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Note 11 - Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Text Block]

Note 11 – Goodwill and Other Intangible Assets

Changes in the carrying value of goodwill and other intangible asset during 2022:

Historical Cost of Intangible Assets	December 31, 2021		Acquisitions		Foreign Currency			December 31, 2022
Customer relationships	$	7,769	$	200,900	$	(76	)	$	208,593
Technology and drawings		6,750		39,800		(7	)		46,543
Other intangibles		1,997		-		-			1,997
Total finite-lived intangible assets		16,516		240,700		(83	)		257,133
Trade names		2,528		10,700		(2	)		13,226
Goodwill		27,243		230,688		(207	)		257,724
Total	$	46,287	$	482,088	$	(292	)	$	528,083

The major components of Goodwill and other intangible assets are:

	2022				2021
	Historical Cost		Accumulated Amortization		Historical Cost		Accumulated Amortization
Finite-lived intangible assets:
Customer relationships	$	208,593	$	13,369	$	7,769	$	7,255
Technology and drawings		46,543		5,757		6,750		4,305
Other intangibles		1,997		1,872		1,997		1,641
Total finite-lived intangible assets		257,133		20,998		16,516		13,201
Trade names and trademarks		13,226		-		2,528		-
Goodwill		257,724		-		27,243		-
Total	$	528,083	$	20,998	$	46,287	$	13,201

Amortization of intangible assets was $7.6 million, $0.8 million and $1.3 million in 2022, 2021 and 2020, respectively. The following table summarizes the future estimated amortization expense relating to our intangible assets as of December 31, 2022 (in thousands):

2023				2024				2025				2026				2027				Thereafter				Total
$	12,527			$	12,402			$	12,367			$	12,318			$	12,281			$	174,240			$	236,135

For 2022, the Company used a quantitative analysis for the annual goodwill impairment testing as of October 1 for its National Pump Company (“National”) reporting unit. The fair value for this reporting unit was estimated using both a discounted cash flow model and a market-based approach. The discounted cash flow model considered forecasted cash flows discounted at an estimated weighted-average cost of capital. The forecasted cash flows were based on the Company’s long-term operating plan and a terminal value was used to estimate the cash flows beyond the period covered by the operating plan. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. The market-based approach considers market prices of corporations engaged in the same or similar line of business. These analyses require the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates and the timing of expected future cash flows. Sensitivity analyses were performed around these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values.

The result of this goodwill impairment test indicated that no impairment existed at National. The Company’s annual impairment analysis performed as of October 1, 2022 concluded that National’s fair value exceeded its carrying value. A sensitivity analysis was performed for the National reporting unit, assuming a hypothetical 100 basis point decrease in the expected long-term growth rate or a hypothetical 100 basis point increase in the weighted average cost of capital, and both scenarios independently yielded an estimated fair value for the National reporting unit above carrying value. If National fails to experience growth or revises its long-term projections downward, it could be subject to impairment charges in the future. Goodwill relating to the National reporting unit is $13.6 million, 1.6% of the Company’s December 31, 2022 total assets.

For 2022, for all other reporting units, the Company used a qualitative analysis for goodwill impairment testing as of October 1. This qualitative assessment included consideration of current industry and market conditions and circumstances as well as any mitigating factors that would most affect the fair value of the Company and these reporting units. Based on the assessment and consideration of the totality of the facts and circumstances, including the business environment in the fourth quarter of 2022, the Company determined that it was not more likely than not that the fair value of the Company or these reporting units is less than their respective carrying amounts. As such, no goodwill impairments for these reporting units were recorded for the year ended December 31, 2022.

Other indefinite-lived intangible assets primarily consist of trademarks and trade names. The fair value of these assets is also tested annually for impairment as of October 1, or whenever events or changes in circumstances indicate there may be a possible permanent loss of value. The fair value of these assets is determined using a royalty relief methodology similar to that employed when the associated assets were acquired, but using updated estimates of future sales, cash flows and profitability. For 2022 and 2021 the fair value of all indefinite lived intangible assets exceeded the respective carrying values.

Finite-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recovered through future net cash flows generated by the assets. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net undiscounted cash flows estimated to be generated by such assets. Based upon our fiscal 2022 and 2021 quantitative and qualitative impairment analyses the Company was not aware of any events or changes in circumstances that indicate the carrying value of its finite-lived intangible assets may not be recoverable.