Goodwill & Intangibles

12 Months Ended

Dec. 31, 2022

Goodwill & Intangibles

Goodwill & Intangibles

(6) Goodwill & Intangibles

Goodwill

The Company performs its annual goodwill impairment testing for each reporting unit as of fiscal October month-end or earlier if there is a triggering event or circumstance that indicates an impairment loss may have occurred. As of the October 23, 2022 testing date, the Company had $581.2 million of goodwill on its balance sheet. In 2022, the Company had seven reporting units. One of these reporting units, Water Quality, had no goodwill. The Company performed a qualitative analysis for each of the six remaining reporting units, which include Blücher, US Drains, Fluid Solutions-Europe, Fluid Solutions-Americas, Heating and Hot Water Solutions (HHWS) and APMEA. As a result of the qualitative analyses, the Company determined that the fair values of the reporting units were more likely than not greater than the carrying amounts. In 2022 and 2021, the Company did not need to proceed beyond the qualitative analysis, and no goodwill impairments were recorded.

In the fourth quarter of 2021, the Company completed an acquisition within the Americas segment resulting in $8.4 million of goodwill. The acquisition is not considered material to the Company’s consolidated financial statements. The changes in the carrying amount of goodwill by geographic segment were as follows:

	Gross Balance						Accumulated Impairment Losses						Foreign Currency Translation		Net Goodwill
			Acquired										January 1,
	Balance		During		Balance		Balance		Impairment		Balance		2022 -
	January 1,		the		December 31,		January 1,		Loss During		December 31,		December 31,		December 31,
	2022		Period		2022		2022		the Period		2022		2022		2022
	(in millions)
Americas	$	490.9	$	—	$	490.9	$	(24.5)	$	—	$	(24.5)	$	(0.6)	$	465.8
Europe		242.9		—		242.9		(129.7)		—		(129.7)		(6.2)		107.0
APMEA		34.0		—		34.0		(12.9)		—		(12.9)		(1.5)		19.6
Total	$	767.8	$	—	$	767.8	$	(167.1)	$	—	$	(167.1)	$	(8.3)	$	592.4

	Gross Balance						Accumulated Impairment Losses						Foreign Currency Translation		Net Goodwill
			Acquired										January 1,
	Balance		During		Balance		Balance		Impairment		Balance		2021 -
	January 1,		the		December 31,		January 1,		Loss During		December 31,		December 31,		December 31,
	2021		Period		2021		2021		the Period		2021		2021		2021
	(in millions)
Americas	$	482.5	$	8.4	$	490.9	$	(24.5)	$	—	$	(24.5)	$	—	$	466.4
Europe		252.1		—		252.1		(129.7)		—		(129.7)		(9.2)		113.2
APMEA		34.9		—		34.9		(12.9)		—		(12.9)		(0.9)		21.1
Total	$	769.5	$	8.4	$	777.9	$	(167.1)	$	—	$	(167.1)	$	(10.1)	$	600.7

Long-Lived Assets

Indefinite-lived intangibles are tested for impairment at least annually or more frequently if events or circumstances, such as a change in business conditions, indicate that it is “more likely than not” that an intangible asset might be impaired. The Company performs its annual indefinite-lived intangibles impairment assessment in the fourth quarter of each year. In 2022 and 2021, the Company performed a qualitative assessment for all tradenames. Based on the results of the assessments, the Company did not recognize an impairment on any indefinite-lived intangibles in 2022 or 2021.

Intangible assets with estimable lives and other long-lived assets are reviewed for impairment at least quarterly or more frequently if events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of intangible assets with estimable lives and other long-lived assets is measured by a comparison of the carrying amount of an asset or asset group to future net undiscounted pre-tax cash flows expected to be generated by the asset or asset group. If these comparisons indicate that an asset is not recoverable, the impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the related estimated fair value. Estimated fair value is based on either discounted future pre-tax operating cash flows or appraised values, depending on the nature of the asset. The Company determines the discount rate for this analysis based on the weighted average cost of capital using the market and guideline public companies for the related businesses and does not allocate interest charges to the asset or asset group being measured. Judgment is required to estimate future operating cash flows. In 2022, the Company recognized a $1.3 million impairment charge for an amortizable technology asset. In 2020, the Company recognized a $1.0 million impairment charge for a long-lived asset and $0.4 million impairment charge for an amortizable technology asset. All impairments were recognized within the Americas segment and due to changes in market expectations indicated the carrying amount of these assets were no longer recoverable. In 2021, there were no indications of the carrying amounts of intangible assets with estimable lives not being recoverable.

Intangible assets include the following:

	December 31, 2022						December 31, 2021
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
	(in millions)
Patents	$	5.0	$	(5.0)	$	—	$	16.1	$	(16.1)	$	—
Customer relationships		175.1		(118.6)		56.5		237.5		(173.1)		64.4
Technology		53.2		(40.5)		12.7		58.6		(40.7)		17.9
Trade names		19.8		(10.8)		9.0		26.8		(16.9)		9.9
Other		1.1		(0.6)		0.5		4.3		(3.8)		0.5
Total amortizable intangibles		254.2		(175.5)		78.7		343.3		(250.6)		92.7
Indefinite-lived intangible assets		35.0		—		35.0		35.9		—		35.9
	$	289.2	$	(175.5)	$	113.7	$	379.2	$	(250.6)	$	128.6

Aggregate amortization expense for amortized intangible assets for 2022, 2021 and 2020 was $12.1 million, $13.7 million and $15.2 million, respectively. Additionally, future amortization expense on amortizable intangible assets is expected to be $12.2 million for 2023, $12.0 million for 2024, $10.5 million for 2025, $9.6 million for 2026 and $8.4 million for 2027. Amortization expense is provided on a straight-line basis over the estimated useful lives of the intangible assets. The weighted-average remaining life of total amortizable intangible assets is 7.9 years. Customer relationships, technology, trade names and other amortizable intangibles have weighted-average remaining lives of 8.0 years, 4.4 years, 11.3 years and 18.9 years, respectively. Indefinite-lived intangible assets include trade names and trademarks. In 2022, we removed fully amortized intangible assets from both gross carrying amount and accumulated amortization, with no effect to net carrying amount, in the amounts of $11.1 million for patents, $61.9 million for customer relationships, $4.2 million for technology, $6.8 million for trade names and $3.2 million for other.