Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2024

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Note 12—Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by segment were as follows:

	Harsh				Interconnect
	Environment		Communications		and Sensor
	Solutions		Solutions		Systems		Total
Goodwill at December 31, 2023	$	2,009.3	$	2,977.5	$	2,105.6	$	7,092.4
Acquisition-related		1,185.4		4.1		57.9		1,247.4
Foreign currency translation		4.3		2.6		5.4		12.3
Goodwill at September 30, 2024	$	3,199.0	$	2,984.2	$	2,168.9	$	8,352.1

The increase in goodwill during the first nine months of 2024 was primarily driven by goodwill recognized from the 2024 Acquisitions, in particular, the CIT acquisition.

The Company performs its evaluation for the impairment of goodwill associated with the Company’s reporting units on an annual basis as of each July 1, or more frequently if an event occurs or circumstances change that would indicate that a reporting unit’s carrying amount may be impaired. The Company reviews its reporting unit structure each year, or more frequently based on changes in our organization. The Company continues to define our reporting units as the three reportable business segments. In the third quarter of 2024, as part of our annual evaluations, the Company utilized the option to first assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment assessment. As part of this assessment, the Company reviews qualitative factors, which include, but are not limited to, economic, market and industry conditions, as well as the financial performance of each reporting unit. In accordance with applicable guidance, an entity is not required to calculate the fair value of a reporting unit if, after assessing these qualitative factors, the Company determines that it is more likely than not that the fair value of each of its reporting units is greater than its respective carrying amount. As of July 1, 2024, the Company determined that it was more likely than not that the fair value of each of its reporting units exceeded its respective carrying amount and, therefore, a quantitative assessment was not required. As a result, no goodwill impairment resulted from the assessment as of July 1, 2024.

The Company has not recognized any goodwill impairment in 2024 or 2023 in connection with its annual impairment assessments.

Other than goodwill noted above, the Company’s intangible assets as of September 30, 2024 and December 31, 2023 were as follows:

	September 30, 2024							December 31, 2023
	Weighted	Gross				Net		Gross				Net
	Average	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Life (years)	Amount		Amortization		Amount		Amount		Amortization		Amount
Customer relationships	12	$	1,296.7	$	505.2	$	791.5	$	782.6	$	450.6	$	332.0
Proprietary technology	13		351.2		164.8		186.4		365.1		146.1		219.0
Backlog and other	1		154.5		154.5		—		114.1		99.4		14.7
Total intangible assets (definite-lived)	11		1,802.4		824.5		977.9		1,261.8		696.1		565.7
Trade names (indefinite-lived)			269.1				269.1		269.1				269.1
		$	2,071.5	$	824.5	$	1,247.0	$	1,530.9	$	696.1	$	834.8

The increase in the gross carrying amount of intangible assets in the first nine months of 2024 was primarily driven by certain customer relationships and acquired backlog recognized as a result of the acquisition accounting associated with the 2024 Acquisitions, in particular, the CIT acquisition, partially offset by measurement period adjustments related to certain intangible assets associated with acquisitions that closed late in 2023. Amortization expense for the three months ended September 30, 2024 and 2023 was approximately $66.2 and $18.1, respectively. Amortization expense for the nine months ended September 30, 2024 and 2023 was approximately $126.9 and $59.4, respectively. Amortization expense for the three and nine months ended September 30, 2024 includes $38.4 and $55.0, respectively, related to the amortization of acquired backlog resulting from the CIT acquisition. Amortization expense for the nine months ended September 30, 2023 included $5.4 related to the amortization of acquired backlog resulting from an acquisition that closed in the first quarter of 2023. As of September 30, 2024, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2024 is approximately $27.6 and for each of the next five fiscal years is approximately $103.3 in 2025, $101.7 in 2026, $95.0 in 2027, $87.6 in 2028 and $76.9 in 2029.

The Company assesses and reviews its identifiable intangible assets, subject to amortization, for potential impairment whenever events or changes in circumstances indicate the intangible asset’s carrying amount may not be recoverable. Any indefinite-lived intangible assets that are not subject to amortization, which are comprised of certain trade names, are reviewed at least annually for impairment. In the third quarter of 2024, the Company performed its annual assessment of these identifiable indefinite-lived intangible assets. Based on its assessment, the Company determined that it was more likely than not that the fair value of the indefinite-lived intangible assets exceeded their respective carrying amounts. There has been no impairment associated with the Company’s intangible assets in 2024 or 2023 as a result of such reviews.