Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

The Company performs its annual testing of goodwill and indefinite-lived intangibles on the first day of the fourth quarter of each year. Between annual testing dates, the Company monitors factors such as its market capitalization, comparable company market multiples and macroeconomic conditions to identify conditions that could impact the Company’s assumptions utilized in the determination of the estimated fair values of the Company’s reporting units and indefinite-lived intangible assets significantly enough to trigger an impairment.

The goodwill impairment tests are based on determining the fair value of the specified reporting units based on management judgments and assumptions using the discounted cash flows under the income approach classified in Level 3 of the fair value hierarchy and comparable company market valuation classified in Level 2 of the fair value hierarchy approaches. The Company has identified Global Ceramic, Flooring NA and Flooring ROW as its reporting units for the purposes of allocating goodwill and intangibles at the asset level, as well as assessing impairments. The valuation approaches are subject to key judgments and assumptions that are sensitive to change such as judgments and assumptions about appropriate sales growth rates, operating margins, weighted average cost of capital (“WACC”) and comparable company market multiples.

As a result of a decrease in the Company’s market capitalization, macroeconomic conditions and an increase in the WACC, the Company determined that a triggering event occurred requiring goodwill impairment testing for each of its reporting units as of September 30, 2023 and October 1, 2022. The impairment tests indicated pre-tax, non-cash goodwill impairment charges related to all 3 reporting units of $870,750 ($859,725 net of tax) and in the Global Ceramic reporting unit of $688,514 ($679,664 net of tax) which the Company recorded during 2023 and 2022, respectively.

The Company compared the estimated fair values of its indefinite-lived intangibles to their carrying values and determined that there were impairment charges of $6,994 ($5,181 net of tax) in all 3 reporting units and $7,257 ($5,939 net of tax) in the Flooring ROW and Flooring NA reporting units during the third quarter of 2023 and 2022, respectively.

The Company’s annual testing date for goodwill and tradenames is the first day of its fourth quarter and due to the fact

that there were no significant changes in facts or circumstances in the one calendar day, the Company determined there was no additional impairment of goodwill or tradenames. The Company conducted a qualitative analysis as of December 31, 2023 and determined there was no indication of an impairment.

A significant or prolonged deterioration in economic conditions, continued increases in the costs of raw materials and energy combined with an inability to pass these costs on to customers, a further decline in the Company’s market capitalization or comparable company market multiples, projected future cash flows, or increases in the WACC, could impact the Company’s assumptions and require a reassessment of goodwill or indefinite-lived intangible assets for impairment in future periods. Future declines in estimated after tax cash flows, increases in the WACC or a decline in market capitalization could result in an additional indication of impairment in one or more of the Company’s reporting units.

The following tables summarize the components of goodwill and intangible assets:

Goodwill:


	Global Ceramic		Flooring NA	Flooring ROW	Total
Balances as of December 31, 2021 (1)	$	1,031,337	531,144	1,045,428	2,607,909
Goodwill adjustments related to acquisitions	—		—	(2,722)	(2,722)
Goodwill recognized	—		60,841	11,542	72,383
Impairment charges	(688,514)		—	—	(688,514)
Currency translation	(2,989)		—	(58,308)	(61,297)
Balances as of December 31, 2022	339,834		591,985	995,940	1,927,759
Goodwill adjustments related to acquisitions	—		(4,888)	3,217	(1,671)
Goodwill recognized	87,520		—	—	87,520
Impairment charges	(424,286)		(214,830)	(231,634)	(870,750)
Currency translation	(3,068)		—	19,934	16,866
Balances as of December 31, 2023	$	—	372,267	787,457	1,159,724

(1) Net of accumulated impairment losses of $1,327,425 ($531,930 in Global Ceramic, $343,054 in Flooring NA and $452,441 in Flooring ROW).

Intangible assets:


	Tradenames
Indefinite life assets not subject to amortization:
Balance as of December 31, 2021	$	694,905
Intangible assets acquired	335
Intangible assets impaired	(7,257)
Currency translation	(19,655)
Balance as of December 31, 2022	668,328
Intangible assets acquired	38,539
Intangible assets impaired	(6,994)
Currency translation	5,873
Balance as of December 31, 2023	$	705,746


	Customer Relationships		Patents	Other	Total
Intangible assets subject to amortization:
Balances as of December 31, 2021
Gross carrying amount	$	680,177	256,336	6,786	943,299
Accumulated amortization	(483,748)		(252,414)	(2,062)	(738,224)
Net intangible assets subject to amortization	196,429		3,922	4,724	205,075
Balances as of December 31, 2022
Gross carrying amount	673,586		242,089	8,511	924,186
Accumulated amortization	(493,361)		(239,010)	(2,195)	(734,566)
Net intangible assets subject to amortization	180,225		3,079	6,316	189,620
Balances as of December 31, 2023
Gross carrying amount	691,498		249,680	8,754	949,932
Accumulated amortization	(531,003)		(247,150)	(2,142)	(780,295)
Net intangible assets subject to amortization	$	160,495	2,530	6,612	169,637


	Years Ended December 31,
	2023		2022	2021
Amortization expense	$	28,339	28,086	29,280

Estimated amortization expense for the years ending December 31 are as follows:


	Amount
2024	$	28,366
2025	28,154
2026	27,933
2027	20,742
2028	12,948