Goodwill and Other Intangible Assets

9 Months Ended

Sep. 29, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

A summary of the changes in goodwill for the nine-month period ended September 29, 2024 is as follows:


	Consumer Packaging		Industrial Paper Packaging		All Other		Total
Goodwill at December 31, 2023	$	1,056,241	$	506,406	$	248,007	$	1,810,654

Divestitures	—		—		(16,559)		(16,559)
Foreign currency translation	(371)		(5,578)		275		(5,674)
Measurement period adjustments	(7,454)		—		—		(7,454)
Goodwill at September 29, 2024	$	1,048,416	$	500,828	$	231,723	$	1,780,967

Goodwill activity reflected under the caption “Divestitures” relates to the April 2024 divestiture of Protexic. See Note 3 for additional information. Goodwill activity reflected under the caption “Measurement period adjustments” relates to the prior year acquisition of Inapel. See Note 3 for additional information.

The Company assesses goodwill for impairment annually during the third quarter, or from time to time when warranted by the facts and circumstances surrounding individual reporting units or the Company as a whole. The Company completed its most recent annual goodwill impairment testing during the third quarter of 2024 and analyzed certain qualitative and quantitative factors in determining whether a goodwill impairment existed. The Company’s assessments reflected a number of significant management assumptions and estimates including the Company’s forecast of sales growth, gross profit margins, and discount rates. Changes in these assumptions could materially impact the Company’s conclusions. Based on its assessments, the Company concluded that there was no impairment of goodwill for any of its reporting units.

Although no reporting units failed the annual impairment test, in management’s opinion, the goodwill balances of the Plastics-Medical, Plastics-Food, and Metal Packaging reporting units are individually at risk of impairment in the near term if each reporting unit’s operation does not perform in line with management’s expectations, or if there is a negative change in the long-term financial outlook for each reporting unit or in other factors such as the particular discount rates used. In the case of Metal Packaging, the lower differential between the fair value and carrying value of the reporting unit is due to the acquisition of Ball Metalpack Holding, LLC in 2022, at which time the majority of assets and liabilities acquired were recorded at fair value. At September 29, 2024, the total goodwill associated with the Plastics-Medical, Plastics-Food, and Metal Packaging reporting units was $64,881, $198,807, and $384,315, respectively.

In the annual goodwill impairment analysis completed during the third quarter of 2024, projected future cash flows for the Plastics-Medical, Plastics-Food, and Metal Packaging reporting units were discounted at 11.5%, 10.5%, and 11.0%, respectively, and their estimated fair values were determined to exceed their individual carrying values by approximately 18.7%, 18.9%, and 12.6%, respectively. Based on the discounted cash flow model and holding other valuation assumptions constant, the discount rates for the Plastics-Medical, Plastics-Food and Metal Packaging reporting units would have to increase to 13.8%, 12.4%, and 12.1%, respectively, in order for the estimated fair values of the reporting units to fall below carrying values.

During the time subsequent to the annual evaluation, and at September 29, 2024, the Company considered whether any events and/or changes in circumstances had resulted in the likelihood that the goodwill of any of its reporting units may have been impaired. It is management’s opinion that no such events and/or changes in circumstances have occurred.

Other Intangible Assets

A summary of other intangible assets as of September 29, 2024 and December 31, 2023 is as follows:


	September 29, 2024		December 31, 2023
Other Intangible Assets, gross:
Patents	$	29,305	$	29,304
Customer lists	1,228,536		1,282,689
Trade names	41,896		41,836
Proprietary technology	56,862		56,857
Other	6,703		6,916
Total Other Intangible Assets, gross	$	1,363,302	$	1,417,602

Accumulated Amortization:
Patents	$	(20,755)	$	(19,549)
Customer lists	(499,376)		(493,778)
Trade names	(22,949)		(18,845)
Proprietary technology	(31,919)		(29,013)
Other	(2,687)		(2,747)
Total Accumulated Amortization	(577,686)		(563,932)
Other Intangible Assets, net	$	785,616	$	853,670

“Total Other Intangibles Assets, gross” and “Total Accumulated Amortization” were both reduced by $54,860 during the first nine months of 2024 as a result of the divestiture of Protexic in April 2024. These fully amortized intangible assets consisted primarily of customer lists. See Note 3 for additional information.

Other intangible assets are amortized using the straight-line method over their respective useful lives when management has determined that the straight-line method approximates the pattern of consumption of the respective intangible assets or in relation to the asset’s specific pattern of consumption if management has determined that the straight-line method does not provide a fair approximation of the consumption of benefits. These lives generally range from three to forty years. The Company has no intangible assets with indefinite lives.

Aggregate amortization expense was $22,645 and $21,379 for the three-month periods ended September 29, 2024 and October 1, 2023, respectively, and $68,095 and $63,082 for the nine-month periods ended September 29, 2024 and October 1, 2023, respectively. Amortization expense on other intangible assets is expected to total approximately $90,200 in 2024, $78,600 in 2025, $74,800 in 2026, $73,800 in 2027 and $73,000 in 2028.