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Goodwill & Intangibles

12 Months Ended

Dec. 31, 2023

(6) Goodwill & Intangibles

Goodwill

The Company performs its annual goodwill impairment testing for each reporting unit as of fiscal October month-end or earlier if there is a triggering event or circumstance that indicates an impairment loss may have occurred. As of the October 22, 2023 testing date, the Company had $589.6 million of goodwill on its balance sheet. In 2023, the Company had eight reporting units. Bradley was acquired in the fourth quarter of 2023, after the goodwill testing date (October 22, 2023), however it was considered a separate reporting unit for the year ended December 31, 2023. One of these reporting units, Water Quality, had no goodwill. The Company performed a qualitative analysis for each of the six reporting units, which include Blücher, US Drains, Fluid Solutions-Europe, Fluid Solutions-Americas, Heating and Hot Water Solutions (HHWS) and APMEA. As a result of the qualitative analyses, the Company determined that the fair values of the reporting units were more likely than not greater than the carrying amounts. In 2023 and 2022, the Company did not need to proceed beyond the qualitative analysis, and no goodwill impairments were recorded.

The Company completed two acquisitions during the year ended December 31, 2023. During the second quarter, the Company completed the acquisition of the primary business assets of Enware within the APMEA region, resulting in $0.9 million of goodwill. The acquisition of Enware was not considered material to the Company’s consolidated financial statements. During the fourth quarter, the Company completed the acquisition of Bradley in a share purchase transaction within the Americas region, resulting in $96.6 million of goodwill. The changes in the carrying amount of goodwill by geographic segment were as follows:

Gross Balance

Accumulated Impairment Losses

Foreign Currency Translation

Net Goodwill

Acquired

January 1,

Balance

During

Balance

Impairment

Balance

2023 -

January 1,

the

December 31,

January 1,

Loss During

December 31,

2023

Period

2023

the Period

2023

(in millions)

Americas

490.3

96.6

586.9

(24.5)

—

(24.5)

0.2

562.6

Europe

236.7

—

236.7

(129.7)

—

(129.7)

3.1

110.1

APMEA

32.5

0.9

33.4

(12.9)

—

(12.9)

(0.2)

20.3

Total

759.5

97.5

857.0

(167.1)

—

(167.1)

3.1

693.0


	Gross Balance						Accumulated Impairment Losses						Foreign Currency Translation		Net Goodwill
			Acquired										January 1,
	Balance		During		Balance		Balance		Impairment		Balance		2022 -
	January 1,		the		December 31,		January 1,		Loss During		December 31,		December 31,		December 31,
	2022		Period		2022		2022		the Period		2022		2022		2022

	(in millions)
Americas	$	490.9	$	—	$	490.9	$	(24.5)	$	—	$	(24.5)	$	(0.6)	$	465.8
Europe		242.9		—		242.9		(129.7)		—		(129.7)		(6.2)		107.0
APMEA		34.0		—		34.0		(12.9)		—		(12.9)		(1.5)		19.6
Total	$	767.8	$	—	$	767.8	$	(167.1)	$	—	$	(167.1)	$	(8.3)	$	592.4

Long-Lived Assets

Indefinite-lived intangibles are tested for impairment at least annually or more frequently if events or circumstances, such as a change in business conditions, indicate that it is “more likely than not” that an intangible asset might be impaired. The Company performs its annual indefinite-lived intangibles impairment assessment in the fourth quarter of each year. In 2023, the Company performed a combination of qualitative and quantitative assessments, and in 2022, the Company performed a qualitative assessment for all tradenames. Based on the results of the assessments, the Company did not recognize an impairment on any indefinite-lived intangibles in 2023 or 2022.

Intangible assets with estimable lives and other long-lived assets are reviewed for impairment at least quarterly or more frequently if events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of intangible assets with estimable lives and other long-lived assets is measured by a comparison of the carrying amount of an asset or asset group to future net undiscounted pre-tax cash flows expected to be generated by the asset or asset group. If these comparisons indicate that an asset is not recoverable, the impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the related estimated fair value. Estimated fair value is based on either discounted future pre-tax operating cash flows or appraised values, depending on the nature of the asset. The Company determines the discount rate for this analysis based on the weighted average cost of capital using the market and guideline public companies for the related businesses and does not allocate interest charges to the asset or asset group being measured. Judgment is required to estimate future operating cash flows. In 2023 and 2021, there were no indications of the carrying amounts of intangible assets with estimable lives not being recoverable. In 2022, the Company recognized a $1.3 million impairment charge for an amortizable technology asset. The impairment was recognized within the Americas segment and due to changes in market expectations indicated the carrying amount of the asset was no longer recoverable.

Intangible assets include the following:

December 31, 2023

December 31, 2022

Gross

Net

Gross

Net

Carrying

Accumulated

Carrying

Accumulated

Carrying

Amount

Amortization

Amount

Amortization

Amount

(in millions)

Patents

5.0

(5.0)

—

5.0

(5.0)

—

Customer relationships

218.0

(85.3)

132.7

175.1

(118.6)

56.5

Technology

53.2

(44.2)

9.0

53.2

(40.5)

12.7

Trade names

20.8

(12.3)

8.5

19.8

(10.8)

9.0

Other

1.1

(0.7)

0.4

1.1

(0.6)

0.5

Total amortizable intangibles

298.1

(147.5)

150.6

254.2

(175.5)

78.7

Indefinite-lived intangible assets

65.5

—

65.5

35.0

—

35.0

363.6

(147.5)

216.1

289.2

(175.5)

113.7

The Company acquired $114.6 million in intangible assets as part of the Bradley acquisition, consisting of customer relationships valued at $84.6 million, with an estimated useful life of 15 years, and an indefinite-lived trade name of $30.0 million.

Aggregate amortization expense for amortized intangible assets for 2023, 2022 and 2021 was $13.2 million, $12.1 million and $13.7 million, respectively. Additionally, future amortization expense on amortizable intangible assets is expected to be $17.7 million for 2024, $16.0 million for 2025, $15.5 million for 2026, $14.0 million for 2027 and $13.6 million for 2028. Amortization expense is provided on a straight-line basis over the estimated useful lives of the intangible assets. The weighted-average remaining life of total amortizable intangible assets is 8.3 years. Customer relationships, technology, trade names and other amortizable intangibles have weighted-average remaining lives of 12.1 years, 3.8 years, 11.4 years and 19.6 years, respectively. Indefinite-lived intangible assets include trade names and trademarks. In 2023, we removed fully amortized intangible assets from both gross carrying amount and accumulated amortization, with no effect to net carrying amount, in the amounts of $41.7 million for customer relationships.