Goodwill

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the carrying value of goodwill are as follows:


	(dollars in thousands)
Balance at December 31, 2020
Goodwill	$	28,871
Accumulated impairment losses	(6,760)
Net beginning balance	22,111
Goodwill impairment	(5,115)
Balance at December 31, 2021	$	16,996

Goodwill Impairment

The Company experienced a sustained decline in market capitalization during the third quarter of 2021 representing a potential indicator of impairment. Furthermore, the Company continued to experience the repercussions from the global semiconductor shortage. The most impactful was the decline in sales to our automotive customers, as North American automotive production volumes continued to be less than expected. The Company identified these circumstances and concluded it was more likely than not the fair value of the goodwill was impaired, and performed an interim quantitative assessment. The quantitative assessment was performed as of September 30, 2021, utilizing a combination of the income and market approaches. The analysis required the comparison of the Company’s carrying value with it’s fair value, with an impairment recorded for any excess of carrying value over the fair value. The discounted cash flow method was used to determine the fair value of the reporting unit under the income approach. Key assumptions used in the discounted cash flow analysis included a discount rate of 14.8%, forecasted revenue for 2022 through 2025, a terminal growth rate for cash flows of 3%, and EBITDA margin of 10.8% by 2025. The guideline public company method was used to determine the fair value of the reporting unit under the market approach. Key assumptions used in this method included revenue and EBITDA multiples for each guideline company. The results of the quantitative analysis performed indicated the carrying value of the reporting unit exceeded the fair value of the reporting unit as of September 30, 2021. As a result, the Company recorded a $5.1 million impairment charge on the consolidated statement of operations for the twelve months ended December 31, 2021.

Annual Assessment

During 2021, the Company decided to change the testing date for the annual impairment assessment for goodwill from December 31, to October 1. This change was made to align the annual assessment with the Company’s annual planning process and to alleviate the additional demand created when conducting the assessment during the year-end financial close process.