Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Other Intangible Assets [Abstract]

8. Goodwill and Other Intangible Assets

Goodwill

We assess the impairment of long‑lived and identifiable intangibles assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. With respect to goodwill, we test for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the fair value of a reporting unit is below its carrying amount.

When performing our evaluation of goodwill for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then a quantitative impairment test would not be required. If we are unable to reach this conclusion, then we would perform a goodwill quantitative impairment test. In performing the quantitative test, the fair value of the reporting unit is compared to its carrying amount. A charge for impairment is recognized by the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

In connection with our operating segment reorganization, we reassessed our reporting units and reallocated goodwill from the reporting units that existed prior to the change to the new reporting units, using a relative fair value approach similar to that used when a portion of a reporting unit is to be disposed of. We performed goodwill impairment tests as of January 1, 2023 on both the reporting units in place prior to the change and the new reporting units, and concluded that the estimated fair values of each of the reporting units exceeded their respective carrying amounts and, therefore, no impairment charge was necessary.

We completed our annual impairment test of goodwill as of December 31, 2023. As of December 31, 2023, we performed a qualitative assessment of the likelihood of a goodwill impairment for the Vehicle Control, Temperature Control and Engineered Solutions reporting units. Based upon our qualitative assessment, we determined that it was not more likely than not that the fair value of the each of the Vehicle Control, Temperature Control and Engineered Solutions reporting units was less than their respective carrying amounts. As such, we concluded that the quantitative impairment test would not be required, and that there would be no required goodwill impairment charge as of December 31, 2023 at each of the reporting units. While we concluded that we did not have a goodwill impairment charge as of December 31, 2023, and we do not believe that future impairments are probable, we will need to maintain the current ongoing performance levels at each of the Vehicle Control, Temperature Control and Engineered Solutions reporting units in future periods to sustain their goodwill carrying values.

Changes in the carrying values of goodwill by operating segment during the years ended December 31, 2023 and 2022 are as follows (in thousands):

	Vehicle Control			Temperature Control		Engineered Solutions			Total
Balance as of December 31, 2021:
Goodwill	$	129,318		$	10,839	$	29,983		$	170,140
Accumulated impairment losses		(38,488	)		—		—			(38,488	)
	$	90,830		$	10,839	$	29,983		$	131,652
Activity in 2022
Acquisition of Kade		—			582		184			766
Foreign currency exchange rate change		(310	)		53		(74	)		(331	)
Balance as of December 31, 2022:
Goodwill		129,008			11,474		30,093			170,575
Accumulated impairment losses		(38,488	)		—		—			(38,488	)
	$	90,520		$	11,474	$	30,093		$	132,087
Activity in 2023
Step acquisition of Gwo Yng		—			1,214		994			2,208
Foreign currency exchange rate change		286			42		106			434
Balance as of December 31, 2023:
Goodwill		129,294			12,730		31,193			173,217
Accumulated impairment losses		(38,488	)		—		—			(38,488	)
	$	90,806		$	12,730	$	31,193		$	134,729

Acquired Intangible Assets

Acquired identifiable intangible assets as of December 31, 2023 and 2022 consist of:

	December 31,
	2023			2022
	(In thousands)
Customer relationships	$	159,641		$	158,717
Patents, developed technology and intellectual property		14,123			14,123
Trademarks and trade names		8,880			8,880
Non-compete agreements		3,295			3,282
Supply agreements		800			800
Leaseholds		160			160
Total acquired intangible assets		186,899			185,962
Less accumulated amortization (1)		(95,681	)		(86,945	)
Net acquired intangible assets	$	91,218		$	99,017

(3)

Applies to all intangible assets, except for a related trademark/trade name totaling $2.6 million, which has an indefinite useful life and, as such, is not being amortized.

Total amortization expense for acquired intangible assets was $8.5 million for the year ended December 31, 2023, $8.6 million for the year ended December 31, 2022, and $8.7 million for the year ended December 31, 2021. Based on the current estimated useful lives assigned to our intangible assets, amortization expense is estimated to be $8.5 million for 2024, $8.5 million in 2025, $8.5 million in 2026, $8.4 million in 2027 and $54.7 million in the aggregate for the years 2028 through 2041.

For information related to identified intangible assets acquired in the Kade acquisition and Gwo Yng step acquisition, see Note 2, “Business Acquisitions and Investments,” of the notes to our consolidated financial statements.

Other Intangible Assets

Other intangible assets include computer software. Computer software as of December 31, 2023 and 2022 totaled $19.1 million and $18.7 million, respectively. Total accumulated computer software amortization as of December 31, 2023 and 2022 was $18 million and $17.2 million, respectively. Computer software is amortized over its estimated useful life of 3 to 10 years. Amortization expense for computer software was $0.8 million, $0.7 million and $0.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.