XML 37 R18.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Goodwill and Intangible Assets | 12 Months Ended
--- | ---
Jan. 27, 2024
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill There were no changes in the carrying amount of goodwill during fiscal 2022. Changes in the carrying amount of goodwill during fiscal 2023 and 2024 were as follows (dollars in thousands):
| Goodwill |  | Accumulated Impairment Losses |  | Total
Balance as of January 29, 2022 | $ | 521,516 |  |  | $ | (249,031) |  |  | $ | 272,485 |
Goodwill from fiscal 2023 acquisition | 60 |  |  | — |  |  | 60 |
Balance as of January 28, 2023 | 521,576 |  |  | (249,031) |  |  | 272,545 |
Goodwill from fiscal 2024 acquisition | 39,446 |  |  | — |  |  | 39,446 |
Balance as of January 27, 2024 | $ | 561,022 |  |  | $ | (249,031) |  |  | $ | 311,991 |
The Company’s goodwill resides in multiple reporting units and primarily consists of expected synergies, together with the expansion of our geographic presence and strengthening of our customer base from acquisitions. The profitability of individual reporting units may suffer periodically due to downturns in customer demand, increased costs of providing services, and the level of overall economic activity. Our customers may reduce capital expenditures and defer or cancel pending projects due to changes in technology, a slowing or uncertain economy, merger or acquisition activity, a decision to allocate resources to other areas of their business, or other reasons. The profitability of reporting units may also suffer if actual costs of providing services exceed the costs anticipated when the Company enters into contracts. Additionally, adverse conditions in the economy and future volatility in the equity and credit markets could impact the valuation of our reporting units. The cyclical nature of our business, the high level of competition existing within our industry, and the concentration of our revenues from a limited number of customers may also cause results to vary. These factors may affect individual reporting units disproportionately, relative to the Company as a whole. As a result, the performance of one or more of the reporting units could decline, resulting in an impairment of goodwill or intangible assets. We evaluate current operating results, including any losses, in the assessment of goodwill and other intangible assets. The estimates and assumptions used in assessing the fair value of the reporting units and the valuation of the underlying assets and liabilities are inherently subject to significant uncertainties. Changes in judgments and estimates could result in significantly different estimates of the fair value of the reporting units and could result in impairments of goodwill or intangible assets of the reporting units. In addition, adverse changes to the key valuation assumptions contributing to the fair value of our reporting units could result in an impairment of goodwill or intangible assets. The Company performs its annual goodwill assessment as of the first day of the fourth fiscal quarter of each fiscal year. Goodwill and indefinite lived intangible assets are required to be tested for impairment between annual tests if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. We performed our annual impairment assessment for fiscal 2024, fiscal 2023, and fiscal 2022, and concluded that no impairment of goodwill or the indefinite-lived intangible asset was indicated at any reporting unit for any of the periods. In each of these periods, qualitative assessments were performed on reporting units that comprise a significant portion of our consolidated goodwill balance. For the Company’s indefinite-lived intangible asset we performed a qualitative assessment for fiscal 2024 and 2022 and a quantitative analysis for fiscal 2023. A qualitative assessment includes evaluating all identified events and circumstances that could affect the significant inputs used to determine the fair value of a reporting unit or indefinite-lived intangible asset for the purpose of determining whether it is more likely than not that these assets are impaired. We consider various factors while performing qualitative assessments, including macroeconomic conditions, industry and market conditions, financial performance of the reporting units, changes in market capitalization, and any other specific reporting unit considerations. These qualitative assessments indicated that it was more likely than not that the fair value exceeded carrying value for those reporting units. For the remaining reporting units, we performed the quantitative analysis described in ASC Topic 350 in each of these periods. When performing the quantitative analysis, we determine the fair value of our reporting units using an equal weighting of fair values derived from the income approach and market approach valuation methodologies. Under the income approach, the key valuation assumptions used in determining the fair value estimates of our reporting units for each annual test were: (a) expected cash flow for a period of seven years based on our best estimate of revenue growth rates and projected operating margins; (b) terminal value based upon terminal growth rates; and (c) a discount rate based on the Company’s best estimate of the weighted average cost of capital adjusted for certain risks for the reporting units. The table below outlines certain assumptions used in our annual quantitative impairment analyses for fiscal 2024, fiscal 2023, and fiscal 2022:
| Fiscal Year Ended |
| January 27, 2024 |  | January 28, 2023 |  | January 29, 2022 |
Terminal Growth Rate | 2.5% |  | 2% - 3% |  | 2% - 3% |
Discount Rate | 10.5% |  | 11.5% |  | 10.5% |
The discount rate reflects risks inherent within each reporting unit operating individually. These risks are greater than the risks inherent in the Company as a whole. Determination of discount rates included consideration of market inputs such as the risk-free rate, equity risk premium, industry premium, and cost of debt, among other assumptions. The decrease in the discount rate for fiscal 2024 from fiscal 2023 is largely due to lower cost of equity capital and an increase in the market participant debt-to-capital ratios which results in more allocation to the cost of debt, which is lower than the cost of equity. The increase in the discount rate for fiscal 2023 from fiscal 2022 was largely driven by increases in prevailing interest rates as observed in financial markets as of each valuation date. We believe the assumptions used in the impairment analysis each year are reflective of the risks inherent in the business models of our reporting units and our industry. Under the market approach, the guideline company method develops valuation multiples by comparing our reporting units to similar publicly traded companies. Key valuation assumptions used in determining the fair value estimates of our reporting units rely on: (a) the selection of similar companies and (b) the selection of valuation multiples as they apply to the reporting unit characteristics. We determined that the fair values of each of the reporting units were in excess of their carrying values in the fiscal 2024 assessment. Management determined that significant changes were not likely in the factors considered to estimate fair value, and analyzed the impact of such changes were they to occur. Specifically, if the discount rate applied in the fiscal 2024 impairment analysis had been 100 basis points higher than estimated for each of the reporting units, and all other assumptions were held constant, the conclusion of the assessment would remain unchanged and there would be no impairment of goodwill. Additionally, if there was a 25% decrease in the fair value of any of the reporting units due to a decline in their discounted cash flows resulting from lower operating performance, the conclusion of the assessment would remain unchanged for all reporting units. Recent operating performance, along with assumptions for specific customer and industry opportunities, were considered in the key assumptions used during the fiscal 2024 impairment analysis. Management has determined the goodwill of the Company may have an increased likelihood of impairment if a prolonged downturn in customer demand were to occur, or if the reporting units were not able to execute against customer opportunities, and the long-term outlook for their cash flows were adversely impacted. Furthermore, changes in the long-term outlook may result in a change to other valuation assumptions. Factors monitored by management which could result in a change to the reporting units’ estimates include the outcome of customer requests for proposals and subsequent awards, strategies of competitors, labor market conditions and levels of overall economic activity. The Company determined that there were no events or changes in circumstances for the other reporting units or indefinite lived intangible assets during fiscal 2024 that would indicate a potential reduction in their fair value below their carrying amounts. As of January 27, 2024, the Company continues to believe the remaining goodwill and the indefinite-lived intangible asset are recoverable for all of its reporting units. However, if adverse events were to occur or circumstances were to change indicating that the carrying amount of such assets may not be fully recoverable, the assets would be reviewed for impairment and could be impaired. There can be no assurances that goodwill or the indefinite-lived intangible asset may not be impaired in future periods. Intangible Assets Our intangible assets consisted of the following (dollars in thousands):
| January 27, 2024 |  | January 28, 2023
| Weighted Average Remaining Useful Lives (Years) |  | Gross Carrying Amount |  | Accumulated Amortization |  | Intangible Assets, Net |  | Gross Carrying Amount |  | Accumulated Amortization |  | Intangible Assets, Net
Customer relationships | 8.0 |  | $ | 338,117 |  |  | $ | 245,512 |  |  | $ | 92,605 |  |  | $ | 312,017 |  |  | $ | 231,028 |  |  | $ | 80,989 |
Trade names, finite | 9.1 |  | 13,050 |  |  | 8,723 |  |  | 4,327 |  |  | 9,250 |  |  | 8,448 |  |  | 802 |
Trade name, indefinite | — |  | 4,700 |  |  | — |  |  | 4,700 |  |  | 4,700 |  |  | — |  |  | 4,700 |
Contract backlog | 2.6 |  | 11,600 |  |  | 4,335 |  |  | 7,265 |  |  | — |  |  | — |  |  | — |
Non-compete agreement | 3.8 |  | 75 |  |  | 18 |  |  | 57 |  |  | 75 |  |  | — |  |  | 75 |
|  |  | $ | 367,542 |  |  | $ | 258,588 |  |  | $ | 108,954 |  |  | $ | 326,042 |  |  | $ | 239,476 |  |  | $ | 86,566 |
Amortization of our customer relationship intangibles and our backlog intangibles are recognized on an accelerated basis as a function of the expected economic benefit. Amortization of our other finite-lived intangibles is recognized on a straight-line basis over the estimated useful life. Amortization expense for finite-lived intangible assets was $19.8 million, $15.3 million, and $17.5 million for fiscal 2024, fiscal 2023, and fiscal 2022, respectively. As of January 27, 2024, total amortization expense for existing finite-lived intangible assets for the next five fiscal years and thereafter is as follows (dollars in thousands):
|  | Amount
2025 |  | $ | 21,563 |
2026 |  | 19,179 |
2027 |  | 16,537 |
2028 |  | 13,370 |
2029 |  | 8,826 |
Thereafter |  | 24,779 |
Total |  | $ | 104,254 |
As of January 27, 2024, we believe that the carrying amounts of our intangible assets are recoverable. However, if adverse events were to occur or circumstances were to change indicating that the carrying amount of such assets may not be fully recoverable, the assets would be reviewed for impairment and the assets could be impaired.

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 350 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//350/tableOfContent + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration