Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

The following table reflects the changes in carrying amounts of goodwill by segment for the six months ended June 30, 2022:


(In thousands)	Harsco Environmental Segment		Harsco Clean Earth Segment		Consolidated Totals
Balance at December 31, 2021	$	399,230	$	483,879	$	883,109

Goodwill impairment	—		(104,580)		(104,580)
Foreign currency translation	(19,090)		—		(19,090)
Balance at June 30, 2022	$	380,140	$	379,299	$	759,439

The Company tests for goodwill impairment annually, or more frequently if indicators of impairment exist, or if a decision is made to dispose of a business. The Company performs its annual goodwill impairment test as of October 1 and monitors for triggering events on an ongoing basis.

As of June 30, 2022, the Company determined that an interim test of goodwill was required. The triggering event was principally due to lower near-term earnings expectations due to the impacts of inflation. The Company used a discounted cash flow model (“DCF model”) to estimate the current fair value of the Clean Earth reporting unit (Level 3), which is defined as the Clean Earth Segment. A number of significant assumptions and estimates are involved in the preparation of DCF models including future revenues and operating margin growth, the weighted-average cost of capital (“WACC”), tax rates, capital spending, pension funding, the impact of business initiatives and working capital projections. The DCF model is based on approved forecasts for the early years and historical relationships and projections for later years. The WACC rate is derived from internal and external factors including, but not limited to, the average market price of the Company's stock, shares outstanding, book value of the Company's debt, the long-term risk-free interest rate, and both market and size-specific risk premiums. As a result of this testing, the Company recorded a goodwill impairment charge of $104.6 million for the Clean Earth Segment in the second quarter of 2022. This charge had no impact on the Company's cash flows or compliance with debt covenants.

For the Harsco Environmental Segment and the Rail business, the Company determined that, as of June 30, 2022, no interim goodwill impairment testing was necessary. However, a continued economic downturn, including continued cost inflation and labor shortages could impact the Company's future projected cash flows used to estimate fair value, which could result in an impairment charge to any of the Company's segments in a future period.

Other Intangibles

Because of lower-than-expected results for the Altek Group of the Harsco Environmental Segment for 2021 due to the timing of customer orders, the Company tested Altek's asset group's recoverability in the fourth quarter of 2021 and no impairment was recorded. The long-lived assets (other than goodwill) of the Altek Group within the Harsco Environmental Segment primarily consist of intangible assets which have a carrying value of approximately $33 million at June 30, 2022. The Company has not identified any triggering events for the Altek asset group in the second quarter of 2022. However, if actual results prove inconsistent with the Company’s assumptions and judgments of the projected cash flows, it could result in impairment of the Altek intangible assets in future periods.