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Note 5 - Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Text Block]

5.	*Goodwill and Intangible Assets:*

The Company’s intangible assets were recorded in connection with its acquisitions that occurred between 2011 and 2020. 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 noncompete agreements in future periods.

Goodwill, by reportable unit, was as follows as of March 31, 2021 and December 31, 2020, respectively. The goodwill is deductible for tax purposes. The change in goodwill during 2021 is related to adjustments to the preliminary purchase price allocation of the fair market values of the assets acquired and liabilities assumed for Action Stainless.

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

Balance as of December 31, 2020	$	1,065	$	4,058	$	-	$	5,123
Acquisitions		-		111		-		111
Impairments		-		-		-		-
Balance as of March 31, 2021	$	1,065	$	4,169	$	-	$	5,234

Intangible assets consisted of the following as of March 31, 2021 and December 31, 2020, respectively:

	As of March 31, 2021
(in thousands)	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net

Customer relationships - subject to amortization	$	21,259	$	(9,457	)	$	11,802
Covenant not to compete - subject to amortization		259		(203	)		56
Trade name - not subject to amortization		20,168		-			20,168
	$	41,686	$	(9,660	)	$	32,026

	As of December 31, 2020
(in thousands)	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net

Customer relationships - subject to amortization	$	21,442	$	(9,101	)	$	12,341
Covenant not to compete - subject to amortization		259		(186	)		73
Trade name - not subject to amortization		20,179		-			20,179
	$	41,880	$	(9,287	)	$	32,593

The Company estimates that amortization expense for its intangible assets subject to amortization will be approximately $1.5 million per year for the next two years and $1.4 million per year for the three years thereafter.