GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Jun. 30, 2025

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 6 GOODWILL AND INTANGIBLE ASSETS

Due to the Acquisition, we recognized increases to our goodwill and intangible assets balances as of June 30, 2025. The goodwill and intangible assets recognized as a result of the Acquisition are considered preliminary. The purchase price allocation may be subject to future adjustments due to the final valuation of acquired assets and assumed liabilities, working capital adjustments, and the valuation of deferred taxes, and any such future adjustments may be recognized in earnings immediately as an adjustment to the impairment charge discussed below. The final valuation will be completed within the measurement period, no later than one year from the Acquisition Date, as allowed by ASC 805. During the three months ended June 30, 2025, we recorded certain measurement period adjustments that increased the fair value of inventory and intangible assets each by $2.0 million and decreased goodwill by $4.0 million. For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination.

Goodwill

Goodwill represents the excess of the purchase price over the fair values of the assets acquired and liabilities assumed in a business combination, at the date of acquisition. Goodwill is not amortized but is tested for potential impairment at the reporting unit level, at a minimum on an annual basis in the fourth fiscal quarter, or when indications of potential impairment exist. Our reporting units with goodwill are H&P Technologies, International Solutions, Offshore Solutions, and Kenera.

During the third fiscal quarter of 2025, due primarily to the sustained decline in our share price and market capitalization, we identified indicators of potential impairment of goodwill and performed an interim impairment test. We estimated the fair value of each reporting unit using a market approach, incorporating significant unobservable, or Level 3, inputs, as defined by the fair value hierarchy. We employed a combination of the guideline public company method and the guideline transactions method, leveraging company comparisons and analyst reports from the energy industry, which supported a range of fair values derived from annualized earnings before interest, income taxes, depreciation and amortization ("EBITDA") multiples between 2.5x and 5.5x for guideline public companies and between 3.4x and 7.6x for guideline transactions. We then derived an estimated fair value of each reporting unit based on an EBITDA multiple at or below the peer-median trading multiple.

Based on our interim goodwill impairment test as of June 30, 2025, we concluded that the International Solutions and Kenera reporting units' carrying value exceeded their respective estimated fair value. As a result, we recorded a non-cash goodwill impairment charge of $128.4 million and $44.9 million, respectively, during the three months ended June 30, 2025, which represented a full impairment of the goodwill allocated to these reporting units. The estimated fair values of our H&P Technologies and Offshore Solutions reporting units as of June 30, 2025 exceeded their respective carrying values by approximately 76 percent and 20 percent, respectively. These estimates reflect management’s best judgments as of June 30, 2025; however, changes in key assumptions or market conditions could yield materially different outcomes. We will continue to monitor events and circumstances that may affect fair values.

The following table sets forth our goodwill balance by segment for the periods indicated:


(in thousands)	North America Solutions		International Solutions		Offshore Solutions		Other		Total
Goodwill balance at September 30, 2024	$	45,653	$	—	$	—	$	—	$	45,653
Acquisition of KCA Deutag1	—		131,351		121,906		44,907		298,164
Measurement period adjustments	—		(3,000)		(1,000)		—		(4,000)
Impairment charges	—		(128,351)		—		(44,907)		(173,258)
Goodwill balance at June 30, 2025	$	45,653	$	—	$	120,906	$	—	$	166,559

(1)The allocation of goodwill is preliminary and may be updated as we continue to evaluate the benefits of expected commercial synergies to our segments.

Intangible Assets

Finite-lived intangible assets are amortized using the straight-line method over the period in which these assets contribute to our cash flows and are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with our policies for valuation of long-lived assets. After initial recognition, in-process research and development ("IPR&D") assets are considered indefinite-lived until the abandonment or completion of the associated research and development effort. Acquired IPR&D is not amortized, but is subject to an annual impairment assessment. Our intangible assets consist of the following:


		June 30, 2025						September 30, 2024
(in thousands)	Weighted Average Estimated Useful Lives	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Finite-lived intangible assets:
Developed technology	14 years	$	110,516	$	45,300	$	65,216	$	89,096	$	40,047	$	49,049
Customer relationships	9 years	432,200		25,005		407,195		—		—		—
Intellectual property	13 years	2,000		781		1,219		2,000		662		1,338
Trade name	13 years	16,725		2,743		13,982		5,865		2,105		3,760
Indefinite-lived intangible asset:
In-process research and development	Indefinite	6,183		—		6,183		—		—		—
		$	567,624	$	73,829	$	493,795	$	96,961	$	42,814	$	54,147

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $18.7 million and $1.6 million for the three months ended June 30, 2025 and 2024, respectively and $31.1 million and $4.8 million for the nine months ended June 30, 2025 and 2024, respectively.

Over the next five years, amortization expense is estimated to be as follows:


(in thousands)
Fiscal year:
Remainder of 2025	$	19,435
2026	74,198
2027	72,718
2028	72,711
2029	47,894