Goodwill and Intangibles

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLES

We anticipate that the COVID-19 pandemic could continue to have an impact on the homebuilding industry in general, as it could result in further business interruptions (government-mandated or otherwise) and could affect, among other factors, inflation, interest rates, employment levels, consumer spending and consumer confidence, which could decrease demand for homes, adversely affecting our business. As such, we considered whether impairment indicators arose through the date of filing of this Quarterly Report on Form 10-Q for our goodwill, long-lived assets and other intangible assets and concluded that no such factors existed to cause us to test for goodwill impairment during the nine months ended September 30, 2022. While we ultimately concluded that our goodwill, long-lived assets and other intangibles assets were not impaired as of September 30, 2022, we will continue to assess impairment indicators related to the impact of the COVID-19 pandemic on our business.

Goodwill

In the first quarter of 2022, we changed our reporting units to align with our change in operating and reportable segments. See Note 10, Information on Segments, for details about our change in segment structure. Effective January 1, 2022, our Installation reporting unit is comprised of our Installation operating and reportable segment, and our Other category is comprised of our Manufacturing and Distribution operating segments which are also reporting units. All three reporting units contain goodwill and were previously combined and recorded as a single operating and reportable segment as of December 31, 2021.

The change in carrying amount of goodwill was as follows (in thousands):


	Installation		Other		Consolidated

Goodwill (gross) - January 1, 2022, after change in reporting units	$	331,782	$	60,739	$	392,521
Business combinations	6,389		27,595		33,984
Other	111		—		111
Goodwill (gross) - September 30, 2022	338,282		88,334		426,616
Accumulated impairment losses	(70,004)		—		(70,004)
Goodwill (net) - September 30, 2022	$	268,278	$	88,334	$	356,612

Other changes presented in the above table primarily include minor adjustments for the allocation of certain acquisitions still under measurement made during the nine months ended September 30, 2022. For additional information regarding changes to goodwill resulting from acquisitions, see Note 17, Business Combinations.

We test goodwill for impairment annually during the fourth quarter of our fiscal year or earlier if there is an impairment indicator. Accumulated impairment losses included within the above table were incurred over multiple periods and were all associated with the Installation segment, with the latest impairment charge being recorded during the year ended December 31, 2010.

Intangibles, net

The following table provides the gross carrying amount, accumulated amortization and net book value for each major class of intangibles (in thousands):


	As of September 30,						As of December 31,
	2022						2021
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Amortized intangibles:
Customer relationships	$	321,720	$	137,495	$	184,225	$	292,113	$	113,849	$	178,264
Covenants not-to-compete	30,015		19,204		10,811		27,717		16,471		11,246
Trademarks and tradenames	116,246		37,833		78,413		103,007		32,623		70,384
Backlog	23,725		21,336		2,389		23,724		19,197		4,527
	$	491,706	$	215,868	$	275,838	$	446,561	$	182,140	$	264,421

The gross carrying amount of intangibles increased approximately $45.1 million during the nine months ended September 30, 2022 primarily due to business combinations. For more information, see Note 17, Business Combinations. Remaining estimated aggregate annual amortization expense is as follows (amounts, in thousands, are for the fiscal year ended):


Remainder of 2022	$	11,113
2023	41,441
2024	37,520
2025	31,199
2026	27,241
Thereafter	127,324