Goodwill and Intangible Assets

9 Months Ended

Sep. 28, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

The following table sets forth the changes in the carrying amount of goodwill by reportable segment and the accumulated impact of impairment loss:


	Aperture Solutions		Surface Solutions		Shelter Solutions		Total
Balance, as of December 31, 2023 (1)	$	771,133	$	708,423	$	202,208	$	1,681,764
Impact of acquisitions and related measurement period adjustments (2)	170,762		1,686		137,421		309,869
Impairment	(12,896)		(369,903)		—		(382,799)
Currency translation	(360)		(1,345)		—		(1,705)
Other(3)	5,504		586		6,429		12,519
Balance, September 28, 2024	$	934,143	$	339,447	$	346,058	$	1,619,648
Balance,
Goodwill	$	947,039	$	709,350	$	346,058	$	2,002,447
Accumulated impairment loss	(12,896)		(369,903)		—		(382,799)
Balance, September 28, 2024	$	934,143	$	339,447	$	346,058	$	1,619,648

(1) There were no impairment losses prior to the period ended December 31, 2023.

(2) Measurement period adjustments have been recorded in conjunction with the acquisitions of MAC Metal, EAS and Harvey during the period. See Note 3 — Acquisitions for additional information.

(3) Other includes insignificant out-of-period corrections totaling $12.5 million, which related to matters that existed as of the date of the Merger.

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. The Company evaluates goodwill for impairment at least annually as of November 1 or whenever events occur, or circumstances indicate, that it is more likely than not that the fair value of a reporting unit is below its carrying value. The process for evaluating potential impairment of goodwill is subjective and requires significant judgement. In estimating the fair value of reporting unit for the purposes of our annual or periodic impairment analyses, we make estimates or significant judgements about the future cash flows of the reporting unit. Our cash flow forecasts are based on assumptions that represent what we believe to be the highest and best use for our reporting units. Changes in judgement on these assumptions and estimates could result in goodwill impairment charges. We believe that the assumptions and estimates utilized are appropriate based upon the information available to management.

We have six reporting units defined as “Aperture Solutions–U.S.,” “Aperture Solutions–Canada,” “Surface Solutions–U.S.,” “Surface Solutions–Canada,” “Stone” and “Shelter Solutions.” Aperture Solutions–U.S. and Aperture Solutions–Canada reporting units are part of the Aperture Solutions reportable segment. Surface Solutions–U.S., Surface Solutions–Canada and Stone are part of the Surface Solutions reportable segment. Shelter Solutions is a reporting unit and a reportable segment.

During August 2024, we evaluated goodwill and other long-lived assets for impairment at the reporting unit level, due to the events described below, which indicated the carrying amounts of goodwill within the Aperture Solutions and Surface Solutions reportable segments and intangible assets in the Surface Solutions reportable segment were in excess of their estimated fair values.

Aperture Solutions–U.S., Siding Solutions–U.S. and Stone experienced adverse impacts as a result of changes in market conditions and continued high-interest rates, relative to recent historical values, which contributed to reduced forecasted revenues and reduced projected future cash flows.

As a result of these adverse impacts, the Company performed a quantitative assessment of goodwill impairment by comparing the fair value of these reporting units to their respective carrying amounts. When performing the assessment the Company determined the fair value of its reporting units as described below. The Company determined that the carrying amount of goodwill for its Aperture Solutions–U.S., Siding Solutions–U.S., and Stone reporting units were impaired during the three months ended September 28, 2024. As a result the Company recorded the following impairment charges: $12.9 million related to Aperture Solutions–U.S., $329.1 million related to Siding Solutions–U.S. and $40.8 million related to Stone. After recording these impairment charges, there is no goodwill remaining at Stone. No goodwill impairment charges were recorded prior to or during 2023.

If these or our other reporting units are unable to achieve their current financial forecasts, we may be required to record an impairment charge in a future period related to goodwill.

The Company uses a quantitative approach to measure the fair value of its reporting units by equally weighting the discounted cash flow approach, which is a Level 3 measurement, and the market approach, which is a Level 2 measurement. The market approach estimates fair value through recent sales of comparable assets or business entities. The discounted cash flow analysis requires significant judgements, including estimates of future cash flows, which are dependent on internal forecasts and determination of the Company’s weighted average cost of capital. The weighted average cost of capital used for all reporting units in the Company’s analysis was 12.0%.

Intangible Assets, Net

The following table sets forth the major components of intangible assets:


	Range of Life in Years			Weighted Average Amortization Remaining Years	Carrying Value		Accumulated Amortization		Net Carrying Value
As of September 28, 2024:
Customer lists and relationships	3	–	19	16	$	2,103,055	$	(312,449)	$	1,790,606
Trademarks, trade names and other	11	–	15	13	728,931		(89,073)		639,858
Total intangible assets					$	2,831,986	$	(401,522)	$	2,430,464


	Range of Life in Years			Weighted Average Amortization Remaining Years	Carrying Value		Accumulated Amortization		Net Carrying Value
As of December 31, 2023:
Customer lists and relationships	3	–	19	16	$	1,883,757	$	(192,473)	$	1,691,284
Trademarks, trade names and other		15		14	653,992		(59,208)		594,784
Total intangible assets					$	2,537,749	$	(251,681)	$	2,286,068

During August 2024, the Company recorded an impairment charge to the intangible assets within the Stone reporting unit. The Company’s forecasted cash flows of Stone indicated the carrying value of the intangible assets were not recoverable and therefore the Company recorded an impairment charge of $32.7 million during the three months ended September 28, 2024. After recording this impairment charge, no intangible assets remain at Stone. No impairments were recorded prior to or during 2023.

Intangible assets are amortized on a straight-line basis. The following table sets forth the amortization expense related to intangible assets:


	Three Months Ended				Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Amortization expense	$	55,185	$	44,690	$	151,384	$	126,292