Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 11: Goodwill and Intangible Assets

Goodwill and intangible assets consisted of the following:

(in $000s)	Weighted Average Remaining Life (Years)	September 30, 2021		December 31, 2020
Goodwill		$	684,796	$	238,052
Intangible assets:
Trade names	16.0	180,780		29,780
Customer relationships	26.0	202,170		52,170
Non-compete agreements and other	0.5	520		520
Intangible assets		383,470		82,470
Less: accumulated amortization		(42,310)		(14,891)
Intangible assets, net		$	341,160	$	67,579

Supplemental Goodwill Information

We recognize goodwill when the purchase price of an acquired business exceeds the fair value of net assets acquired. The increase in goodwill as of September 30, 2021 compared to December 31, 2020 relates to the Acquisition of Custom Truck LP (see Note 3: Business Combination, for additional information). Goodwill is not amortized for financial reporting purposes.

We perform our goodwill impairment analysis annually on October 1 or more frequently if an event or circumstance (such as a significant adverse change in the business climate, operating performance metrics, or legal factors) indicates that an impairment may have occurred. Goodwill is impaired when its carrying value exceeds its implied fair value. Recognized goodwill is assigned to our reporting units using an income approach based on the present value of estimated future cash flows. Additionally, intangible assets with indefinite lives that are not amortized are tested annually for impairment on October 1, or more frequently if an event or circumstance indicates that an impairment loss may have occurred. During the three and nine months ended September 30, 2021, there were no triggering events necessitating an interim impairment test of goodwill.

As discussed in Note 3: Business Combination, the Company acquired Custom Truck LP on April 1, 2021 and the allocation of the purchase price is preliminary. Accordingly, goodwill has been assigned to our ERS segment, TES segment and APS segment on a preliminary basis. The preliminary goodwill allocation by segment as of September 30, 2021 was: $484.3 million to the ERS segment, $163.3 million to the TES segment and $37.2 million to the APS segment. As of December 31, 2020, goodwill related to our ERS segment and APS segment was $229.4 million and $8.7 million, respectively.

Supplemental Intangible Asset Information

Amortization Expense

As of September 30, 2021, estimated amortization expense for intangible assets for each of the next five years and thereafter is estimated to be as follows:

(in $000s)	Amortization
2021 (October 1 - December 31)	$	18,912
2022	32,332
2023	25,325
2024	25,314
2025	25,314
Thereafter	213,963
Total estimated future amortization expense	$	341,160

NESCO Trade Name

In connection with the Acquisition and the combination of the businesses of Nesco Holdings and Custom Truck LP, the Company’s products and services will no longer be marketed under the “NESCO” brand. Accordingly, management began the process of discontinuing the brand, which includes the use of trade names such as, “NESCO Specialty” and “NESCO Sales and Rentals.” Prior to the Acquisition, the trade name intangible asset was carried as an indefinite-lived intangible asset. As a result of the decommissioning of the brand, we determined that the trade name intangible asset should be reclassified to a definite-lived asset. Accordingly, the

intangible asset will be amortized over a 12-month period, which is the estimated remaining period of economic benefit to the Company.