Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill

At December 31, 2022, goodwill related to the Former Parent’s acquisition of the Company was $69.7 million, net of accumulated impairment of $51.9 million.

As a result of the STI Acquisition, the Company recorded $343.4 million of goodwill and began reporting two segments, Array Legacy Operations and STI Operations (the newly acquired STI Operations). These reportable segments are separate operating segments and reporting units.

Changes in the carrying amount of goodwill by reporting unit during the year ended December 31, 2023, consisted of the following (in thousands):

	Array Legacy Operations(1)		STI Operations		Total
Beginning balance	$	69,727	$	346,457	$	416,184
Adjustment to goodwill	—		(2,000)		(2,000)
Foreign currency translation	—		21,407		21,407
Ending balance	$	69,727	$	365,864	$	435,591

(1) Goodwill attributable to Array Legacy Operations is net of impairment of $51.9 million.

In connection with the acquisition of STI, the Company had understated goodwill by $2.0 million and overstated inventory by the same amount that was sold during 2022. The Company corrected the goodwill balance during the first quarter 2023, resulting in an increase in goodwill and a decrease in cost of revenue.

The Company performs an annual goodwill impairment test, utilizing a qualitative or quantitative impairment analysis during the fourth quarter of each year. The results of this analysis indicated that goodwill was not impaired as of December 31, 2023 and 2022.

Other Intangible Assets

Other intangible assets consisted of the following (in thousands, except for useful lives):

		December 31,
	Estimated Useful Life (Years)	2023		2022
Amortizable:
Developed technology	14	$	203,800	$	203,800
Customer relationships	10	336,134		321,935
Backlog	1	54,438		51,015
Trade name	20	27,061		25,682
Total amortizable intangibles		621,433		602,432
Accumulated amortization:
Developed technology		108,905		94,347
Customer relationships		115,444		81,268
Backlog		54,322		49,507
Trade name		2,666		1,246
Total accumulated amortization		281,337		226,368
Total amortizable intangibles, net		340,096		376,064
Non-amortizable:
Trade name		10,300		10,300
Total other intangible assets, net		$	350,396	$	386,364

Amortization expense related to intangible assets was $51.3 million, $98.2 million and $23.5 million for the years ended December 31, 2023, 2022 and 2021, respectively, of which $14.6 million was included in amortization of developed technology, a component of cost of revenue, in all three periods. The remaining amortization expense of $36.7 million, $83.6 million and $8.9 million, respectively, was included in depreciation and amortization, on the accompanying consolidated statements of operations.

The following table presents estimated future annual amortization expense (in thousands):

	Amount
2024	$	49,107
2025	49,107
2026	44,801
2027	40,157
2028	40,157
Thereafter	116,767
	$	340,096

The Company performs an annual impairment test on its Trade name indefinite-lived intangible asset, utilizing a qualitative or quantitative impairment analysis during the fourth quarter of each year. The results of this analysis indicated that its Trade name was not impaired as of December 31, 2023 and 2022.