GOODWILL AND INTANGIBLE ASSETS, NET

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Primarily due to a sustained decline in the Company's market value of common stock and market conditions, the Company identified a triggering event requiring a test for impairment as of June 30, 2022. The Company completed its goodwill impairment testing and recorded an impairment charge of $189,572 as the test determined that the carrying value of the reporting units of U.S. and Canada was in excess of the fair value. The recognized impairment reduced the goodwill balance to zero as of June 30, 2022. The impairment was primarily due to a deterioration in customer demand in the U.S. and Canada caused by macroeconomic and industry conditions.

The Company determined the fair value of the U.S. and Canada reporting units based on an income approach, using the present value of future discounted cash flows, and based on a market approach. The fair values were reconciled to the market value of common stock of Hydrofarm to corroborate the estimates used in the interim test for impairment. Significant estimates used to determine fair value include the weighted average cost of capital, financial forecasts, and pricing multiples derived from publicly-traded companies that are comparable to the reporting units. Refer to Note 15 - Fair Value Measurements, for further discussion of valuation inputs. There was no goodwill impairment recognized during the year ended December 31, 2021. The changes in goodwill are as follows:


	Goodwill
Balance at December 31, 2020	$	—
Acquisition - Heavy 16	18,204
Acquisition - H&G Entities	49,707
Acquisition - Aurora	46,433
Acquisition - Greenstar	43,009
Acquisition - IGE Entities	48,687
Foreign currency translation adjustments, net	(1,172)
Balance at December 31, 2021	$	204,868
Acquisition - IGE Entities - measurement period adjustments	(21,304)
Acquisition - Greenstar - measurement period adjustments	7,000
Acquisition - all others - measurement period adjustments and foreign currency translation adjustments, net	(992)
Impairments	(189,572)
Balance at December 31, 2022	$	—

Intangible Assets, net

Intangible assets, net comprised the following:


	December 31, 2022						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Finite-lived intangible assets:
Computer software	$	9,408	$	(7,976)	$	1,432	$	8,814	$	(7,208)	$	1,606
Customer relationship	99,933		(24,533)		75,400		101,222		(16,517)		84,705
Technology, formulations and recipes	114,187		(15,344)		98,843		110,561		(3,630)		106,931
Trade names and trademarks	131,410		(10,052)		121,358		—		—		—
Other	4,778		(4,246)		532		2,428		(1,744)		684
Total finite-lived intangible assets, net	359,716		(62,151)		297,565		223,025		(29,099)		193,926

Indefinite-lived intangible assets:
Trade name	2,801		—		2,801		120,773		—		120,773
Other	—		—		—		120		—		120
Total Intangible assets, net	$	362,517	$	(62,151)	$	300,366	$	343,918	$	(29,099)	$	314,819

Amortization expense related to intangible assets was $33,308 and $10,354 for the years ended December 31, 2022, and 2021, respectively. Amortization expense includes the impact from intangible assets recorded in connection with five acquisitions completed during the year ended December 31, 2021. The following are the estimated useful lives and the weighted-average amortization period as of December 31, 2022, for the major classes of finite-lived intangible assets:


	Useful lives	Weighted-average amortization period
Computer software	5 years	3 years
Customer relationships	7 to 18 years	11 years
Technology, formulations and recipes	8 to 12 years	10 years
Trade names and trademarks	15 to 20 years	18 years

The estimated aggregate future amortization expense for intangible assets subject to amortization as December 31, 2022, is summarized below:


	Estimated Future Amortization Expense
Year ending December 31,
2023	$	24,525
2024	24,418
2025	24,348
2026	23,968
Thereafter	200,306
Total	$	297,565