Goodwill and Intangibles Assets

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles Assets

Goodwill and Intangible Assets

The Company tests its goodwill and indefinite-lived intangible asset allocated to its reporting units for impairment annually on October 1, or more frequently if events or circumstances indicate that it is more likely than not that the fair value of its reporting units and indefinite-lived intangible asset are less than their carrying amount. The Company has the option to assess goodwill for possible impairment by performing a qualitative analysis to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. A quantitative assessment is performed if the qualitative assessments results in a more-likely-than-not determination or if a qualitative assessment is not performed.

On October 1, 2020, the Company performed a qualitative assessment. In conducting that qualitative assessment, the Company analyzed a variety of events or factors that may influence the fair value of the reporting unit or indefinite-life intangible, including, but not limited to: if applicable; changes in the carrying amount of the reporting unit or indefinite-life intangible;

actual and projected revenue and operating margin; relevant market data for both the Company and its peer companies; industry outlooks; macroeconomic conditions; liquidity; changes in key personnel; and the Company's competitive position. Significant judgment was used to evaluate the totality of these events and factors to make the determination of whether it is more likely than not that the fair value of the reporting units or indefinite-life intangible is less than its carrying value. No impairment losses were identified as a result of our qualitative assessment during the year ended December 31, 2020.

During the year ended December 31, 2019, the Company determined that the fair value of its construction reporting unit was below its carrying amount, and, accordingly, recognized a non-cash impairment charge for its Construction reporting unit of $4.4 million.

The Company reviews intangible assets with definite lives subject to amortization whenever events or changes in circumstances (triggering events) indicate that the carrying amount of an asset may not be recoverable. Intangible assets with definite lives subject to amortization are amortized on a straight-line or accelerated basis with estimated useful lives ranging from 1 to 15 years. Events or circumstances that might require impairment testing include the identification of other impaired assets within a reporting unit, loss of key personnel, the disposition of a significant portion of a reporting unit, a significant decline in stock price, or a significant adverse change in the Company’s business climate or regulations affecting the Company.

Changes in the carrying amount of goodwill, by segment, consist of the following:

(in thousands)	Construction		Service		Total
December 31, 2018	$	4,359	$	6,129	$	10,488
Third quarter 2019 impairment	(4,359)		—		(4,359)
December 31, 2019	$	—	$	6,129	$	6,129
2020 Activity	—		—		—
December 31, 2020	$	—	$	6,129	$	6,129

Definite-lived and indefinite-lived intangible assets consist of the following:

(in thousands)	Gross carrying amount		Accumulated amortization		Net intangible assets
December 31, 2020
Amortized intangible assets:
Backlog – Construction	$	4,830	$	(4,830)	$	—
Customer Relationships – Service	4,710		(3,112)		1,598
Favorable Leasehold Interests	530		(407)		123
Total amortized intangible assets	10,070		(8,349)		1,721
Unamortized intangible assets:
Trade Name	9,960		—		9,960
Total unamortized intangible assets	9,960		—		9,960
Total amortized and unamortized assets, excluding goodwill	$	20,030	$	(8,349)	$	11,681

(in thousands)	Gross carrying amount		Accumulated amortization		Net intangible assets
December 31, 2019
Amortized intangible assets:
Backlog – Construction	$	4,830	$	(4,830)	$	—
Customer Relationships – Service	4,710		(2,655)		2,055
Favorable Leasehold Interests	530		(234)		296
Total amortized intangible assets	10,070		(7,719)		2,351
Unamortized intangible assets:
Trade Name	9,960		—		9,960
Total unamortized intangible assets	9,960		—		9,960
Total amortized and unamortized assets, excluding goodwill	$	20,030	$	(7,719)	$	12,311

The definite-lived intangible assets are amortized over the period the Company expects to receive the related economic benefit, which for customer relationships is based upon estimated future net cash inflows. The Company has previously determined that its trade name has an indefinite useful life. The Limbach trade name has been in existence since the Company’s founding in 1901 and therefore is an established brand within the industry.

Total amortization expense for these amortizable intangible assets was $0.6 million for the year ended December 31, 2020 and December 31, 2019.

The estimated remaining useful lives of definite-lived intangible assets are as follows:

Asset	Amortization Method	Estimated Remaining Useful Life
Customer Relationships – Service	Pattern of economic benefit	10.0 years
Favorable Leasehold Interests	Straight line	8.17 years

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

(in thousands)	Estimated Amortization Expense
2021	$	379
2022	304
2023	245
2024	198
2025	161
2026 and thereafter	434
Total	$	1,721