Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill represents the excess of the aggregate purchase price over the fair value of the identifiable net assets acquired and is not amortized. Delek performs an annual assessment of whether goodwill retains its value. This assessment is done more frequently if indicators of potential impairment exist. We performed our annual goodwill impairment review in the fourth quarter of 2023, 2022 and 2021. This review was performed at the reporting unit level, which is at or one level below our operating segment. For a quantitative assessment, we estimated the value of each of our reporting units using a discounted cash flows ("DCF") analysis and a multiple of expected future cash flows, such as those used by third-party analysts. The DCF analysis included a market participant weighted average cost of capital, forecasted crack spreads, future volumes, gross margin, capital expenditures, and long-term growth rate based on historical information and our best estimate of future forecasts. The market approach involves significant judgment, including selection of an appropriate peer group, selection of valuation multiples, and determination of the appropriate weighting in our valuation model.

With respect to the goodwill associated with the reporting units within the logistics segment, we performed a quantitative assessment for our Delaware Gathering reporting unit and a qualitative assessment for our other reporting units. Our 2023 testing of goodwill did not identify any impairments other than our Delaware Gathering reporting unit, which reported a goodwill impairment charge of $14.8 million. The impairment was primarily driven by the significant increases in interest rates and timing of system connections with our producer customers. We performed a qualitative assessment in 2022 and 2021 for the reporting units within the logistics segment.

With respect to the goodwill associated with the reporting units within the refining and retail segments, we performed a qualitative assessment in 2023 and 2022 and a quantitative assessment in 2021.

For the year ended December 31, 2023, the annual impairment review resulted in an impairment charge of $14.8 million, which is included in asset impairment in the consolidated statements of income. For the years ended December 31, 2022 and 2021, there was no goodwill impairment charge.

A summary of our goodwill by segment is as follows (in millions):


		Refining		Logistics		Retail		Corporate, Other and Eliminations		Total
Gross goodwill balance		$	801.3	$	12.2	$	42.2	$	—	$	855.7
Accumulated impairment losses		(126.0)				—		—		(126.0)
Balance,	December 31, 2021	675.3		12.2		42.2		—		729.7
Acquisition		—		14.8		—		—		14.8

Write-off goodwill associated with stores sold		—		—		(0.2)		—		(0.2)
Gross goodwill balance		801.3		27.0		42.0		—		870.3
Accumulated impairment losses		(126.0)		—		—		—		(126.0)
Balance,	December 31, 2022	675.3		27.0		42.0		—		744.3


Goodwill Impairment		—		(14.8)		—		—		(14.8)
Gross goodwill balance		801.3		27.0		41.9		—		870.2
Accumulated impairment losses		(126.0)		(14.8)		—		—		(140.8)
Balance,	December 31, 2023	$	675.3	$	12.2	$	41.9	$	—	$	729.4

Intangibles

A summary of our identifiable intangible assets are as follows (in millions):


	As of December 31, 2023							As of December 31, 2022
	Useful Life	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Intangible Assets subject to amortization:

Third-party fuel supply agreement	10 years	$	49.0	$	(31.8)	$	17.2	$	49.0	$	(26.9)	$	22.1
Fuel trade name	5 years	4.0		(4.0)		—		4.0		(4.0)		—
Rights-of-way	8 - 35 years	15.0		(1.1)		13.9		13.5		(0.4)		13.1
Customer relationships	11.6 years	210.0		(28.7)		181.3		210.0		(10.6)		199.4
Intangible assets not subject to amortization:
Rights-of-way	Indefinite	61.2				61.2		58.4				58.4
Line space history	Indefinite	12.0				12.0		12.0				12.0
Liquor licenses	Indefinite	8.5				8.5		8.5				8.5
Refinery permits	Indefinite	2.1				2.1		2.1				2.1
Total		$	361.8	$	(65.6)	$	296.2	$	357.5	$	(41.9)	$	315.6

Amortization of intangible assets was $23.7 million, $16.2 million and $5.7 million during the years ended December 31, 2023, 2022 and 2021, respectively, and is included in depreciation and amortization on the accompanying consolidated statements of income.

Amortization expense for the next five years is estimated to be as follows (in millions):


2024	$	23.6
2025	$	23.6
2026	$	23.7
2027	$	21.2
2028	$	18.8