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Goodwill and Other Intangibles, Net | 9 Months Ended
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Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangibles, Net | 11. Goodwill and Other Intangibles, Net The Company has intangible assets of substantial value on its condensed consolidated balance sheet. These intangible assets are generally related to intangible assets with a useful life, indefinite-lived trade names and goodwill. The Company determines whether an intangible asset (other than goodwill) has a useful life based on multiple factors, including how long the Company intends to generate cash flows from the asset. These intangible assets are more fully explained in the following sections. Intangible Assets With a Useful Life The following table provides information related to the carrying value of intangible assets with a useful life:
| September 30, 2023 |  |  |  |  | December 31, 2022 |
| Gross |  |  |  |  |  |  |  |  | Amortization |  | Gross |  |  |  |  |  |  |  |  |  |
| Carrying |  |  | Accumulated |  |  |  |  |  | Period |  | Carrying |  |  | Accumulated |  |  |  |  |  |  |
| Amount |  |  | Amortization |  |  | Net |  |  | (Years) |  | Amount |  |  | Amortization |  |  | Impairments |  |  | Net |
Amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade Names | $ | 1,384.8 |  |  | $ | (383.2 | ) |  | $ | 1,001.6 |  |  | 3-20 |  | $ | 1,785.8 |  |  | $ | (406.2 | ) |  | $ | (319.0 | ) |  | $ | 1,060.6 |
Customer Relationships |  | 644.9 |  |  |  | (364.9 | ) |  |  | 280.0 |  |  | 15-20 |  |  | 723.4 |  |  |  | (358.9 | ) |  |  | (59.3 | ) |  |  | 305.2 |
Patents/Formulas |  | 208.3 |  |  |  | (113.1 | ) |  |  | 95.2 |  |  | 4-20 |  |  | 251.7 |  |  |  | (114.6 | ) |  |  | (32.7 | ) |  |  | 104.4 |
Total | $ | 2,238.0 |  |  | $ | (861.2 | ) |  | $ | 1,376.8 |  |  |  |  | $ | 2,760.9 |  |  | $ | (879.7 | ) |  | $ | (411.0 | ) |  | $ | 1,470.2 |
Intangible amortization expense was $31.1 and $29.3 for the third quarter of 2023 and 2022, respectively. Intangible amortization expense amounted to $93.3 and $88.1 for the first nine months of 2023 and 2022, respectively. The Company estimates that intangible amortization expense will be approximately $124.0 in 2023 and approximately $123.0 to $94.0 annually over the next five years. In the fourth quarter of 2022, the Company determined that a review of our ability to recover the carrying values of the global FINISHING TOUCH FLAWLESS intangible assets was necessary based on the discontinuance of certain products at a major retailer. The FINISHING TOUCH FLAWLESS assets consist of the definite-lived trade name, customer relationships and technology assets recorded at acquisition. The Company evaluated our ability to recover the intangible assets by comparing the carrying amount to the future undiscounted cash flows and determined that the cash flows would not be sufficient to recover the carrying value of the assets. After determining the estimated fair value of the assets, which included a reduction in cash flows due to the loss of distribution mentioned above along with an expected continued decline in discretionary consumption and higher interest rates, a non-cash impairment charge of $411.0 was recorded in the fourth quarter of 2022. The impairment charge was applied as a full impairment of the customer relationship and technology assets and a partial impairment of the trade name. The remaining net book value of the trade name as of December 31, 2022 is $46.3 and will be amortized over a remaining useful life of three years. The estimated fair value of the intangible assets was determined using the income approach with Level 3 inputs. The Level 3 inputs include the discount rate of 8.5% applied to management’s estimates of future cash flows based on projections of revenue, gross margin, marketing expense and tax rates considering the loss of product distribution and the reduction in customer demand that FINISHING TOUCH FLAWLESS had been experiencing through December 31, 2022. The Company is implementing strategies to address the decline in profitability. However, if unsuccessful, a further decline could trigger a future impairment charge. Indefinite-Lived Intangible Assets The following table presents the carrying value of indefinite-lived intangible assets:
| September 30, |  |  | December 31, |
| 2023 |  |  | 2022 |
Trade Names | $ | 1,961.4 |  |  | $ | 1,961.4 |
The Company’s indefinite lived intangible impairment review is completed in the fourth quarter of each year. Fair value for indefinite-lived intangible assets was estimated based on a “relief from royalty” or “excess earnings” discounted cash flow method, which contains numerous variables that are subject to change as business conditions change, and therefore could impact fair values in the future. The key assumptions used in determining fair value are sales growth, profitability margins, tax rates, discount rates and royalty rates. The Company determined that the fair value of all indefinite lived intangible assets for each of the years in the three-year period ended December 31, 2022 exceeded their respective carrying values based upon the forecasted cash flows and profitability. In recent years the Company’s global TROJAN® business, specifically the condom category, has not grown and competition has increased. In addition, profitability has been negatively impacted by inflation, resulting in higher input costs and discount rates. As a result, the TROJAN business has experienced declining sales and profits resulting in a reduction in expected future cash flows which have eroded a portion of the excess between the fair and carrying value of the trade name. This indefinite-lived intangible asset may be susceptible to impairment and a continued decline in fair value could trigger a future impairment charge of the TROJAN trade name. The carrying value of the TROJAN trade name is $176.4 and fair value exceeded carrying value by 46% as of October 1, 2022 (the Company's last annual impairment test date). The key assumptions used in the projections from the Company’s October 1, 2022 impairment analysis include discount rates of 8.0% in the U.S. and 9.5% internationally, revenue assumptions based on recent trends adjusted for management’s estimates of the success of its growth strategies and the impact of improvement in the supply chain, and an average royalty rate of approximately 10%. While management has implemented strategies to address the risk, including lowering production costs, investing in new product ideas, and developing new creative advertising, significant changes in operating plans or adverse changes in the future could reduce the underlying cash flows used to estimate fair value. Due to the results of the Company's annual impairment test of the TROJAN trade name, the company monitors the performance of this business on at least a quarterly basis. Based on that review, the Company's expectations regarding the profitability of the global TROJAN® business has not substantially changed since the Company's last impairment test. The Company’s global WATERPIK business has recently experienced a significant decline in customer demand for many of its products, primarily due to lower consumer spending for discretionary products from inflation and a growing number of water flosser consumers switching to more value-branded products. As a result, the WATERPIK business has experienced declining sales and profits resulting in a reduction in expected future cash flows which have eroded a substantial portion of the excess between the fair and carrying value of the trade name. This indefinite-lived intangible asset may be susceptible to impairment and a continued decline in fair value could trigger a future impairment charge of the WATERPIK trade name. The carrying value of the WATERPIK trade name is $644.7 and fair value exceeded carrying value by 7% as of October 1, 2022 (the Company's last annual impairment test date). The key assumptions used in the projections from the Company’s October 1, 2022 impairment analysis include a discount rate of 8.4%, revenue growth rates between 0% and 6% and Earnings Before Interest Taxes and Amortization ("EBITA") margins between 18% and 21%. These assumptions are based on current market conditions, recent trends and management’s expectation of the success of initiatives to lower costs (including tariffs) and to develop lower-cost water flosser alternatives as well as improvement in the supply chain. While management has implemented strategies to address the risk, significant changes in operating plans or adverse changes in the future could reduce the underlying cash flows used to estimate fair value. Due to the results of the Company's annual impairment test of the WATERPIK trade name, the Company monitors the performance of this business on at least a quarterly basis. Based on that review, the Company's expectations regarding the profitability of the global WATERPIK business has not substantially changed since the Company's last impairment test. Goodwill The carrying amount of goodwill is as follows:
| Consumer |  |  | Consumer |  |  | Specialty |  |  |  |
| Domestic |  |  | International |  |  | Products |  |  | Total |
Balance at December 31, 2022 | $ | 2,056.4 |  |  | $ | 234.4 |  |  | $ | 136.0 |  |  | $ | 2,426.8 |
Hero Acquisition adjustments |  | 4.7 |  |  |  | 0.0 |  |  |  | 0.0 |  |  |  | 4.7 |
Balance at September 30, 2023 | $ | 2,061.1 |  |  | $ | 234.4 |  |  | $ | 136.0 |  |  | $ | 2,431.5 |
The result of the Company’s annual goodwill impairment test, performed in the beginning of the second quarter of 2023, determined that the estimated fair value substantially exceeded the carrying values of all reporting units. The determination of fair value contains numerous variables that are subject to change as business conditions change and therefore could impact fair value in the future.

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