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Basis of Presentation and Accounting Policies | 6 Months Ended
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Jun. 30, 2025
Accounting Policies [Abstract] |
Basis of Presentation and Accounting Policies | (1) Basis of Presentation and Accounting Policies Basis of Presentation Certain information and footnote disclosures normally included in the financial statements prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although we believe that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements included in our 2024 Annual Report on Form 10-K. The information furnished reflects all adjustments that, in the opinion of management, were necessary for a fair statement of the Consolidated Financial Statements for the periods presented. Such adjustments were of a normal recurring nature, unless otherwise disclosed. Allowance for Expected Credit Losses We have an allowance for expected credit losses recorded as an estimate of the accounts receivable that may not be collected. This allowance is calculated on an entity-by-entity basis with consideration of historical write-off experience, age of receivables, market conditions, and a specific review for expected credit losses. Items that affect this balance mainly include provision for credit losses and the write-off of accounts receivable balances. A rollforward of our allowance for expected credit losses is shown below:
|  | Six Months Ended June 30, 2025 |
Balance, December 31, 2024 |  | $ | 67.6 |
Provision for credit losses |  |  | 1.9 |
Write-offs |  |  | (2.4 | )
Currency impact and other |  |  | 10.2 |
Balance, June 30, 2025 |  | $ | 77.3 |
Leases We determine whether a contract is or contains a lease at contract inception. We recognize right-of-use (“ROU”) assets and lease liabilities on the balance sheet for leases with contract terms longer than 12 months. We classify the lease as a finance or operating lease which affects the recognition, measurement, and presentation of lease expenses and cash flows. Our Consolidated Balance Sheets present ROU assets, short-term lease liability and long-term lease liability as separate line items. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. As the rate implicit in the lease is not readily determinable in most of our leases, we use our incremental borrowing rate. We determine our incremental borrowing rate at the commencement date using our unsecured borrowing rate, adjusted for collateralization, lease term, economic environment, currency and other factors. ROU assets are recognized at commencement date at the value of the related lease liabilities, adjusted for any prepayments, lease incentives received, and initial direct costs incurred. Our lease terms include options to renew or not terminate the lease when it is reasonably certain that we will exercise that option. Lease expenses for operating leases are recognized on a straight-line basis over the lease term and recorded in selling and administrative expenses on the Consolidated Statements of Operations. Impairment of Goodwill and Other Indefinite-Lived Intangible Assets In accordance with the accounting guidance on goodwill and other intangible assets, we perform an annual impairment test of goodwill at our reporting unit level and indefinite-lived intangible assets at our unit of account level during the third quarter, or more frequently if events or circumstances change that would more likely than not reduce the fair value of our reporting units below their carrying value. In the event the fair value of a reporting unit is less than the carrying value, including goodwill, we would record an impairment charge based on the excess of a reporting units’ carrying amount over its fair value. Similarly, if the fair value of an indefinite-lived intangible asset is less than its carrying value, we record an impairment charge for the difference. We evaluate the recoverability of goodwill utilizing an income approach that estimates the fair value of the future discounted cash flows to which the goodwill relates. This approach reflects management’s outlook of the reporting units, which is believed to be the best determination of value due to management’s insight and experience with the reporting units. Significant assumptions used in our goodwill impairment tests include: expected future revenue growth rates, Operating Unit Profit ("OUP") margins, working capital levels, discount rates, and terminal value revenue growth rates and OUP margin. The expected future revenue growth rates and operating unit profit margins are determined after taking into consideration our historical revenue growth rates and operating unit profit margins, our assessment of future market potential and our expectations of future business performance. We believe that the future discounted cash flow valuation model provides the most reasonable and meaningful fair value estimate based on the reporting units’ projections of future operating results and cash flows and is consistent with our view of how market participants would value the company’s reporting units in an orderly transaction. For indefinite-lived intangible assets, we use either an income approach or a relief-from-royalty method, depending on the nature of the asset. Significant assumptions include expected future revenue growth rates, profit margins, discount rates, and market participant assumptions. Management closely monitors the financial and operating results impacting our reporting units and indefinite-lived intangible assets and makes comparisons to the key assumptions used in our fair value estimate at the time of our annual impairment test, in addition to operational initiatives and macroeconomic conditions, which may impact the results of the reporting units and indefinite-lived intangible assets. During the second quarter of 2025, in connection with the preparation of our financial statements, we assessed the changes in circumstances that occurred during the quarter to determine if it was more likely than not that the fair value of any reporting unit or indefinite-lived intangible asset were below its carrying amount. We identified several factors related to our United Kingdom and Switzerland reporting units that led us to conclude that it was more likely than not that the fair value of the reporting units were below the carrying values which triggered us to perform an interim goodwill impairment assessment for these reporting units. These factors included further deterioration of the macroeconomic and local market conditions, financial performance that came in below management’s planned revenue and OUP expectations for the first half of 2025, and downward revisions to full year 2025 planned revenue and OUP projections. As a result of the interim test, we recognized a partial non-cash goodwill impairment loss of $33.4 related to our United Kingdom reporting unit in our Northern Europe segment and a partial $24.7 non-cash goodwill impairment loss related to our Switzerland reporting unit in our Southern Europe segment to bring the carrying value of these reporting units down to their estimated fair value. Key assumptions included in the United Kingdom discounted cash flow valuation performed during the second quarter of 2025 included a discount rate of 11.4%, working capital as a percentage of revenue of 6.6%, revenue growth for the next 10 years ranging from -8.4% to 10.0%, and terminal value revenue growth and OUP margin of 3.0% and 3.2%, respectively. Key assumptions included in the Switzerland discounted cash flow valuation performed during the second quarter of 2025 included a discount rate of 11.2%, working capital as a percentage of revenue of 10.5%, revenue growth for the next 10 years ranging from -12.4% to 12.0% and terminal value revenue growth and OUP margin of 3.0% and 4.2%, respectively. The remaining goodwill balances related to our United Kingdom and Switzerland reporting units, as of June 30, 2025, were $79.3 and $35.8, respectively. In addition, we recognized a full impairment of $30.6 related to the reacquired franchise right associated with our Switzerland business, which is an indefinite-lived intangible asset. Key assumptions included in the indefinite-lived intangible asset impairment test included a discount rate of 13.7% and OUP margins ranging from 1.0% to 4.0%. While we continued to see challenging market conditions in North America and Europe, which led to lower l evels of revenues and OUP in certain of our other reporting units than we had forecasted during our 2024 annual impairment testing, we concluded, based on our analysis performed, that there was no triggering event related to our other reporting units and the fair value of the reporting units continued to exceed the carrying value. There could be significant further decreases in the operating results of our reporting units for a sustained period, which may result in a recognition of goodwill impairment that could be material to the Consolidated Financial Statements. Subsequent Event On July 4, 2025, the bill commonly known as the One Big Beautiful Bill Act was signed into law. The legislation includes significant changes to U.S. federal tax law, including the permanent extension of certain Tax Cuts and Jobs Act business provisions and the modification of several international tax laws. We are currently assessing its impact on our Consolidated Financial Statements.

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