Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill

As a result of acquisitions of various businesses, the Company has significant intangible assets on its balance sheet that include goodwill and indefinite-lived intangibles. The Company’s goodwill and indefinite-lived intangibles are tested and reviewed for impairment annually as of March 31st or more frequently if facts and circumstances warrant by comparing the fair value of each reporting unit to its carrying value. Each of the Company’s businesses represent a reporting unit.

A reconciliation of the change in the carrying value of goodwill by segment for the years ended December 31, 2023 and 2022 are as follows (in thousands):


	Balance at January 1, 2023		Acquisitions/Measurement Period Adjustments (1)		Goodwill Impairment		Balance at December 31, 2023
5.11	$	92,966	$	—	$	—	$	92,966
BOA	254,153		—		—		254,153
Ergobaby	40,896		625		—		41,521
Lugano	86,337		—		—		86,337
PrimaLoft	291,150		(804)		(57,810)		232,536
Velocity Outdoor	39,773		—		(31,590)		8,183
Altor Solutions	91,129		—		—		91,129
Arnold	39,267		—		—		39,267
Sterno	55,336		—		—		55,336

Total	$	991,007	$	(179)	$	(89,400)	$	901,428

(1) Acquisition of businesses during the year ended December 31, 2023 includes an add-on acquisition at Ergobaby.


	Balance at January 1, 2022		Acquisitions/Measurement Period Adjustments (1)		Goodwill Impairment		Balance at December 31, 2022
5.11	$	92,966	$	—	$	—	$	92,966
BOA	254,153		—		—		254,153
Ergobaby	61,448		—		(20,552)		40,896
Lugano	83,458		2,879		—		86,337
PrimaLoft	—		291,150		—		291,150
Velocity Outdoor	30,079		9,694		—		39,773
Altor Solutions	90,843		286		—		91,129
Arnold	39,267		—		—		39,267
Sterno	55,336		—		—		55,336

Total	$	707,550	$	304,009	$	(20,552)	$	991,007

(1) Acquisition of businesses during the year ended December 31, 2022 includes the acquisition of PrimaLoft by the Company, and an add-on acquisition at Velocity.

Approximately $117.8 million of goodwill is deductible for income tax purposes at December 31, 2023.

Interim Impairment Testing

2023 Interim Impairment Testing

PrimaLoft - The Company performed an interim impairment test of goodwill at PrimaLoft as of December 31, 2023. As a result of operating results that were below forecast amounts that were used as the basis for the purchase price allocation performed when PrimaLoft was acquired as well as the failure of certain financial covenants in the intercompany credit agreement as of December 31, 2023, the Company determined that a triggering event had occurred. The Company performed the quantitative impairment test using both an income approach and a market approach. The prospective information used in the income approach considers macroeconomic data, industry and reporting unit specific facts and circumstances and is our best estimate of operational results and cash flows for the PrimaLoft reporting unit as of the date of our impairment testing. The discount rate used in the income approach was 11.3% The results of the quantitative impairment testing indicated that the fair value of the PrimaLoft reporting

unit did not exceed its carrying value, resulting in goodwill impairment expense of $57.8 million in the year ended December 31, 2023.

Velocity Outdoor - The Company performed interim quantitative impairment testing of goodwill at Velocity at August 31, 2023. As a result of operating results that were below the forecast that we used in the quantitative impairment test of Velocity Outdoor at March 31, 2023, the Company determined that a triggering event had occurred at Velocity in the third quarter of 2023 and performed an interim impairment test as of August 31, 2023. The Company used an income approach for the impairment test, whereby we estimate the fair value of the reporting unit based on the present value of future cash flows. Cash flow projections are based on management's estimate of revenue growth rates and operating margins, and take into consideration industry and market conditions as well as company specific economic factors. The Company used a weighted average cost of capital of 17% in the income approach. The discount rate used was based on the weighted average cost of capital adjusted for the relevant risk associated with business specific characteristics and Velocity's ability to execute on projected cash flows. Based on the results of the impairment test, the fair value of Velocity did not exceed its carrying value. The Company recorded goodwill impairment of $31.6 million during the year ended December 31, 2023.

2022 Interim Impairment Testing

Ergobaby - The Company performed interim quantitative impairment testing at Ergobaby of goodwill and the indefinite lived tradename at December 31, 2022. As a result of operating results that were below historical and forecast amounts, the Company determined that a triggering event had occurred at Ergobaby. The Company used an income approach for the impairment test, whereby we estimate the fair value of the reporting unit based on the present value of future cash flows. Cash flow projections are based on management's estimate of revenue growth rates and operating margins, and take into consideration industry and market conditions as well as company specific economic factors. The Company used a weighted average cost of capital of 16% in the income approach. The discount rate used was based on the weighted average cost of capital adjusted for the relevant risk associated with business specific characteristics and Ergobaby's ability to execute on projected cash flows. Based on the results of the impairment test, the fair value of Ergobaby did not exceed its carrying value. We recorded goodwill impairment of $20.6 million at December 31, 2022. For the indefinite lived tradename, quantitative testing indicated that the fair value exceeded the carrying value.

Annual Impairment Testing

The Company uses a qualitative approach to test goodwill and indefinite lived intangible assets for impairment by first assessing qualitative factors to determine whether it is more-likely than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform quantitative goodwill impairment testing.

2023 Annual Impairment Testing

The Company determined that the Velocity reporting unit required additional quantitative testing because we could not conclude that the fair value of the reporting unit exceeded its carrying value based on qualitative factors alone. For the reporting units that were tested only on a qualitative basis for the 2023 annual impairment testing, the results of the qualitative analysis indicated that it is more likely than not that the fair value exceeded the carrying value of these reporting units.

The quantitative test of Velocity was performed using an income approach to determine the fair value of the reporting unit. The discount rate used in the income approach was 15% and the results of the quantitative impairment testing indicated that the fair value of the Velocity reporting unit exceeded the carrying value by 21%.

2022 Annual Impairment Testing

The results of the qualitative analysis indicated that it was more-likely-than-not that the fair value of each of our reporting units exceeded their carrying value for the 2022 annual impairment testing.

2021 Annual Impairment Testing

The Company determined that the Arnold reporting unit required additional quantitative testing because we could not conclude that the fair value of the reporting unit exceeded its carrying value based on qualitative factors alone. The quantitative test of Arnold was performed using an income approach to determine the fair value of the reporting unit. The results of the quantitative impairment testing indicated that the fair value of the Arnold reporting unit exceeded the carrying value. For the reporting units that were tested only on a qualitative basis for the 2021 annual

impairment testing, the results of the qualitative analysis indicated that it is more likely than not that the fair value exceeded the carrying value of these reporting units.

The following is a summary of the net carrying amount of goodwill at December 31, 2023 and 2022 (in thousands):


	December 31, 2023		December 31, 2022
Goodwill - gross carrying amount	$	1,069,125	$	1,069,304
Accumulated impairment losses (1)	(167,697)		(78,297)
Goodwill - net carrying amount	$	901,428	$	991,007

(1) Includes goodwill impairment expense of $20.6 million recorded at Ergobaby, $64.5 million at Velocity $24.9 million at Arnold and $57.8 million at PrimaLoft. In the year ended December 31, 2023, the Company recorded $31.6 million of goodwill impairment expense at Velocity and $57.8 million of goodwill impairment expense at PrimaLoft. In the year ended December 31, 2022, the Company recorded $20.6 million in goodwill impairment expense at Ergobaby.

Intangible Assets

Intangible assets are comprised of the following (in thousands):


	December 31, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Lives
Customer relationships	$	772,423	$	(294,628)	$	477,795	$	770,982	$	(237,500)	$	533,482	14
Technology and patents	202,898		(66,035)		136,863		200,820		(51,169)		149,651		12
Trade names, subject to amortization	375,507		(124,648)		250,859		374,888		(101,577)		273,311		17
Non-compete agreements	4,638		(4,082)		556		4,638		(3,825)		813		5
Other contractual intangible assets	1,960		(1,593)		367		1,960		(1,185)		775		4
	1,357,426		(490,986)		866,440		1,353,288		(395,256)		958,032
Trade names, not subject to amortization	56,965		—		56,965		56,965		—		56,965
In-process research and development (1)	500		—		500		500		—		500
Total intangibles, net	$	1,414,891	$	(490,986)	$	923,905	$	1,410,753	$	(395,256)	$	1,015,497

(1) In-process research and development is considered indefinite lived until the underlying technology becomes viable, at which point the intangible asset will be amortized over the expected useful life.

The Company’s amortization expense of intangible assets for the years ended December 31, 2023, 2022 and 2021 totaled $95.8 million, $84.7 million and $73.7 million, respectively.

Estimated charges to amortization expense of intangible assets over the next five years, is as follows, (in thousands):


2024	$	94,326
2025	$	89,124
2026	$	82,825
2027	$	72,091
2028	$	69,958