Goodwill and Intangible Assets

12 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 12 — Goodwill and Intangible Assets

Changes in the carrying amount of goodwill by reportable segment are as follows:

	AmeriGas Propane		UGI International		Midstream & Marketing		Utilities		Total
Balance September 30, 2021	$	2,004	$	993	$	336	$	437	$	3,770
Purchase accounting adjustments	—		—		—		(5)		(5)
Foreign currency translation	—		(153)		—		—		(153)
Balance September 30, 2022	2,004		840		336		432		3,612
Impairment of goodwill	(656)		—		—		—		(656)
Acquisitions	—		3		—		—		3
Foreign currency translation	—		68		—		—		68
Balance September 30, 2023	$	1,348	$	911	$	336	$	432	$	3,027

During the third quarter of Fiscal 2023, the Company identified interim impairment indicators related to goodwill within the AmeriGas Propane reporting unit: (1) AmeriGas Partners issued $500 of Senior Notes at an interest rate of 9.375%, which was significantly higher than the interest rates on the other AmeriGas Propane debt obligations; and (2) financial projections for the AmeriGas Propane reporting unit were reduced significantly compared to previous forecasts following declines in gross margins and customer retention and higher operating expenses. The Company concluded that these events constituted triggering events that indicate that the AmeriGas Propane goodwill may be impaired and, as such, performed an interim impairment test of its goodwill as of May 31, 2023.

Using level 3 inputs, we performed a quantitative assessment of the AmeriGas Propane reporting unit using a weighting of the income and market approaches to determine its fair value. With respect to the income approach, management used a discounted cash flow (“DCF”) method, using unobservable inputs. The significant assumptions in our DCF model include projected EBITDA and a discount rate (and estimates in the discount rate inputs). With respect to the market approach, management used recent transaction market multiples for similar companies in the U.S. The resulting estimates of fair value from the income approach and the market approach were then weighted equally in determining the overall estimated fair value of AmeriGas Propane.

Based on our evaluation, the estimated fair value of the AmeriGas Propane reporting unit was determined to be less than its carrying value. As a result, the Company recorded a non-cash pre-tax goodwill impairment charge of $656, included in “Impairment of goodwill” on the Fiscal 2023 Consolidated Statement of Income, to reduce the carrying value of AmeriGas Propane to its fair value. The Company calculated the deferred tax effect using the simultaneous equation method.

The performance of the AmeriGas Propane reporting unit and the potential for future developments in the global economic environment, including the prospect of higher interest rates, introduces a heightened risk for additional impairment in the AmeriGas Propane reporting unit. If there is continued deterioration in the results of operations, a portion or all of the remaining recorded goodwill for the AmeriGas Propane reporting unit, which was $1.3 billion as of September 30, 2023, could be subject to further impairment.

Intangible assets comprise the following at September 30:

	2023		2022
Customer relationships	$	977	$	1,006
Trademarks and tradenames	4		3
Noncompete agreements and other	26		71
Accumulated amortization	(602)		(621)
Intangible assets, net (definite-lived)	405		459
Trademarks and tradenames (indefinite-lived)	38		41
Total intangible assets, net	$	443	$	500

During Fiscal 2023, the Company recognized a $10 non-cash, pre-tax impairment charge related to customer relationships intangible assets and indefinite-lived tradenames at DVEP in connection with the wind-down of the energy marketing business in the Netherlands (see Note 5). During Fiscal 2021, the Company recognized a $20 non-cash, pre-tax impairment charge related to a customer relationship intangible asset at DVEP resulting from a decline in anticipated volumes attributable to a historical customer. These charges are reflected in “Operating and administrative expenses” on the Consolidated Statements of Income.

Amortization expense of intangible assets was $56, $61 and $76 for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. Estimated amortization expense of intangible assets during the next five fiscal years is as follows: Fiscal 2024 — $53; Fiscal 2025 — $51; Fiscal 2026 — $50; Fiscal 2027 — $27; Fiscal 2028 — $18.