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6 Months Ended

Jun. 30, 2023

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Note 2. Select balance sheet data

Inventory

Inventories are stated at the lower of cost, determined on the first-in, first-out method, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Work-in-process and finished goods are valued at production costs consisting of material, labor, and overhead.

Inventories as of June 30, 2023 and December 31, 2022 consist of:

	June 30,		December 31,
	2023		2022
Finished goods and purchased parts	$	31,069	$	44,728
Raw materials		26,998		17,003
Work-in-process		8,761		9,977
Total	$	66,828	$	71,708

Property, plant and equipment

Property, plant and equipment as of June 30, 2023 and December 31, 2022 consist of:

	Useful Lives		June 30,		December 31,
	Years		2023		2022
Land		Indefinite	$	1,030	$	1,030
Land improvements		15-39		3,169		3,169
Building and building improvements		15-39		65,487		59,664
Machinery, equipment and tooling		3-10		264,307		250,110
Vehicles		5		4,360		4,359
Office furniture and fixtures		3-7		20,453		19,585
Construction in progress		N/A		13,091		26,435
Total property, plant and equipment, gross				371,897		364,352
Less accumulated depreciation				230,571		218,581
Total property, plant and equipment, net			$	141,326	$	145,771

Depreciation expense was $6,273 and $5,507 for the three months ended June 30, 2023 and 2022, respectively, and $12,415 and $10,975 for the six months ended June 30, 2023 and 2022, respectively.

At December 31, 2021, there was uncertainty as to the level of demand from the former fitness customer. The Company received a notification from the former fitness customer in February 2022 resulting in a change in forecasted future cash flow, triggering an impairment assessment of assets purchased, and assets the Company had committed to purchase, to meet obligations under the agreement with the former fitness customer as of December 31, 2021. As a result, at December 31, 2021, the Company recorded a long-lived asset impairment of $12,875.

During the three and six months ended June 30, 2022, the Company was able to cancel $906 and $2,089 respectively, of purchase commitments for property, plant and equipment relating to the former fitness customer that had previously been recorded in the Consolidated Statements of Comprehensive Income as an impairment of long-lived assets and loss on contracts as of December 31, 2021. The cancellation of loss contracts has resulted in the reversal of these amounts from other current liabilities in the Condensed Consolidated Balance Sheets and recorded in the Condensed Consolidated Statements of Comprehensive Income as an impairment of long-lived assets and gain on contracts for the three and six months ended June 30, 2022.

The Company adopted ASC 842 on January 1, 2022, classifying finance leases of $914 and $1,103 in property, plant and equipment on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, respectively. Please refer to Note 4 – Leases for additional information.

Goodwill

There were no changes to the goodwill balance of $71,535 between December 31, 2022 and June 30, 2023.

Intangible Assets

The following is a listing of intangible assets, the useful lives in years (amortization period) and accumulated amortization as of June 30, 2023 and December 31, 2022:

	Useful Lives		June 30,		December 31,
	Years		2023		2022
Amortizable intangible assets:
Customer relationships and contracts		9-12	$	78,340	$	78,340
Trade name		10		14,780		14,780
Non-compete agreements		5		8,800		8,800
Patents		19		24		24
Accumulated amortization				(65,422)		(61,946)
Total amortizable intangible assets, net				36,522		39,998
Non-amortizable brand name				3,811		3,811
Total intangible assets, net			$	40,333	$	43,809

Non-amortizable brand name is tested annually during the fourth quarter for impairment, or more frequently if triggering events occur indicating there may be impairment.

Changes in intangible assets between December 31, 2022 and June 30, 2023 consist of:

Balance as of December 31, 2022	$	43,809
Amortization expense		(3,476)
Balance as of June 30, 2023	$	40,333

Amortization expense was $1,738 for the three months ended June 30, 2023, and 2022, and $3,476 for the six months ended June 30, 2023 and 2022.

Future amortization expense is expected to be as followed:

Year ending December 31,
2023 (remainder)	$	3,390
2024	$	5,192
2025	$	5,192
2026	$	5,192
2027	$	5,192
Thereafter	$	12,364