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Goodwill and Other Intangibles, Net | 3 Months Ended
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Mar. 31, 2024
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 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:
| March 31, 2024 |  |  |  |  | December 31, 2023 |
| Gross |  |  |  |  |  |  |  |  | Amortization |  | Gross |  |  |  |  |  |  |  |  |  |
| Carrying |  |  | Accumulated |  |  |  |  |  | Period |  | Carrying |  |  | Accumulated |  |  |  |  |  |  |
| Amount |  |  | Amortization |  |  | Net |  |  | (Years) |  | Amount |  |  | Amortization |  |  | Impairments |  |  | Net |
Amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade Names | $ | 1,385.2 |  |  | $ | (422.6 | ) |  | $ | 962.6 |  |  | 3-20 |  | $ | 1,385.5 |  |  | $ | (403.5 | ) |  | $ | 0.0 |  |  | $ | 982.0 |
Customer Relationships |  | 641.4 |  |  |  | (381.6 | ) |  |  | 259.8 |  |  | 15-20 |  |  | 644.9 |  |  |  | (373.3 | ) |  |  | (3.5 | ) |  |  | 268.1 |
Patents/Formulas |  | 208.3 |  |  |  | (121.1 | ) |  |  | 87.2 |  |  | 4-20 |  |  | 208.3 |  |  |  | (116.1 | ) |  |  | (1.9 | ) |  |  | 90.3 |
Total | $ | 2,234.9 |  |  | $ | (925.3 | ) |  | $ | 1,309.6 |  |  |  |  | $ | 2,238.7 |  |  | $ | (892.9 | ) |  | $ | (5.4 | ) |  | $ | 1,340.4 |
Intangible amortization expense was $30.8 and $31.1 for t he first quarter of 2024 and 2023, respectively. The Company estimates that intangible amortization expense will be approximately $123.0 in 2024 and approximately $122.0 to $87.0 a nnually 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 consisted 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 is included in SG&A with $349.3 recorded in the Consumer Domestic segment and $61.7 recorded in the Consumer International segment. 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 March 31, 2024 is $27.0 and will be amortized over a remaining useful life of approximately two 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 has implemented 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:
| March 31, |  |  | December 31, |
| 2024 |  |  | 2023 |
Trade Names | $ | 1,961.5 |  |  | $ | 1,961.9 |
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, 2023 exceeded their respective carrying values based upon the forecasted cash flows and profitability. The Company’s global WATERPIK business has continued to experience 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. Waterpik's profitability has also been impacted by tariffs imposed on its products imported into the United States that were manufactured in China. 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 represented 109% of the carrying value as of October 1, 2023. The key assumptions used in the projections from the Company’s October 1, 2023 impairment analysis include a discount rate of 8.8%, revenue growth rates between 0% and 4.5% and EBITA margins between 19% and 26%. These assumptions are based on current market conditions as of the date of the impairment analysis, recent trends and management’s expectation of the success of initiatives to lower costs 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. The vitamin category continues to experience a softening of growth from record high levels during the COVID-19 pandemic and significant product competition coming from new category entrants. The category has grown from a few competitors a decade ago to more than 60 of significance. In addition, residual impacts from previous vitamin-specific supply chain challenges have resulted in reduced shelf space for VITAFUSION and LIL' CRITTERS at certain retailers and consumers switching to competitor’s brands. These factors along with higher interest rates have resulted in a reduction in the 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 VITAFUSION and LIL' CRITTERS trade name. The carrying value of the VITAFUSION and LIL' CRITTERS trade name is $281.3 and fair value represented 154% of the carrying value as of October 1, 2023. The key assumptions used in the projections from the Company’s October 1, 2023 impairment analysis include a discount rate of 8.6%, revenue growth rates between 3% and 5% and EBITA margins between 12% and 15%. These assumptions are based on current market conditions as of the date of the impairment analysis, recent trends and management’s expectation of the success of growth initiatives primarily from higher promotional and marketing spend, new product introductions as well as e-commerce and international expansion. 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 VITAFUSION and LIL' CRITTERS 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 VITAFUSION and LIL' CRITTERS 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, 2023 | $ | 2,061.1 |  |  | $ | 234.4 |  |  | $ | 136.0 |  |  | $ | 2,431.5 |
Balance at March 31, 2024 | $ | 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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