Goodwill and Other Intangible Assets

12 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying amount of goodwill by segment are as follows:

	Storage and Terminal Solutions		Utility and Power Infrastructure		Process and Industrial Facilities		Total
	(In thousands)
Net balance at June 30, 2020	$	26,618	$	6,905	$	26,846	$	60,369
Translation adjustment (1)	156		79		32		267
Net balance at June 30, 2021	26,774		6,984		26,878		60,636
Goodwill impairment	(7,208)		(2,659)		(8,445)		(18,312)
Translation adjustment (1)	(121)		(62)		(6)		(189)
Net balance at June 30, 2022	19,445		4,263		18,427		42,135
Goodwill impairment	—		—		(12,316)		(12,316)
Disposal of business(2)	—		—		(627)		(627)
Translation adjustment(1)	(48)		(24)		—		(72)
Net balance at June 30, 2023	$	19,397	$	4,239	$	5,484	$	29,120

(1)The translation adjustments relate to the periodic translation of Canadian Dollar and South Korean Won denominated goodwill recorded as a part of prior acquisitions in Canada and South Korea, in which the local currency was determined to be the functional currency.

(2)We sold our industrial cleaning business during the fourth quarter of fiscal 2023, which resulted in the allocation $0.6 million of goodwill to net assets sold in the transaction. See Note 3 - Property, Plant and Equipment, Industrial Cleaning Disposal, for more information.

Fiscal 2023

We performed our annual goodwill impairment test as of May 31, 2023, which resulted in no impairment. The fiscal 2023 test indicated that three reporting units with a combined total of $20.9 million of goodwill as of June 30, 2023 were at higher risk of future impairment. If our view of project opportunities or gross margins deteriorates, particularly for the higher risk reporting units, then we may be required to record an impairment of goodwill. Subsequent to the completion of the May 31, 2023 annual impairment test, additional information regarding new project awards became available which would significantly improve the cash flows and fair values of two of the higher risk reporting units, which comprised $15.4 million of our total goodwill as of June 30, 2023.

The estimated fair value of each segment was derived by utilizing a discounted cash flow analysis and market multiples of projected EBITDA. The key assumptions used are described in Note 1 - Summary of Significant Accounting Policies, and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Policies, Goodwill.

In the second quarter of fiscal 2023, we concluded that a goodwill impairment indicator existed in the Process and Industrial Facilities segment based on a material adverse change in gross profit on a project. Based on the indicated outcome of this project and our near-term outlook for the reporting unit, we performed an interim impairment test for the unit and concluded that its $12.3 million of goodwill was fully impaired. The impairment was recognized in operating income during the three and six months ended December 31, 2022.

Fiscal 2022

In the third quarter of fiscal 2022, we concluded that goodwill impairment indicators existed based on the decline in the price of our stock and operating results that have underperformed our forecasts during the year. Accordingly, we performed an interim impairment test as of March 31, 2022 and concluded that there was $18.3 million of total impairment to goodwill, which was recognized in operating income during the three and nine months ended March 31, 2022 as follows:

•$8.4 million in the Process and Industrial Facilities segment;

•$7.2 million in the Storage and Terminal Solutions segment; and

•$2.7 million in the Utility and Power Infrastructure segment.

Other Intangible Assets

Information on the carrying value of other intangible assets is as follows: 

		At June 30, 2023
	Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(Years)	(In thousands)
Intellectual property	10 to 15	$	2,483	$	(2,371)	$	112
Customer based(1)	6 to 15	13,144		(10,190)		2,954
Total other intangible assets		$	15,627	$	(12,561)	$	3,066

(1)Customer-based intangible assets have been adjusted in fiscal 2023 to remove $4.2 million of customer relationships that have been fully amortized.

		At June 30, 2022
	Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(Years)	(In thousands)
Intellectual property	10 to 15	$	2,558	$	(2,276)	$	282
Customer based	6 to 15	17,331		(12,817)		4,514
Total other intangible assets		$	19,889	$	(15,093)	$	4,796

Amortization expense totaled $1.7 million, $1.8 million, and $2.3 million in fiscal 2023, 2022, and 2021, respectively.

We estimate that future amortization of other intangible assets will be as follows (in thousands):

For year ending:
June 30, 2024	$	1,415
June 30, 2025	1,096
June 30, 2026	555
Total estimated amortization expense	$	3,066