Goodwill and Other Intangible Assets, Net

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets, Net

Goodwill and Other Intangible Assets, Net

Goodwill

Changes in the carrying amount of goodwill by operating segment during the six months ended June 30, 2024, consisted of the following (in thousands):

	Array Legacy Operations(1)		STI Operations		Total
Beginning balance	$	69,727	$	365,864	$	435,591
Foreign currency translation	—		(33,090)		(33,090)
Ending balance	$	69,727	$	332,774	$	402,501

(1) Goodwill attributable to Array Legacy Operations is net of impairment of $51.9 million.

Each quarter the Company evaluates if facts and circumstances indicate that it is more-likely-than-not that the fair value of its reporting units is less than their carrying value, which would require the Company to perform an interim goodwill impairment test During our most recent evaluation, the Company noted facts and circumstances around its STI Operations, were indicative that the fair value of the STI reporting unit could be less than its carrying value. Accordingly, with the assistance of a third-party specialist, the Company performed the first step of the goodwill impairment test (“Step One”). Based on the results of the Step One test, the Company concluded there were no indicators of impairment as of June 30, 2024.

The Company concluded there were no indicators of impairment of the Array Legacy Operations operating unit as of June 30, 2024.

Other Intangible Assets, Net

Other intangible assets consisted of the following (in thousands, except useful lives):

	Estimated Useful Lives (Years)	June 30, 2024		December 31, 2023
Amortizable:
Developed technology	14	$	203,800	$	203,800
Computer software	3	1,452		5,267
Customer relationships	10	313,563		336,134
Backlog	1	49,124		54,438
Trade name	20	25,147		27,061
Total amortizable intangibles		593,086		626,700
Accumulated amortization:
Developed technology		116,183		108,905
Computer software		932		1,274
Customer relationships		126,450		115,444
Backlog		49,124		54,322
Trade name		3,106		2,666
Total accumulated amortization		295,795		282,611
Total amortizable intangibles, net		297,291		344,089
Non-amortizable:
Trade name		10,300		10,300
Total other intangible assets, net		$	307,591	$	354,389

Amortization expense related to intangible assets was $11.8 million and $12.6 million for the three months ended June 30, 2024 and 2023, respectively, of which $3.6 million was included in amortization of developed technology, a component of cost of revenue, in both periods and $8.1 million and $9.0 million, respectively, was included in depreciation and amortization, on the accompanying condensed consolidated statements of operations.

Amortization expense related to intangible assets was $24.7 million and $26.5 million for the six months ended June 30, 2024 and 2023, respectively, of which $7.3 million was included in amortization of developed technology, a component of cost of revenue, in both periods and $17.4 million and $19.2 million, respectively, was included in depreciation and amortization, on the accompanying condensed consolidated statements of operations.

Estimated future amortization expense of intangible assets as of June 30, 2024, is as follows (in thousands):

	Amount
Remainder of 2024	$	23,928
2025	47,594
2026	42,817
2027	38,300
2028	38,300
Thereafter	106,352
	$	297,291

Long-lived assets, including both amortizable and non-amortizable intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset group may not be recoverable.

During the second quarter of 2024, the Company noted facts and circumstances around asset groups at its STI reporting unit were indicative that the fair value could be less than its carrying value. The Company performed a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the STI asset groups to the net carrying value of the STI asset groups as of June 30, 2024. The result of the recoverability test indicated the sum of the expected future undiscounted cash flows was greater than the carrying amount of the asset groups of the STI. Accordingly, we concluded the asset groups of the STI reporting unit were not impaired as of June 30, 2024.

As of June 30, 2024, no events or circumstances were noted that would indicate the carrying amount of any of Legacy Array’s asset groups may not be recoverable.