Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill:

The following table sets forth the change in the carrying amount of goodwill for each reportable segment and for the Company as of and for the period ended September 30, 2024:


	Aerospace		Industrial		Total Company
December 31, 2023 (A)	$	352,352	$	831,272	$	1,183,624
Acquisition related	7,478		—		7,478

Divestiture related (see Note 4)	—		(58,900)		(58,900)
Impairment charge	—		(53,694)		(53,694)
Foreign currency translation	1,478		1,974		3,452
September 30, 2024	$	361,308	$	720,652	$	1,081,960

(A) Industrial amounts as of December 31, 2023 are net of accumulated goodwill impairment losses of $68,194.

The acquisition-related changes recorded at Aerospace during 2024 include purchase accounting adjustments of $7,478 of goodwill resulting from the acquisition of MB Aerospace.

The Company completed the sale of the Businesses in April 2024. See Note 3. Pursuant to the required accounting guidance, the Company allocated $58,900 of goodwill within the Force & Motion Control (formerly Motion Control Solutions) reporting unit to the divested Businesses based on the estimated relative fair values of the Businesses.

During the second quarter, management completed the Company's annual impairment assessment of goodwill as of April 1, 2024. The Company utilizes the option to first assess qualitative factors to determine whether it is necessary to perform the Step 1 quantitative goodwill impairment test in accordance with the applicable accounting standards. Under the qualitative assessment, management considers relevant events and circumstances including but not limited to macroeconomic conditions, industry and market considerations, overall reporting unit performance and events directly affecting a reporting unit. If the Company determines that the Step 1 quantitative impairment test is required, management estimates the fair value of the reporting unit using a discounted cash flow model (a form of the income approach), a market approach, or both. Inherent in management’s development of cash flow projections under the income approach are assumptions and estimates, including those related to future earnings and growth rates and the weighted average cost of capital. Pursuant to the market approach, management considers readily available market information, including comparable public company earnings multiples relative to the performance of the Company's businesses. The Company compares the fair value of the reporting unit with the carrying value of the reporting unit. If the fair values were to fall below the carrying values, the Company would recognize a non-cash impairment charge to income from operations for the amount by which the carrying amount of any reporting unit exceeds the reporting unit’s fair value, assuming the loss recognized does not exceed the total amount of goodwill for the reporting unit.

Based on qualitative assessments as of April 1, 2024, management concluded that it was not more likely than not that the fair value of each of the Company’s reporting units was below its respective carrying value, except for the Automation reporting unit. Therefore, management performed a Step 1 quantitative assessment for the Automation reporting unit. In estimating the fair value of the Automation reporting unit, management evaluated readily available end market information, including earnings multiples, from comparable public companies that also operate within the automation sector. Management’s assessment resulted in a non-cash goodwill impairment charge of $53,694 related to the Automation reporting unit as the estimated fair value of the reporting unit declined below its carrying value. The reduction of fair value was primarily the result of lower projections for the reporting unit, consistent with a reduction of forecasted growth trends within the broader automation market. A decline in projections was largely due to uncertainty in the broader industrial manufacturing markets, partially restricting the significant capital expenditures required for such investments in automation. A significant level of reliance on the automotive sector and corresponding delays in model change releases, more specifically, also negatively impacted the fair value of the Automation reporting unit. The non-cash goodwill impairment charge was recorded during the three-month period ended June 30, 2024.

Other Intangible Assets:

Other intangible assets consisted of:


		September 30, 2024				December 31, 2023
	Range of Life -Years	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Amortized intangible assets:
Revenue Sharing Programs (RSPs)	Up to 30	$	296,700	$	(186,237)	$	299,500	$	(176,143)
Component Repair Programs (CRPs)	Up to 30	111,839		(54,987)		111,839		(49,577)
Customer relationships	10-16	579,050		(199,088)		586,189		(180,679)
Patents and technology	4-18	174,280		(101,859)		178,433		(100,662)
Trademarks/trade names	10-30	7,153		(6,469)		10,949		(10,910)
Other	Up to 10	27,150		(17,487)		26,334		(14,857)
		1,196,172		(566,127)		1,213,244		(532,828)
Unamortized intangible assets:
Trade names		55,670		—		55,670		—
Foreign currency translation		(29,788)		—		(29,615)		—
Other intangible assets		$	1,222,054	$	(566,127)	$	1,239,299	$	(532,828)

In the second quarter of 2024, management completed its annual impairment assessment of its trade names, which are indefinite-lived intangible assets. Based on this assessment, there were no impairments.

Gross amounts of $7,139, $4,153 and $3,821 that were included within customer relationships, patents and technology, and trademarks, respectively, and were fully amortized as of December 31, 2023, were related to the divested Businesses.

Amortization of intangible assets for the three months period ended September 30, 2024 and September 30, 2023 was $16,735 and $18,860, respectively. Amortization of intangible assets for the nine months period ended September 30, 2024 and September 30, 2023 was $51,398 and $42,084, respectively.

Estimated amortization of intangible assets for future periods is as follows: 2024 (remainder) - $19,000; 2025 - $71,000; 2026 - $68,000; 2027 - $67,000; 2028 - $63,000 and 2029 - $62,000.