Note 5 - Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

(5) GOODWILL AND INTANGIBLE ASSETS

We have three operating segments which are also our reporting units: Electronic Test, Environmental Technologies and Process Technologies. Goodwill and intangible assets on our balance sheets are the result of our acquisitions. 

Goodwill

Changes in the amount of the carrying value of goodwill for the years ended December 31, 2024 and 2023 are as follows:

(in thousands)
Balance - January 1, 2023	$	21,605
Impact of foreign currency translation adjustments		123
Balance - December 31, 2023	$	21,728
Alfamation acquisition (Electronic Test segment)		9,883
Impact of foreign currency translation adjustments (all goodwill)		(867	)
Balance - December 31, 2024	$	30,744

Goodwill was comprised of the following:

	December 31,
(in thousands)	2024		2023
Electronic Test	$	12,567	$	3,436
Environmental Technologies		1,817		1,817
Process Technologies		16,360		16,475
Total Goodwill	$	30,744	$	21,728

Intangible Assets

Changes in the amount of the carrying value of indefinite-lived intangible assets for the year ended December 31, 2024 and 2023 are as follows:

(in thousands)
Balance - January 1, 2023	$	8,369
Impact of foreign currency translation adjustments		29
Balance - December 31, 2023		8,398
Alfamation acquisition		1,967
Impact of foreign currency translation adjustments		(190	)
Balance - December 31, 2024	$	10,175

Changes in the amount of the carrying value of finite-lived intangible assets for the years ended December 31, 2024 and 2023 are as follows:

(in thousands)
Balance - January 1, 2023	$	10,190
Impact of foreign currency translation adjustments		102
Amortization		(2,094	)
Balance - December 31, 2023		8,198
Alfamation™ acquisition		11,365
Impact of foreign currency translation adjustments		(817	)
Amortization		(2,545	)
Balance - December 31, 2024	$	16,201

The following tables provide further detail about our intangible assets at December 31, 2024 and 2023:

	December 31, 2024
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	23,912	$	11,496	$	12,416
Technology		5,786		2,001		3,785
Patents		590		590		-
Backlog		481		481		-
Software		270		270		-
Trade name		140		140		-
Total finite-lived intangible assets		31,179		14,978		16,201
Indefinite-lived intangible assets:
Trademarks		10,175				10,175
Total intangible assets	$	41,354	$	14,978	$	26,376

	December 31, 2023
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-lived intangible assets:
Customer relationships	$	16,407	$	9,687	$	6,720
Technology		2,895		1,417		1,478
Patents		590		590		-
Backlog		499		499		-
Software		270		270		-
Trade name		140		140		-
Total finite-lived intangible assets		20,801		12,603		8,198
Indefinite-lived intangible assets:
Trademarks		8,398				8,398
Total intangible assets	$	29,199	$	12,603	$	16,596

We generally amortize our finite-lived intangible assets over their estimated useful lives based on the pattern in which the economic benefits of the intangible assets are expected to be consumed, or on a straight-line basis, if an alternate amortization method cannot be reliably determined. Any such alternate amortization method would be based on the pattern in which the economic benefits of the intangible asset are expected to be consumed. None of our intangible assets have any residual value.

The following table sets forth the estimated annual amortization expense for each of the next five years and thereafter at December 31, 2024:

(in thousands)
2025	$	3,184
2026		2,393
2027		1,855
2028		1,531
2029		1,227
Thereafter		6,011
Total estimated amortization of finite-lived intangible assets	$	16,201

Impairment of Goodwill and Indefinite Life Intangible Assets

During October 2024 and 2023, we assessed our goodwill and indefinite life intangible asset for impairment in accordance with the requirements of ASC 350 using a quantitative approach. Our goodwill impairment assessment is based upon the income approach, which estimates the fair value of our reporting units based upon a discounted cash flow approach. This fair value is then reconciled to our market capitalization at year end with an appropriate control premium. The discount rate used in 2024 for the discounted cash flows ranged between 19.5% and 20.5% depending on the reporting unit. The discount rate used in 2023 for the discounted cash flows ranged between 14.5% and 16.0% depending on the reporting unit. The selection of the rates in each year was based upon our analysis of market-based estimates of capital costs and discount rates. The determination of the fair value of our reporting units requires management to make significant estimates and assumptions including the selection of control premiums, discount rates, terminal growth rates, forecasts of revenue and expense growth rates, income tax rates, changes in working capital, depreciation, amortization and capital expenditures. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the reporting unit or the amount of the goodwill impairment charge.

During the goodwill impairment assessment in both 2024 and 2023, we compared the fair value of our reporting units with their carrying values. This assessment indicated no impairment existed as the fair value of the reporting units exceeded their carrying values in both 2024 and 2023.

During the indefinite life intangible asset impairment assessment in both 2024 and 2023, we compared the fair value of our indefinite life intangible assets with their carrying values. This assessment indicated no impairment existed as the fair value of the indefinite life intangible assets exceeded their carrying values in both 2024 and 2023. 

Impairment of Long-Lived Assets and Finite-lived Intangible Assets

During 2024 and 2023, we did not review any of our long-lived assets for impairment as there were no events or changes in business circumstances that would indicate an impairment might exist.