.1
Acquisitions (Note 4)		—		—		22.8		—		—		—		22.8
Impairment losses		(297.1)		—		—		—		—		—		(297.1)
Foreign currency impact		(21.3)		(1.1)		(2.7)		(0.3)		—		—		(25.4)
Balance at December 31, 2022	$	348.9	$	14.8	$	42.5	$	4.2	$	—	$	—	$	410.4

Goodwill impairment testing is performed annually as of October 1, or more frequently when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below the carrying value. Refer to Note 2 for further information. In the year ended December 31, 2022, the Company performed its annual impairment test for goodwill and determined that the PMMA business and Aristech Surfaces carrying value of their net assets exceeded fair value, resulting in an impairment of $297.1 million, discussed further below. The estimated fair values of all other reporting units was in excess of the carrying value. The Company concluded there were no goodwill impairments or triggering events for the years ended December 31, 2021 and 2020.

As noted within Note 4, in the year ended December 31, 2021, the Company completed the PMMA Acquisition and Aristech Surfaces Acquisition, each of which represents a separate reporting unit within the Engineered Materials segment. As a result of the Company’s fourth quarter impairment testing, an impairment charge was taken primarily due to the continuation of the challenging macroeconomic environment experienced in 2022 into the fourth quarter of 2022, including significantly lower demand for building & construction and wellness applications, which led to lower operating results including slower growth projections, and a prolonged drop in market capitalization, as well as an increase in the WACC. During the year ended December 31, 2022, the Company reduced the carrying value of the PMMA business and Aristech Surfaces reporting units through the recognition of a $226.6 million and $70.5 million non-cash goodwill impairment loss, respectively. These charges are recorded within “Impairment and other charges” on the consolidated statement of operations and are allocated to the Engineered Materials segment. These reporting units may be at risk for future impairment due to the remaining fair value being equal to carrying value as a result of the recorded impairment. Should the conditions resulting in the impairment persist, or other events occur indicating that the estimated future cash flows of these reporting units have declined, the Company may be required to record future non-cash impairment charges related to goodwill.

As of December 31, 2022, the reported balance of goodwill included accumulated impairment losses of $297.1 million in the Engineered Materials segment. There were no accumulated goodwill impairment losses as of December 31, 2021 in any of the Company’s segments. 

Other Intangible Assets

The following table provides information regarding the Company’s other intangible assets as of December 31, 2022 and 2021:

		December 31, 2022						December 31, 2021
	Estimated Useful	Gross Carrying		Accumulated				Gross Carrying		Accumulated
	Life (Years)	Amount		Amortization		Net		Amount		Amortization		Net
Developed Technology	7 - 15	$	306.4	$	(138.2)	$	168.2	$	321.4	$	(119.3)	$	202.1
Customer Relationships	7 - 13		479.5		(60.6)		418.9		477.1		(23.4)		453.7
Software	5 - 10		241.8		(118.0)		123.8		162.3		(93.8)		68.5
Software in development	N/A		8.8		—		8.8		39.7		—		39.7
Tradenames	10 - 16		51.3		(5.8)		45.5		53.0		(2.1)		50.9
Other	1 - 5		10.5		(3.7)		6.8		12.4		(3.5)		8.9
Total		$	1,098.3	$	(326.3)	$	772.0	$	1,065.9	$	(242.1)	$	823.8

Amortization expense related to finite-lived intangible assets totaled $93.6 million, $71.8 million, and $27.7 million, for the years ended December 31, 2022, 2021, and 2020, respectively.

The following table details the Company’s estimated amortization expense for the next five years, excluding any amortization expense related to software currently in development:

Estimated Amortization Expense for the Next Five Years
2023		2024		2025		2026		2027
$	95.2	$	85.7	$	77.0	$	71.7	$	70.4