Equity Investments

12 Months Ended

Dec. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

NOTE 11. EQUITY INVESTMENTS

Investment in joint venture as of December 31, 2022 and 2021 reflected the equity interest in our 50% investment in our WAVE joint venture. The WAVE joint venture is reflected within the Mineral Fiber segment in our consolidated financial statements using the equity method of accounting.

We use the cumulative earnings approach to determine the appropriate classification of distributions from WAVE within our cash flow statement. For all years presented, cumulative distributions received in prior periods, less distributions that were returns of investment, exceeded our cumulative equity earnings from WAVE as adjusted for the amortization of basis differences. Accordingly, the distributions were reflected as returns of investment in cash flows from investing activity in our Consolidated Statements of Cash Flows for all years presented. Distributions from WAVE in 2022, 2021 and 2020, were $104.5 million, $78.3 million, and $81.5 million, respectively.

In certain markets, we sell WAVE products directly to customers pursuant to specific terms of sale. In those circumstances, we record the sales and associated costs within our consolidated financial statements. The total sales associated with these transactions were $47.3 million, $42.3 million and $35.2 million for the years ended 2022, 2021 and 2020, respectively.

Condensed financial data for WAVE is summarized below.


	December 31, 2022		December 31, 2021
Current assets	$	100.8	$	119.7
Non-current assets (1)		86.3		42.1
Current liabilities (1)		31.3		37.1
Other non-current liabilities (1)		372.3		297.4

(1)

Includes initial ROU assets and lease liabilities of $29.4 million recognized upon adoption of Accounting Standards Codification Topic 842 – Leases on January 1, 2022.


	2022		2021		2020
Net sales	$	458.2	$	430.8	$	343.3
Gross profit		231.1		244.5		194.7
Net earnings		163.7		184.6		137.8

Our recorded investment in WAVE was higher than our 50% share of the carrying values reported in WAVE’s consolidated financial statements by $132.2 million as of December 31, 2022 and $136.4 million as of December 31, 2021. These differences are due to our

adoption of fresh-start reporting upon emergence from Chapter 11 in October 2006, while WAVE’s consolidated financial statements do not reflect fresh-start reporting. The differences are composed of the following fair value adjustments to assets:


	December 31, 2022		December 31, 2021
Property, plant and equipment	$	0.4	$	0.4
Other intangibles		101.4		105.6
Goodwill		30.4		30.4
Total	$	132.2	$	136.4

Other intangibles include customer relationships and trademarks. Customer relationships are amortized over 20 years and trademarks have an indefinite life.

Management regularly evaluates its investment in WAVE for impairment. Based on those evaluations, management concluded that its investment in WAVE was not impaired in 2022, 2021 or 2020.

See discussion in Note 26 to the Consolidated Financial Statements for additional information on this related party.