Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

The changes in the carrying amount of goodwill, for the year ended December 31, 2022, were as follows:


	December 31, 2021		Goodwill Resulting from Business Combinations (1)		Impairments (2)		Foreign Currency Translation		December 31, 2022
HVAC reportable segment
Gross goodwill	$	528.9	$	8.9	$	—	$	(8.3)	$	529.5
Accumulated impairments	(334.1)		—		—		5.9		(328.2)
Goodwill	194.8		8.9		—		(2.4)		201.3
Detection and Measurement reportable segment
Gross goodwill	424.9		11.0		—		(10.7)		425.2
Accumulated impairments	(162.4)		—		(12.0)		3.2		(171.2)
Goodwill	262.5		11.0		(12.0)		(7.5)		254.0
Total
Gross goodwill	953.8		19.9		—		(19.0)		954.7
Accumulated impairments	(496.5)		—		(12.0)		9.1		(499.4)
Goodwill	$	457.3	$	19.9	$	(12.0)	$	(9.9)	$	455.3

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(1) Reflects (i) goodwill acquired with the ITL acquisition of $10.8, (ii) an increase in Sealite’s goodwill of $0.2 resulting from revisions to the valuation of certain assets and liabilities, and (iii) an increase in Cincinnati Fan’s goodwill of $8.9 resulting from revisions to the valuation of certain assets and liabilities. As indicated in Note 1, the acquired assets, including goodwill, and liabilities assumed in the ITL acquisition have been recorded at estimates of fair value and are subject to change upon completion of acquisition accounting.

(2) During the fourth quarter of 2022, in connection with the annual impairment analyses of ULC’s goodwill and indefinite-lived intangible assets, we determined that the carrying value of ULC’s net assets exceeded the estimated fair value of the business, resulting in an impairment charge of $12.9, with $12.0 related to goodwill and $0.9 to the ULC trademarks. After such impairment charge, ULC had no goodwill and $5.4 of trademarks included in our consolidated balance sheet as of December 31, 2022.

The changes in the carrying amount of goodwill, for the year ended December 31, 2021, were as follows:


	December 31, 2020		Goodwill Resulting from Business Combinations (1)		Impairments (2)		Foreign Currency Translation		December 31, 2021
HVAC reportable segment
Gross goodwill	$	492.2	$	46.0	$	—	$	(9.3)	$	528.9
Accumulated impairments	(340.6)		—		—		6.5		(334.1)
Goodwill	151.6		46.0		—		(2.8)		194.8
Detection and Measurement reportable segment
Gross goodwill	351.5		78.7		—		(5.3)		424.9
Accumulated impairments	(134.5)		—		(28.2)		0.3		(162.4)
Goodwill	217.0		78.7		(28.2)		(5.0)		262.5
Total
Gross goodwill	843.7		124.7		—		(14.6)		953.8
Accumulated impairments	(475.1)		—		(28.2)		6.8		(496.5)
Goodwill	$	368.6	$	124.7	$	(28.2)	$	(7.8)	$	457.3

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(1) Reflects (i) goodwill acquired with the Sealite, ECS and Cincinnati Fan acquisitions of $47.7, $25.9 and $46.0, respectively, (ii) and increase in ULC’s goodwill of $3.1 resulting from revisions to the valuation of certain assets and liabilities, and (iii) an increase in Sensors & Software's goodwill of $2.0 resulting from revisions to the valuation of certain assets and liabilities.

(2) As indicated in Note 1, we concluded during the third quarter of 2021 that the operating and financial performance milestones related to the ULC contingent consideration would not be achieved, resulting in the reversal of the related liability of $24.3, with the offset to “Other operating (income) expense, net.” We also concluded that the lack of achievement of these milestones, along with lower than anticipated future cash flows, were indicators of potential impairment related to ULC’s indefinite-lived intangible assets and goodwill. As such, we performed quantitative analyses of ULC’s goodwill and indefinite-lived intangible assets for impairment during the third quarter of 2021. Based on such testing, we determined that the carrying value of ULC’s net assets exceeded the implied fair value of the business. As a result, we recorded an impairment charge of $24.3 during the third quarter, with $23.3 related to goodwill and the remainder to trademarks. In connection with our annual impairment analyses of ULC’s goodwill and indefinite-lived intangibles, during the fourth quarter of 2021, we determined that the carrying value of ULC’s net assets exceeded the implied fair value of the business by $5.2. As a result, we recorded impairment charges of $4.9 and $0.3 related to the business’s goodwill and trademarks, respectively.

Identifiable intangible assets were as follows:


	December 31, 2022						December 31, 2021
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible assets with determinable lives:(1)
Customer relationships	$	198.9	$	(41.7)	$	157.2	$	188.2	$	(26.7)	$	161.5
Technology	81.5		(18.4)		63.1		80.1		(11.9)		68.2
Patents	4.5		(4.5)		—		4.5		(4.5)		—
Other	36.7		(24.1)		12.6		31.6		(18.0)		13.6
	321.6		(88.7)		232.9		304.4		(61.1)		243.3
Trademarks with indefinite lives (2)	168.7		—		168.7		172.2		—		172.2
Total	$	490.3	$	(88.7)	$	401.6	$	476.6	$	(61.1)	$	415.5

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(1)The identifiable intangible assets associated with the ITL acquisition consist of customer relationships of $14.0, definite-lived trademarks of $3.0, technology of $2.9, and non-compete agreements of $2.6.

(2)During the fourth quarter of 2022, in connection with our annual impairment analyses, we recorded impairment charges of $1.4, with $0.9 related to ULC’s trademarks (see above) and the remainder to certain other trademarks. Other changes during 2022 related primarily to foreign currency translation.

Amortization expense was $28.5, $21.6 and $14.0 for the years ended December 31, 2022, 2021 and 2020, respectively. Estimated amortization expense is approximately $25.0 for 2023 and each of the four years thereafter.

At December 31, 2022, the net carrying value of intangible assets with determinable lives consisted of $94.6 in the HVAC reportable segment and $138.3 in the Detection and Measurement reportable segment. Trademarks with indefinite lives consisted of $105.0 in the HVAC reportable segment and $63.7 in the Detection and Measurement reportable segment.

As indicated in Note 1, we review goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter. In addition, we test goodwill for impairment on a more frequent basis if there are indications of potential impairment. In reviewing goodwill for impairment, we initially perform a qualitative analysis. If there is an indication of impairment, we then perform a quantitative analysis. During the fourth quarter of 2022, we performed quantitative analyses on the goodwill of our Cincinnati Fan and ULC reporting units. The Cincinnati Fan analysis indicated that the fair value of its net assets exceeded the related carrying value by less than 10%. A change in assumptions used in Cincinnati Fan’s quantitative analysis (e.g., projected revenues and profit growth rates, discount rates, industry price multiples, etc.) could result in the reporting unit’s estimated fair value being less than the carrying value. If Cincinnati Fan is unable to achieve its current financial forecast, we may be required to record an impairment charge in a future period related to its goodwill. As of December 31, 2022, Cincinnati Fan’s goodwill totaled $54.8. As previously discussed, our fourth quarter 2022 quantitative analysis of the ULC reporting unit resulted in an impairment charge of $12.9, with $12.0 related to goodwill and $0.9 to the ULC trademarks. After recording this impairment charge, there is no goodwill remaining related to the ULC acquisition.

Our quantitative analysis of trademarks is based on applying estimated royalty rates to projected revenues, with resulting cash flows discounted at a rate of return that reflects current market conditions. In addition to the impairment charges related to the ULC trademarks of $0.9 and $1.3, respectively, during 2022 and 2021, we recorded impairment charges of $0.5, $0.5 and $0.7, respectively, during 2022, 2021, and 2020 related to certain other trademarks.