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Goodwill and Intangible Assets | 12 Months Ended
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Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The annual changes in the carrying amount of goodwill, by segment, as of December 31, 2021 and 2022, were as follows, respectively:
(in thousands) | North America |  | Europe |  | Asia Pacific |  | Total
Balance as of January 1, 2021 | $ | 96,311 |  |  | $ | 38,059 |  |  | $ | 1,474 |  |  | $ | 135,844 |
Foreign exchange | (4) |  |  | (1,622) |  |  | (90) |  |  | (1,716) |
Reclassifications | — |  |  | (106) |  |  | — |  | (106) |
Balance as of December 31, 2021 | 96,307 |  |  | 36,331 |  |  | 1,384 |  |  | 134,022 |
Goodwill acquired | 7,444 |  |  | 365,591 |  |  | — |  |  | 373,035 |
Foreign exchange | (179) |  |  | (11,123) |  |  | (83) |  |  | (11,385) |
Reclassifications | — |  |  | — |  |  | — |  |  | — |
Balance as of December 31, 2022 | $ | 103,572 |  |  | $ | 390,799 |  |  | $ | 1,301 |  |  | $ | 495,672 |
Goodwill Impairment Testing The Company tests goodwill for impairment at the reporting unit level on an annual basis (in the fourth quarter). Our goodwill balance is not amortized to expense, and we may assess qualitative factors and quantitative factors to determine whether it is more likely than not that the fair value of each reporting unit is less than its carrying amount as a basis for determining whether it is necessary to complete quantitative impairment assessment s We assessed the qualitative factors related to the goodwill of the reporting units to determine whether it is necessary to perform an impairment test. During fiscal year 2022, we revised our European reporting units due to the acquisition of ETANCO and changes to the management, product distribution and operations structure of our legacy European operations. Subsequent to this change, all European reporting units, including the S&P Clever reporting unit, but excluding ETANCO, were consolidated for reporting purposes into one overall Europe reporting unit. ETANCO will remain as its own reporting unit until it is fully integrated into our other European operations, and there are sufficient economic similarities between the ETANCO and European reporting units. A qualitative assessment was performed immediately preceding the reporting unit change and determined that it was not more likely than not that any impairment existed prior to the reporting unit change. For the Company’s remaining reporting units, the reporting unit level is generally one level below the operating segment, which is at the country level, except for the United States and Australia. The Company determined that the U.S. reporting unit includes four components: Northwest United States, Southwest United States, Northeast United States and Southeast United States. The Australia reporting unit includes two components: Australia and New Zealand. For each of these reporting units, the Company aggregated the components because management concluded that they are economically similar and that the goodwill is recoverable from these components working in concert. In 2021, the Company applied the ("Step 1") approach where the Company compares the fair value of the reporting unit to its carrying value. The fair value calculation uses both the income approach (discounted cash flow method) and the market approach, equally weighted. If the Company determines that the carrying value of the net assets assigned to the reporting unit, including goodwill, exceeds the fair value of the reporting unit, no further action is taken. If the Company determines that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company will record an impairment charge equal to the difference between the implied fair value of the goodwill and the carrying value. In 2022, we completed our annual impairment assessment by performing a qualitative assessment. For this qualitative assessment, we assessed various assumptions, events and circumstances that would have affected the estimated fair value of the reporting units as compared to the quantitative fair value measurement determined in the fourth quarter of 2021. Based on the qualitative assessment performed, the Company concluded that there was no evidence of events or circumstances that would indicate a material change from the Company’s prior year quantitative assessment by reporting unit and therefore, it was more likely than not that the estimated fair value of reporting units exceeded their respective carrying values. The 2022 and 2021 annual testing of goodwill for impairment did not result in impairment charges. "See Item 7 - Critical Accounting Policies and Estimates -Goodwill and Other Intangible Assets". Amortizable Intangible Assets Intangible assets from acquired businesses or asset purchases are recognized at their estimated fair values on the date of acquisition and consist of patents, unpatented technology, non-compete agreements, trademarks, customer relationships and other intangible assets. Finite-lived intangibles are amortized to expense over the applicable useful lives, ranging from three to twenty-one years, based on the nature of the asset and the underlying pattern of economic benefit as reflected by future net cash inflows. The Company performs an impairment test of finite-lived intangibles whenever events or changes in circumstances indicate their carrying value may be impaired. The total gross carrying amount and accumulated amortization of definite-lived intangible assets as of December 31, 2022, was $427.0 million and $64.1 million, respectively. The aggregate amount of amortization expense of intangible assets for the years ended December 31, 2022, 2021 and 2020 was $17.4 million, $6.4 million and $6.1 million, respectively. The weighted-average remaining amortization period for all amortizable intangibles on a combined basis is 9.1 years as of December 31, 2022. The annual changes in the carrying amounts of patents, unpatented technologies, customer relationships and non-compete agreements and other intangible assets subject to amortization for the years ended December 31, 2022 and 2021 were as follows:
(in thousands) | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Patents |  |
Balance as of January 1, 2021 | $ | 4,699 |  |  | $ | (934) |  |  | $ | 3,765 |
Purchases | 6,074 |  |  | — |  |  | 6,074 |
Amortization | — |  |  | (428) |  |  | (428) |
Balance as of December 31, 2021 | 10,773 |  |  | (1,362) |  |  | 9,411 |
Purchases | 13,775 |  |  | (670) |  |  | 13,105 |
Amortization | — |  |  | (771) |  |  | (771) |
Foreign exchange | (376) |  |  | — |  |  | (376) |
Balance as of December 31, 2022 | $ | 24,172 |  |  | $ | (2,803) |  |  | $ | 21,369 |
(in thousands) | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Unpatented Technology |  |
Balance as of January 1, 2021 | $ | 22,104 |  |  | $ | (16,492) |  |  | $ | 5,612 |
Amortization | — |  |  | (2,174) |  |  | (2,174) |
Reclassifications | 348 |  |  | — |  |  | 348 |
Foreign exchange | (49) |  |  | — |  |  | (49) |
Balance as of December 31, 2021 | 22,403 |  |  | (18,666) |  |  | 3,737 |
Amortization | — |  |  | (793) |  |  | (793) |
Reclassifications | (49) |  |  | — |  |  | (49) |
Foreign exchange | 56 |  |  | — |  |  | 56 |
Balance as of December 31, 2022 | $ | 22,410 |  |  | $ | (19,459) |  |  | $ | 2,951 |
(in thousands) | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Non-Compete Agreements, Trademarks and Other |  |
Balance as of January 1, 2021 | $ | 21,582 |  |  | $ | (7,724) |  |  | $ | 13,858 |
Amortization | — |  |  | (2,631) |  |  | (2,631) |
Foreign exchange | (148) |  |  | — |  |  | (148) |
Balance as of December 31, 2021 | 21,434 |  |  | (10,355) |  |  | 11,079 |
Purchases of intangible assets | 6,880 |  |  | (5) |  |  | 6,875 |
Amortization | — |  |  | (2,572) |  |  | (2,572) |
Reclassifications | 149 |  |  | — |  |  | 149 |
Foreign exchange | (162) |  |  | — |  |  | (162) |
Balance as of December 31, 2022 | $ | 28,301 |  |  | $ | (12,932) |  |  | $ | 15,369 |
(in thousands) | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Customer Relationships |  |
Balance as of January 1, 2021 | $ | 18,123 |  |  | $ | (15,175) |  |  | $ | 2,948 |
Disposal | (217) |  |  | — |  |  | (217) |
Amortization | — |  |  | (1,186) |  |  | (1,186) |
Foreign exchange | (117) |  |  | — |  |  | (117) |
Balance as of December 31, 2021 | 17,789 |  |  | (16,361) |  |  | 1,428 |
Purchases of intangible assets | 249,767 |  |  | (12,223) |  |  | 237,544 |
Amortization | — |  |  | (386) |  |  | (386) |
Reclassifications | (151) |  |  | — |  |  | (151) |
Foreign exchange | (6,946) |  |  | — |  |  | (6,946) |
Balance as of December 31, 2022 | $ | 260,459 |  |  | $ | (28,970) |  |  | $ | 231,489 |
As of December 31, 2022, estimated future amortization of intangible assets was as follows: (in thousands)
2023 | $ | 20,957 |
2024 | 20,012 |
2025 | 19,782 |
2026 | 19,259 |
2027 | 18,953 |
Thereafter | 172,215 |
| $ | 271,178 |
Indefinite-Lived Intangible Assets Indefinite-lived intangible assets totaled $91.7 million as of December 31, 2022, including $91.1 million, net of an unfavorable foreign exchange impact of $2.7 million, attributable to trade names acquired in the ETANCO acquisition. Definite-lived and indefinite-lived assets, net, by segment as of December 31, 2022, and 2021 were as follows:
| As of December 31, 2021
| Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
(in thousands) |  |
Total Intangible Assets |  |
North America | $ | 46,643 |  |  | $ | (26,346) |  |  | $ | 20,297 |
Europe | 26,371 |  |  | (20,399) |  |  | 5,972 |
Total | $ | 73,014 |  |  | $ | (46,745) |  |  | $ | 26,269 |
| As of December 31, 2022
| Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
(in thousands) |  |
Total Intangible Assets |  |
North America | $ | 53,498 |  |  | $ | (29,782) |  |  | $ | 23,716 |
Europe | 373,538 |  |  | (34,337) |  |  | 339,201 |
Total | $ | 427,036 |  |  | $ | (64,119) |  |  | $ | 362,917 |

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