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Note 5 - Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Text Block]

5.	Goodwill and Intangible Assets:

The Company’s intangible assets were recorded in connection with its acquisitions of EZ Dumper and McCullough (2019), its acquisition of Berlin Metals (2018) and its acquisition of CTI (2011). The intangible assets were evaluated on the premise of highest and best use to a market participant, primarily utilizing the income approach valuation methodology. The useful life of the customer relationships was determined to be fifteen years, based primarily on the consistent and predictable revenue source associated with the existing customer base, the present value of which extends through the fifteen-year amortization period. The useful life of the non-compete agreements was determined to be the length of the non-compete agreements, which range from one to five years. The useful life of the trade names was determined to be indefinite primarily due to their history and reputation in the marketplace, the Company’s expectation that the trade names will continue to be used, and the conclusion that there are currently no other factors identified that would limit their useful life. The Company will continue to evaluate the useful life assigned to its amortizable customer relationships and non-compete agreements in future periods.

Goodwill, by reportable segment, was as follows as of September 30, 2020 and December 31, 2019, respectively. The goodwill is deductible for tax purposes.

(in thousands)	Carbon Flat Products		Specialty Metals Flat Products		Tubular and Pipe Products		Total

Balance as of December 31, 2019	$	1,065	$	2,358	$	-	$	3,423
Acquisitions		-		-		-		-
Impairments		-		-		-		-
Balance as of September 30, 2020	$	1,065	$	2,358	$	-	$	3,423

Intangible assets consisted of the following as of September 30, 2020 and December 31, 2019, respectively:

	As of September 30, 2020
(in thousands)	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net

Customer relationships - subject to amortization	$	18,022	$	(8,801	)	$	9,221
Covenant not to compete - subject to amortization		259		(170	)		89
Trade names - not subject to amortization		18,995		-			18,995
	$	37,276	$	(8,971	)	$	28,305

	As of December 31, 2019
(in thousands)	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net

Customer relationships - subject to amortization	$	18,022	$	(7,900	)	$	10,122
Covenant not to compete - subject to amortization		259		(117	)		142
Trade names - not subject to amortization		18,995		-			18,995
	$	37,276	$	(8,017	)	$	29,259

The Company estimates that amortization expense for its intangible assets subject to amortization will be approximately $1.3 million per year for the next year and $1.2 million per year for the four years thereafter.