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Goodwill and Other Intangibles, Net | 6 Months Ended
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Jun. 30, 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 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:
| June 30, 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 | $ | 1,384.1 |  |  | $ | (441.4 | ) |  | $ | 942.7 |  | 3-20 |  | $ | 1,385.5 |  |  | $ | (403.5 | ) |  | $ | 0.0 |  |  | $ | 982.0 |
Customer Relationships |  | 643.3 |  |  |  | (386.9 | ) |  | $ | 256.4 |  | 15-20 |  |  | 644.9 |  |  |  | (373.3 | ) |  |  | (3.5 | ) |  |  | 268.1 |
Patents/Formulas |  | 205.6 |  |  |  | (121.3 | ) |  |  | 84.3 |  | 4-20 |  |  | 208.3 |  |  |  | (116.1 | ) |  |  | (1.9 | ) |  |  | 90.3 |
Total | $ | 2,233.0 |  |  | $ | (949.6 | ) |  | $ | 1,283.4 |  |  |  | $ | 2,238.7 |  |  | $ | (892.9 | ) |  | $ | (5.4 | ) |  | $ | 1,340.4 |
Intangible amortization expense was $30.7 and $31.1 for the sec ond quarter of 2024 and 2023, respectively. Intangible amortization expense amounted to $61.5 and $62.2 for the first six months of 2024 and 2023, respectively. The Company estimates that intangible amortization expense will be appr oximately $122.0 in 2024 a nd approximately $121.0 declining 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 June 30, 2024 is $23.2 and will be amortized over a remaining useful life of 1.5 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:
| June 30, |  |  | December 31, |
| 2024 |  |  | 2023 |
Trade Names | $ | 1,961.3 |  |  | $ | 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 VITAFUSION and LIL' CRITTERS trade name is susceptible to future impairment risk. The carrying value of the VITAFUSION and LIL' CRITTERS trade name is $281.3. The fair value represented 154% of the carrying value as of October 1, 2023, the date of the Company’s last impairment test. The key assumptions used in the projections from the 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%. Other noncurrent assets supporting the VITAFUSION and LIL' CRITTERS brand are PP&E, net, including investments in future capacity expansion projects, of $173.0, and other intangible assets of $17.1. The assumptions used in the October 1, 2023 tradename impairment test were based on market conditions and management’s expectation of the success of growth and profitability initiatives at that time. The growth and profitability initiatives were primarily from higher promotion and marketing spend, new product introductions and expansion in e-commerce and international markets. In 2024, the vitamin category has continued to decline. We have also continued to experience a reduction in market share and profitability primarily due to significant product competition coming from new category entrants, including private label. In addition, residual impacts from past 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. Management has implemented actions intended to improve the VITAFUSION and LIL' CRITTERS business which have included upgrading formulas for better texture and flavor to improve the consumer experience, new and innovative packaging and advertising, and introducing new product forms like soft chews. However, to date, these actions have not slowed the loss of market share in 2024 making it difficult to grow the business. The above 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. The Company monitors the performance of this business on at least a quarterly basis. Our current review did not indicate that a triggering event occurred in the second quarter as the Company continues to expect benefits from its efforts to stabilize the VITAFUSION and LIL' CRITTERS business. However, improvements in the business are taking longer than we anticipated. If our growth and profitability initiatives do not begin to realize benefits soon, the tradename is susceptible to impairment. 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 was $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. 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 |
Graphico acquired goodwill |  | 0.0 |  |  |  | 2.1 |  |  |  | 0.0 |  |  |  | 2.1 |
Passport divestiture |  | 0.0 |  |  |  | 0.0 |  |  |  | (1.0 | ) |  |  | (1.0 | )
Balance at June 30, 2024 | $ | 2,061.1 |  |  | $ | 236.5 |  |  | $ | 135.0 |  |  | $ | 2,432.6 |
The result of the Company’s annual goodwill impairment test, performed in the second quarter of each year, 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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- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 350 -SubTopic 30 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/350-30/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 350 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/350-20/tableOfContent + Details
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