Goodwill and Other Intangible Assets

12 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The changes in the carrying amount of goodwill by segment are as follows:


	Utility and Power Infrastructure		Process and Industrial Facilities		Storage and Terminal Solutions		Total
	(In thousands)
Net balance at June 30, 2018	$	31,848	$	37,612	$	26,702	$	96,162
Disposal of business (1)	—		(2,775)		—		(2,775)
Translation adjustment (2)	(8)		5		(16)		(19)
Net balance at June 30, 2019	31,840		34,842		26,686		93,368
Goodwill impairment	(24,900)		(7,981)		—		(32,881)
Translation adjustment (2)	(35)		(15)		(68)		(118)
Net balance at June 30, 2020	6,905		26,846		26,618		60,369

Translation adjustment(2)	79		32		156		267
Net balance at June 30, 2021	$	6,984	$	26,878	$	26,774	$	60,636

(1)In August 2018, we disposed of a business that marketed process heating equipment. See Note 3 - Acquisitions and Disposals for more information about the disposal. The business disposed of constituted its own reporting unit and the amount of goodwill written off was all of the goodwill assigned to that reporting unit. None of the goodwill was considered impaired since we recorded a gain on the disposal.

(2)The translation adjustments relate to the periodic translation of Canadian Dollar and South Korean Won denominated goodwill recorded as a part of prior acquisitions in Canada and South Korea, in which the local currency was determined to be the functional currency.

We performed our annual goodwill impairment test as of May 31, 2021, which resulted in no impairment. The fiscal 2021 test indicated that four reporting units with a combined total of $37.7 million of goodwill as of June 30, 2021 were at higher risk of future impairment than others. If our view of project opportunities or gross margins deteriorates, particularly for the higher risk reporting units, then we may be required to record an impairment.

In the second quarter of fiscal 2020, we concluded that a goodwill impairment indicator existed in the Utility and Power Infrastructure segment based on the recent history of depressed gross margins and the second quarter’s downward acceleration of revenue and gross margin. Accordingly, we performed an interim impairment test as of December 31, 2019, reflecting updated revenue and gross margin assumptions, and concluded that the reporting unit's $24.9 million of goodwill was fully impaired. Additionally, we concluded that a goodwill impairment indicator existed for a Process and Industrial Facilities segment reporting unit based on several second quarter events. These events included the deterioration of our relationship with a significant customer in the iron and steel industry in the second quarter. As a result, the customer canceled other previously awarded work and we received no subsequent business from this customer. Accordingly, we performed an interim impairment test as of December 31, 2019 and concluded that the reporting unit's $8.0 million of goodwill was fully impaired.

The estimated fair value of each reporting unit was derived primarily by utilizing a discounted cash flow analysis. The key assumptions used are described in Note 1 - Summary of Significant Accounting Policies.

Other Intangible Assets

In the fourth quarter of fiscal 2020, we fully impaired a customer relationship intangible asset with a net book value of $1.2 million. The customer relationship primarily related to services which were impacted by our performance improvement plan (see Note 14 - Restructuring Costs). As a result, the customer relationship intangible asset was no longer recoverable. As of June 30, 2020, this intangible asset had a remaining useful life of approximately 2 years, a gross carrying amount of $6.3 million and accumulated amortization of $5.1 million. The impairment is included in restructuring costs in the Consolidated Statements of Income.

Also in the fourth quarter of fiscal 2020, we fully impaired a customer relationship intangible asset with a net book value of $0.4 million in connection with the closure of an underperforming operating unit. The closure was part of our performance improvement plan (see Note 14 - Restructuring Costs). As of June 30, 2020, this intangible asset had a remaining useful life of approximately 4 years, a gross carrying amount of $0.9 million and accumulated amortization of $0.5 million. The impairment is included in the restructuring costs caption in the Consolidated Statements of Income.

In the second quarter of fiscal 2020, in connection with the factors disclosed for the Process and Industrial Facilities segment goodwill impairment above, we fully impaired a customer relationship with a net book value of $5.6 million. As of December 31, 2019, this intangible asset had a remaining useful life of 9 years, a gross carrying amount of $9.4 million and accumulated amortization of $3.8 million. The impairment is included within the goodwill and other intangible asset impairment caption in the Consolidated Statements of Income.

Information on the carrying value of other intangible assets is as follows:


		At June 30, 2021
	Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(Years)	(In thousands)
Intellectual property	10 to 15	$	2,483	$	(2,031)	$	452
Customer based	6 to 15	17,354		(11,192)		6,162


Total other intangible assets		$	19,837	$	(13,223)	$	6,614


		At June 30, 2020
	Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(Years)	(In thousands)
Intellectual property	10 to 15	$	2,579	$	(1,956)	$	623
Customer based	6 to 15	21,840		(13,626)		8,214


Total other intangible assets		$	24,419	$	(15,582)	$	8,837

Amortization expense totaled $2.3 million, $3.4 million, and $3.3 million in fiscal 2021, 2020, and 2019, respectively.

We estimate that future amortization of other intangible assets will be as follows (in thousands):


For year ending:
June 30, 2022	$	1,819
June 30, 2023	1,729
June 30, 2024	1,415
June 30, 2025	1,096
June 30, 2026	555

Total estimated amortization expense	$	6,614