Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

At the beginning of 2021, the Company had five reporting units to which goodwill was allocated: steel, on-board weighing, instrumentation, DSI, and DTS.

For the steel and on-board weighing goodwill reporting units, the Company performed the qualitative assessment, which included assessment of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and other entity specific events which could impact the reporting unit. Based on this review, it was determined that the fair value of each of those reporting units was in excess of its carrying value and therefore no quantitative impairment test was required.

During the second quarter of 2021, due to updated financial projections, the Company performed a quantitative impairment test on its instrumentation reporting unit's goodwill and indefinite-lived intangible trade name. The Company recognized a non-cash impairment loss of $1.1 million in goodwill and $0.1 million in indefinite-lived intangible trade name. The impairment was driven mainly by changes in forecasted projections including slower growth rate in revenues. The Company performed its annual impairment test on indefinite-lived trade names as of the first day of the fourth fiscal quarter of 2021. The impairment test indicated no additional impairment. After considering the impact of the second quarter impairment charges, the carrying amount of goodwill and indefinite-lived trade names as of December 31, 2021 was $0.0 million and $0.3 million, respectively.

For the DSI goodwill reporting unit, the Company performed the quantitative impairment test. In estimating the fair value of our DSI reporting unit the Company used the income approach. The income approach to valuation requires management to make significant estimates and assumptions related to future revenues, profitability, working capital requirements and selection of discount rate and long term growth rate. Changes in these estimates and assumptions could have a significant impact on the fair value of the reporting units. The Company's required goodwill and indefinite-lived asset annual impairment test is completed as of the first day of the fourth fiscal quarter each year. In 2021, the results of the quantitative impairment test for the DSI reporting unit indicated no impairment, with the fair value exceeding the carrying value by approximately 12% for goodwill and 15% for the indefinite-lived trade name.

The Company's analysis in 2020 resulted in the fair value exceeding the carrying value for the DSI reporting unit and a non-cash impairment loss of $2.4 million for the instrumentation reporting unit.

In 2019, the Company did not recognize an impairment for the instrumentation reporting unit, as the fair value exceeded its carrying value by approximately 12%.

The goodwill and indefinite-lived trade name allocated the DTS goodwill reporting unit is still provisional as of December 31, 2021 and therefore will be tested in the following year's annuals impairment test.

The change in the carrying amount of goodwill by segment is as follows (in thousands):

	Total		Measurement Systems
			KELK Acquisition		DSI Acquisition		Stress-Tek Acquisition		Pacific Instruments Acquisition		DTS Acquisition
Balance at January 1, 2020	$	35,018	$	6,559	$	18,606	$	6,311	$	3,542	$	—
Adjustment to goodwill acquired	(1,700)		—		(1,700)		—		—		—
Impairment charges	(2,416)		—		—		—		(2,416)		—
Foreign currency translation adjustment	203		167		36		—		—		—
Balance at December 31, 2020	31,105		6,726		16,942		6,311		1,126		—
Goodwill acquired	15,903		—		—		—		—		15,903
Impairment charges	(1,126)		—		—		—		(1,126)		—
Foreign currency translation adjustment	(52)		(20)		(32)		—		—		—
Balance at December 31, 2021	$	45,830	$	6,706	$	16,910	$	6,311	$	—	$	15,903

Intangible assets were as follows (in thousands):

	December 31,
	2021		2020
Intangible assets subject to amortization
(Definite-lived):
Patents and acquired technology	$	33,026	$	19,804
Customer relationships	34,036		26,061
Trade names	1,665		1,747
Non-competition agreements	11,335		12,259
	80,062		59,871
Accumulated amortization:
Patents and acquired technology	(7,430)		(5,895)
Customer relationships	(14,918)		(13,363)
Trade names	(1,665)		(1,747)
Non-competition agreements	(11,329)		(12,250)
	(35,342)		(33,255)
Net intangible assets subject to amortization	$	44,720	$	26,616
Intangible assets not subject to amortization
(Indefinite-lived):
Trade names	7,717		5,423
	$	52,437	$	32,039

Certain intangible assets are subject to foreign currency translation.

In conjunction with the acquisition of DTS on June 1, 2021 (See Note 3), the Company allocated $8.1 million of the purchase price to customer relationships, $13.2 million to patents and acquired technology, and $2.4 million to indefinite-lived trade names.

Amortization expense was $3.3 million, $2.4 million, and $1.7 million, for the years ended December 31, 2021, 2020, and 2019, respectively. Amortization expense in 2021 included $0.8 million related to the DTS acquisition.

Estimated annual amortization expense for each of the next five years is as follows (in thousands):

2022	$	3,873
2023	3,767
2024	3,734
2025	3,733
2026	3,733