Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

The following table details the changes in the carrying amount of goodwill:


	Engine Products		Fastening Systems		Engineered Structures		Forged Wheels		Total
Balances at December 31, 2020
Goodwill	$	2,890	$	1,620	$	306	$	7	$	4,823
Accumulated impairment losses	(719)		—		(2)		—		(721)
Goodwill, net	2,171		1,620		304		7		4,102
Impairment (See Note U)	—		(4)		—		—		(4)
Translation and other	(22)		(9)		—		—		(31)


Balances at December 31, 2021
Goodwill	2,868		1,611		306		7		4,792
Accumulated impairment losses	(719)		(4)		(2)		—		(725)
Goodwill, net	2,149		1,607		304		7		4,067


Translation and other	(38)		(16)		—		—		(54)

Balances at December 31, 2022
Goodwill	2,830		1,595		306		7		4,738
Accumulated impairment losses	(719)		(4)		(2)		—		(725)
Goodwill, net	$	2,111	$	1,591	$	304	$	7	$	4,013

During the 2022 annual review of goodwill in the fourth quarter, management elected to perform qualitative assessments on the Engine Products and Forged Wheels reporting units and performed quantitative impairment tests on the Engineered Structures and Fastening Systems reporting units. The estimated fair values for the Engineered Structures and Fastening Systems reporting units exceeded their respective carrying values by approximately 40%; thus, there were no goodwill impairments. Howmet uses a discounted cash flow (“DCF”) model to estimate the current fair value of the reporting unit, which is compared to its carrying value, when testing for impairment. Management believes forecasted cash flows are the best indicator of such fair value. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including sales growth, production costs, capital spending, and discount rate. Assumptions can vary among the reporting units. Cash flow forecasts are generally based on approved business unit operating plans for the early years and historical relationships in later years. The WACC rate for the individual reporting units is estimated with the assistance of valuation experts. The annual goodwill impairment tests in the fourth quarters of 2022, 2021, and 2020 indicated that goodwill was not

impaired for any of the Company’s reporting units. If actual results or external market factors decline significantly from management’s estimates, future goodwill impairment charges (or the amount by which the carrying amount exceeds the reporting unit’s fair value without exceeding the total amount of goodwill allocated to that reporting unit) may be necessary and could be material.

During the first quarter of 2020, we performed a qualitative impairment test of our reporting units as a result of these macroeconomic factors, including Howmet’s market capitalization declining significantly compared to the fourth quarter of 2019, equity value of our peer group companies and the overall U.S. stock market significant declines amid market volatility and the onset of the COVID-19 pandemic and its impact on the aerospace and commercial transportation industries. As a result of this qualitative assessment, the Company performed a quantitative impairment test for the Engineered Structures reporting unit in the first quarter of 2020 and concluded that although the margin between the fair value of the reporting unit and carrying value had declined from 60% to approximately 15%, it was not impaired. Since the first quarter of 2020, there have been no indicators of impairment identified for the Engineered Structures reporting unit or any other reporting units or indefinite-lived intangible assets.

Other intangible assets were as follows:


December 31, 2022	Gross carrying amount		Accumulated amortization		Intangibles, net
Computer software	$	204	$	(173)	$	31
Patents and licenses	67		(66)		1
Other intangibles	678		(221)		457
Total amortizable intangible assets	949		(460)		489
Indefinite-lived trade names and trademarks	32		—		32
Total intangible assets, net	$	981	$	(460)	$	521


December 31, 2021	Gross carrying amount		Accumulated amortization		Intangibles, net
Computer software	$	206	$	(175)	$	31
Patents and licenses	67		(65)		2
Other intangibles	686		(202)		484
Total amortizable intangible assets	959		(442)		517
Indefinite-lived trade names and trademarks	32		—		32
Total intangible assets, net	$	991	$	(442)	$	549

Computer software consists primarily of software costs associated with enterprise business solutions across Howmet's businesses.

Amortization expense related to the intangible assets recorded in Provision for depreciation and amortization in the Statement of Consolidated Operations was $36, $36, and $40 for the years ended December 31, 2022, 2021, and 2020, respectively, and is expected to be in the range of approximately $34 to $39 annually from 2023 to 2027.